Asian expats dominate Jakarta’s housing market

Majority of them prefer to stay in apartments instead of landed houses.

The expatriate housing market in Jakarta has been exhibiting a steady increase and can be said to have consistently improved compared to previous semesters, according to a recent report from Colliers. 

“As we enter this semester, quite a few expatriates from various countries have been observed, predominantly from Asian nations, notably India, Korea and China,” the report added.

Here’s more from Colliers:

Moreover, we are witnessing a renewed arrival of expatriates from Japan. These expatriates’ occupations represent a range of various sectors, such as mining, banking, pharmacy, consulting and logistics, and they typically hold managerial to directorial positions. 

At present, a number of expatriates tend to arrive without their families (single), and 90% of them opt to stay in apartments over landed houses. This trend can be attributed to corporate budgets that have remained stagnant since the pandemic, with a reduction of roughly 30%, while property owners have already increased their property rental prices. In terms of location, single expatriates tend to favour areas such as SCBD and Sudirman, prioritising proximity to their workplaces. 

On the other hand, families are inclined to choose residential complexes in Cilandak, Cipete or Pondok Indah, which are conveniently located near educational institutions. Furthermore, there are instances where expatriates, despite their offices being located outside Jakarta, prefer residing in South Jakarta, such as Pondok Indah, due to the established communities there. In general, they tend to opt for residential areas where communities from their respective countries are already well established. 

As for housing preferences, expatriates generally seek new, modern and minimalist designs, with a growing demand for amenities such as water filters and air purifiers in their accommodations.

Since 2023, most homeowners specialising in leasing to expatriates have increased rental rates by 5 to 10%. In favoured housing areas, this increase can even reach 15 to 30%. Currently, the expatriate housing market has entered what is known as a "landlord market," a condition applicable to almost all housing, especially those with high demand. Colliers Residential has been advising expatriates renting homes to anticipate rental increases when they renew their leases. 

In reality, signs of this "landlord market" condition and the subsequent rise in rental rates have been apparent since last year. The extended pandemic period necessitated a market price correction to prevent a significant disparity from the pandemic era. Upfront payment methods naturally benefit landlords, making them more willing to negotiate price reductions, while they also consider the tenants’ employer, the expatriate's duration of stay and the number of expatriates employed by the company. 

The reasons for this rental increase are a surge in demand and the influx of expatriates. Additionally, rental prices had decreased in previous years, leading homeowners to believe that now is the appropriate time to raise rates. The numerous requests from prospective tenants for enhanced operational comfort of the homes also contributed to the rationale for the increase.

In the current situation, prospective tenants have limited options and generally accept the increases. However, the issue for tenants is that their companies, since the pandemic, have reduced housing allowance budgets and have not yet restored them to prepandemic levels. The negotiation process with landlords is typically left to the prospective tenants, and if an agreement on rental prices cannot be reached, the tenants must cover the shortfall with personal funds or find alternative accommodations that fit their budgets. This scenario frequently occurs, with the majority of expatriates (around 80%) opting to seek alternative housing that aligns with their budgets.

On the other hand, homeowners and housing complexes focusing on the expatriate market are striving to restore rental rates to pre-pandemic levels. Historically, the current rental adjustments are more about restoring rates to their original state than introducing new increases. 

Not only are rental rates starting to adjust, but payment methods have also returned to prepandemic norms, requiring tenants to pay two years in advance for both lease renewals and new leases. Although some landlords still accept annual payments, the payment method has generally reverted to "normal."