Post Coronavirus Property Forecast
Despite suffering the deepest pressure this year as a result of the corona pandemic which has weakened purchasing power, the property and real estate market is expected to be one of the fastest to rebound post covid-19 in 2021.
Despite suffering the deepest pressure this year as a result of the corona pandemic which has weakened purchasing power, the property and real estate market is expected to be one of the fastest to rebound post covid-19 in 2021. The property industry is predicted to grow by 20-30% in the upcoming year.
The property industry growth wave is likely to occur in the next 8-10 years. A number of main factors driving the growth of the property industry include the application of the Job Creation Law (UU Cipta Kerja) which is expected to cut the bureaucracy in licensing and land acquisition assurance.
One of Indonesia’s leading real estate property developers, PT Ciputra Development Tbk (CTRA) said, the prospect of the property business in 2021 really depends on the development of the post coronavirus property market.
“With the new covid-19 vaccine, the real estate market should be able to rebound faster and be better in 2021. So, the biggest challenge is how quickly vaccinations can overcome the pandemic. The opportunity is that there are many pending requests,” said Corporate Secretary and Independent Director of CTRA, Tulus Santoso, to kontan.co.id, Friday (11/12).
Indonesia’s Real Estate during Covid-19 Pandemic
According to Associate Executive Director of Century 21 Indonesia, Daniel Handojo, during the coronavirus pandemic, Indonesia’s real estate found new challenges and opportunities. During the country’s social distancing program, PSBB (Pembatasan Sosial Berskala Besar), property agents are unable to do the conventional way of promotion such as open house, property expo, and house auctions.
However, the property sector slowly started to rise since June 2020. Daniel revealed that currently the property sector has begun to adapt to market conditions during the corona pandemic. For example, in the secondary property business many properties began to sell, albeit the home prices are at 20-30 percent below normal rates.
The same also occurs with the primary property business. Daniel sees that during the past month, property developers have started doing business quite aggressively. “They have also started to make products that are still needed by consumers today, such as ready-to-live houses,” he explained. For example, in the midst of the Covid-19 pandemic, PT Ciputra Residence was able to sell new products with a total value of IDR 55 billion in one day.
One of the property sub-sectors that received the hardest hit was the offices and business rental properties sector. Due to the country’s economic recession, many businesses are hesitating to pay rent for physical offices leading to a decrease in vacancy rates. Many small businesses and individual workers prefer working from home or at coworking spaces for safety reasons.
Post Coronavirus Property Market
Property consultant, Coldwell Banker Indonesia, explained the projected demand for the property market after coronavirus (Covid-19) has subsided globally and in Indonesia. According to Tommy Bastami, Coldwell Banker Managing Partner of Strategic Advisory, some property sub-sectors will not recover quickly after the corona issue has passed.
According to him, the property sub-sector that will grow the fastest are the sectors whose potential demand comes from real demand or individual investors, considering the sources of demand from both will recover quicker.
The housing market will be more prospective because most developers are also likely to launch new projects since developers have refrained from releasing their latest products due to covid-19. Tommy predicts, areas surrounding big cities will be more active in terms of property transactions.
Meanwhile, other sub-sectors such as offices and industrial sectors will likely not recover as quickly. This is due to the fact that the business climate from sources of demand in this sector requires a longer recovery time.