Indonesia Expat
Business/Property Info for Expats

Jakarta Rental Property Market

Jakarta Rental Property Market

By: Marilyn Ardipradja for Colliers International

Jakarta Rental Property MarketIndonesia continues to maintain the interest of international investors due to its large population and thus potentially large consumer market. Several very large infrastructure projects are in the planning stages or have recently started up. Combined with rapid growth in multiple sectors, this has created the need for additional expatriate staff and management personnel which eventually affects the housing market.

Some reports indicate a decrease in the number of incoming expatriates in middle and lower management positions due to the fact that working permits for these levels are being restricted. Multinational corporations, however, continue to operate, expand or establish their companies in Indonesia and therefore require expatriates in many higher management positions.

It is not surprising that the stimulated economy has resulted in price increases and this is particularly noticeable in the Jakarta residential rental property market. An influx of foreigners seeking suitable residences has been a factor in causing rents to climb higher over the past year. Although there is still no shortage of housing, prime properties that fulfil all or many of the multinational companies’ security requirements, such as being in a gated community or in close proximity to an international school, are definitely increasing in price and are becoming more difficult to find. South Jakarta continues to be the most popular choice for expatriate families because of the shorter commute time to most of the international schools.

Due to the increase in demand for houses that meet these standards, landlords who were previously asking for rental payments one year in advance are now able to request a minimum of two to three years in advance. Landlords are seldom willing to negotiate a one year lease on a house. Rental prices in general have increased substantially with at least a 20% increase, and in some cases 30% or more. These drastic increases come as a shock to many tenants who are forced to rent smaller, older properties or those not in a prime location. Although multinational companies typically plan for rent increases from year to year, few are prepared or willing to accommodate rent increases of this scale and are unwilling to revise their employees’ living allowances. As almost all rents are quoted in US dollars, a huge additional strain has been put on housing budgets due to the increase of the US dollar against the Rupiah.

As land prices in Jakarta increase, landlords are demanding a better return on their investment. They are currently enjoying high market demand and therefore are able to dictate the pricing for their properties. Housing in prime locations will seldom be empty more than a month before a new tenant moves in.

Rental rates for apartments are more stable, in particular if they are part of an international chain as they rely on corporate pricing usually dictated by overseas headquarters. Typically, apartment rentals will undergo a 10% – 12% yearly increase. Because of this predicted increase, apartment leases are normally for only one year so this increase can be incorporated. However, service fees can vary greatly from building to building depending on the extent of surrounding grounds and what kinds of facilities are provided. Apartment rentals are typically subject to 10% VAT and 11% service charge. A number of apartment buildings have given notice that as of January 1st 2014, their service charge will increase to 13.5%. This will inflate rental rates even higher in the upcoming year.

In spite of the fact that there will be several new apartment buildings being completed in 2014, apartment owners and management remain very optimistic that they will be able to maintain their pricing and keep their occupancy rates very high. The supply of stand-alone housing however, is not keeping up with demand, therefore it is highly unlikely that rents will be decreasing in the foreseeable future. As long as Indonesia continues to experience rapid growth and still requires the assistance of expatriates, Jakarta landlords will be in a strong position to dictate rental prices.

With the ongoing increase in rental prices, finding your home in Jakarta has become increasingly challenging. If you are given the option by your company of selecting your own home in Jakarta, you may first wish to become familiar with the various residential areas. It is important in all cases to take into account the traffic problem in Jakarta, and the time you will spend commuting between work, school, activities, friends and home.

These are a few of the most popular areas:

Kemang (South Jakarta)
Kemang is one of Jakarta’s most desirable residential areas with a nice variety of stores well stocked with Western and Asian food items. New restaurants, boutiques and home furnishing shops are sprouting up every day and flourishing. Kemang is also close to several clubs and organizations, cultural centres and sports facilities.

Pondok Indah (South Jakarta)
This area is slightly newer, with streets, homes and shopping areas which would appeal to those who prefer a more Western style home. Homes here range from the more modest to the particularly grand. Pondok Indah is blessed with elegant, tree-lined streets and sidewalks.

Cipete / Cilandak (South Jakarta)
This area, located between Kemang and Pondok Indah, boasts the same advantages as the former in terms of location, but is decidedly more local in flavour. There are many beautiful homes, some of which have relatively large gardens. The streets are relatively quiet and retain their Indonesian character.

Menteng (Central Jakarta)
Menteng is a very special area to Jakartans, set apart from other areas by its history. Menteng can be described as old, elegant and aristocratic. Here you will find many of the original stately Dutch homes, and what is left of any colonial architecture or character. This neighbourhood is noted for its embassies and ambassadors’ residences, and is home to many Indonesian government officials.

Kebayoran Baru (South Jakarta)
Much the same as Menteng, this area consists of many beautiful homes and landscaped areas. It is also popular with many government officials. Kebayoran Baru encompasses the busy Blok M and Panglima Polim shopping areas.

Kuningan (Central Jakarta)
Kuningan can best be described as a residential area within the business district. There are attractive new apartment complexes here, as well as the older Pertamina Oil Village housing development, with its American style streets and sidewalks. Kuningan has a metropolitan atmosphere, and is close to shopping centres, restaurants, hotels, office buildings and medical facilities.

Permata Hijau / Simpruk (South Jakarta)
This area, very close to the large Senayan Sports Stadium and the very elegant and chic Plaza Senayan and Senayan City malls, has a wide variety of homes and apartments. Here you will find wide, quiet streets and particularly good access to sports facilities.

Bintaro (South Jakarta)
Bintaro is an area on the southwest outskirts of Jakarta, comprising newer, middle class housing developments and private homes. Because it is a newer residential area, there are few amenities aside from a shopping plaza and basic supermarkets.

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