Market Report, "Indonesia Real Estate Report Q4 2013", published

We believe that Indonesia's strong fundamentals of a large, youthful population and a strong economic trajectory bode exceptionally well for the real estate sector over the long-term. However there are a number of short-term risks which will subdue yield growth over the coming quarters. Increased interest rates to combat wider economic issues will see borrowing costs increase. This will subdue consumer demand in the retail sector and will make the office and factory expansion plans under consideration more expensive for companies to execute. Given that the slowdown in China will dim the growth of Indonesia's economy, although not as much as some of it regional peers, we expect that rents will remain broadly neutral as landlords fear increasing rents may drive out businesses. We do however see opportunities for investors in new property, who may capitalise on lower prices, especially in the government's special economic zones.

Full Report Details at
- http://www.fastmr.com/prod/686320_indonesia_real_estate_report_q4_2013.aspx?afid=301

With a focus on the three principal areas of Jakarta, Bandung and Bali, the report 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 that 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.

That said, 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 (with the exception of the office sector) and have, in fact, generally increased over the past few years. Our latest data collection in December 2012 revealed that rents continue to soar across the majority of cities and commercial real estate sub-sectors. 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 approval of the land acquisition bill is an important step in the right direction.

Key Points

* We believe that corporate demand for office space will continue to be muted whilst companies concentrate on cost-consolidation.
* In spite of the upside to the long-term potential for the retail real estate market stemming from the potential of the domestic consumer, in the short term, global macroeconomic factors continue to weigh on growth, and we anticipate that the market will remain flat over 2013.

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