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Indonesian market to outperform global construction industry

Indonesia is set for strong growth in its construction industry in the next few years, according to recent research by BMI Group.

The analysis predicts that the sector will see an annual average real growth rate of 8.1% from 2017-2026, outperforming the overall construction industry’s projected annual growth rate of 3.9%.

In particular, the non-residential building segment will see robust growth supported by favourable monetary and investment policies, developing infrastructure, and a growing middle-class market for retail, entertainment, and tourism services.

Low property prices in the residential sector will surge investment interest from buyers looking to take advantage. Both the residential and non-residential sectors will benefit from Indonesia’s strong demographics – a large, young population of 260m, a high urbanisation rate of 53% and rapid GDP growth BMI forecasts to reach an annual average of 6.9% from 2017-2026.

Building sector growth is co-dependent on that of infrastructure, which is forecast to grow 5.9% each year from 2017-2026 and is supported by President Joko Widodo’s ambitious $436bn infrastructure improvement plan. The programme’s new roads, railways, power plants, and water systems will be key in paving the way for residential, commercial, and industrial developments in urban and rural areas.

The developments will ensure Indonesia continues to be one of Asia’s largest and fastest-growing construction markets.


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