The residential property market, particularly condominiums and apartments, has displayed remarkable growth both in supply and demand as upbeat developers have started to take advantage of the downward trend in lending rates.
The lending rate, which reached just above 18 percent at the beginning of 2006, dropped significantly to between 9 percent and 13 percent by the end of this year's first quarter amid signs of improvement in the country's economic indicators, especially interest rates.
"The cheaper lending rates have enhanced affordability and encouraged further property development," property consultancy Procon Indah's strategic advisory group senior manager, Arief N.Rahardjo, told reporters last week.
He said that with such an encouraging increase in both supply and demand, the country's condominium and apartment market was well on track for another boom.
The property market, including the condominium and apartment sectors, had been the main driving force behind the country's economic growth prior to the outbreak of the financial crisis in the late 1990s. The property sector had been at a standstill for years before showing promising signs of recovery last year.
Based on Procon's latest report, the supply of new condominiums increased 300 percent to 5,024 units in the first quarter of the year, up from 1,253 units in the corresponding period last year. From 656 units in the fourth quarter of 2006, growth in this year's first quarter has been more than sevenfold.
Arief said the sharp increase in condominium supply was due to the completion of new six condominium blocks.
Among the new buildings are the Sudirman Park and Mediterania Boulevard complexes in Central Jakarta, each with a total of 2,000 and 884 units; the Bellezza and the Setiabudi Residence, located in South Jakarta, which contributed 304 units and 300 units respectively, and The Summit in North Jakarta, which added 376 units.
Another block located in Depok, the Margonda Residence, supplied 840 new units. The remaining new supply comes from several newly-renovated condominium sites.
Arief said the new supply will also be boosted by four upcoming projects, all of which have already launched pre-construction unit auctions.
These include the Sahid Metropolitan Residence and the Galeria Glodok in Central Jakarta, which account for 668 units, and the Kuningan Place and The Lavande in South Jakarta with 1,074 units. The four blocks are currently under construction and are targeted for completion by 2009.
As of the end of March, the total supply of condominiums amounted to 50,649 units, up 11 percent from the same period last year. This figure was projected to rise by 30 percent during the next three quarters, Arief said.
According to Procon's figures, the net take-up of condominiums increased by 285 percent to 4,865 units during the first three months of this year, up from 1,265 units during the same period in 2006.
The biggest contributors to the take-up rate were the Sudirman Park, the Mediterania Boulevard and the Margonda Residence, from which more than 96 percent of units were snapped up during the pre-sales.
The Procon report showed that the average occupancy rate of condominiums decreased by 5.5 percent to 65.7 percent, due to the newly-launched blocks, during the first quarter, increasing the overall number of unoccupied units.
The occupancy rate is projected to continue to decrease in line with the completion of several projects throughout the upcoming quarters.
Procon classifies a condominium as a dwelling unit in a multi-level building sold under strata title, whereas an apartment is a dwelling unit that is built for lease.
Similar to that of condominiums, the supply of apartments also rose sharply, by about 340 percent, to 2,696 units during the first three months of 2007, up from 611 units during the same period in 2006.
The rise was attributed to the completion of the Marriott Executive Apartments, which delivered 96 new units, and several other newly-renovated apartments.
As of the end of March, the total supply of apartments reached 26,280 units. It is estimated that this figure will rise by 28 percent by the end of this year.
Procon recorded that the net take-up rate also increased to 2,004 units during the first quarter, up from 1,528 units during the corresponding period last year.
The rise in take-ups has been helped along by increases in the number of domestic lessees, in addition to the high number of foreigners. It is predicted that the number of domestic lessees will continue to rise, particularly in the middle-class apartment market.
The average occupancy rate, the report said, remained unchanged at 74.6 percent, with the total number of unoccupied units hanging at 6,675. (04)