Property Developers Raise Alarm Over Soaring Building Material Prices

Property developers have been complaining about rising construction material costs due to conflicts in the Middle East over recent months. Bambang Ekajaya, Deputy Chairman of REI (Real Estate Indonesia), stated that the rise in building material prices is expected to persist for a long time given the ongoing geopolitical tensions in the Middle East. “If the Middle East conflict remains unresolved, construction costs will surge sharply,” Bambang said on Sunday, 24 May 2026. Global conflicts have severely impacted production and distribution costs, causing sharp price increases in materials such as cement, iron, light steel, and paint. According to Bambang, this situation could lead to higher construction costs, ultimately affecting property prices in the national market. He added that domestic property developers are also under increasing pressure due to higher Bank Indonesia (BI) rates, which could push up mortgage interest rates. Bambang noted that sales of non-subsidised commercial housing would become even more challenging due to potential increases in bank mortgage rates. “The current situation is extremely difficult. The BI rate hike will inevitably drive up commercial interest rates, including for non-subsidised mortgages. This will place a heavy burden on both prospective buyers and current borrowers,” he explained. He added that this creates layered pressures on the property sector: while property prices may rise, consumer purchasing power remains weak. Bambang stated that raising property prices is not an easy step for developers in the current climate. Meanwhile, according to KONTAN, Christian Kartawijaya, Chairman of the Supervisory Board of the Indonesian Cement Association (Asperssi), stated that industry players cannot avoid rising production costs. In addition to rising operational costs, the rupiah’s depreciation against the US dollar has further burdened the industry as many production components still rely on imports. Furthermore, Christian, who is also Managing Director of Indocement Tbk (INTP), revealed that producers are adjusting prices.