Demand for Condos is Limited, Prices in the First Quarter of 2024 Stagnant

As demand is limited, the supply of owned apartments or condominiums slows and prices remain relatively stagnant.

KOMPAS/HERU SRI KUMORO

The Samesta Mahata Margonda apartment located in Depok, West Java, on Thursday (13/4/2023). This residential complex targeting millennials is integrated with the Pondok Cina KRL Station. Additionally, the apartment is also very strategically located near hospitals, campuses, and shopping centers. Samesta Mahata Margonda is one of seven residential projects with a transit-oriented development (TOD) concept in Jabodetabek.

JAKARTA, KOMPAS — The number of launches of owned apartments or condos in Jakarta is decreasing. This situation occurs because the level of market demand is relatively limited. During the first quarter of 2024, prices were relatively stagnant.

Jakarta Property Market 2024, released by property consultant JLL Indonesia, stated that the number of condominium projects launched has been decreasing since 2015. This happened in line with changes in investment trends< /a> and economic conditions.

The Head of Research at JLL Indonesia, Yunus Karim, stated that the supply of condominiums has been continuously decreasing since 2015 until the first quarter of 2024. The trend of buyers who are individual investors has experienced a change in investment patterns in line with changes in the economy.

Also read: Apartment Market Still Sluggish, Purchases Dominated by Users

During the first quarter of 2024, there were no new condominium projects launched. The selling price of apartments tends to stagnate, with an estimated price growth of only 0.4 percent. This price growth has slowed down compared to the same period last year, which was 1.1 percent.

"The number of condominiums launched is still limited. This responds to the relatively limited demand level," said Yunus in a press conference in Jakarta, on Monday (13/5/2024).

As for the condominium project that is being sold and has not yet been completed, it is currently not optimally absorbed by the market. Out of the 26,000 marketed apartment units, 59 percent have been sold, while 41 percent have not been absorbed by the market.

KOMPAS/RADITYA HELABUMI

Spatial layout and interior design of one of the EleVee Condominium example units in Alam Sutera, Tangerang City, Banten, Wednesday (10/1/2024).

Yunus added that some apartment developers are actually ready to launch new projects. However, some are still considering the right strategy to enter the market.

Currently, some investors still tend to watch and wait (wait and see) market conditions. This is mainly because this year is a political year for Indonesia. This condition is different from 2013 and 2014, when individual investors dominated condominium purchases.

Also read: Keeping Breath and Provoking the Property Industry

He assessed that the project's base will still receive a positive market response if it offers unique products, a good reputation of the developer, a high level of accessibility, and attractive payment schemes to encourage market affordability.

"Projects that can be occupied in the near future or are in the completion stage are the main driver of the condominium market," he said.

KOMPAS/AGUS SUSANTO

The glass reflections of apartment building construction in the Setiabudi area of South Jakarta on Sunday (23/7/2023). The weakening of the global property market needs to be anticipated by property sector actors in the country by responding to domestic market challenges.

Another factor is the trend of society that still prefers owning landed houses instead of apartments. Meanwhile, the residential market is dominated by price segments below Rp 2 billion.

"There is competition between landed houses and apartments. Culturally, consumers still prefer dwellings with land ownership. On the other hand, the cost of condominium services remains a consideration," said Yunus.

Also read: Housing Market Considered the Most Stable

The Head of Research at Rumah123.com, Marisa Jaya, separately stated that the demand for condominiums in March 2024 grew by 91.7 percent annually. However, the demand decreased by 5.1 percent compared to the previous month.

Throughout the first quarter of 2024, the community's highest interest is in apartments priced at Rp 400 million - Rp 1 billion (34.9 percent) and below Rp 400 million (29.5 percent). Apartments priced at Rp 1 billion - Rp 3 billion have a demand proportion of 24.1 percent. Meanwhile, the interest for apartments priced at Rp 3 billion - Rp 5 billion is 5.7 percent, and above Rp 5 billion is 5.8 percent.

E14 UNTUK KOMPAS

Visitors see one of the newly completed condominiums in the Serpong area, South Tangerang, Banten, Wednesday (31/7/2018).

"In general, the price preference for apartments appears to be lower compared to landed houses given that apartments are a more affordable housing option compared to landed houses," said Marisa.

On the other hand, the Value-Added Tax (VAT) incentive borne by the government, which has been rolled out, is considered to also contribute to the condominium market, although not significantly. The tax incentive is considered necessary to continue in order to further drive the residential market, including apartments.

The government covers 100 percent VAT for house purchases under IDR 2 billion.

Based on the PPNDTP, the government bears 100% of the VAT for the purchase of houses priced below Rp 2 billion. The government will cover 100% of the VAT until June 2024. Then, from July-December 2024, the government will bear 50% of the VAT.

Marisa added that when the extension of PPNDTP was announced in October 2023, there was a monthly growth of 12.6 percent in the demand for condominiums. In November 2023, the growth of demand increased to 15.1 percent. Meanwhile, in December 2023 and January 2024, demand for condominiums grew by 4.7 percent and 8.4 percent, respectively.