Commercial Property Prices Slowed Throughout 2016

The commercial property price index showed a slowdown throughout 2016 due to limited demand growth. In Bank Indonesia's (BI) Commercial Property Quarterly Report, the commercial property price index in Q4 2016 stood at 167.23, down 0.06 percent compared to the previous quarter. The commercial property price index also decreased by 0.33 percent compared to the same quarter of 2015.

In Q4 2016, the largest decline in the commercial property price index was in the hotel segment, reaching 5.98 percent (qtq) due to a decrease in hotel occupancy rates, followed by the office segment at 0.06 percent (qtq). Meanwhile, the convention hall segment recorded an increase of 2.7 percent (qtq) due to sustained high demand. The commercial property demand index in Q4 2016 only grew by 0.39 percent, lower than the previous quarter's 0.46 percent, and also lower than Q4 2015's 0.53 percent.

Regionally, the decline in commercial property prices was most significant in Jakarta, reaching 0.31 percent (yoy). This compares to Medan, which only contracted by 0.26 percent (yoy). Meanwhile, property prices in Semarang grew by 3.65 percent (yoy), supported by a 9.3 percent (yoy) increase in office prices.