What we’re learning from the experts

Today’s highly anticipated Property Report Congress Indonesia 2016 is already underway, with many of the country’s leading industry professionals in attendance.

Stay tuned, we’ll be bringing you live updates from the event, including highlights from the speaker’s sessions.

Also be sure to follow us on Twitter and Facebook, where we’ll be posting regular updates from the congress, and also in anticipation of tonight’s Indonesia Property Awards.

10.25 am – Welcome from Liam Barnes, brand director and editor-in-chief for Property Report


10.35 am Congress Chairman Todd Lauchlan, Country Head , Jones Lang Lasalle Indonesia takes the stage.

10.40 am – Keynote Speaker: Hendra Hartono, CEO, PT. Leads Property Services Indonesia, gives an overview of the current state of Indonesia’s real estate market.

The middle and middle low segments are still active, particularly in the suburbs, within 15 to 30 km from the CBD. This segment contributes 8- percent of total existing supply of units.

The middle up and upper properties are 19.5 percent of the market, with the luxury niche market less than 1 percent.

The tax amnesty has yet to impact the condominium market, but improvements are expected.

Factors to consider when making investments are largely as they have always been – with location and traffic key factors.

Existing supply of 4.95m sqm, with limited new supply in Jakarta.

There is a growing middle class, with an appetite for fashion, lifestyle, entertainment and gadgets.

Some new brands are planning entering the Indonesian market, however, they typically follow expansion from Hong Kong, Tokyo, Seoul and Singapore. Indonesia is not a leader here.

Playland theme is a key factor for a successful mall. There are increasing middle class malls in secondary cities.

Hendra Hartono

The upscale market is still experiencing growth. 5 star hotel’s numbers have tripled in the last five years, and there is more coming in the next 3 years.

Tourist arrivals continue, reaching 5 million by mid year 2016. The majority of these arrive via Ngurah Rai International Airport Bali, Soekamo-Hatta International Airport Tangeerang and Batam Airport.

New airline routes are being established, with connectivity to China and Japan.

Most visitors come from China (20.83 percent).

Airbnb is affecting the market, however this is not as damaging as it has been in cities such as Tokyo.

The Bali market is saturated.

There is large industrial land supply of at least 10,771 hectares in Greater Jakarta. Due to high population density and escalated land prices.

Central Java as well as Serang are becoming new interesting hotspots for industrial activities due to competitive land prices and lower wages.

Sentiment is positive. The recovery will depend on the effectiveness of the tax amnesty, the new cabinet policy, the speedy completion of infrastructure program and Rupiah stabilization.

11.15 am Panel discussion: How the MRT could transform Jakarta real estate.

Moderator: Mina Ondang, Director, Cushman & Wakefield
Panelists: Charles Barguirdjian, Studio Director, Atkins Singapore, Sutanto Soehodho, Deputy of Transportation, Trade and industry, DKI Jakarta, Irawati Hermawan of Hermawan Juniarto

Mina asks: How will the Jakarta MRT acts a catalyst to the property sector?

Charles is hugely encouraged by what he expects to become a hugely comprehensive network of stations and lines in Jakarta. It’s connectivity that makes an economy successful, he explains.

Drawing from past experience, in emerging cities such as Hyderabad, there is typically some hesitation from the developers’, because it’s a public transportation system, and in such cities the demographic for public transport is lower. But, he says, this reluctance is short lived once the project opens, and they see that convenience leads to a broader demographic.

“We have to be aggressive because people are skeptical about the system. This is a problem in Jakarta.”

Sutano notes the Asian Games in 2018, which is hosted by Indonesia. It is hoped that some lines will be in place by this time.

He also notes the tariff for travel will be subsidized by the government. “You have to provide an attractive tariff for people.” This is important to discuss with the private sectors.

Charles jumps in on the topic of tarrifs. When asked: “What can we learn from the Singapore government and the subsidized tarrifs,” he explained: “I think if we look at Singapore as a city, it has probably one of the more sophisticated public transport systems. It’s not just about metro, it’s about buses, cycling, walking. The transport profile in Singapore spans from CEO down to worker. This enables them to put incentives in place to reduce the cars on the road.”

He also notes that as owning cars in Singapore is so expensive, people have to use public transport.

11.10 am Keynote Speaker: Bambang Brodjonegoro, Head of National Development planning agency (Bappenas) Republic of Indonesia

Bambang ran through the various challenges Indonesian real estate faces, including housing subsidies, and the increasing urban population and lack of housing finance support.

He said the middle and high-income housing can be fully delivered by market mechanisms. But, low-income housing struggles without governmental support. Newly formed households cannot afford the lowest-price housing in the formal housing market.

Home ownership rate is 78.7 percent. This means that 11.8 million families have no house. At the other end of the scale, 3.1 million households have more than one house.

Bambang Brodjonegoro

1.15 pm – Panel discussion: What it takes to develop a luxury project

Moderator: Hendra Hartono, CEO, PT. Leads Property Services Indonesia
Panelists: Alexander Karolik-Shlaen, Managing Director, Panache Management, Andrew Corkery, Managing Partner, Selong Selo Group

Indonesia has been experiencing an increased millionaire population, Hendra explains. This is only expected to increase, therefore the opportunity for luxury projects is huge.

Luxury is a very relative word, and is frequently overused, said Alexander. “Any condo with a swimming pool by its side may be called luxury.”

Andrew agreed. “We could ask the crowd here today for their definition of luxury, and we would get a different answer for each.

“The main things that determine luxury status are location, opportunity, value and exclusivity. The location must have views and must have international access. Opportunity is the circumstances that this presents for the buyer. Value – buyers are becoming more discerning; they want “bang for their buck”. The exclusivity element of the purchase is that people want a community of like-minded people who share their values.”

He explains that when a buyer comes to Lombok to see Selong Selo they’re sold 90 percent. When introduced to existing owners and arrange for them to go out to dinner, this frequently closes the deal.

Alexander cites branded developments in Manila, which have proved very successful, as a future theme for luxury projects in Indonesia, and Jakarta in particular.

Selong Selo, not a branded development, has had to work to differentiate itself, explained Andrew. “We’ve done this through various sustainability initiatives,” he said.

On the topic of location, since Lombok airport opened, it’s increased 60 percent with international arrivals. This has increased property and land prices on the back of that, explained Andrew.

But how important is location and connectivity?

“Without connectivity it’s impossible to do luxury properly,” said Alexander.

When looking for luxury properties, Alexander explains, if they are after a luxury lifestyle, convenience is a large part of this. Therefore, long travelling time and multiple flights make this harder.

“In terms of resorts, Phuket is the most expensive. This is because they have direct flights to many cities, including secondary cities, around the world. If it becomes too difficult to get there, it will not apply to most investors, as they will not want to travel to it.”

All the rich people I know, want to make money on their property. No one wants to lose money. Even the richest people I know, the UHNW, they will only buy in the best location, because they want to gain money on property.

But, added Andrew, people can get more for their money in somewhere like Lombok. “For the size and quality, they can get a superior property for the same money in somewhere like Lombok than they can in somewhere like Phuket.”


2pm – Panel discussion: The rise of state-of-the-art architecture in Indonesia

Moderator: Minkqee Tan, Chief Designer/Registered Architect, MINKEE Architects
Panelists: M. Archica Danisworo, Design Director, PDW Architects, Carlos Monterde, General manager, Fairmont Jakarta

Minkqee: What is the role of architecture in the success of a development or city?

Carlos: “We need buildings that give you an experience that enhances the product, and produces an emotion.”

Archica: “There has to be a combination between buildability and attractiveness. Indonesia is in its infancy in some ways, and still working out our own unique design style. Designers are wanting to impact the Jakarta skyline, they want uniqueness when standing up against their competitors, but buildings must also comply with regulations, which is a challenge here.”

Minkqee: “What is the role of architecture in the city and Jakarta?”

Carlos: “Architecture plays an important role in making a city attractive. Jakarta is an industrial city, people come here just to do business. This is something that can be changed with architecture.”

We have cities that when they have focused on facilities and making a city attractive through architecture, they become viewed as a great place to live, he explained, citing Singapore as a good example of this.

Archica explained that mixed use developments are the future. If an area is purely industrial, he said, then it is empty in the evenings and weekends. He also feels that traffic is made worse by having designated working and living areas.

Minkqee: “How is Indonesia catching up with other cities in the region?”

Archica “During the last 10 – 15 years, personally I can feel the buzz. Jakarta is changing, it’s more dynamic.” He continued that the landscape is evolving with increased investments coming from around the region.

2.30pm – Jaime Rivera, Regional Director Asia, Crystal Lagoons. How water-based technology can increase interest in your property

Crystal Lagoons is a multi-national innovation company which has developed an innovative technology and concept, which allows for the construction and maintenance of unlimited-sized pools, with crystal-clear turquoise water.

With this technology, it is possible to create a beach paradise in the middle of deserts, or in city centres, explains Jamie.

The company can create Caribbean-style lagoons in cold areas, and makes it possible to develop beach resorts inland, in countries where coast lines are almost completely developed.

In Miami, for example, beach-side properties are too expensive. But also – the beaches are so crowded. For your home, he explains, you want privacy. With such crowded beaches, the lagoon swimming pools are ideal.

Another example is a resort in Chile, where the sea is too dangerous to swim in. By building a development by the coast, but with a crystal lagoon pool, people can enjoy a real beach view, but swim in safe waters.

The company has more than 40 projects in the US underway, and 400 worldwide.

In terms of number of projects in the next 15 years – 14,000. Half of these are in Asia.


3pm – Panel discussion: What tax and the law can do to improve the real estate market

Moderator: Paulius Kuncinas, Regional Editor, Oxford Business Group
Panelists: Todd Lauchlan, Country Head, Jones Lang LaSalle Indonesia, Rahayu Ningsih Hoed, managing Partner, Makarim & Taira S.

There is some confusion and challenge in Indonesia for foreigners purchasing property in Indonesia, explains Todd. While individuals cannot legally buy property, there is no problem for companies wishing to buy and hold full ownership.

The important thing to remember with the Hak Pakai law, Rahayu explains is that if you stop residing in Indonesia, you must transfer the property. If you fail to do this, the government takes over this process. Hak Pakai properties can now be mortgaged, she adds.

Indonesia is performing well, says Todd and the country is considered stable.

Changes to the luxury and super luxury taxes will get the market moving, Todd hopes, adding that the luxury taxes tend to confuse people. “Our view at JLL is that if there’s going to be a luxury tax, tier it. We should try to make the regime more sensible.”

In regard to the tax amnesty, although agreeing that it is overall successful, Rahayu suggests that the statistics regarding the money that has been collected may not be as high as has been reported, “people try to inflate perhaps” she said.