By Benget Besalicto Tnb., The Jakarta Post, Jakarta
Executives in the property sector have called on the government to improve market openness and legal certainty to allow greater foreign investments in the sector.
Alastair Hughes, CEO of international property consultancy Jones Lang LaSalle for Asia Pacific, said greater transparency was "the key things *that would benefit* the economy. The more transparent the market, the more foreign investors will come in, which is very good for the whole economy."
A Jones Lang LaSalle survey last year showed the key reason for the improvement in the property sector shown by the biggest improvers in Asia Pacific (China, India and Vietnam) was the increased availability of data on major market fundamentals, particularly for the office sector.
This openness has also had a further positive impact on improving financial disclosures across the region and building on gains observed during the period between 2004 and 2006, the survey showed.
"Unlike in Singapore, Australia or Hong Kong, we find it harder here in Indonesia to buy property or do property development projects," Hughes told The Jakarta Post.
"In those markets, it is easy to buy property *and sell it the next day*."
He added the three countries stood as models of high levels of transparency.
The Jones Lang LaSalle survey showed real estate transparency in the Asia-Pacific region had generally improved since 2006. However, compared to the region's larger improvements and the latest condition in Europe, the Middle East and North Africa during the period from 2004 to 2006, the region's improvement during the last two years was relatively modest in most countries.
The survey also reported that countries such as Argentina, Greece, Indonesia and Peru scored low in the transparency index level despite an increase in cross-border trade, finance and commerce.
Most investors, however, were driven by higher returns as a compensation for the higher risks associated with the lower transparency within the markets.
Those in the Indonesian property sector have long called on the government to reform the law on the sector. One of their proposals has been for the government to allow foreigners to own property in the country.
A 1996 government regulation rules that foreigners may not own houses, apartments or condominiums in Indonesia. They are only allowed to have utility rights for up to 20 years, eligible for another 20-year extension upon expiry. Recently, the number of expatriates owning houses, apartments or condominiums, by taking advantage of loopholes in the existing laws, has increased.
Some foreigners buy property through local people.
Nick Van Helden, Jones Lang LaSalle's country head in Indonesia, noted that if the government reformed its property law to provide equal treatment for local and foreign investors, then the Indonesian property sector would see a significant increase in growth.
"Reforming the law to improve transparency will significantly boost the property sector's growth," he said.
Find Article by Date