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roperty consultant Jones Lang LaSalle (JLL) has predicted sales and demand for condominium properties will grow this year but a level of caution will remain in the market. The recently published foreign ownership policy, meanwhile, would not affect the residential market, the group said.

JLL head of research James Taylor said that the sales growth seen in the condominium market over the last two quarters of 2015 was expected to continue this year.

Taylor said last year was a difficult time for property market overall given the country'€™s slowing economy, plunging commodity prices and the rupiah'€™s depreciation against the US dollar.

According to him, investors will return to the property market and conditions will stabilize when business players regain their confidence, as has occurred in economic slowdown and financial crises in the past.

'€œAs with the current situation, investors tend to wait until the situation is improving,'€ he said.

Particularly for the condominium market, however, negative effects flowing from the macroeconomic situation were further exacerbated by uncertainties over the government'€™s luxury tax policy early last year and growth that was mostly supported by growing demands in middle-to-lower class segment.

Data provided by the consultant revealed that quarterly sales dropped significantly from nearly 5,000 units sold during the first quarter to just slightly above 1,000 units in the second quarter '€” just when the report on luxury tax adjustments was circulating.

Demand bounced back significantly during the third and fourth quarterly, exceeding more than 2,500 units sold, however JLL noted that luxury demand remained low.

The significant drop occurred during the second quarter when annual sales declined to around 11,000 units last year from more than 16,000 units in 2014. However, Taylor said that 2015 sales were still above average annual sales of around 9,000 units, thus signifying a stable market.

In September 2015, the Finance Ministry decided to change the threshold for the imposition of the 20 percent luxury tax on properties valued above Rp 10 billion from earlier plan of Rp 2 billion.

However, before the policy was decided, the property value threshold came under heated discussion, with plans including taxing houses priced at around Rp 4 billion that business players said was '€œjust a normal, not-so-luxurious housing price for big cities like Jakarta.'€

The discussion on luxury tax coincided with a plan to allow foreign property ownership in the country to help bolster the real estate industry. President Joko '€œJokowi'€ Widodo signed the revision into effect late last month.

However, JLL strategic consultant head Vivin Harsanto said the policy would not have a significant impact on the market.

'€œThe residential market is expected to be better than last year. However, the foreign ownership policy will not contribute significantly to the growth, mainly because it limits foreigners to purchasing units with only the right-of-use, meaning that there is no significant change from the previous regulation except that they may own the property for 80 years,'€ she said.

'€œMost developers build their residential towers using the right-to-build scheme, which represents a higher level of ownership than right-of-use. To allow foreign owners means that they have to downgrade the rights or build a new tower dedicated for that purpose.'€

The new regulation, PP No. 103/2015, stipulates that foreigners who hold stay permits are eligible to own housing under the terms of '€œright-of-use'€, either on state land or freehold land. The right of use, which has an 80-year total term, can be inherited by any of the holders'€™ heirs who also hold stay permits.

The new PP took effect on Dec. 28, 2015, and automatically replaces the earlier PP No. 41/1996, which only allows ownership for 25 years and cannot be extended.