A peek at Jakarta's branded residences
By Feily Sofian
The Sky Residence penthouse of Regent Residences Jakarta
(Photo courtesy of KG Global)
Jakarta, the capital city of Indonesia, is home to opulent residences bearing luxury hotel brands. Regent Hotels & Resorts is teaming up with KG Global Developments, a leading property developer in Indonesia, to manage Regent Jakarta — an upcoming luxury residential and hotel development in the CBD. Scheduled to be completed in 2017/18, the development will be part of a bigger complex named Mangkuluhur City, which includes premium offices.
Regent Residences Jakarta is an exclusive 87-unit project to be managed by the hotel chain. Regent is returning to Indonesia’s capital city after a 10-year hiatus. Harry Gunawan, 55, founder and president director of KG Global, had first-hand experience with Regent’s bespoke services, having stayed in the penthouse of the former Regent Residences in Jakarta, now known as Four Seasons Residences.
Four Seasons acquired Regent in 1992, but its Jakarta hotels and residences continued to operate under the Regent brand. In the mid- 2000s, the hotel chain renamed The Regent Jakarta as Four Seasons Jakarta. Although Carlson Hospitality Group took over Regent from Four Seasons in 1997, only new projects tote the Regent name. Regent changed hands again in 2010 when it was acquired by Steven Pan of Formosa International Hotels Corp.
Besides Regent Residences, the latest projects in the market include Langham Residences by Agung Sedayu Group, The Hundred by Farpoint, which will be managed by Sofitel So and Le Parc by Putragaya Wahana, which partners Hilton’s Waldorf Astoria brand. Existing developments include Kempinski Residences, Keraton Residences which is managed by Starwood’s The Luxury Collection, and Raffles Residences.
The hotel’s top-notch concierge services appeal to the second generation of Indonesia’s affluent families, who are accustomed to easy living. With a simple phone call or finger tap, the concierge can arrange dinner delivery and home repair. Some projects offer shuttle services for residents on their fleet of Rolls-Royce and Bentley.
Most property consultants would define luxury residences as projects located in the CBD with an exclusive number of units, premium building materials, finishes and home appliances, topped with first-class services and facilities. Each unit size should be no less than 200 sq m (2,150 sq ft). Many of these projects are located in the proximity of Bundaran HI (Hotel Indonesia Roundabout), a historical landmark featuring a round pool with fountains and bronze statues, that is often considered the focal point of Jakarta’s CBD. The CBD itself is located in the vicinity of Menteng, the equivalent of Singapore’s good class bungalow areas.
Jakarta’s luxury and high-end residential segment is the playground of internationally acclaimed architects. The sweeping arch building forms of The Hundred, for example, are the brainchild of Woods Bagot. KG Global, meanwhile, collaborates with Singapore’s DP Architects on Mangkuluhur City and its past projects. Separately, a consortium comprising Lyman Group, Kerry Group and Salim Group has appointed SCDA as the lead architect for Casa Domaine, a high-end residential project next to Shangri-La Hotel Jakarta. SCDA Architects is behind the design of several luxury residences in Singapore, including Leedon Residence, The Ladyhill, The Boulevard Residence, The Marq on Paterson Hill, Nassim Park Residences and TwentyOne Angullia Park.
The Hundred, a mixed-use development in Mega Kuningan Jakarta, designed by Woods Bagot. Jakarta’s luxury and high-end residential segment is the playground of internationally acclaimed architects.
(Photo courtesy of Farpoint)
Pursuit of perfection
Jakarta’s luxury residences offer a glimpse into the lifestyle of Indonesia’s rich and famous. Spacious bathrooms are a mark of luxury as residents can indulge in a spa treatment in the comfort of their home.
Luxury appliances are a given. Residences come with premium home appliances from Smeg and Gaggenau to Hans Grohe and Miele. Tipped as the most expensive project in the primary market, Langham Residences offers SieMatic kitchen cabinets, Poliform wardrobes, Sub-Zero and Wolf kitchen appliances and door hardware by Baldwin. The project, which has been on the market since 2013, is said to have sold 47 of the 57 units available.
When designing the units for Regent Residences, Gunawan had in mind how he and his family would want their home to be. After all, he and an immediate family member have taken up two floors of the project. The devil is in the details. At Regent Residences, two private lifts will take residents straight to their apartments, where they will be greeted by an expanse of space. A powder room is placed between the private lifts so guests who require the bathroom need not wander deep into the unit and intrude into the host’s privacy. The building’s concierge has a separate lift that opens out to the service area of the unit.
Design efficiency is an integral element in all KG Global’s developments. “As luxury apartments do not come cheap, every inch of space in the unit must be usable. For example, units in Regent Residences have lighting points at every nook and cranny, so there is no dark corner within the house,” says Gunawan. The lofty 3.6m ceiling height was carefully deliberated so each piece of the project’s double-glazed glass façade can be cut with minimum wastage. Gunawan attributed his keen eye for detail to his early days when his firm dabbled in assembling machinery parts.
Gunawan had in mind how he and his family would want their home to be when designing the units for Regent Residences Jakarta
Spacious bathrooms at Regent Residences Jakarta (left) and Raffles Residences, where residents can indulge in an in-house spa treatment
(Photos courtesy of KG Global and Ciputra Group)
Luxury living for a fraction of Singapore prices
According to Kazim Ali, head of research at Leads Property, a strategic partner of CBRE in Indonesia, prices of luxury residences in Jakarta average IDR6.7 million ($690) per sq ft. If the heftiest tax rate of 40% applies, the average price would be in the region of IDR9.4 million ($970) per sq ft, which is still below the price of many mass-market condos in Singapore.
However, as units in the luxury segment usually start from 200 sq m (2,150 sq ft), buyers must be prepared to fork out at least IDR10 billion ($1.03 million), excluding taxes, says Anton Sitorus, head of research and consultancy at Savills Indonesia. The quantum is still a fraction of similar projects in Singapore. Units at St Regis Residences Singapore, for example, were transacted at a median price of $7.8 million or S$2,100 per sq ft this year. In the suburb, a 2,800 sq ft unit at 99-year leasehold Clementiwoods Condominium changed hands for $2.85 million or $1,018 psf in September.
High mortgage rates pose as an additional hurdle. In view of this, it is common for local developers to offer interest-free instalments for 30 months, or longer, with interests. Property purchases in Indonesia are subject to 10% value-added tax and a 5% acquisition levy of right of land and building. In addition, a luxury tax of 20% is applicable to strata-titled properties that are at least 150 sq m.
Earlier this year, the government slapped an additional 5% super-luxury tax on properties that are above IDR5 billion or bigger than 150 sq m. At the same time, the authority is tightening its tax collection regime in its bid to boost the country’s tax revenue for its infrastructure financing. These led to a pullback in sales volume as locals keep a low profile to avoid dispute over the taxable income assessment. The changes are also blamed for the dwindling of Indonesian nationals buying Singapore properties.
Capital appreciation more than offset the depreciation of the rupiah
Prices of condos in the CBD rose 22% y-o-y in 1H2015, according to Knight Frank (see Chart 1). Hasan Pamudji, associate director of consultancy and research at Knight Frank Indonesia, estimated a capital appreciation of 25% per annum for luxury residences in Jakarta since 2011.
Data mined by Leads Property showed similar trends. Prices of Raffles Residences Jakarta, for example, have more than doubled from slightly below IDR3million per sq ft when the project was launched in 2011 to more than IDR6 million per sq ft today, excluding taxes. This translates into a compound annual growth rate of more than 20%.The imposition of the super- luxury tax and a draconian tax collection system are reining back capital appreciation in the interim as local buyers choose to wait on the sidelines and monitor changes in regulatory frameworks before committing.
Rental yields range from 8% to 12%, says Knight Frank. The high rental yields compensate market risks, such as the depreciation of the rupiah. Strata-titled projects also come with a “Hak Guna Bangunan” leasehold title instead of a “Hak Milik” freehold title, although the former is almost certainly renewable. “The renewal fee is manageable, at a very small percentage of the assessed land value,” says Savills’ Sitorus.
Owing to security reasons, many super luxury projects, including Regent Residences, exclude a shopping mall in their mixed-use components. “Security ranks high among the criteria of embassies shortlisting rental properties for their ambassadors,” says KG Global’s Gunawan. “ Jakarta’s luxury residences have tremendous rental potential as rents are still relatively low compared with other capital cities in the region and multi- national companies would offer an attractive expatriate package to incentivise talents to relocate to the country,” he adds.
Foreign ownership
Indonesia is planning to allow foreigners to own luxury apartments to boost its economy by attracting talents and increasing the tax revenue in its coffer. In anticipation of this, some developers are holding on to their units to capitalise on price appreciation.
At present, foreigners can buy properties by setting up companies, using local citizens as proxies or purchasing a long-term lease. “A long-term lease usually applies to developments that sit on state land. The lease period would depend on the balance lease of the land,” says Rosaline Lie, marketing senior director at Savills Indonesia.
On the development front, only a handful of foreign players have penetrated the Jakarta property market, mostly partnering local firms. Hong Kong Land is collaborating with Astra International to develop Anandamaya Residences in the CBD, that is scheduled to complete in 2018. China Sonangol Land and Media Group held a groundbreaking for Indonesia 1, a mixed-use project comprising offices, condos and serviced apartments, in May this year. China Sonangol Land pre viously collabo rated with Sampoerna Group to develop Sampoerna Strategic Square.
Land acquisition in dense Jakarta is a challenging and lengthy process. Local developers would typically purchase a principal site and acquire the surrounding sites from squatters. There could be several years of time lapse between the first phase of land acquisition and the launch of the project for sale.
Going forward
Regardless of changes in the foreign ownership law, property experts are positive on the luxury residential market in Jakarta. Savills’ Sitorus notes that Indonesia is home to a large number of high-net-worth individuals, while its luxury property prices remain just a fraction of their equivalent in other capital cities.
Indonesia is expected to witness a 132% growth in the number of ultra-wealthy people by 2024 and is the only MINT country where the 10-year forecast growth exceeds 100%, according to Knight Frank’s 2015 Wealth Report. “Quality developments with unique concepts in highly sought-after locations are expected to outperform the market, says Knight Frank’s Pamudji.
Supply from upcoming luxury projects remains just a trickle. Figures from Colliers International Indonesia show that luxury units will constitute just 1% of the pipeline supply in the next few years (see Chart 2).
This article appeared in The Edge Property Pullout, Issue 704 (November 23, 2015) of The Edge Singapore.
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