Propping up Indonesia’s proptech sector

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Hello reader,

For those of you living outside Singapore, you might not be familiar with the build-to-order (BTO) system. Simply put, married couples (or those intending to get married) can apply for a public housing project with the Housing & Development Board (HDB).

I went through this process when I was applying for a house with my partner a couple of years ago. I’ve got a lot of gripes with the BTO system – namely the long waiting times and the balloting aspect – but one thing I never complained about was the administrative process.

I was pleasantly surprised to find that it went rather smoothly, with prompt responses and assistance from HDB employees.

Because of this, I’ve found it difficult to imagine trying to get a house through other avenues, as they might seem too troublesome. This includes proptech platforms, which are now facing a bit of a crunch in Indonesia, as covered in today’s story.

Today we look at:

• How Indonesian proptech firms are dealing with a shrinking middle class
• An Indonesia-focused AI model
• Other newsy highlights such as TSMC getting sued and a US$14 million series B round for a flying taxi startup

Premium summary

A roller-coaster year

Image credit: Timmy Loen

Indonesia’s proptech sector has seen both highs and lows over the past year. While some players conducted layoffs and even left the market altogether, others are seeing financial success. Let’s dive in.

• Big daddy: The government’s upcoming policies could have a strong effect on proptech firms. The new administration under Prabowo Subianto is implementing a tax incentive for home purchases, as well as increase construction of new homes, which could lead to a rise in demand for proptech solutions.
• Comes back to the money: However, affordability will remain a key issue. The median home price to median annual household income ratio in Jakarta stands at around 22x, far from the ideal ratio of 5x. This also comes amid Indonesia’s shrinking middle class, down from 57.3 million people in 2019 to 47.9 million this year.
• Old school: Proptech companies may also have to deal with consumers preferring to conduct the actual home-buying transaction in person rather than using a platform. As such, advertising will remain a crucial revenue source for these firms.

Read more: Indonesia’s rising proptech scene at risk as middle class shrinks

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AI in the archipelago

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