A recovery in the fairly depressed property sector, which was hit this year by the global financial downturn, will be spearheaded by the office market next year, a survey by a property consultant shows.
Global property consultant Jones Lang LaSalle unveiled its latest survey Wednesday, saying the office market in Jakarta - in particular in the central business district (CBD) - and nationally would rebound at the beginning of next year and lead to a recovery in the overall sector.
"Next year, Indonesia will likely gain more foreign direct investment due to the improving state of the global economy after the crisis, meaning demand for office space will rise significantly," said Jones Lang LaSalle head of research Anton Sitorus.
"Our survey found that there was a historical correlation between foreign direct investment and demand for office space. If the investment increases, the demand will increase as well."
The Asian financial crisis of the late 1990s helped bring down property prices, but a rebound in subsequent years was led by robust demand from the residential and retail segments.
This trend, however, differs from the current crisis, which started to shattered economies worldwide late last year, with the tone of a rebound to be set by rising demand from the office market, Anton said.
"Indonesian's economy has proved its resilience, much better than others elsewhere in the region, and remains largely safe from the impacts of the global crisis and latest terrorist attacks in July," he said.
Still, any improvement is only expected to take place next year, with demand for office space to remain relatively stagnant until the end of the year as businesses adopt a wait-and-see approach, Anton said.
"The commercial office will be the first sector in property to rebound after this crisis, while residential and retail may find it difficult to rebound next year because the supply is still higher than the demand," he said, adding these sectors would fully recover by 2011.
"The global economic downturn has influenced condominium and apartment sales in the country. They need more time to fully recover, and will not rebound as fast as offices."
The survey showed that in the third quarter of this year, net absorption for office space leasing in the CBD surged by around 24,000 square meters from 749,000 square meters, or a 100 percent increase from the second quarter.
However, demand outside the CBD was still stagnant, with only 3,100 square meters of office space occupied, leaving 196,000 square meters vacant.
In the condominium and apartment segment, demand also remained slow, with the survey showing that during the third quarter, only 500 condominiums were sold.
"Until September this year, we noted about 2,000 of the targeted 4,000 condominiums were sold," Anton said.
"That figure was quite small, considering that last year we sold about 5,000 condominiums."
He added about 10,000 condominiums were currently still vacant, including new units.
Apartments have seen a similarly discouraging trend, with only 148 units sold in the third quarter, while 26,000 of them are waiting to be sold.
"Many expatriates have cut down on their expenses due to the crisis, or else have been sent back to their countries altogether," said Jones Lang Lasalle chairwoman Lucy Rumantir.
Others, meanwhile, tended to invest in low-cost government-subsidized apartments, locally known as rusunami, which are far more affordable and gaining in popularity amid the slower economic growth climate.
However, Anton said he believed that next year, demand for condominiums would increase to between 6,000 and 7,000 units. (naf)