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Property incentives seen to drive demand, but maybe less for apartments
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Touch up: A builder works at the construction site of a low-cost apartment project in Kendari, Southeast Sulawesi, in April 2017. (Antara/Jojon)
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roperty players have welcomed a new set of government-funded incentives meant to reinvigorate an industry hit first by the pandemic and then by rising interest rates, but whether the sweeteners will help the apartment segment out of the doldrums remains to be seen.
Real Estate Indonesia (REI) chairman Joko Suranto told The Jakarta Post on Monday that players in the sector were thankful for the incentives and had begun to coordinate with the government to ensure smooth execution.
“We view [this regulation] as the government thinking ahead to lift up the property industry so that it can rebound like others, since property has not gotten back on its feet,” said Joko.
The incentives come in the shape of a general value-added tax (VAT) waiver for property purchases as well as an exemption from the Rp 4 million (US$252) administration fee for low-income home buyers, funded by the state budget.
Any buyer of a property costing up to Rp 2 billion can avail themselves of the VAT waiver until mid-2024, while buyers will still enjoy a 50 percent VAT reduction in next year’s second half.
Given that the VAT rate in Indonesia is currently 11 percent, the waiver could save buyers up to Rp 220 million.
Jakarta has yet to issue a regulation on the incentives, but Finance Minister Sri Mulyani Indrawati said on Wednesday that the incentives would apply to purchases starting in November.
