After showing substantial growth across the board in recent years, Indonesia’s property market began a period of consolidation in 2014. The recent deceleration of prices (see Fig. 1) indicates that the sector is maturing, which in turn has soothed concerns of overheating.
Despite the slower pace, residential property in Indonesia continues to show healthy growth, particularly in Greater Jakarta, the most active and international market in the country. While the country’s capital remains the focus for the large majority of real estate outfits, other regions are also undergoing significant property expansion. In fact, residential property has become one of the fastest growing sectors in the economy in recent years due to a surge in demand among Indonesia’s expanding middle class.
One of Indonesia’s fastest growing regions is Tangerang, a secondary city that is adjacent to Jakarta. Serpong, a district in Tangerang with population of more than 6.5 million people, which is developing particularly rapidly, is no longer considered as a rubber plantation at the periphery of Jakarta. “It is now an independent city with majestic buildings adorning its remarkable infrastructure; city centres, commercial parks and entertainment centres can now easily be found there”, said Ervan Adi Nugroho, the President Director of PT Paramount Enterprise International (also known as Paramount Enterprise).
Changes in social perspectives… make property ownership part of one’s lifestyle choice
Gading Serpong
Serpong’s recent development can be largely attributed to Paramount Land, the property arm of Paramount Enterprise. Paramount Land’s flagship project is the Gading Serpong township, an area that was chosen because of its proximity to Soekarno-Hatta International Airport and its accessibility via two toll roads, the Jakarta-Merak and the Jakarta Outer-Ring Road. Its location has thus made Gading Serpong a new giant economic hub, which lies at the centre of other property and township developments that are being undertaken by various renowned Indonesian firms. The development of the 1,200 hectare township has been so successful that Gading Serpong has become one of the busiest trade and business centres in Tangerang, as well as one of the most desirable locations to live and invest in. Currently the population in the township exceeds 53,000 people, not including those that commute to Gading Serpong to work and/or to visit; and more than 15,000 houses, commercial units and several condominium towers are built.
Taking advantage of its expertise in urban planning, project management and property management, Paramount Land has built modern infrastructure for the township, which includes a network of roads, complete access via toll roads, a water treatment plant and underground fibre optic cables. “Gading Serpong has grown into a pleasant, modern, self-contained city with well-constructed facilities that are enjoyed by residents and visitors alike”, said Nugroho. Hotels, hospitals, schools, universities, commercial areas, restaurants, supermarkets, hypermarkets, wet markets, shophouse complexes, a small office home office complex, are all everywhere in Gading Serpong. In addition, essential cultural structures have been built, such as places of worship, sports and recreational spaces and community complexes, as well as green public spaces. Travel within the township has been made convenient via pedestrian walkways, bicycle lanes and various public transportation. “These facilities are expected to further accelerate Gading Serpong’s development in the near future”, said Nugroho.
“We have found that property in the township is attractive both to residents and investors alike due to Gading Serpong’s fast return on investment; on average, the value of property has increased by 15 to 20 percent per annum in the past five years or so.” In order to continue growth amid fierce competition in Indonesia’s property industry, Paramount Land prioritises constant innovation. “We always strive to give the best to consumers; we are committed to providing excellence, especially in terms of service, product quality and on-time delivery. Our motto, ‘Building Homes and People with Heart’, is at the basis of everything we do”, said Nugroho.
Lifestyle shift
As Indonesia’s population continues to grow, so will the need for housing. In addition, the desire to invest in primary or secondary properties is likely to increase in line with improving and growing economic growth and corresponding changes in social perspectives, which make property ownership part of one’s lifestyle choice. In response to this growing trend, last year Paramount Land unveiled more than 3,000 new residential units in the Gading Serpong township. These properties were developed with innovative concepts, such as detached homes: landed houses, which have maximum cross ventilation and optimum lighting; and compact homes that have critical land utilisation in mind. Other innovative products include big and micro-custom homes, in which customers can choose from more than 1,000 design options according to their needs and tastes, including various styles such as classic, Scandinavian, Japanese, Mediterranean, Victorian, colonial, and art deco. Currently, more than 5,000 residential units are under construction. Each development is in a different stage and will be handed over to buyers within the next year or two.
Paramount Land also owns and manages several strategically located land banks in major cities across Indonesia, which are due to be developed into either townships, real estate sites or integrated mixed-use developments. Due to the increasing demand for residential homes and condominiums in big cities, Paramount Land is currently making preparations for real estate projects in Semarang (phase two; phase one already launched successfully last June), Central Java, Manado, North Sulawesi, and Balikpapan, East Kalimantan. Other projects in the pipeline that include integrated mixed-use projects are those in Pekanbaru and Bali, as well as in Jakarta.
Recognising the lifestyle trend and the growing economy, the Indonesian government is showing great support, which can be seen from the numerous infrastructure projects that they are currently funding, including toll roads that connect the cities to the capital. This is a vital step in the future success of the townships as they enable citizens to commute into major cities from areas that they prefer to live in. Adding further to the potential of property investment in Indonesia is the fact that the average price of property is relatively low in comparison to other countries in Asia, such as Singapore, Hong Kong, Malaysia and China.
Recurring income
In addition to property development, Paramount Enterprise also develops hotels, resorts, and hospitals. Identifying the need to diversify its portfolio, Paramount Enterprise has entered various industries, such as retails, logistics, fisheries, alternative energy and multimedia.
Through its hotel management company, Parador Hotels and Resorts, Paramount Enterprise currently owns and manages six hotels that are located within various business hubs: four hotels in Gading Serpong, namely Atria Hotel (four-star), Atria Residences (four-star), Ara Hotel (three-star) and Fame Hotel (two-star); a four-star hotel in Central Java and another four-star hotel in East Java. A further two new hotels are due to be opened in the coming months in Sunset Road Bali and Serpong, while there are also serious expansion plans currently underway to build new hotels in Jakarta, Surabaya, Bali, Lombok, Semarang, Bogor, Bandung, Balikpapan and other major cities in Indonesia. In addition, Parador Hotels and Resorts will also manage the third-parties owned hotels.
In terms of its healthcare segment, Paramount Enterprise owns Bethsaida Hospital, the first general hospital in Gading Serpong, which provides quality and affordable healthcare, not only for residents, but also for the people living in West Jakarta, Tangerang and other surrounding areas. “The centre includes aesthetic, orthopaedic, dental, hyperbaric and cardiac wards”, said Nugroho. While in retail, Paramount Enterprise operates fashion stores, convenience shops, mini markets, and cafes that serve the varying needs of a rapidly growing suburban population. “The existence of business units is one of the strategies we have in place to increase and optimise the company’s recurring income”, concludes Nugroho. “Developing the property and lifestyle business responds to Indonesia’s rising middle-class income and the demographic shift that is currently taking place in the country.”
