Demand for all types of property in Jakarta grew during the third quarter due to increasing consumer confidence about the domestic and global economies and lower interest rates, property consultancy PT Procon Indah said on Wednesday.
Procon managing director Hendra Hartono said demand for office space, retail, condominium and residential property is expected to rise further next year in tandem with accelerating domestic growth.
“We believe that the improvement in the economy and faster domestic growth next year will spark more demand for property. We can tell that companies that previously held off their decisions to rent more office space have gained agreement from their principals to expand,” Hendra said.
“The number of pre-sales of condominiums had also increased during the third quarter, indicating people are taking advantage of lower interest rates,” he added.
Procon data showed that demand for office space had increased by 1.6 percent to 3.447 million square meters in the three months through September, compared to the previous quarter.
The retail market saw a similar increase, with demand rising 3.1 percent to 2.64 million square meters during the quarter.
Pre-sales of condominium projects were rose 31 percent to 2,420 units. The residential market also showed signs of improvement, with the average monthly uptake increasing to 850 units in the quarter from 480 last quarter.
Despite the expected increase in demand, buyers should not be worried that prices would also increase, said Utami Prastiana, Procon’s head of research. There was a huge supply of property already available that had not been absorbed due to the economic slowdown and there were also new projects to be completed, she said. “Given the conditions, owners have to offer attractive packages to attract customers,” she said.
Teguh Satria, chairman of the Indonesia Real Estate Developers Association (REI), said he was similarly optimistic about demand. The office market was likely to improve sharply next year because foreign companies were expanding their operations in Indonesia given strong domestic demand, he said.
“The demand for office space would exceed supply since banks were reluctant to finance office building projects,” he said.
Procon also released its “Office Occupier’s Preference Survey 2009” report on Wednesday. The survey showed business tenants were becoming more concerned about environmental issues and believed “green buildings” would be good for the health of their employees and increase their productivity, Hendra said. “But despite the interest, tenants do not want to pay higher rent for green buildings,” he said.
Jakarta Governor Fauzi Bowo recently said the city government is planning to apply green building standards soon.