Indonesia in the Asia Pacific Real Estate Investment Map: Demographic Bonus and Infrastructure as Attractive Factors
Indonesia in the Asia Pacific Real Estate Investment Map: Demographic Bonus and Infrastructure as Attractive Factors
When discussing real estate investment that appeals to both local residents and foreign investors, several factors come into play, such as favorable property ownership regulations, economic growth, and demographic trends. Citing research from Knight Frank, the leading countries in the Asia Pacific region in this regard are Vietnam, Australia, and Japan.
Vietnam has recorded high economic growth (7.40% in Q3 2024), with policies supporting property investment, making it a popular destination in the Asia Pacific. But what about Indonesia?
What about Indonesia?
In the third quarter of 2024, Indonesia’s economy grew by 4.95%, lower than Vietnam’s 7.40% for the same period. However, the global economic growth forecast of 2.6%-3.2% in 2024 shows that Indonesia’s economy remains on a solid path, even outperforming other developed and emerging countries such as Singapore (4.1%), Saudi Arabia (2.8%), and Mexico (1.5%).
Given this economic growth, Indonesia seems capable of offering investment opportunities with room for growth. This is especially true when considering the following advantages:
Demographic Bonus: Population and Productive Age Distribution
According to the Director General of Dukcapil, as of June 30, 2024, Indonesia’s total population is 282,477,584, with 69.58% or 196,558,195 individuals in the productive age group (15-64 years). This is followed by 64,833,766 individuals (22.95%) in the younger age group (0-14 years).
According to a study titled Bonus Demografi di Indonesia published in Jurnal Visioner, Vol. 12, No. 2, 2020 by Achmad Nur Sutikno, the demographic bonus is defined as the phenomenon of a rapid increase in the number of the productive age population, which can be a great opportunity for national development. Furthermore, a study published in Jurnal Populasi, Vol. 21, No. 1, 2015 by Wasisto Raharjo Jati explains that the demographic bonus brings significant benefits, such as an abundant labor force and economic growth.
Implications for the Real Estate Market
The demographic bonus can boost economic growth, which is often translated into greater potential for real estate investment, both residential and commercial (R Silvi, 2021). The productive age population tends to increase demand for housing, especially when they enter their prime years for buying homes. This increase in demand can drive up property prices and stimulate construction activity to meet the housing needs of a growing population (Francke, 2022).
The growth of the productive age population creates an increased demand for housing, especially in urban areas that serve as economic and labor hubs. Additionally, the large youth demographic ensures long-term demand for various types of property, including residential, commercial, and infrastructure development. On the other hand, the abundant workforce drives the expansion of the industrial and service sectors, creating additional opportunities, such as the demand for commercial properties, including office spaces, logistics facilities, and shopping centers.
Government Policy
The Indonesian government, post-COVID-19, has shown a policy direction that encourages economic growth and increases domestic investment, including through structural and fiscal reforms (Perkoppi). For example, revisions to the Omnibus Law on Job Creation, specifically Government Regulation (PP) No. 5 of 2021 on Risk-Based Business Licensing, are expected to streamline business permits. According to Airlangga (2023), revisions related to risk-based business licensing, especially basic permits such as KKPR, PBG, and AMDAL, will continue to improve the investment climate.
Moreover, during President Jokowi’s administration, numerous infrastructure projects have been undertaken. As outlined in the 2020-2024 Ministry of Public Works and Housing’s Infrastructure Development Strategy, these include continued infrastructure development (2015-2019) to support regional development such as National Strategic Tourism Areas (KSPN), Special Economic Zones (KEK), industrial zones, airport/seaport areas, and other productive regions. Transportation infrastructure has become one of the factors influencing property values, alongside factors like regional facilities, area image, land use, inflation, and high market demand for certain property products (Syaukat, 2023).
Infrastructure developed over the past decade includes the new capital city, Nusantara (IKN), the Jakarta-Bandung High-Speed Rail (Whoosh) – in which Asti Widyahari was involved in land procurement – the MRT (Mass Rapid Transit) and Light Rail Transit (LRT), the MBZ elevated toll road, the Trans-Sumatra toll road, the Trans-Java toll road, the Trans-Kalimantan toll road, the Trans-Papua highway, and the 4G BTS projects in Indonesia’s 3T areas.
Conclusion
Indonesia holds a unique attraction in the competitive real estate investment market of the Asia Pacific. While its economic growth is slower than Vietnam, the country’s stable economy, large population with a favorable demographic bonus, and supportive government policies show that Indonesia has substantial room for real estate investment growth.
As the country with the largest productive population in the region, Indonesia offers promising long-term opportunities, both in residential and commercial properties. The demographic bonus drives demand for housing, while policy reforms enhance investment ease.
With economic stability, a demographic bonus, and ongoing infrastructure development, Indonesia remains a highly competitive destination for property investment. Local and foreign investors can seize this opportunity for sustainable long-term returns.
Thus, this article titled Indonesia in the Asia Pacific Real Estate Investment Map: Demographic Bonus and Infrastructure as Attractive Factors concludes. I hope this is useful!
For more information or a consultation regarding property investment in Indonesia, feel free to contact Asti Widyahari via WhatsApp. Click the link below to send me a message:
Asti Widyahari is an experienced property valuer and advisor based in Jakarta, Indonesia, with extensive expertise in property valuation and property consultancy. She is the founder of Penilaian.id and CekNilai.id. Asti is also an active speaker at international conferences, promoting the property valuation profession and professional development in the sector.
Tentang Asti Widyahari
Asti Widyahari adalah Penilai dan Advisor Properti berpengalaman yang berbasis di Jakarta, Indonesia, dengan keahlian dalam penilaian properti dan konsultasi properti. Ia adalah pendiri Penilaian.id dan CekNilai.id. Asti juga aktif sebagai pembicara di konferensi internasional, mempromosikan profesi Penilai dan pengembangan profesional di sektor ini.
