Bank property sales, new retail complexes among Indonesia real estate market opportunities

INDONESIAN banks could start selling off real estate from May onwards, as distress starts to set into the pandemic-hit market, a property market analyst believes.

Steve Atherton, director of capital markets at Colliers, has flagged bank-owned real estate divestment and bank loan portfolio divestment as market sectors to watch this quarter.

"While we are still early in the Covid-19 pandemic and resulting economic recession, we will start to see properties for sale at discounted prices from the banks," he said, pointing to hotels going onto the market as the deadly coronavirus hammers the hospitality industry.

Colliers has highlighted a weaker rupiah as "a significant discount-buying opportunity for new, foreign capital entering the market", even before local sellers lower their asking prices.

"We are starting to see some tell-tale signs of the distress in the market, but believe it will be increasingly visible after Lebaran or in the month of June 2020 and beyond," Mr Atherton added, using the Indonesian term for the Hari Raya Puasa holiday, which falls on May 24.

He noted that "power centre retail concepts" are another market opportunity, even amid lower demand for office and retail space, as movement restrictions to curb the spread of the virus kick in.

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Colliers has observed that some retail clients are asking for independent land parcels to build free-standing single-use buildings or multi-use retail centres, instead of conventional malls.

"Big box retailers could group together to create more of the traditional power retail center like those found in other primary markets," he suggested, pointing to Europe and the United States.