The Indonesia property market is the most transparent and efficient in Asia, according to Cushman and Wakefield’s 2014 Emerging and Frontier Markets Report. The study focused on office and retail property in 42 emerging nations, excluding Brazil, Russia, China and India.
Demand for commercial property in Indonesia has been strong. This is even while the country’s general elections were underway and multinational companies had a “wait and see” approach. But a large office supply could weaken the segment’s growth in Jakarta’s central business district.
Indonesia ranked 5th in the world and was the only country in Asia to be in the top ten. The country scored well in several categories, including the amount of bureaucracy and the ease of leasing real estate which have both been improving along with the rapidly developing Indonesian economy.
Indonesia Property Market on Top, But Neighbors Catching Up
Other Southeast Asian real estate markets included in the study were Thailand, Philippines, Vietnam, and Myanmar. They were ranked 11th, 14th, 25th and 40th place respectively.
Ranking second in Asia, Thailand’s rental yields continue to increase because of a limited supply of prime real estate in Bangkok that has access to the MRT and BTS transit lines. Many property owners and have begun refurbishing malls and offices to prepare for the upcoming ASEAN Economic Community.
Offices in the Philippines remain one of the world’s least expensive to lease. According to the report, improvements in infrastructure and public transportation should spur development beyond the Metro Manila area.
Analysts are wary of real estate investment in emerging markets, where risk is generally higher than in developed markets. Corruption, political instability and crime are some of the primary concerns. “Existing political systems in many countries are under pressure and states with poor governance and cultural tensions are susceptible to terrorism and other crimes such as kidnapping,” stated the report.
While countries with high a geopolitical risk have fallen out of favor, the report also noted that there are significant growth opportunities across many emerging and frontier markets. Property investors see strong population growth, an increasingly educated and affluent labor force and more transparent governments as key factors for expansion.
Interested in buying Indonesia property? You may want to see our Ultimate Guide on buying real estate in Indonesia.
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