JAKARTA – The outlook for Indonesia’s property sector in 2026 remains highly promising, largely fueled by the continued 100% government-borne Value Added Tax (VAT) discount policy, known as PPN DTP, coupled with potential improvements in banking liquidity. These two pivotal factors are anticipated to be the primary drivers for pre-sales growth in the upcoming year, even as the sector undergoes a normalization phase following a period of exceptionally high growth in 2024.
According to a research report issued on Thursday, September 25, 2025, by BRI Danareksa analysts Ismail Fakhri Suweleh and Wilastita Muthia Sofi, the extension of VAT incentives until 2026 is poised to significantly bolster demand within the real estate market. The research team projects a 4% growth in pre-sales for 2026, following a similar 4% increase recorded in 2024, despite an anticipated 3% contraction in 2025.
In light of this positive outlook, BRI Danareksa Sekuritas maintains its ‘overweight’ recommendation for the property sector, highlighting CTRA, PWON, SMRA, and BSDE as top stock selections. Property valuations remain relatively attractive when compared to their five-year average, while both sales performance and return on equity (ROE) continue to demonstrate improvement. Sustained PPN incentives, a looser liquidity outlook, and the strong dominance of the residential segment priced between IDR 1 billion and IDR 5 billion are identified as key catalysts, though the risk of short-term selling pressure warrants ongoing vigilance.
Since its introduction, the PPN DTP incentive has proven highly effective in addressing consumer affordability challenges. Its contribution to overall property sales has surged dramatically, increasing from a mere 5% in 2023 to 28% in 2024, and climbing further to 31% in the first half of 2025. These achievements have been instrumental in keeping the property sector on track to meet its ambitious sales targets, with 49% of the 2025 target already realized, even amidst market adjustments to a higher growth baseline.
Beyond fiscal incentives, improved liquidity is also considered a critical catalyst for the real estate market. Government fund placements in banks are expected to lower the overall cost of funds, thereby expanding the capacity for housing loan (KPR) disbursements. Historically, robust liquidity has maintained a close correlation with pre-sales growth, as mortgage loans remain the primary instrument for household consumption in the property sector. “Improved liquidity will empower banks to be more aggressive in credit distribution, particularly as buyer profiles increasingly shift towards end-users,” noted BRI Danareksa.
Despite these encouraging indicators, potential risks persist, most notably the increasing non-performing loans (NPLs) within the lower-segment property market. Consequently, government policy sentiment will continue to serve as a primary driver for property stocks. However, medium-term fundamental factors such as robust end-user demand and the quality of companies’ balance sheets remain crucial underlying considerations for sustainable growth.
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Summary
Indonesia’s property sector outlook for 2026 is highly promising, primarily driven by the extended 100% government-borne VAT discount (PPN DTP) and anticipated improvements in banking liquidity. Analysts project a 4% pre-sales growth for 2026, mirroring 2024 levels despite an expected 2025 contraction. Consequently, BRI Danareksa maintains an ‘overweight’ recommendation, highlighting attractive valuations and improving sales performance.
The PPN DTP incentive has significantly boosted property sales, contributing 31% in the first half of 2025, up from 5% in 2023. Improved liquidity is also crucial, as government fund placements are expected to lower funding costs and expand housing loan capacity, supporting end-user demand. While strong demand and company balance sheets are key, potential risks include increasing non-performing loans in the lower-segment market.