JAKARTA - The Indonesian Coordinating Minister for Economic Affairs, Airlangga Hartarto, believes that Indonesia has become one of the best property investment destinations in the world.
“Indonesia has become the best property investment destination in the world. "With the fourth largest population in the world, namely around 273 million people, and a demographic bonus that will occur over the next few years, demand for property in Indonesia, especially for smart and green cities, will also increase," said Coordinating Minister Airlangga at The International Real event. Estate Federation (FIABCI) Trade Mission 2023 through an official statement in Jakarta, quoted from Antara, Wednesday, September 20.
Coordinating Minister Airlangga explained, through the theme Green Cities for Greener Future, the Indonesian property industry is also implementing sustainable development in the context of environmentally friendly cities.
This concept is important to maintain a balance between economic growth and environmental protection.
He gave an example of applying this concept to the Archipelago Capital (IKN) project which will be built with a green city vision. In order to achieve efficiency and energy conservation, an environmentally friendly building design (green building) is incorporated by utilizing a circular water management system and district cooling.
"The government's support for the concept of green development has been demonstrated through Government Regulation Number 16 of 2021 concerning Building Structures which contains provisions for the issuance of environmentally friendly building certificates," he explained.
The government has also passed Law Number 11 of 2020 concerning Job Creation which aims to improve the investment climate in Indonesia, including in the property sector.
This is because the property sector has an important role in providing a significant multiplier effect on around 174 property supporting industries such as construction, labor and building materials.
Furthermore, Coordinating Minister Airlangga explained that the contribution of the property industry as one of the leading sectors to drive the Indonesian economy towards Gross Domestic Product (GDP) in the second quarter of 2023 was recorded at 9.43 percent for the construction sector and 2.40 percent for the housing or real estate sector.
Even though the housing or real estate sector in the second quarter of 2023 still showed a decline of 12.30 percent on an annual basis (yoy), sales of large 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.
Coordinating Minister Airlangga assessed that the increase in the demand index could create positive momentum in the commercial property industry, including the potential to increase activity and property 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 100 percent Loan to Value and Financing to Value for property loans which are valid until December 31, 2023," he concluded.
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