News alert: Indonesia property market "in its prime"

29 Jun 2012

News : Indonesia’s real estate sector is in its prime, despite an 18% fall in property stocks, according to one of the country’s biggest property developers, Lippo Karawaci.

"If you look anywhere there are shopping malls, condos and hotels. All sub sectors are performing really well right now. I think the Indonesian real estate sector today is at a prime time,” Michael Riady, the CEO of the company’s shopping malls division, told CNBC.

According to Riady there is significant room for foreign investors.

"If you look at Indonesia, I would say close to 99 percent are all domestic buyers, so being a very big domestic market we think that Indonesia is still under served," he said.

Citi, the banking group, is also positive on the Indonesian property sector. In a report last week the bank said, "Property demand continues to outstrip supply, [and] launches are quickly being absorbed.”

“Banks are aggressively providing mortgage loans, and even a lower LTV [loan-to-value ratio] of 70% is unlikely to dampen demand,” Citi added, asserting that the new rules introduced to prevent a property bubble will have little impact on the market.