In a rare bit of good news related to the global financial crisis, the current economic slump may provide opportunities for companies to snap up â€ścheapâ€ť office space now on offer by property developers.
With demand expected to slow this year, competition among developers is heating up as they offer bigger incentives and more flexible leases.
Property consultants said on Wednesday that now may be a good time to buy or lease higher-end properties like office space.
â€śWe think it would be a good time for firms to lock into a long-term deal, as a slowdown in office space demand is putting downward pressure on rental price growth,â€ť said Anton Sitorus of
PT Jones Lang LaSalle.
Office base rental rates, currently at around $10 per square meter, have risen steadily from $7 in 2005. However, growth has slowed during the past year, rising from only $9 per square meter at the end of 2007.
Anton said Jakartaâ€™s property markets, including office space, were near the bottom of their price cycles, creating good investment opportunities.
‘A slowdown in office space demand is putting pressure on price growthâ€™
head of research at
PT Jones Lang LaSalle
The capitalâ€™s office space market enjoyed healthy demand last year, driven primarily by corporate expansions and relocations of both local and multinational companies in various sectors.
Growth slowed in the last quarter of 2008 as financing from banks dried up, which led to declining demand due to rising rental rates, according to a recent survey by Bank Indonesia.
Ferry Salanto of PT Colliers International said Jakarta prices had proved relatively stable compared with neighboring capitals.
â€śThus far, we have not registered a significant drop in Jakarta office rental rates, but we project a slowdown in construction activity this year, particularly from recently completed projects,â€ť he said.
Ferry said some office projects had been forced to push back their completion timetables due to the downturn.
â€śBut due to the large amount of construction activity being rescheduled, the office market will stay relatively healthy because it will help control supply,â€ť he said.
Jakartaâ€™s office market grew by around 390,000 square meters in 2008, bringing the total at yearâ€™s end to about 5 million square meters.
Anton said about 1 million square meters could open up in Jakarta in the next three years.
â€śAround 65 percent of this future supply will be in the [central business district],â€ť he said.
He added, however, that office space demand from oil and gas, mining and telecommunication firms would likely remain moderate in the coming years.
Analysts also said that if this yearâ€™s legislative and presidential elections go smoothly, interest in real estate could improve.