There will be more industrial estate construction in 2020 compared to 2019. Moreover, in terms of value, industrial estate construction is predicted to surge 54.88%.

“Industrial [sector] is predicted to grow significantly in 2020 and will reach Rp50.35 trillion,” BCI Asia General Manager for Indonesia Pieter Sanjaya said to Investor Daily when he was contacted in Jakarta on Saturday.

Based on the data of BCI Asia, the growth in 2020 is higher compared to 2019, which grew 32.47% from 2018. Next year’s industrial sector growth is the highest in the last five years, from 2016 to 2020. Generally, industrial estate construction continues to grow, except in 2018 when it dropped 2.83% to be Rp24.54 trillion.

According to Pietter, construction value growth in 2020 is supported by several factors. One of the factors is warehousing business growth from the demand of fast-moving consumer goods (FMCG). “Then, [the growth is] supported by the growth of e-commerce, third-party logistics, and investments in the food and beverages (F&B) sector which keep increasing,” he explained.

BCI Asia predicts that industrial estate construction will increase significantly in the second quarter of 2020 with a total investment value of Rp15.36 trillion. Despite industrial estate fluctuating every quarter, it shows gradual growth in 2020.

Based on the data of BCI Asia, the province with the largest industrial estate construction value in 2020 is Kalimantan, with Rp18.36 trillion or 36.47%. Followed by East Java with Rp12.45 trillion (24.73%) and Greater Jakarta with Rp7.38 trillion (14.66%). Then, Sulawesi, Maluku, and Papua with Rp5.74 trillion (11.41%), West Java with Rp3.02 trillion (6.01%), Sumatra with Rp1.76 trillion (3.51%), Central Java with Rp1.36 trillion (2.70%), and Bali-Nusa Tenggara with Rp259 billion (0.51%).

Lifestyle

Savills Indonesia Head of Research and Consultancy Anton Sitorus said that Indonesia was the largest online market share in Southeast Asia, so it had a phenomenal growth of digital economy. Based on the survey of Google-Tamasek-Bain some time ago, Anton said that the digital economy market potential in Indonesia, which included e-ecommerce, online media, travel, and transportation, increased five times from US$8 billion in 2015 to US$ billion in 2019, and it was predicted to keep increasing to be US$130 billion or RP1,900 trillion in 2025.The digital economy phenomenon contradicts the conventional business sector that is shadowed by economic slowdown.

According to Anton, this is caused by the changing lifestyle of consumers who are increasingly connected with the sophisticated internet, which affects nearly all the life aspects of modern citizens. Similar to other business sectors, the property sector cannot evade the occurring disruption. “Today, we have seen various new business models that rival conventional property companies which are based on the sharing economy concept,” Anton said.

Related to land acquisition in industrial estates, Collier International Indonesia predicts that there will be an increase of industrial estate land transactions in the third quarter of 2019. The property consultant predicts that the transactions will reach 273.6 hectares until the end of 2019.

“From the reports of industry players, they stated that there was quite a high amount of activities in the industrial sector in the third quarter of 2019,” Colliers International Indonesia Senior Associate Director of Research Ferry Salanto said in Jakarta recently.

He said that demands would potentially come from the automotive and the logistics sectors. “Demands will potentially come from the automotive and the logistics sectors, but we also see a trend of demand from consumer goods, steel, construction materials, and light manufacturing sectors,” Ferry said.

Colliers data shows that, in the second quarter of 2019, transactions for industrial estate lands in Greater Jakarta decreased by 17.03 ha compared to the previous quarter. However, until the end of 2019, transactions are predicted to reach 273.6 ha, while transactions from 2019 to 2023 are predicted to reach 267.2 ha.

Ferry explained that supplies for the industrial sector seemed stagnant until the second quarter of 2019, but it was predicted that there would be a supply of 55 ha until the end of 2019. The supply will keep increasing until the end of 2023 to be 171.2 ha.

“So, all of the industrial estate owners are still focusing on their existing land and only a few have conducted land clearing for the next expansion,” he said.

Meanwhile, industrial estate land price is still stable, and it is predicted to increase by 3% or US$200.67 until the end of this year, while it is predicted to increase by 5.3% or US$221.62 until 2023.