Jakarta. Sales of apartment declined in the first quarter of 2017 as a result of the government charging a new value-added luxury tax, property consultancy firm Jones Lang LaSalle said on Wednesday (05/04).
JLL reported developers sold 1,237 apartment units between January and March this year, down 12 percent from 1,400 units in the same period last year. The developers put up 1,333 new apartments for sale in the first quarter, down a third from 2,000 units in the same period last year.
Starting from March 1, government slapped a 20 percent value-added tax on sales of apartments worth Rp 10 billion or more. Previously the government charged the tax based on the location of the apartments, and only on those larger than 150 square meters. The new rule means smaller apartments are now also subjected to the luxury tax.
"Buyers are more hesitant to purchase new apartments because of that," JLL head of research James Taylor told reporters on Wednesday.
Taylor also predicted that prices of condominium units will remain flat this year.
"Slow economic growth has led to weak demand for condominium units, and that will continue for a while yet. Things may pick up in the last quarter," Taylor said.
Recently launched condominium projects are targeting lower to middle-income buyers, including the Daan Mogot City apartment, a superblock project in West Jakarta developed by the China Communication Construction Group; Permata Hijau Suites in Kebayoran Lama, South Jakarta, developed by Pulauintan; and the East 8 apartment in Cibubur, East Jakarta, developed by Karya Cipta Group.
Taylor said there are around 60,000 units in the pipeline so far this year, with at least 67 percent already sold. In the same period last year, there were at least 72,000 units in the pipeline, with 72 percent already sold.
JLL said Indonesia's property market is likely to improve on the back of a stable macroeconomic condition, regulatory support and a rupiah rally expected throughout the year.
"We remain hopeful that Indonesia's macroeconomic condition will improve this year. Some good signs include an increase in the state infrastructure budget and Indonesia climbing the ranks in ease of doing business," JLL head of advisory Vivin Harsanto said.
She also said demand for apartment sales will likely rise in West, East and North Jakarta, where more lower and middle-income residents live.