West Nusa Tenggara’s Construction Cost Index, a significant factor in assessing the feasibility of new hotels and villa projects, as well as evaluating replacement costs for existing establishments has reached 104.44 in 2022, up slightly from an index of 101.93 in 2021 and up significantly from 91.63 in 2017.
The index is a spatial index used to compare costs of building materials/services for construction in an area compared to a reference city which records average costs and is given an index of 100.
West Nusa Tenggara was 4.44% more expensive than the reference city (Makassar City) in 2022. Its Construction Cost Index ranked 14th out of thirty-four provinces in Indonesia in 2022, compared to 20th place in 2018.
Since it is a spatial index, an increase or decrease in the index value over time does not necessarily indicate an increase or decrease in the cost of construction in a region.
The major hotel/accommodation centers of West Lombok, Central Lombok, North Lombok, and Mataram City recorded Construction Cost Indexes of 104.09, 102.23, 100.31, and 104.09 respectively in 2022.
Several factors may have contributed to this increase: inflation, demand and supply dynamics, and transportation and logistics costs. The combined inflation of Mataram City and Bima City was 6.23% in 2022, up from 2.21% in 2021.
It is challenging to pinpoint the exact causes for the shift in the Construction Cost Index for West Nusa Tenggara over the past 12 months. Will the index continue to grow and will West Nusa Tenggara's rank end up in the Top 10 in the next year or two?
Ross Woods is a seasoned hotel investment advisor with over 30 years of global experience in hotel asset management, portfolio management, and hotel advisory services. Known for his collaborative-based consulting style that integrates a high level of strategic and analytical expertise, his “smarts” are sought by clients to solve complex issues, make better decisions and realize the highest risk-adjusted investment returns. His clients include banks, private investors, REITs and hotel management companies in the United States, South East Asia, Australasia, Europe, and Dubai.
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