Increase in Provincial Minimum Wage (UMP) is significant in some areas, including in the pockets of the industry will threaten the industrial property sector. The reason the two things that would curb demand for industrial land as investors curb the expansion of its business.
"There are some indications that need to be aware about the development of the sector (property) industry in the future. Demo request revised minimum wage in Jakarta led to some challenges," said Hendra Hartono, CEO of Leads Property.
Hendra said the first threat, namely to increase the minimum wage by 45% would increase the operational costs. Second, the ongoing demonstrations in the last 6 months to make some foreign companies began to plan shift production from Indonesia.
"If this can not be resolved, it is quite likely the trend will slow down the growth of the industrial sector and this impact will be felt in 2014 and beyond," said Hendra.
He said the industrial property sector in previous years was enough left over from other property sectors. But in the last two years, the industry sector grew significantly.
"Even the industrial sector has been a demand generator for the development of other property sectors. Growth of the industrial sector led to an increase in demand for industrial land that exceeds expectations and estimates of the developers," he said.
Leady Property noted increased demand for industrial land to grow beyond the level of economic growth. This resulted in a scarcity of industrial land supply and sale price surge.
"By 2013, there will be new supply, but with a limited amount. This is because the majority of developers still need time to prepare the land and infrastructure development in it," he said.
The new supply is expected to land scarcity reduces the industry as a result of the increased demand for land continues. Infiltration rate of the industry in 2013 is expected to remain strong with projected land absorption of approximately 70% to 80%.
"The average price of industrial land is expected to increase by 30% to 40% in 2013. Rental rates for long-term industrial land will also be increased to a maximum of 5%," said Hendra.
