Indonesia leads middle-class growth in Asia

Photo credit:   Yohanes Budiyanto

Indonesia is leading middle-class growth in Asia, as people flock to Jakarta.

The middle-class has become an increasingly important part of the global property market, as a growing number of people find themselves with disposable income to invest in real estate. China, Russia and other countries have seen their middle-class population grow, in particular, but in Asia, Indonesia is leading the increase.

The number of people in the middle-income bracket is expected to more than double in the next five years, with cities such as Jakarta already experiencing a surge in middle class residents. The country’s growing middle class is flocking into the capital city, increasing need for residential and commercial properties, and demanding technological products, reliable Internet connectivity and online services.

This shift has a knock-on effect in various industries: as consumer demand grows, more jobs will be created in the emerging markets to meet the needs of the growing populations. The economic improvements as a result of the emerging middle class will further drive developments in education and healthcare, leading to enhanced quality of life and growth prospects for these countries.

The middle classes in the emerging markets are much younger than their developed counterparts. Indeed, earlier this year, Lamudi – an online real estate portal focused exclusively in the emerging markets – revealed that in the first five months of 2015, 60.3 percent of house-hunters in Pakistan were between the ages of 18 and 34; in Nigeria, the same age group made up 49.4 percent of house-hunters using the platform. 

These younger age groups are more focused on using technology, influencing spending habits by looking online to buy quality products and services. This young, affluent demographic is expected to drive the growth of the real estate sector in the emerging markets.

According to Pew Research Center, 63 million people entered Latin America’s middle class over the last decade; it is estimated that Nigeria’s middle class grew by 600 percent between 2000 and 2014.

By 2030, EY expects two thirds of the global middle class to live in the Asia-Pacific region. As this portion of the population grows in size, it is becoming increasingly affluent, in turn creating a new group of consumers with higher purchasing power than ever before. This rapid expansion will not only create economic change, but drive demand for consumer goods, such as mobile devices, luxury brands, cars, and high-quality real estate.

Paul Philipp Hermann, co-founder and managing director of Lamudi, comments: “The shifting demographics within the emerging markets are very important, particularly when you look at the growing middle class in regions like Asia.

“As people become more affluent, they also become better educated, more career-minded and therefore they have more purchasing power as they enter the property market. They buy houses earlier and more often, leading to increasing turnover and search volume. The importance of this trend cannot be underestimated, as it continues to support strong growth in the country’s property market.”