Indonesia's strong economic growth lures property investment

With China's economic growth stalling and regulators there and in Hong Kong and Singapore trying to restrain their property markets, investors are turning their attention to Southeast Asia, and particularly Indonesia.

John van Oost, managing partner of Singapore-based Yishan Capital Partners, visited Hong Kong recently on a fund-raising mission. His company has launched a fund to invest in Southeast Asia, targeting US$250 million in assets, and has already committed US$25 million.

Indonesia is where he sees the best opportunity and Yishan has made four investments there. Singapore, Thailand and Malaysia, as well as the frontier markets of Cambodia and Myanmar, also are on the radar.

"We have been very vocal that there is not going to be a lot of excitement about real estate in Europe - it's going to be pretty static," he said. "In terms of yield, you can get that in Europe. But the growth has to be in Asia."

There are good reasons for that kind of optimism, particularly in Indonesia. It has stabilised politically and its fundamentals look strong, with real estate brokerage Jones Lang LaSalle calling it "one of the bright spots in the regional economy".

Chinese investors are often attracted by the way Chinese Indonesians control large parts of the economy, while Dutch investors like their historic connections to the former colony.

The country posted 6.2 per cent GDP growth in the third quarter, only marginally lower than in the previous three months. Exports are slowing but domestic demand provides a strong underpinning.