Bumi Serpong, the property arm of Indonesian conglomerate Sinar Mas Group, expects property sales to increase 15% this year to 7.5 trillion rupiah ($600 million).
In 2014, sales dropped 11% to 6.5 trillion due to the absence of a one-time gain in a property sale to a joint venture with Hongkong Land, a subsidiary of Jardine Matheson Holdings, in 2013. This year's growth will be fueled by new projects, including the Element Rasuna apartment towers in central Jakarta and the Aerium Taman Permata Buana apartment complex in west Jakarta.
Lippo Karawaci, a unit of the Lippo Group conglomerate, sees property sales rising 16% to 6 trillion rupiah this year. The company expects to reap one trillion rupiah in sales from new residential towers in Orange County, a township in an industrial zone about 40 km east of Jakarta.
Property sales include pre-sales, which Indonesia's property developers use to help fund actual construction. Pre-sales are widely seen as an indicator of market demand. These are not immediately booked as revenue, however, since most buyers pay using mortgages or cash installments.
Developers are bullish on new projects this year. Fueled by brighter economic prospects, Jakarta's property prices have been rising at one of the fastest rates in Asia recently.
In 2014, high interest rates and the political uncertainty surrounding last year's presidential election dampened demand, leading developers to slow new projects. Cushman & Wakefield, a property consultant, said the supply of condominium units in 2014 increased only 3% year on year compared to 7% in 2013. The consultancy expects the figure to surge 17% this year.
"Market conditions will be better this year," on the back of rising prospects of an economic recovery, Lippo Karawaci's President Ketut Budi Wijaya said. Shares of property companies also ticked up after Bank Indonesia, the central bank, said it would cut the policy interest rate 0.25% to 7.5% on Feb.17.
One risk for developers is tighter regulation. The government is currently discussing a new tax policy in which houses and apartments above a certain price will be subject to a 20% luxury tax paid by buyers. This proposal figures in government plans to boost tax revenue by about 30% to 1,489 trillion rupiah to help finance public spending. This could force prices down on developers or lead them to downsize projects.