Indonesian property prices on the rise

Investors in Indonesia are shifting money from low-yielding bank deposits into real estate in search of higher returns, it has been revealed.

The trend is pushing up property prices in the main cities, the country's housing minister Yusuf Asy'hari confirmed.

The strong demand for property in Southeast Asia's biggest economy has come from upper-income levels in search of higher returns, as well as from the middle to lower-income buyers who need housing.

Residential property prices in Jakarta have climbed at a time when high inflation and rising interest rates have put a dampener on other regional property markets such as India, Singapore and Hong Kong.

It is also having a positive outcome for developers. Indonesian property developers such as Ciputra Development and PT Bakrieland Development are enjoying higher margins, despite higher land and construction costs.

Ciputra Development said it has more than doubled its home presales in the first half of this year and PT Bakrieland Development has seen a 76 % growth.

Projects are outlined for 1,000 apartment blocks worth about $5 billion across Indonesia over the next few years. These include developments in Jakarta, Surabaya, which is Indonesia's second-largest city, and Medan, North Sumatra.

Panangian Simanungkalit, property analyst and executive director at the privately owned Indonesia Property Study Centre, said Indonesia's property prices were up by around 12% so far this year.

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