The escalation of the US-Israel-Iran war is serving as an external\ncatalyst for rises in energy prices, inflation, and exchange rates,\nwhich will slow the property industry.<\/p>\n
The impact of the war in the Middle East is affecting market\nsentiment and making Indonesia\u2019s economic risks increasingly complex.\nThe effects could spill over into the property industry, markets, and\nrelated sectors.<\/p>\n
Market tightening is evident in the apartment sector, for instance.\nDevelopers are delaying expansions and prioritising the absorption of\nready-to-occupy units. The market is more concentrated in the middle and\nupper-middle segments.<\/p>\n
\u201cGlobal geopolitical pressures and rising material prices will impact\nthe prices of new projects going forward,\u201d said Head of Research at\nColliers Indonesia, Ferry Salanto, during a Q1 (January-March) 2026\nmedia briefing last week.<\/p>\n
Colliers Indonesia projects that only around 3,100 apartment units\nwill enter Jakarta until 2029. This supply is down 80 percent compared\nto the 2020-2025 period. Apartments as an investment choice are\nincreasingly declining. To stimulate the market, developers are offering\nprice discounts, free furniture, and low-interest apartment ownership\ncredit.<\/p>\n
Pressure is also predicted to persist in the hospitality sector until\nmid-2026, influenced by global pressures. Amid weakening demand and\nrising operational costs, industry players are once again adopting\nefficiency strategies to maintain performance.<\/p>\n
Secretary General of the Central Board of the Indonesian Real Estate\nCouncil, Raymond Arfandy, contacted separately, stated that the property\nindustry has historically driven 185 related sectors, from building\nmaterials and furniture to household appliances. However, the property\nindustry is also vulnerable to economic conditions and purchasing\npower.<\/p>\n
The impact of the Israel-United States war with Iran and complex\ngeopolitical situations could affect energy volatility. Uncertainty in\nfuel supply and oil prices must be watched, as it impacts logistics\ncosts and production costs, thereby raising prices of products and\nmaterials from related industrial sectors.<\/p>\n
\u201cIf raw material prices rise, the property sector is automatically\ndisrupted. The effect is not only on the supply side but also on the\ndemand side. Consumers and investors will delay purchases,\u201d said Raymond\nwhen contacted on Tuesday (31\/3\/2026).<\/p>\n
Raymond added that the commercial property market faces many\nchallenges. Investment in the property sector is weakening because\ninvestors are still delaying while observing (wait and see) market\nconditions. Over the past ten years, property investment has been deemed\nno longer to generate significant business turnover and returns.\nMeanwhile, the market dominated by end-users is vulnerable to economic\nslowdowns.<\/p>\n
\u201cIn the past, property value increases could reach 20 percent per\nyear. The property world is no longer like it used to be, considered to\nproduce promising business prospects and turnover. Buyers now seek\naccording to needs and ability, not driven by investment,\u201d said\nRaymond.<\/p>\n
Colliers Indonesia property consultants predict that property\nsegments dependent on business activities and investment will be more\nsensitive to economic turbulence impacts. Those segments include\nupper-middle-class apartments often bought by investors, properties with\nspeculative purchases, and MICE-based hotels (meetings, incentives,\nconventions, and exhibitions) that depend on consumption and business\nactivities.<\/p>\n
Ferry Salanto stated that the Iran war with the US and Israel is not\na direct factor determining the direction of Indonesia\u2019s property\nmarket. However, the escalation of that tension has the potential to\nbecome an external catalyst through channels of rising energy prices,\ninflation, exchange rates, and credit interest rates.<\/p>\n
\u201cIn a negative scenario, if the conflict escalates, there will be an\noil price hike that triggers inflation, followed by interest rate\nincreases, so the property market experiences deeper slowdown,\u201d said\nFerry last week.<\/p>\n
The property world is no longer like it used to be, considered to\nproduce promising business prospects and turnover.<\/p>\n
Negative impacts could also be felt by developers with high leverage\nor using a larger proportion of debt compared to their own capital to\nfinance projects. Vulnerability also affects the lower-middle housing\nsector, which is sensitive to rises in home ownership credit (KPR)\ninterest rates and inflation in basic needs.<\/p>\n
Conversely, in a positive scenario (bull case), if geopolitical\ntensions ease in a relatively short time, market sentiment has the\npotential to recover, and property activities could return to normal\nwithin the next few quarters.<\/p>\n
Raymond added that the property market slowdown needs to be\nanticipated with several concrete and strategic breakthroughs. The\ngovernment needs to open space for discussion with industry players to\nmap needs and solutions to maintain supply and demand.<\/p>\n
The government has rolled out fiscal incentives in the form of\nGovernment-Borne Value Added Tax (PPN DTP) for the housing sector. Other\nfiscal stimuli need to be considered to stimulate investment, such as\ntax amnesty for property investors.<\/p>\n
In the people\u2019s housing sector, the government needs to ensure that\nthe energy crisis and economic slowdown do not erode people\u2019s purchasing\npower. If consumer purchasing power is disrupted, the industry will be\neven harder to move and recover. \u201cGovernment stimulus is needed to\nmaintain people\u2019s purchasing power,\u201d he said.<\/p>\n
Ferry believes that consumers and investors are deemed to need\nstrategies to face market shocks and impacts on the property sector. For\nend-user consumers with real needs and adequate liquidity, the decision\nto buy a house can still be considered, especially if there are\npromotions and competitive KPR interest rate schemes available.<\/p>\n
Meanwhile, property investors are advised to focus on strategic or\npremium locations with strong fundamentals. Potential returns<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/property-sector-strategies-amid-turbulence-1776189084", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }