Property Shares Soar in Jakarta on Land Bill Hopes
Shares of some of the biggest Indonesian property and construction companies surged on Tuesday as investors speculated that a land acquisition bill would be approved by the nation’s lawmakers this week.
Ciputra Development jumped 11 percent to Rp 620, bringing its gain this year to 77 percent. Jaya Konstruksi Manggala Pratama, a construction company, rose 25 percent to Rp 1,210, while Bumi Serpong Damai, a housing complex developer, was up 4.4 percent to Rp 960.
The House of Representatives is expected to pass a land acquisition bill that will give the government greater power to speed up infrastructure projects including seaports, roads and airports.
Lawmakers will hold a plenary session to approve the bill on Friday, Antara news agency reported, citing Taufik Hidayat, vice chairman of the House’s special committee on land procurement.
The property index, which groups stocks of property and construction companies, rose 3.9 percent to 224.78 on the Indonesia Stock Exchange on Tuesday, compared with a 0.8 percent drop for the benchmark measure.
Reza Priyambadha, an analyst at Indosurya Asset Management, said the soaring stock prices were supported by a combination of the land clearance bill, the strong outlook for the property market and affordable home financing schemes.
“Demand for property remains high, and I expect that this will continue later into the future,” Reza said.
Adding to that, Indonesian banks have reduced their housing rates, which may boost demand by consumers, he said.
Juniman, an economist at Bank Internasional Indonesia, said investors were giving a positive response to the planned approval of the land bill.
Separately, Cushman & Wakefield, a property advisory firm, said the need for office and retail space in Jakarta will continue to increase next year and that a possible upgrade on Indonesia’s sovereign credit rating next year would help to push demand.
Moody’s Investors Service and Standard & Poor’s earlier this year raised their ratings on Indonesia to a notch below investment grade, and may raise them again next year.
“When Indonesia obtains investment grade, offices and retail space will go up even more, because these properties are what foreign investors are looking at when they enter a market,” David Cheadle, managing director at Cushman & Wakefield Indonesia said on Tuesday.
The company’s latest research shows that the office occupancy rate in Jakarta’s central business district rose by 5.5 percentage points to 90.7 percent this year.
Total net take-up, which measures the change in occupied space, was 332,600 square meters for office space in the Jakarta CBD this year, up 63 percent from 2010, according to Cushman.
“A 5 percent increase in the occupancy rate is very significant. This indicates strong corporate recovery since the global financial crisis in 2009,” Cheadle said.
High demand pushed the average gross rental price up 8.6 percent in rupiah terms, he said.
Yes, I am looking at you, foreign property players. The passing of land bill (which I hoped would be passed early this year) will bring many positive impact to the economy as it is now easier for foreigners to own property in Indonesia. This will eventually drives up property prices and increase the competitiveness in property industry, or maybe even REIT companies are coming in. What’s your take on this? If you are a property-related company and you’d like to expand to Indonesia, don’t hesitate to drop us an email at email@example.com!~