Indonesia Becomes the Best Property Investment Destination in the World


Sukabumi - The contribution of the property industry as one of the leading sectors to drive the Indonesian economy to GDP in the second quarter of 2023 was recorded at 9.43 percent for the construction sector and 2.40 percent for the real estate sector.

The property industry also provides a multiplier effect for supporting industries and influences the development of the financial sector while absorbing labor significantly.

Although the real estate sector in the second quarter of 2023 still showed a decline of 12.30 percent (year on year/yoy), sales of large-sized houses increased by 15.11 percent (yoy). From the demand side, the Commercial Property Demand Index in the rental category grew by 5.87 percent (yoy) and the Commercial Property Demand Index in the sales category increased by 0.36 percent (yoy) in the second quarter of 2023.

The increase in the demand index can generate positive momentum in the commercial property industry, including potentially increasing property activity and sales in Indonesia as a whole.

"In order to encourage increased demand and investment in the property sector, the Government has issued various policies such as Loan to Value 100 percent and Financing to Value for property loans which are valid until December 31, 2023," explained Coordinating Minister for Economic Affairs Airlangga Hartarto when giving a keynote speech at The International Real Estate Federation (FIABCI) Trade Mission 2023 in Jakarta, Tuesday (19/9/2023).

With the theme "Green Cities for Greener Future", the property industry also realizes that sustainable development in the context of environmentally friendly cities is very important to maintain a balance between economic growth and environmental protection.

One of the latest examples that embodies this concept is the construction of the Capital City of the Archipelago (IKN) project, which will be built with a green city vision. To achieve energy efficiency and conservation, the incorporation of green building design is essential, utilizing circular water management systems and district cooling.

"The Government's support for the concept of green development has been shown through Government Regulation Number 16 of 2021 concerning Building Structures which contains provisions for the issuance of environmentally friendly building certificates," Airlangga said.

The Government has also passed Law Number 11 of 2020 on Job Creation which aims to improve the investment climate in Indonesia, including in the property sector, because it has an important role with a significant multiplier effect on around 174 property supporting industries such as construction, labor, and building materials.

"Indonesia has become the best property investment destination in the world. With the fourth largest population in the world, which is around 273 million people, and the demographic bonus that will occur for the next few years, the demand for property in Indonesia, especially for smart and green cities, will also increase," Airlangga concluded.