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Jakarta Post

Property market unaffected by coronavirus, but share prices plunge

  • News Desk

    The Jakarta Post

Jakarta   /   Tue, March 10, 2020   /   09:14 am
Property market unaffected by coronavirus, but share prices plunge A housing complex is constructed in Bogor, West Java, on Jan. 6. (Antara/Yulius Satria Wijaya)

Indonesia’s property market has been basically unaffected by the new coronavirus outbreak as the country’s property sales are less dependent on foreign buyers, studies have shown.

The Indonesian property sector is basically a domestic play with locals taking up almost the entire sales market, according to a February report by Savills World Research Indonesia. But the prices of their shares on the local stock market have dropped sharply in recent days.

“With very minor foreign involvement in Indonesian property sales market, direct impact from Chinese investors pulling back as an impact of COVID-19 outbreak will be essentially insignificant,” the report says.

Read also: Property developers upset over ‘thinning’ housing loan subsidy

The report pointed to an Indonesian policy that restricted foreign ownership of property in Indonesia as one of the contributing factors to Indonesia’s locally dominated property landscape.

“By law, only foreigners with a valid working visa are eligible to own residential property built on a ‘Right to Use’ land title,” the report stated.

Property ownership by foreigners is regulated under Government Regulation No. 103/2015 and Agrarian Ministerial Regulation No. 13/2016. Under the ministerial regulation, foreigners can only purchase landed houses for at most Rp 10 billion (US$699,888) and Rp 5 billion for apartments.

PT Perintis Triniti Properti Tbk president and chief executive officer Ishak Chandra told reporters during a discussion on the impact of the coronavirus on the property industry on Feb. 5 that his company had not seen any decline in sales.

“Our sales in February are very high,” Ishak said, noting that between Feb. 21 and Feb. 23, during the BCA Expoversary exhibition, the company sold 30 units with a total revenue of Rp 23 billion.

The company hopes to achieve between Rp 800 billion and Rp 900 billion in marketing sales in 2020 through its projects in Tangerang and Batam, up from Rp 518 billion in 2019.

Ishak acknowledged that the impact of the novel coronavirus on the property sector was more prominent for developers who sold some of their property to foreigners. However, for his company, with 10 to 15 percent foreign buyers, he did not see any impact.

 “The last four years have not been easy for any Indonesian property developer, but Triniti Land group was able to meet the company’s sales target,” Ishak said in a written statement.

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Despite not being affected significantly by the virus outbreak, property companies and the property sector as a whole have not been performing well on the stock market.

PT Perintis Triniti Properti Tbk’s shares, listed on the Indonesia Stock Exchange (IDX) under the code TRIN, had fallen 11.76 percent month-to-month (mtm) to Rp 210 by the close of trading on Friday. On Monday, the share prices fell further, by 7 percent to Rp 195 just before the close of the trading.

The IDX Property index fell 5.45 percent to 399.10 on Monday amid a sharp fall in most share prices on the IDX on Friday. The property index has declined by 20 percent this year. (ydp)