BI rate has potential to be lowered again in the remainder of 2025. Bank Indonesia cut BI rate by 25 bps to 4.75%, there is still room for BI rate cuts in line with Indonesia’s relatively solid macroeconomic conditions, where the inflation rate is in line with BI’s assumptions (1.5%-3.5%) in 2025.

Residential property sales declined by 3.80% YoY and 16.72% QoQ in 2Q25. Residential property sales were pressured by three main factors: rising building material prices (19.97%), licensing issues (15.13%), and mortgage interest rates (15.00%) in 6M25.

Several stimuli from the Government. The government will continue the Value Added Tax (VAT) Incentive program until 2025. Furthermore, the government is also preparing a 2026 VAT incentive ceiling of IDR 3.4 trillion, targeting 40,000 new housing units.

The majority of property company in our coverage booked recurring income growth. Shopping centers became the revenue driver in the recurring income growth of company in our coverage, such as PWON and SMRA, which booked growth of 9.98% YoY and 7.69% YoY.

Mortgage growth is still overshadowed by worsening asset quality. Annually, total mortgages grew 7.81% YoY in 6M25, down from 13.97% YoY in 6M24. Quarterly growth remained in line with the annual growth rate, with total mortgages growing 1.32% QoQ, down from 2.54% QoQ in 3M25.

With the various catalysts above, as well as the performance of each issuer in the property sector, we make our top picks CTRA with a potential fair value of Rp1,320 and PWON with a potential fair value of Rp535.

By PHINTRACO SEKURITAS | Research
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