This demographic seeks out residential areas in the city center or with adequate access to transportation.
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Kompas/Raditya Helabumi
Workers repaint the outer walls of a high-rise apartment complex on Nov. 22, 2017 in Kebon Jeruk, Jakarta. Apartments are growing as a key investment because of their high rental rates.
JAKARTA, KOMPAS — The rise of the young urban population has influenced shifts in residential needs. This demographic seeks out residential areas in the city center or with adequate access to transportation.
Houses are not simply a residence, but are assets that can be rented or sold at any time. The generation born between 1980-1999 is fond of apartments.
Based on Kompas’ analysis, other popular choices include houses on the city’s outskirts, but that have access to transportation facilities.
"There is a tendency for the millennial generation to choose apartments that are located within, or have with easy access to the city center. This choice is in line with a practical lifestyle," said Anton Sitorus, head of research firm Savills Indonesia.
Deputy chairman of legislation and property regulation of the Central Board of Real Estate Indonesia Ignesjz Kemalawarta said the shift in Indonesia’s demographics, digitalization and future residential trends need to be observed carefully. In 2030, Indonesia’s population will be dominated by a young generation familiar with the internet and the steadily expanding access to information. "People searching for properties will be dominated by those who are digitally literate," he said.
Future residences will need to be practical and intelligent. Access to the internet has become a major requirement of housing infrastructure. This is different from housing infrastructure of the past, which covered only water, roads and electricity. Developers also need to pay attention to transportation access.
"The changes in the property paradigm need to be observed. The pattern of property development needs to adapt with the times,” said Ignesjz.
Breakthrough
Because of the increasingly high price of urban land, new housing, both ordinary houses and apartments, are being built on the outskirts of the city. This situation has affected the prices of housing on the outskirts of the city.
A survey by Savills Indonesia, a property consultant in the Greater Jakarta area, in the fourth quarter of 2017 showed that the price of houses in urban areas, such as Serpong, Cibubur, Sentul and Bekasi, had increased significantly.
On Jakarta’s outskirts, almost no residences are sold below Rp 200 million, either houses or apartments. A 20-25 square meter studio apartment fetches a price of at least Rp 250 million, while in Jakarta the price of a similar apartment is Rp 400 million.
The increasing housing prices in urban areas has not been balanced by an increase in purchasing power and may trigger a housing shortage crisis. In 2015, the housing shortage in Jakarta reached 1.3 million units. As a result, rental housing became a mainstay for many urbanites.
According to Indonesia Property Watch, up to 53.87 percent of Jakarta\'s population does not occupy their own property. They live in rental houses or houses owned by their parents or relatives.
In Surabaya, developers offer housing that is integrated with public facilities to accommodate the market demands of the millennial generation.
General manager of Citraland Surabaya Andy Sugiharjo said the millennial generation in Surabaya also preferred to purchase apartments. A studio apartment in Surabaya is priced at between Rp 300 million - Rp 500 million, while the cheapest houses cost Rp 700 million.
“The millennial generation is also fond of travelling and shopping, so we have to provide related facilities," Andy said.
The ”Big but not big enough" class
Executive director of Indonesia Property Watch Ali Tranghanda said the country’s demographic bonus would give birth to a "large but not large enough" class in urban areas. This class earns an income that is a little bit bigger than the low-income segment of society and so do not receive housing subsidies. However, this class faces difficulties buying non-subsidized housing as the price is far above subsidized housing.
In Singapore, the government’s system for providing housing targets certain communities. The prices of apartments provided by the government are affordable for certain income communities. If the income of a family increases, they are obligated to resell their apartment to the government and move to a residence that matches their income.
Separately, Public Works and Housing Minister Basuki Hadimuljono said the government was aware of the problems young people faced affording housing. The millennial generation is forced to buy housing on the outskirts of the city or even in other cities.
"The government is aware of this. We will develop several financing schemes, such as financing on the basis of savings," said Basuki.
