The Expat Housing Condition for the 3rd Quarter 2018

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The expatriate housing sector for the 3rd quarter remains quiet. The leasing activities of expatriates searching for homes in Indonesia typically pick up during summer months with the peak coinciding with the beginning of the new school term however this year volume was not as expected. Some reasoning for the prolonged stagnancy includes the expiration of existing work contracts, reduction in the number of arriving expatriates, and lack of new, ongoing projects of nation-wide scale. Even with the significant number of in-bound Chinese expatriates, the impact remains light of the overall rental. Chinese expatriates typically take the posting without their families and opt for studio apartments or exclusive kost-kostan.

On the other hand, demand for upscale property specifically those located in a housing complex and stand-alone houses remains healthy. Enquiries are made primarily by white-collar workers and distinguished profiles, such as the country heads of a company, diplomats or chief executive directors from financial institutions, as well as individuals who have a strong renting capacity. Typically, the landlords of such property are part of the high-net-worth-income (HNWI) society that do not care whether their property is vacant or not. Even if the property is vacant, they are still reluctant to lower the rent.

The number of younger Asian expatriates accepting postings in Indonesia has grown, particularly from India, Singapore and China. This expat is generally arriving with smaller budgets which range from USD1,000 to IDR1,500 per month. This provides opportunity for small individually owned apartment units that are offered for lease which is a departure from the large 3- or 4-bedroom house that was common in the past. In general, the remuneration package for Asian expatriates is relatively smaller if compared with Western expatriates, and schooling fee may not be included in the budget. This drastically influences the decision to bring the family or not.

Vicinity to the workplace is becoming a prime concern. Many expiates are shocked when initially faced with the traffic situation. Because of this, if possible often expats will ask to be within walking distance to their place of work.

Location-wise, Kebayoran Baru and Menteng continue to receive high demand as relocation areas, as reflected in the positive trend of enquiries. As a result, residential landlords in these locations managed to raise rents significantly after reaching high occupancy levels. It is common to see that owners of these most sought-after properties do not chase after quick money, and they are not too worried if their property is either still vacant or occupied, as cash-flow is not an immediate issue for them.

In contrast, properties in the secondary areas, such as Lebak Bulus, Permata Hijau, and Ampera continue to face challenges, including limited demand, lack of vicinity to international schools, clubs, shopping malls and dining spots. As a result, most landlords, particularly of individually owned stand-alone houses, are more accommodative in offering contract term lease tenure, as well as in entertaining additional requests related to the renovations, improvements and inclusive features of the house.

It is becoming more common that the employing company is giving the housing allowance directly to the employee giving them the liberty to spend as much as they want on housing. This trend however is putting the final decision of the budget directly with the tenant which they may opt to retain a portion of the housing budget for themselves which is further depleting budgets.

Currently, the employing industries have shifted from the oil and gas sector to broader industries, such as banking and insurance, energy, tech, infrastructure, automotive, fast moving consumer goods, consultancy services and real estate (co-working space) industries.

South Jakarta is still irreplaceable as an expatriate’s home location, as it provides almost all of their needs such as international schools, entertainment centres and the communities that they most enjoy.

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