Authored by the expert who managed and guided the team behind the Indonesia Property Pack
Yes, the analysis of Jakarta's property market is included in our pack
What will happen in Jakarta’s real estate market? Will prices go up or down? Is Jakarta still a hotspot for foreign investors? How is Indonesia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who buy properties in Jakarta, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Property values in flood-prone areas will drop as climate change effects become more evident
Residential properties in flood-prone areas like Jakarta are losing value as climate change worsens.
In 2023, 98% of Indonesia's natural disasters were hydrometeorological, largely due to climate change, which is causing property values in these areas to drop. As flooding becomes more frequent and severe, this trend is expected to continue.
By 2024, Jakarta faced numerous floods, and experts predict that flooding events will become even more common due to climate change. This increased risk is making these properties less appealing to buyers, who are now steering clear of flood-prone areas, further driving down property values.
The financial strain on property owners is also intensifying. In 2023, there was a rise in demand for flood insurance in Jakarta, but high premiums deterred many from purchasing it. This financial burden, coupled with predictions that Jakarta's annual flood damage costs could soar by up to 402% by 2050, suggests a continued decline in property values.
Buyers are increasingly aware of these risks and are opting for safer investments, leaving properties in flood-prone areas struggling to maintain their value. The combination of increased flooding, financial burdens, and changing buyer preferences is reshaping the real estate landscape in these regions.
Sources: Columbia Climate School, PreventionWeb, EconPapers
2) Jakarta’s real estate prices will keep rising because of limited land and high demand
Jakarta's residential real estate prices are climbing and show no signs of slowing down.
One big reason is the limited availability of land. Over the years, much of Jakarta's agricultural land has been transformed into residential and industrial zones, leaving little room for new developments. This scarcity makes it tough to meet the growing demand for housing.
Demand for housing in Jakarta is not just high; it's growing. The city's population density is on the rise, and there's a significant housing backlog. In 2023, the backlog hit 9.9 million housing units, and it's been increasing every year. This high demand, combined with limited land, naturally pushes property prices up.
Jakarta's economic growth and infrastructure projects are also drawing more people to the city. Developments like the Jakarta-Bandung high-speed rail and the expansion of the MRT network are improving connectivity, making the city more attractive to live in. As more people move to Jakarta, the demand for housing rises, further driving up real estate prices.
With limited land and a growing population, the pressure on housing is intense. The city's infrastructure improvements are a double-edged sword, making Jakarta more livable but also more crowded. This dynamic keeps the real estate market hot, with prices continuing to rise.
Sources: E3S Conferences, Asia News Network, The Lets Move Group
We have made this infographic to give you a quick and clear snapshot of the property market in Indonesia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) More foreign buyers will invest in Jakarta’s residential market as regional tensions boost Indonesia’s appeal
Foreign buyers are increasingly eyeing Jakarta's residential market as regional tensions make Indonesia a more attractive investment destination.
In 2023 and 2024, Indonesia experienced a remarkable surge in foreign direct investment, with record highs in the third quarter of 2024. This influx, particularly from Singapore, Hong Kong, and China, underscores Indonesia's growing appeal as a prime spot for investors.
Jakarta's property market is thriving, especially in the central business district, where housing occupancy rates remain steady. New developments like Two Sudirman and LRT City Tebet are selling fast, thanks to their excellent transportation links, making them hot picks for foreign buyers.
Indonesia's political stability stands out in the region, drawing in foreign investors. With a large population and rich resources, the country offers a fertile ground for investment. Regional geopolitical tensions have further shifted focus towards Indonesia, seen as a safer and more stable haven.
For those considering property in Jakarta, the market's resilience and growth potential are hard to ignore. The demand for well-connected properties is a clear sign of a robust market, appealing to international investors looking for stability and growth.
As regional dynamics evolve, Indonesia's position as a stable and promising investment destination becomes even more pronounced. Foreign interest in Jakarta's real estate is set to rise, driven by the city's strategic advantages and Indonesia's overall appeal.
Sources: Invest in Asia, Trading Economics, Invest Indonesia
4) Affordable housing developments in Jakarta will grow due to government initiatives
The Indonesian government is making a big push to boost affordable housing in Jakarta.
They've committed to building 3 million affordable homes each year, with a large chunk of these homes planned for the capital. By 2025, they aim to have resources ready for 800,000 subsidized housing units, showing their serious intent to tackle the housing shortage.
To make this happen, the government has rolled out policies to make it easier for developers to focus on affordable housing. For example, they suspended VAT and administration fees for low-income buyers from November 2023 to June 2024, making it cheaper to buy property. Even after this period, VAT was cut by 50% until the end of 2024, which keeps the momentum going for affordable housing projects.
Public-private partnerships are also a key part of this strategy. Collaborations like the one between the World Bank Group’s International Finance Corporation (IFC) and PT Farpoint Realty Indonesia are providing green loans to build affordable homes. These partnerships ensure that new developments meet green building standards, making them both sustainable and eco-friendly.
These initiatives are not just about numbers; they’re about creating a livable and sustainable environment for Jakarta’s residents. The focus on green standards means that new homes will be better for the environment, which is a big plus for future homeowners.
Sources: C40, Oxford Business Group, Balipod
5) Gated communities in Jakarta will become more popular as security and privacy concerns rise
Jakarta's crime rates have surged, making safety a top concern for residents.
In 2023, criminal cases jumped to 52,432 from 39,589 the previous year, according to Polda Metro Jaya. This rise in crime, including fraud and embezzlement, has made people more anxious about their safety. Media coverage has amplified these concerns, with surveys like one from Ipsos showing that 25% of Indonesians are consistently worried about crime and violence, especially in urban areas like Jakarta.
As a result, the real estate market is shifting. There's a noticeable trend towards gated communities, which offer enhanced security and privacy. This is not just a preference but a necessity for many, as evidenced by the increased sales of security systems and services. People are actively looking for ways to protect their homes, and gated communities are becoming a popular choice.
Urban planning in Jakarta is also adapting to these needs. The focus is on creating secure residential areas, with gated communities being a key part of this strategy. Authorities are working on crime prevention measures, such as increasing surveillance and adding CCTV cameras, to make these areas safer. This aligns with the broader public demand for secure living environments.
Social media and expert opinions highlight the importance of privacy and security, further driving the demand for gated communities. People are talking about it, and it's clear that these communities offer a sense of safety that many are seeking. The trend is gaining momentum as more residents prioritize security in their living arrangements.
Sources: Kompas, Ipsos, Statista
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6) Luxury home prices in Jakarta will adjust downward as supply exceeds demand
Jakarta's luxury residential market is seeing a shift as supply is outpacing demand.
By late 2023, the city had a total of 226,815 apartment units, with new luxury projects like Edensuite Casablanca and LRT City Tebet – The Premiere MTH adding 434 units. This influx is creating a crowded market, making it a buyer's paradise but a challenge for sellers.
New luxury projects keep popping up, often with higher rental rates, hinting at a possible oversupply. Meanwhile, the condominium sector saw a dip in sales in late 2023, showing that demand isn't matching the growing supply.
Economic factors are also playing a role. With global growth expected to stay low, at 2.9% in 2023 and 2.8% in 2024, high-income growth is slowing. This economic uncertainty often means people are less willing to splurge on luxury real estate.
Real estate agents are noticing that luxury listings are lingering on the market longer, leading to price cuts or discounts from developers eager to sell.
Sources: Mordor Intelligence, Real Estate Asia, Cushman & Wakefield, JLL
7) Property prices in Jakarta will rise due to higher construction costs from stricter building regulations
Stricter building regulations in Jakarta are set to push up construction costs, which will, in turn, affect property prices.
Developers in Jakarta will need to meet new safety and quality standards, much like the Building Safety Act 2022 in the UK, which has already shown how such changes can increase costs. These additional expenses often end up being passed on to property buyers, making homes more expensive.
In Indonesia, construction costs can vary widely due to regulatory demands, especially those focusing on green buildings and energy efficiency. For instance, building a villa might cost anywhere from IDR 7.5 million to IDR 23 million per square meter, depending on these regulations. This isn't just an Indonesian phenomenon; cities like Singapore also see higher property prices because of strict building codes.
Construction companies in Indonesia have noted that meeting regulatory requirements significantly adds to their project costs. These extra costs are usually transferred to buyers, leading to higher property prices. Developers in Jakarta are likely bracing for cost hikes due to the new regulations, as they anticipate increased construction expenses from stricter standards.
Surveys of developers in Jakarta are expected to show that they foresee higher construction costs due to these new regulations. This is because they will need to adhere to more stringent safety and quality standards, which inevitably raises the overall cost of building.
Sources: Bevan Brittan, Own Property Abroad, Global Property Guide
8) Interest in traditional houses in Jakarta will drop as modern living spaces gain popularity
Jakarta's housing market is shifting towards modern apartments as the preferred choice for many buyers.
In 2023, the city saw the addition of 4,716 new apartment units, and this number is expected to grow even more by 2025. This surge in supply is a response to the increasing demand for contemporary living spaces, which offer amenities like smart home technology that traditional houses often lack.
Prices for these modern homes are climbing, especially in the mid-range price bracket, reflecting their growing popularity. This trend is backed by consumer surveys showing a clear preference for modern amenities, which are becoming a must-have for many homebuyers in Jakarta.
Jakarta's high population density and rapid urbanization are driving the need for high-density housing solutions, such as modern apartments. The government is actively promoting these developments to address the city's housing needs, making them a practical choice for many residents.
Social media and media coverage are also influencing consumer preferences by highlighting the benefits of modern living spaces. This exposure is making modern apartments more desirable, as they are often portrayed as the future of urban living in Jakarta.
Traditional houses are losing their appeal as more people are drawn to the convenience and modernity of apartment living. This shift is evident in the market trends and consumer behavior, indicating a decline in interest for traditional homes in favor of modern living spaces.
Sources: Kompas, Kompas, World Population Review, The Lets Move Group, JLL
We made this infographic to show you how property prices in Indonesia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) Residential demand will rise unexpectedly in northern coastal Jakarta due to new flood prevention measures
The northern coastal areas of Jakarta are seeing a surprising increase in residential demand, thanks to new flood prevention infrastructure.
In the past, these areas were often flooded, making them less appealing for homebuyers. But now, with the National Capital Integrated Coastal Development (NCICD) project in full swing, things are changing. This project, a collaboration between the Central Government and the Provincial Government of DKI Jakarta, started in 2014 to tackle flooding issues. They've been busy building sea walls and polder systems to protect these coastal areas.
By 2023, over half of the NCICD construction targets had been met, including major projects like the sea walls in Muara Baru and Kali Baru. These efforts are paying off. For instance, the Ancol Sentiong pump, completed in 2023, has reduced flooding in seven districts. This has made these areas more attractive for property development.
Developers and buyers now see these areas as safer places to live. Property prices in these previously flood-prone areas are rising, showing that people are willing to invest more in homes that are now considered secure. The increased property development projects in these areas are a testament to this newfound confidence.
With fewer flooding incidents, thanks to the new infrastructure, the northern coastal areas are becoming a hot spot for residential demand. The transformation of these areas is drawing attention from both local and international investors, eager to capitalize on the safer environment.
As the NCICD project continues to progress, the northern coastal areas of Jakarta are expected to see even more growth in residential demand. The combination of government investment and improved infrastructure is reshaping the real estate landscape in these once flood-prone areas.
Sources: Smart City Jakarta, Prevention Web, PwC
10) Property values in Jakarta will rise in areas newly accessible by expanded public transport
New public transportation options often lead to rising property values.
In cities like Singapore and Tokyo, when new MRT lines are introduced, property values tend to increase significantly due to better connectivity. Jakarta is no stranger to this trend. After the Jakarta Mass Rapid Transit (MRT) launched in 2019, areas like Kemang and Menteng saw a noticeable boost in property values, making them more appealing to investors.
Access to public transportation is a major factor in property value growth. A study by PwC Indonesia shows that integrating public transportation makes areas more desirable, which naturally increases their value. Buyers often prioritize properties near public transit, as proximity is a key driver of demand in mixed-use developments.
Jakarta's expanding public transportation network is expected to have a similar impact. As new lines are developed, previously inaccessible areas will become more attractive to potential buyers and investors. This expansion is likely to transform these areas, enhancing their appeal and boosting property values.
For those considering buying property in Jakarta, it's worth noting that areas near new transit lines could see significant appreciation. This trend is supported by consistent data and observations from other major cities. As Jakarta continues to develop its public transportation infrastructure, the potential for property value growth remains strong.
Investors and homebuyers should keep an eye on these developments, as proximity to new transit options can be a game-changer in property investment. The ongoing expansion of Jakarta's public transportation network presents a unique opportunity for those looking to capitalize on rising property values.
Sources: PwC Indonesia, JLL Indonesia
11) Residential development in Jakarta's suburbs will grow as infrastructure improves
Infrastructure improvements in Jakarta's suburbs are setting the stage for more residential development.
The Indonesian government is pouring resources into these areas, focusing on projects that boost connectivity and accessibility. This effort is a major factor in the property market's growth, with initiatives like the Solo-Yogya toll road and the Jakarta LRT extensions leading the charge. These projects are not just about roads and rails; they are about making suburban living more viable and attractive.
With the completion of new transportation links, such as the MRT and LRT extensions, suburban areas are becoming hot spots for residential development. Improved public transportation has made a big difference, especially in North and East Jakarta, where apartment rental demand has surged. As property prices in central Jakarta climb, more people are eyeing the suburbs for affordable housing.
Population growth in these suburban areas is also driving the need for more homes. The Jabodetabek metropolitan area is densely populated, leading to a significant housing backlog. This backlog highlights the strong demand for new homes, and the extensive infrastructure development is making these regions more livable and convenient.
Utilities and services are becoming more available thanks to the infrastructure boom, making suburban life more appealing. This is not just about convenience; it's about creating communities where people want to live. As these areas become more developed, they offer a viable alternative to the crowded city center.
Sources: PwC Indonesia, JLL Indonesia, Antara News
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12) Virtual reality will transform property viewings in Jakarta, allowing buyers to explore homes remotely
Virtual reality is changing how people buy property in Jakarta, making it easier to explore homes without leaving your couch.
Jakarta's buzzing tech scene has embraced VR, with real estate agencies offering immersive 360° virtual tours that let you walk through a house from anywhere. Companies like InReality Solutions are leading this charge, helping buyers visualize their future homes without stepping outside.
Thanks to more people using the internet and smartphones in Indonesia, virtual property tours have become a hit. By 2024, homes with these tours got 87% more views, especially among younger buyers who are 130% more likely to check out a place if they can do it virtually.
VR tech is now more affordable, so more agencies are jumping on board. This means less hassle for sellers and quicker sales. Homes with virtual tours not only sell for 9% more but also close 31% faster, saving everyone time and money.
For buyers, this tech is a game-changer. You can explore multiple properties in a day without the Jakarta traffic, making the whole process smoother and more efficient. It's like having a personal open house, anytime, anywhere.
As VR continues to evolve, expect even more interactive features that will make property hunting in Jakarta an even more engaging experience. The future of real estate is here, and it's virtual.
Sources: SP Indonesia, The Luxury Playbook, PhotoUp
13) Demand for eco-friendly homes in Jakarta will grow as sustainable living becomes more popular
Jakarta is facing big challenges like flooding and traffic congestion, pushing people to think more about sustainable living.
In early 2024, more people in Indonesia, especially expats, started looking for eco-friendly homes. This shift is partly due to the government's push for green building standards, like the EDGE Zero Carbon certification, which is encouraging developers to create more sustainable projects in Jakarta.
Developers are jumping on board, thanks to government incentives for sustainable construction. Projects like Verde Two and Savyavasa have earned green certifications, highlighting the rise of eco-friendly residential options in the city.
Investments in renewable energy are also increasing, with projects like Ecoloft using solar photovoltaics to power their buildings. This trend is making eco-friendly living more accessible and attractive to potential buyers.
Jakarta's real estate market is seeing a shift towards sustainability, with more developers focusing on green infrastructure. This change is not just about meeting demand but also about creating a healthier environment for residents.
As more people become aware of climate change impacts, the demand for eco-friendly residential properties in Jakarta is expected to grow. This trend is reshaping the city's real estate landscape, making it a hotspot for sustainable living.
Sources: EDGE Buildings, IFC Pressroom, Swire Properties, The Lets Move Group
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.