JSI Group Indonesia aims to grow as Jakarta opens the door for foreign ownership

Jakarta Setiabudi Internasional Group is an Indonesian listed property company that has been actively looking at opportunities within Indonesia and abroad.

The Indonesian government announced in September last year that foreign property ownership rules would be relaxed.

In South East Asia, it was always the company’s preference to partner up with a developer local to capitalize on their strengths. We also think this is the direction we will take in the future.

Although China’s property market has suffered over the past twelve months, Hong Kong listed developer still remains positive about the country’s prospects.

Swire has invested in two projects that will be completed in 2023. They are opposite Taikoo Li Qiantan as well as along the Huangpu River at Shanghai’s Pudong New Bund Area.

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These are the fourth and the fifth developments of the group in Shanghai. We will also be making our first entry into the residential market within mainland China.

The company will expand to other cities, such as Xi’an or Sanya. It also plans on investing in two retail opportunities, in Liwan district of Guangzhou and Futian area, Shenzhen.

This new change offers foreign purchasers a clearer picture of the tax and legal implications that may arise during a purchase.

The Indonesian government has boosted demand by imposing additional taxes on the purchase of property in South-east Asia.

JSI Group’s biggest portfolio consists of 11 properties in the hotel segment. In Bali, the company owns 3 hotels and is working on launching a new resort condo development.

The group is likely to tap this foreign ownership because of their large exposure in Bali.

A foreign national may only own a single plot of land measuring up to 2000 sq m. When buying apartments or landed properties in different cities, there are also different price levels.

For instance, the minimum amount to be paid for a house in Jakarta is five bn rupiah (427, 000 S$), whereas foreigners can buy only apartment units that are priced at three bn rupiah.

This differential in pricing ensures affordable housing for locals, and they will not be priced out.

Although the interest rate has been higher for longer in recent years, the current mortgage rates of 5.5 to 7.5% are still quite affordable.

The market is likely to accept this rate, given that the country was previously experiencing rates of up to 15%.

Analysts remain positive on the luxury segment in Indonesia. Aside from the expected easing of the foreign ownership requirements in 2024, the political situation of the country is expected to be favorable.

The growth of 7-9% in the number high-net-worth individuals across the country has also fueled demand for luxury homes.

JSI Group, a private company, is developing a new residential township measuring 667 hectares near Medan. The company wants to move into the logistics business in the very near future.

Asali was visiting Singapore to promote JSI Group’s newest Savyavasa project. Savyavasa translates as living south in Sanskrit. The 3-hectare site is in South Jakarta’s upscale Dharmawangsa district.

Jantra Swarna Dipta, a joint venture of JSI Group (India) and Swire Properties (UK), is the entity that has undertaken this project. The total number of units is 402 in three blocks.

Apartments start at 131 square metres and go up to a three bedroom unit of 336. A four bedroom apartment can be as large as 496.

A unit with two bedrooms costs S$675,000. A unit with three rooms costs S$1.02million. Four-bedders start at S$1.4m.

As of the end of 2018, about 41 percent of the development was complete. The date for handover will be around the 2nd quarter of 2025.

Prior to this new move, which aims at boosting foreign investment, only certain types of visas were available for foreigners who wanted to buy property. These included the Limited Stay Permit Card and Permanent Stay Permit Card.

The foreigner will now pay only the usual transaction costs such as stamp duty and legal fees.

He explained that property owners have been pushing the industry to make this decision for many years.

JSI Group says the HGB can be granted for a specified period – usually 20 to 30 years – and then extended for 20 or even 30-years consecutively. Strata-title holders are allowed to freely sell, transfer and mortgage their apartment units.

JSI Group plans to promote the project, not just in Singapore, but also in Hong Kong or mainland China.

Sophie Watson-Swingewood (Vice-President Director for Indonesia at Swire Properties) said Swire had allocated HK$100bn ($17bn S$) to be invested in core markets such as Hong Kong mainland China, South-east Asia and South-east Asia in 2022.

She said 20% of the money will be spent on new residential trading opportunities, while 30% will go toward expanding Swire’s Hong Kong offices, which currently include Pacific Place and Taikoo Place.

In order to develop its retail brand Taikoo Li in existing Tier-1 and emerging cities, the remaining 50% will go towards China. Swire’s China retail space is expected to double in size by 2032.

Over half of the total fund has already been committed.

Swire’s most recent project in Singapore, the Eden residential development at 2 Draycott Park was a freehold luxury residential community. In 2021, it sold all twenty units in the project for S$293 millions or S$4,827 square feet. The units, which were all four-bedders measuring over 3,000 ft2, occupied entire floors.

The company still is searching for a new Singapore project. Watson-Swingewood added.

In Indonesia the strata title is used to hold apartment ownership. The title is usually overlaid by a Hak Guna Bangunan Land Title (HGB), resulting in a commonly seen layered system of property rights.

This system permits individual ownership of apartment unit within a built-up that is located on land under HGB title. HGB is simply a way to build or use buildings on land which is owned by someone else. This is usually the government.

Swire recently acquired 40 per cent of a 136,000 sq.ft. residential project with freehold ownership in Bangkok. They also have a minor interest in two projects located in Vietnam.

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