Indonesia is struggling with a significant disparity between the number of homes built and the number of homes needed, in stark contrast to nations like Singapore, China, and America, where housing backlogs are virtually nonexistent. According to Mart Polman, CEO of Lamudi.co.id, this shortage is particularly severe among the young people in the country, or the millennial generation, who make up the next generation of home buyers. To solve this problem, builders are now concentrating on making homes that cater specifically to millennials' requirements and interests.
Despite the high borrowing rates, such as the 5.5% established by Bank Indonesia, Lamudi.co.id has seen that consumers of real estate are resiliant. Despite the difficult economic environment, there was a 9% increase in internet searches for real estate in December 2022.
The millennial and Gen-Z groups, who make up 60% of property seekers on their site, represent the next generation of home buyers, according to Polman.
"Within this group, landed houses are the dominant search target, accounting for 76% of searches in the period between June and December 2022," Polman told Real Estate Asia.
The younger generation's choice for homes that suit their wants and preferences—such as having an effective and efficient area and connected to the internet to assist ease of living—drives this preference for landed homes.
Focus on landed houses
Developers are currently concentrating on landed homes, according to Real Estate Indonesia (REI), an organisation that represents real estate developers, consultants, and agents in Indonesia. In Indonesia now, landed homes with prices ranging from $ 19,134 (IDR 300m) to $ 63,780 (IDR 1b) make up about 79% of new construction. Although it is a smaller home, it is nevertheless functional in terms of both the inside and amenities.
"How everything is connected to the internet is the most crucial factor. Particularly when every component of the house, including the electronics, can be ordered using a smartphone. Therefore, millennials currently account for 65% of the real estate market, according to REI Chairman Paulus Totok Lusida.
For millennial characters that enjoy leisure and vacation, a home with an effective and efficient space is ideal, especially given that they belong to a generation that dislikes doing housework. Even if there are millennials who enjoy housework, the number is quite small—perhaps only 5%. As a result, the area is less significant than the design. You could argue that they like the feeling of living in a hotel, according to Totok.
Developers are also making payments convenient in the meanwhile. "For instance, we give customers the option to pay the interest first, say for the first five years, and then only after ten years can they pay back the principal. They'll feel less burdened as a result and
Given that situations in Indonesia are different from those in other nations, this is a part of REI's current goal. Totok estimates that there were 12.7 million vacant homes, 47% of which were occupied by young people.
Overcoming backlogs
Nixon L.P. Napitupulu, vice president director of Bank Tabungan Negara (BTN), emphasised that 7.9% of millennials living in metropolitan areas currently lack access to housing, with 5.8 million millennials currently unable to afford to buy a home.
In order to make it simpler for the millennial generation to buy their first home, BTN, a state-owned firm involved in the banking industry to promote housing sector financing, has created a housing credit programme.
According to Nixon, BTN's two primary programmes right now are. First, BTN offers a Graduated Payment Mortgage (GPM) programme, which uses a tiered instalment structure through a product called "KPR BTN Gaess." According to Nixon, "this product is in fact marketed to the millennial generation, whose initial installment payments are lower."
Second, BTN also introduced "KPR Rent to Own" for groups in society who are reluctant to purchase a home because they are unable to save for a down payment or purchase a property close to their place of employment. According to Nixon, "with this product, people can pay rent each month while also setting aside some of their savings for future home purchases."
The BTN Gaess KPR programme will give millennials access to up to 203 dwelling units in 2021. Up till June 2022, 946 units of BTN Gaess KPR have been realised, totaling more over $ 24.66 million (IDR 382 billion). BTN is aiming for the following for the Rent to Own KPR product, which just launched in the third quarter of 2022:
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