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Jakarta Post

Indonesia'€™s hospitality property prospects

  • Handewi Pramesti

    The Jakarta Post

  /   Thu, November 19, 2015   /  08:42 am

Home to 10 emerging economies, ASEAN is set to welcome the ASEAN Economy Community (AEC), slated to begin in December.

The AEC will transform ASEAN into a region with free movement of goods, services, investment and skilled labor and free flow of capital.

In the tourist sector, the AEC is expected to spur the growth of hospitality and tourism related businesses in the region.

Based on statistics from ASEAN, as of Sept. 20 this year the number of tourists entering the region had reached over 105 million, around 9.5 million of whom visited Indonesia.

Aside from being Southeast Asia'€™s largest economy, Indonesia is also blessed with abundant natural resources and attractive tourist sites. So, this has paved the way for the hospitality industry to grow.

With the emergence of the growing middle class especially in big cities across the archipelago, travel has become a necessity among many Indonesians. Correspondingly, this has led to the demand for more tourist related business, such as in the lucrative property sector.

With the increasing demand for hotel accommodation in the country, more and more property developers are now focusing on developing various types of hotels, as well as hotel residences such as condotels and serviced apartments.

'€œI see that the Indonesian market is promising, with the number of international tourists continuing to grow,'€ said Bill Barnett, managing director and founder of C9Hotelworks, a property consulting firm based in Phuket, Thailand.

The company'€™s business focus covers residential, mixed-use, hotel and resort developments across Asia-Pacific, including Indonesia.

Barnett, who has worked with Indonesian chains such as Tauzia, Archipelago and Ciputra, targets established markets in Indonesia, including Bali, Bintan, Jakarta and Lombok, and some potential markets in Manado, Surabaya and Bogor.

'€œI find the Indonesian market interesting. In terms of brand and values, Indonesia is different from other Asian countries. It is seen as the biggest proponent of its own brand,'€ Barnett said. '€œThailand, Indonesia and Vietnam are sitting atop of the game in numbers, followed by Malaysia and the Philippines with the latter taking a decidedly urban approach to properties.'€

Barnett, who has worked on projects all over Indonesia, was recently in Jakarta for a regular meeting with his business counterparts on Bali projects.

'€œ60 to 70 percent of Bali Island is not largely developed. There is still a potential in the north. It'€™s a question about opening a new airport in that area,'€ he said. '€œIt'€™s good that the current airport is a gateway, and the new toll roads allow tourists to easily reach the east coast through Sanur.'€

'€œI think in terms of prospects, the number of international tourists visiting Indonesia is swinging up,'€ he continued. '€œThis year is a record high as the number of tourists has reached over 10 million, due to the visa free frame for 90 countries. That makes Indonesia prospective.'€

Around three to five years prior to an actual development, potential developers carry out market research. Barnett said that the highest demand for his consultancy reached its peak this year, because Asia was the fastest paced market in the world.

 When asked about a property law restricting foreigners from purchasing land in Indonesia, Barnett said that it should be reformed.

'€œIf the country wants to attract foreign property buyers and grow the sector, then it is important to make reforms to keep pace with other ASEAN markets,'€ Barnet said.

'€œIndonesia needs a more transparent position on property ownership by foreigners. The restriction on foreign ownership for condominiums needs to be liberalized to grow the sector and be competitive with other ASEAN countries, like Thailand for example.'€

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