The trend of successful and wealthy young people buying luxury homes as comfortable family homes is growing in line with increasing income. This new market share is so tempting that it has become the target of top developers by providing luxury homes priced above IDR 10 billion.
In addition, along with the positive economic development after the Covid-19 outbreak, developers are seizing this opportunity. Developers are building large and luxurious houses targeting the upper middle segment.
The Rumah123 & 99.co platforms noted that house searches on the property channel were dominated by millennials (48.02 percent), followed by generation Z (23.52 percent). Generation Z has a birth year range of 1996-2010 or is currently 13-27 years old, while the millennial generation has a birth year range of 1981-1995 or is 28-42 years old.
Based on the number of searches, around 9 percent-11 percent of home seekers from the millennial and generation Z generations are interested in houses of more than 300 square meters. However, based on price preferences, Generation Z’s interest in houses priced above IDR 5 billion has a very limited proportion, namely 1.9 percent, and the millennial generation 2.2 percent.
Head of Research 99 Group Indonesia Marisa Jaya said that determining the selling price of a house is very dependent on the location, land and building area, and area facilities. In addition, there is also the concept of housing that is carried. The concept of a green house and smart home, for example, drives housing prices higher than the price of houses in general because of the added features.
Each area has different characteristics and preferences so that developers can present housing products that are more relevant and in demand by the local market. In Jakarta and Tangerang City, Banten, for example, the concept of smart and green housing will be preferred. Meanwhile, in other big cities, such as Surabaya (East Java) and Medan (North Sumatra), the concept of green housing can be one option. However, the impression of luxury tends to be preferred.
Upper middle
Director of Strategic Consulting Cushman and Wakefield Indonesia Arief Rahardjo projects that the growth of middle and upper middle class homes will still be very high. The property consultant noted that during the Covid-19 pandemic, developers tended to focus on building smaller houses. However, since last year, developers have started building large housing units targeting the upper middle class segment.
“In the future, with improving economic conditions and an increasingly positive economy for Indonesia, as well as interest rates that are still competitive, it is hoped that the upper middle class market will continue to do well
He added that the housing market is the most stable market compared to other property sectors. Accompanied by a positively growing economy and infrastructure improvements in Jabodetabek, demand and supply of housing continue to grow. The majority of luxury home buyers in Jabodetabek are the domestic market.
The millennial generation and generation Z are seen as consumer groups that tend to prioritize the innovative side and are also technology literate. This makes them consider environmental aspects and the use of technological innovation, including in buying a home.
“The innovation and technology aspects will certainly help the millennial and Z generations maintain daily productivity, while improving their quality of life,” said Marisa, in a written statement, Monday (4/12/2023).
From an environmental aspect, both generations are also more interested in efficient housing designs and functional rooms that support productivity, the presence of green open spaces, the use of environmentally friendly building materials, and efficient and integrated waste management systems.
Meanwhile, from a technological aspect, they will look for residences that offer support for home automation systems, such as for lighting and temperature, as well as integration with virtual assistants and technology for various purposes, such as water and energy savings. Smart security systems and fast internet network support are also important factors in choosing a residence.
“Consumer expectations from these two generations can be an opportunity that developers can take advantage of in encouraging innovation in presenting residences with solutions that combine technological convenience and environmental responsibility,” said Marisa.
Established businessman
One of the developers targeting the successful and wealthy young people is PT Alam Sutera Realty Tbk (Alam Sutera). The top developer in Tangerang City and South Tangerang, Banten, which has been active in the property world since 1993, launched a luxury landed house cluster in Alam Sutera, South Tangerang City, namely The Gramercy.
The Gramercy offers three types of houses with the smallest unit measuring 312 square meters for IDR 16.6 billion. Of the 109 houses offered by Alam Sutera, currently 22 units have entered the payment process and are certain to continue to increase until the end of 2023.
The buyers, according to The Gramercy Alam Sutera Sales and Marketing Division Head Michael Lim, are between 30 and 40 years old who have their own businesses. Their businesses also come from anti-mainstream industrial sectors. “Surprisingly, they are young businessmen who are engaged in computers, games, art work, agriculture for herbal medicine, and special information technology spare parts. There are also those who are in the plastic recycling business,” he said in Tangerang, Monday (4/12/2023).
The businesses they started, said Michael, are not included in the new business category. This is because the age of the business has ranged from 5-10 years. There are also businesses that have actually been built by their parents, then The Gramercy consumers continue them.
In other words, they are established businessmen. This can be seen from The Gramercy’s home purchase scheme, such as short-term installment models and installments to developers, not long-term installments to banks.
Most buyers come from West Jakarta and Tangerang. However, there are also those from Batam City (Riau Islands), Surabaya, and Medan. However, they have businesses around Tangerang.
Michael claims The Gramercy as a premium entry-level housing cluster that is functional, practical, personal, and not just aesthetic. For example, the installation of one wide door leaf compared to two door leaves, one of which is rarely used. There is also no part of the house that is a hallway like a “sultan” house worth hundreds of billions of rupiah.
“People aged 30-40 years have usually bought a house to live in, but maybe they have never had their first premium house. It is difficult for these young people to explain their desires and needs for their home. So the concept is made ready to use according to needs, not confusing the buyer,” he said.
With a house price set at the lowest of IDR 16 billion, the “premium” criteria, according to Michael, lies in several factors, starting from the price of land in Alam Sutera, Tangerang, which is quite high. Then, a garage that can accommodate four cars and a large back garden that can be filled with a swimming pool.
Beyond that, there are features of window frames that are 90 percent soundproof, a smart home system integrated in one application, and a three-layer roof. The front road of the cluster is green and shady thanks to the green tunnel or natural canopy from the shade of the rain tree vegetation (Samanea saman) on both sides of the wide road in Alam Sutera.
Alam Sutera Marketing Director Lilia S Sukotjo, who was met at The Gramercy Lounge, Alam Sutera, Wednesday (6/12/2023), explained that the residential area is integrated with nature is a basic concept that has been consistently implemented by Alam Sutera since 1993. “Alam Sutera is indeed an area designed for a healthy and environmentally friendly lifestyle,” he said.
The developer has developed a green open space so that residents can exercise comfortably and safely. At least 500 security cameras are spread across the Alam Sutera area plus the availability of a panic button, which when pressed in an emergency will be responded to by security officers in a matter of minutes.
Alam Sutera also has a lake to conserve rainwater and maintain water so that it stays in the channels that flow into the river longer. From the lake, said Lilia, it becomes raw water that is processed by the Alam Sutera drinking water treatment unit, then distributed to houses in this independent city. “Alam Sutera no longer allows groundwater extraction for environmental conservation and to prevent land subsidence,” she said.
Alam Sutera Management built a housing cluster that is “embraced” by green open spaces with streets shaded by rain trees with the aim of providing various facilities for residents who enjoy a healthy lifestyle. This is manifested by the increasing number of people exercising in various green open spaces in Alam Sutera.
The young entrepreneur who owns PT Ultrapak Wibawa, Mohamad Harry Wibawa, admitted that he had visited and seen the Gramercy model house and was interested even though he had not decided to buy. According to him, the modern classic European style that is carried gives a simple impression plus there is a smart door feature.
“The facilities around the cluster are quite supportive starting from fitness centers, malls, schools, and hospitals. There is also a green tunnel in front of the cluster which is good for exercise. Direct access to the Jakarta toll road is also easy,” said the Deputy Chairperson of the Banten Chamber of Commerce and Industry (Kadin) for Manpower and Industrial Relations.
Primadona
Indonesia Property Watch CEO Ali Tranghanda said that currently the luxury home market is becoming a primadona. However, in the long term the market has the potential to shift to the real market in the middle segment.
He added that several large developers continue to roll out large and luxurious houses with premium locations. The goal is to secure the limited market niche so that it does not shift to luxury houses in other projects. However, the limited market capacity must also be considered.
“Developers must continue to be more careful in observing the market. In time, the luxury market will be temporarily saturated. It is not purchasing power that is decreasing, it is feared that there is too much excess supply in the luxury market,” he said.
Outside Jabodetabek, there are also luxury landed house projects. For example in Surabaya. Developers are also building luxury landed houses worth IDR 4 billion and above in the eastern part of Surabaya City. Head of Sales and Marketing Pakuwon Group Liliani Harsono, when contacted, Tuesday (5/12/2023), from Jakarta, said that buyers generally come from cities in East Java and eastern Indonesia.
“Our home buyers if the price is IDR 10 billion and above are people who are 50 years old and above, although the occupants can be their children,” said Liliani.
Director of PT Ciputra Development Tbk Harun Hajadi said that his group’s luxury home projects outside Jabodetabek, such as in Medan, Makassar, and Surabaya, have been priced at over IDR 5 billion. In addition to considering purchasing power in these areas, it also depends on the development area. In Surabaya, for example, the development area is large so that the product variations vary.