Indonesian luxury apartment plan fails to boost property stocks

JAKARTA (BLOOMBERG) - Indonesia's plan to let foreigners buy luxury apartments failed to lift sagging property stocks as the price threshold for purchases was set at 10 billion rupiah (S$987,414).

Coordinating Minister for Economic Affairs Darmin Nasution released a document outlining the move late on Wednesday, part of wider government efforts to revive an economy growing at the slowest pace since 2009.

An index of Indonesian property closed little changed, compared with an 0.1 per cent drop in the Jakarta Composite Index. Real-estate developers including PT Bumi Serpong Damai and PT Lippo Karawaci have been hurt by the economic slowdown, with the property gauge losing 14 per cent this year as the main index declined 17 per cent.

"The impact from the ruling is likely to be limited," said Edward Tanuwijaya, a stocks analyst at PT DBS Vickers Securities Indonesia in Jakarta. "There aren't that many apartments priced at 10 billion rupiah in Jakarta and probably none in other cities."

The documents released by Minister Mr Nasution didn't specify whether foreigners would need to be Indonesian residents to buy apartments and when the rule will come into effect. The rule doesn't apply to landed property, such as villas on the resort island of Bali.

Previously, foreigners haven't been able to own any property in Indonesia, although it's common for them to use local citizens as proxies or structure purchases as long-term leases.

"The government needs to come up with more clarity on the ruling to remove the uncertainties among investors in the property market," DBS Vickers' Mr Tanuwijaya said.