Sales of apartment in Jakarta are showing signs of bottoming out, following a crunch caused by the government implementing new luxury taxes and a slow economic growth, property consultancy firm Jones Lang LaSalle reported on Wednesday (07/02).
Developers sold more apartments between October and December last year — around 1,300 units — than in the previous quarters.
They sold 1,237 units in the first quarter, 1,004 units in the second and 1,069 units in the third, the JLL report said.
In total, developers in Jakarta sold 4,610 apartments last year, down from 5,450 units in 2016 and far below the heyday of 2014 when 17,000 apartments were sold in just a year.
“The market has bottomed out… but more apartments were sold in the last quarter as the economy grew a little,” JLL head of research James Taylor told reporters.
The Indonesian government started imposing a 20 percent value added tax on sales of any apartment worth Rp 10 billion or more since March 1 last year.
Before that, the government charged the tax based on the location of the apartments, and only on units larger than 150 square meters.
The new rule means cheaper apartments are now also subjected to the luxury tax.
Impact from the policy is expected to ease now and JLL is eyeing improvements in Indonesia’s property market this year on the back of growing confidence from buyers and predictions that the economy will continue to improve this year.
“We’re optimistic there will be an increase in apartment sales in 2018 as reputable developers offer good development quality, strategic location, good infrastructure and attractive amenities at affordable prices,” Taylor said.
JLL expects apartment prices in Jakarta to flatten out throughout this year as the market continues to suffer from oversupply.
Developers built 13,000 new apartments last year, bringing up the total number of apartments in the capital city to 138,000 by the end of 2017, but around 37 percent of those have remained unsold.
According to JLL’s residential head Luke Rowe, demand for apartments has been more robust among lower- and middle-income buyers, with developers completing many projects in this target market last year, including The Stature, The Pakubuwono Menteng, Simprug Signature-Thames, Kasamara dan Sakura Garden City.