Property Prices in Indonesia

[atlantis]

This is why I never replied to her PM. .

Jeeeeeeeeeezzzzz! Are you telling me that not only 'she' was shilling but that she was also spamming our users through the PM system???

 

[Zavia]

Not talking full refurb etc but at least sweep up the dead cockroaches from under the fridge before you show it!

Of the landlords I have had here, I never met them. Only the agents and an exception was the (pretty) daughter in law. Thrice. The son couldn't have cared enough to come along with his wife apparently.

So the Agents send pics, which doesnt really show enough of the situation, dont want to ask money to repair, cos then the landlord may think they are troublesome and another agent can find a tenant without siding a non-existent tenant.
Also there is the attitude that if no one complains its ok. That and the owner never really visits the apartment to see the condition, just the money.

And that, Ladies and Gentlemen, is how the bailout package works.

Soooo the money goes back to the goverment? I dont recall seeing that.

Anyway, it reminds me of BoardGameGeek Math Trades https://boardgamegeek.com/wiki/page/Math_Trades
Where the algorithm will calculate everyone's presents wanted and offered, and give a solution where everyone is happy.
They should do a math debt payment, where everyone who owes others but has others owing em, can be mathematically paid off like your example!

 

[Scooterindo]

the driving force in Bali is simply greed. The market is saturated and not very much is selling but still the local owners wont reduce their prices in the hope of making a killing from some gullible expat.

I wanted to buy some land in an area called Mambal a Balinese mate of mine was offered some land to purchase at 150 juta per are - he was not able to buy the land himself (6 are) so knowing I was looking he told me about it. We met up and went to view the land and it was exactly what we were looking for, I asked him to contact the owner (so he'd get a commission) and inform him that he had found a buyer.

Between him making the call and us coming home to speak to the bank and the solicitor someone from the village must have called the owner to tell him a bule and his Javanese wife had been to view the land and the price went up by another 100 million an are. We were prepared to make a cash purchase at 150 but we knew we were being fucked over so we walked away.

This is typical in Bali, the land was still unsold the last time I went past.

 

[Daniel50]

In discussion with someone they don't think there is a current property bubble in parts of Indonesia. They believe a lot of the properties are paid with cash. Therefore, they can sit empty, as opposed to mortgages being paid by rentals or by themselves. There is a lot of corrupt money all through society and people put a lot of this in properties. It can be whoever from for eg. Makassar etc. etc. etc. who puts money in others names in Jakarta, BSD etc etc etc.. So there is nothing much to contract if a lot of the properties are paid off. Looking at different professionals in Indonesia, a lot, anecdotally, are still paying on their first long term mortgage for anywhere from 400 to 800 million but there are still many new houses and apts. being built and marketed as "good investments". There appears to be enough dirty, and other money, to keep this whole system turning.

 

[scouser59]

Except in bali where prices are dropping.

 

[jstar]

The amnesty program also had a negative effect on local real estate investments. (While it should have been the opposite after people get their money back to RI.) Many are afraid that they will be much more exposed in their future tax reporting.

For the rest; nothing new under the sun, people calculate themselves rich (“if my neighbor is asking 12 billion for his house, mine is worth 15!”). And houses don’t get sold.

 

[Anglian]

I know a gentleman in the MPR, he has five houses, I wonder if I could temp him to buy my house for lots of Rupiah, better than buying half a dozen cars

 

[Daniel50]

For the rest; nothing new under the sun, people calculate themselves rich (“if my neighbor is asking 12 billion for his house, mine is worth 15!”). And houses don’t get sold.

Yes, well that is fine if people have wads of cash or paid cash. But for most working Budis/Dewis their mortgage on their 1st property is no where near these prices and there are ever new developments marketed as "investment properties". I don't believe it is the burgeoning middle class driving these eg. 3 to 8 milyard per month. They can't be the ones driving the prices with the homes/apts. sitting empty. There appears to be a big enough dirty cash etc. market where homes can just sit empty.

In Bali, I read in the New York Times, prices were down about 20% and that roughly 12% of the market was foreign driven and the rest was Indonesians ( I am too lazy to track down the articles I was going to post them on another thread about Bali property prices but didn't bother). It indicated some were putting money in Flores etc. but that some Jakarta money was flowing back in. I also read a more local source from 2 or 3 years ago who indicated housing prices were down as much as 40%. The difference is banks are not being shaken as most properties are paid for and can sit empty. This doesn't sound like a mortgage of the working class or poor Indonesians. So how sustainable is it, it seems fairly stable as far as the banks are concerned.

I guess some of what really surprises me is eg. I see shows where there are properties for sale in parts of the US and the prices seem great. I think wow those are some cheap homes. Also places in parts of Europe/Spain/Italy etc. where there are really good prices on properties and the I see Indonesia where prices are just as high, or any many cases higher then some places where wages are much higher. This makes me wonder about some of the prices and the amount of homes etc that just sit empty. And most of the people in Indonesia have very modest incomes compared to property prices.. And it is not foreign investors driving up property prices like in Vancouver area etc.. So to me, it just does not seem sustainable but apparently there is enough money to both sustain and expand the market.

 

[jstar]

The superblock market supply here is huge, you can imagine what 16 apartment blocks in a Meikarta will do for instance. Now, from an investment perspective there are the (super) rich that buy multiple apartments and who probably don’t lose one second of sleep if they’re empty and the (rather new) middle class who take a first step on the real state ladder.

Don’t forget that for many of these (small) apartments the developers offer a (mandatory) installment plan of 2-5 years.. This has a similar effect as a (short term) mortgage. But the monthly amounts are much higher than with a 20 year plan and those developers don’t do background checks by credit managers as the financial institutions would.

And newbies think after some calculation it should be possible to pay the monthly amount if both partners work. Of course they expect long term rent, as well as an increase in value of the property. But often even before the completion things turn sour.

So there are quite some lucrative buybacks by the developers and good deals to be done since people need the cash fast.

In case of large houses, there is quite a supply but many are turned into commercial or kost since -also in Indonesia- young couples can’t afford and don’t want huge dwellings anymore. They buy 2-3 bedroom 1 bathroom townhouses with a small terrace at the back in projects in the suburbs. So these ‘palaces’ stay much longer on the market in cities as Jakarta, while the youngsters buy in Serpong, Cibubur, Bekasi, Depok, Cikarang etc. to live there and commute. In Jakarta itself, they often only can afford the Hak Pakai projects.

 

[Smallworld]

The superblock market supply here is huge, you can imagine what 16 apartment blocks in a Meikarta will do for instance.

......

Meikarta is going to be 200 towers to my knowledge.

 

[jstar]

Could be @Smallworld, i know the initial current phase is 15 or so, with a next one up to 50.

Lippo Group has a rather bad track record here for not finishing on time btw.

 

[waarmstrong]

Indonesia projects have a universally bad track record for finishes as scheduled; unlikely that I will be able to travel the trans-Java tollway from Jakarta to Surabaya except perhaps in a disinterred coffin on the bed of a pickup truck.

 

[Smallworld]

Could be @Smallworld, i know the initial current phase is 15 or so, with a next one up to 50.

Lippo Group has a rather bad track record here for not finishing on time btw.

Hmm ... not sure if I would like to live next to a construction site. I had very bad experience in Bandung when they were building new apartment next to ours.

From what I know if they will not finish on time they will pay penalty to "future" owners.

 

[snpark]

Indonesia projects have a universally bad track record for finishes as scheduled; unlikely that I will be able to travel the trans-Java tollway from Jakarta to Surabaya except perhaps in a disinterred coffin on the bed of a pickup truck.

But with a police escort, natch

 

[jstar]

Or with some yellow flagged motordevils.

But seriously, even for Indonesian standards Lippo has a rather bad name in approach and finishes. The superblock Holland Village in Jakarta (Pusat but close to Kelapa Gading) is one of the examples, as well as a seaside project in Manado. (The design and layout of those blocks left me speechless.)

What also surprised me, was that Meikarta will be built by Chinese workers. So PRC nationals. I'm sure most Indonesians are not aware of this and I wonder what they will think considering local employment and build quality. (As usual, the slogan should be 'it can be worse'; did you see the collapsing Nanchang airport terminal building? Some water damage in Terminal 3 of Soekarno-Hatta is nothing compared to that.)

 

[Davita]

Heh! jstar....you seem to know a lot about building in Jakarta and suburbs...are there any that would satisfy your requirements and you'd recommend for the rest of us to contemplate purchasing?

 

[jstar]

Kensington Kelapa Gading for location (LRT) and quality (layout) and future development.

Bellagio (in Kuningan) solely for the location and price. Quality is not great and it's in a rather bad shape and the tenants are somewhat iffy, but you can't top the location and ppsqm. It can only get better.

Something like Scientia in Serpong is interesting if you want to rent out to students or so...

We canceled our almost investment (down payment) in the 'Japanese' blocks close to Aeon in BSD since it was unclear what would be built next door and the 'walking distance' to the mall and ICE was somewhat far. But I liked the technologies in the Branz towers. The hype is somewhat over though, they start to give away iPhone X etc. when you buy...

 

[Davita]

Kensington Kelapa Gading for location (LRT) and quality (layout) and future development.

Bellagio (in Kuningan) solely for the location and price. Quality is not great and it's in a rather bad shape and the tenants are somewhat iffy, but you can't top the location and ppsqm. It can only get better.

Something like Scientia in Serpong is interesting if you want to rent out to students or so...

We canceled our almost investment (down payment) in the 'Japanese' blocks close to Aeon in BSD since it was unclear what would be built next door and the 'walking distance' to the mall and ICE was somewhat far. But I liked the technologies in the Branz towers. The hype is somewhat over though, they start to give away iPhone X etc. when you buy...

Thanks jstar.
Serpong/Alam Sutera/BSD was an investment I made over ten years ago and is a keeper for the family..... but I was more interested in your thinking of central Jakarta. For example...I purchased a 2-bed in Bellezza in Permata Hijau prior to construction...should I sell now as it's only used when we return to the city from Bali?

 

[jstar]

Bellezza, isn't that Selatan though? Of course the connection to the airport is not bad, although you can get better access. But what were your primary drivers at the time to buy it? The location? The layout and facilities? The developer? The perceived quality? The expected resale value? Rental income? I guess you need a replacement when you would sell? Or a hotel when it's only for ad hoc stays in JKT?

I'm afraid the real estate market won't be very good for the years to come and that you could be disappointed with the profit. (In appartements there is also an oversupply.) If the meeting between the two dickhead presidents goes wrong and there is an international conflict, I think it could become worse and be very nasty for a decade. Of course, do as the locals do; offer it for sale just to test the waters...you can always decide not to sell.

 

[Davita]

Re: post # 99
Thanks jstar....I think I'll keep the apartment as I'm coming to JKT on Monday to avoid Nyepi in Bali. It was bought so cheap I'm not even considering profit.
I just wondered if you had information about the building as, according to your posts, you seem to have intimate knowledge about other building's construction..
I'm starting to see some ongoing maintenance issues and the developer is the same company that should maintain the building. I think, in most countries, it is the rule that the developers are not permitted to continue with the ongoing management and is handed over to a resident's association...maybe that's a problem for Indonesia to look at if they want their property market to flourish with foreign investment.