![]() ![]() And now, with the central bank having hiked interest rates to the highest level in four years and economic growth having slowed to the lowest level in four years, the property market is starting to cool. Second, the concomitant fears of an emerging bubble. First, a property frenzy as speculators rushed to buy apartments off-plan in the cities and to land-bank paddy fields in outlying areas. With prices rising faster than in almost any other market in Asia, there were two inevitable consequences. “The Jakarta real estate market has been one of the strongest in the world,” says David Cheadle, managing director of the Indonesia office of Cushman & Wakefield, an international real estate broker. Much of the price surge in Jakarta and other hot Indonesian property destinations – namely the second city of Surabaya and the resort island of Bali – came in the past three years, when values jumped by 30 to 40 per cent annually. In the last two years many big companies have jumped into the property sector and some of these developers will have to pull out.” “Competition will be tougher and profit margins will be squeezed. “ year will be challenging for us, with a lot of noise before the presidential election and interest rates going higher,” he says. Yet, although 90 per cent of the more than 350 apartments have been sold and prices are still rising, Archied Noto Pradono, an executive from developer Intiland, says he is becoming more concerned about the outlook for the Indonesian property market. With countless Bentleys, Ferraris and other expensive cars parked in the basement of the Dubai, Miami, Monte Carlo and Rio de Janeiro towers at Regatta, not many of the residents are feeling the heat. Now the price has nearly tripled to Rp8bn on the back of an economic and property boom that has lined the pockets of well-connected developers and canny investors, but left many aspiring Indonesians struggling to put a decent roof over their heads. When the first three-bedroom apartments at the upmarket Regatta complex, designed by the same architect as the famous Dubai hotel, were sold off-plan in 2006, they went for just Rp3bn ($250,000). The four Burj Al Arab-style towers rising into the humdrum skyline on reclaimed land in northwest Jakarta tell the story of a capital city and a property market in flux. Surrounded by putrid water and at risk from floods during the rainy season, seafront living in Jakarta has traditionally been the last refuge of fishermen and slum dwellers rather than the preferred choice of arriviste coal magnates and the progeny of old money. Simply sign up to the Life & Arts myFT Digest - delivered directly to your inbox.
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