Swire Properties expects sales boost for Indonesia Savyavasa project as Jakarta eases foreign buying requirements

A sales roadshow for Savyavasa, a joint venture between the Hong Kong developer and Jakarta Setiabudi International Group, to take in Hong Kong, mainland China, Singapore and other cities in Southeast Asia will kick off in the first quarter of 2024, said Adrian To, director of residential at Swire Properties.

The project, part of a HK$100 billion (US$12.8 billion) 10-year capital expenditure plan by one of Hong Kong’s oldest and largest builders of luxury homes and grade A offices, has pre-sold about 69 units as of late October, according to the latest data. Swire Properties, however, believes that Jakarta’s easing measure will further boost demand, with new enquiries already received in Singapore and mainland China among others.

“We welcome the Indonesian government’s latest initiative, which will make it much easier for foreigners to obtain property ownership rights in the country with eased requirements,” said To. “This is beneficial to Savyavasa.”

“[The easing] greatly broadens the target consumer base for residential developments, especially those featuring high-quality designs and amenities that are highly sought after by international buyers and expatriates residing in the country,” said To. “An additional advantage is that foreign passport holders don’t need to pay extra purchase duties or taxes.”

The move by Jakarta comes amid mixed fortunes for the property sector in Southeast Asia’s largest economy.

As of the end of September, total cumulative supply of flats in Greater Jakarta was 380,497 units, 7.7 per cent higher than a year ago and up 1.35 per cent from the preceding quarter, according to Cushman & Wakefield.

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But demand remains relatively slow with the presales rate for projects being developed declining by 2 per cent in the third quarter to about 60 per cent compared to the April-to-June period. Given the lower demand, 42,032 units of future stock remain unsold, according to the property consultancy.

“Only about 1,000 apartments have been sold in Jakarta this year, and prices across the capital region are just 0 .9 per cent higher than a year ago,” said Kashif Ansari, co-founder and group CEO of real estate agency Juwai IQI and CEO of IQI. Juwai IQI transacted nearly 50,000 properties in 2022 and advertises US$4 trillion of property across 111 countries, while IQI is a global network of more than 30,000 property agents in more than 20 countries.

Meanwhile, Indonesia’s general election next year is also making some buyers cautious, which could dent flat sales, said Christine Li, head of research, Asia-Pacific at Knight Frank.

“Historically, investors tend to adopt a wait-and-see approach during election years, influenced by uncertainties related to legal matters,” Li said. “In contrast, the submarket – primarily dominated by end users – is expected to remain active and has the potential for growth.”

Nevertheless, both Ansari and Li believe that Jakarta’s property easing move for foreign buyers will, in general, have a positive impact on real estate and the wider economy.

“The real estate and construction industry accounts for about 15 per cent of GDP, so any policy that makes it more successful is of vital importance,” said Ansari. Although the policy has yet to have an impact, it “creates conditions in which foreign purchases can soar when the economy and other conditions are right,” he added.

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The new property policy is expected to benefit individuals who already have “established connections to the country through family, friends or business ties,” said Knight Frank’s Li, adding that it was likely to stimulate more sales “in the middle to upper segments of the housing market”.

Jakarta is also pursuing the implementation of a fast-track residency programme, more popularly known as a “golden visa”, which is “designed to attract high-net-worth investors and property buyers by offering residency or citizenship in return for a substantial investment in the country’s economy,” Li said.

“This strategic move not only enhances foreign investment but also underscores Indonesia’s commitment to fostering economic growth through innovative policies,” Li added.

Beyond investor-friendly policies, Swire Properties’ To believes that Savyavasa’s premium features and amenities will draw in buyers. The development has its own spa, a jogging path, expansive open lawn, outdoor kids playground, cafe, gym and various other indoor and outdoor facilities.

“Via new initiatives and its expanding economy, as well as growing foreign investment and demand for property, Jakarta and Indonesia as a whole are expected to become increasingly competitive,” said To.