Boston, MA -- (SBWIRE) -- 12/21/2012 -- The Indonesia Real Estate report examines the commercial office, retail and industrial segments in the context of a market which is outperforming regionally.

With a focus on the three principal areas of Jakarta, Bandung and Bali, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of international headwinds on a market which has historically proven itself to be resilient. The key potential growth areas driven by increasing activity on the part of international investors, favourable fundamentals and the potential of the archipelago's consumption-driven economy are also explored, alongside corporate growth strategies looking to both domestic and international channels for growth.

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As such there is considerable optimism in the Indonesian commercial property market. The last few years have seen impressive growth in the Indonesian real estate sector. Rents were hardly touched by the global financial crisis and have, in fact, generally increased over the past few years. Our latest data collection in July 2012 revealed that rents continue to soar across the majority of cities and commercial real estate subsectors. One substantial hindrance to both the industry and the economy as a whole is that Indonesia's physical infrastructure is substandard. The extent of future growth depends very much on the government's ability to push through bureaucratic reforms that will allow much-needed infrastructure investment, and the recent approval of the land acquisition bill is an important step in the right direction.

Key Points

- We believe that signs of overheating as a result of Bank Indonesia's easy monetary policy are beginning to emerge; a phenomenon that will continue to unwind as we move into 2013. This, combined with declining external demand and a challenging outlook for commodities, has led us to materially downgrade our 2013 GDP forecast to 5.6% from 6.4% previously, in line with slowing investment growth. Still, we note that even with this downgrade, we expect Indonesia to remain a regional outperformer.

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