Demand for apartments and condominiums in the second semester in Jakarta are likely to remain weak despite an improvement in the economy, global property consultant Jones Lang LaSalle said.
"Continuing negative sentiment among foreign investors impeded demand for apartments, while the still-high interest rates triggered a fall in the demand for condominiums," head of research Anton Sitorus said on Wednesday evening in a phone interview, after the launch of the company's report.
Anton said the trend in the second half of the year would largely emulate the one witnessed in the first six months, when the global economic downturn gave rise to a delay in the expansion of many large European- and American-based companies.
Jone Lang LaSalle refers to high-rise residential buildings purposely built for rent and mainly targeting foreigners as apartments. Condominiums, on the other hand, are multi-storey dwellings comprising units for sale, targeting largely locals.
He said there would be no increase in the demand for apartments in the second semester compared to the first semester, which was 300 units. Therefore full-year sales were likely to total 600 units, a 83 percent decline compared to the 1,100 units sold last year.
Sales are expected to increase in 2010 to 1,000 units.
Demand for condominiums is not likely to recover in the second semester, with sales even expected to be weaker than in the first semester.
"The estimated drop in sales in the second half of the year is due largely to the slow pace of economic recovery, with people preferring to wait for interest rates to go down," Anton said.
"Interest rates will stop people from buying condominiums in the second semester as they will probably opt to save money instead."
Sales of condominiums reached 1,500 units in the first semester. In 2008, sales of condominiums in the area stood at well over 6,000 units.
Banks overall are still slow to respond to the central bank's aggressive benchmark rate cut. While the central bank has cut its rate by more than 2 percent since December, banks have lowered their lending interest rates far slower than that.
However, a recovery is within sight next year, Anton said, betting on macroeconomic fundamentals improving, such as economic growth, investment and the interest rate environment.
He said sales of condominiums were likely to reach more than 7,500 units at the end of 2010.
"Better responses from the banking sector with regard to interest rates, improvements in the socio-political environment and a better distribution of wealth will restore confidence in 2010."
Lucy Rumantir, head of Jones Lang LaSalle, said most of the property products sold to the market targeting locals in 2010 would be condominiums.
She also said offices and apartments were expected to attract more demand from foreigners next year as a global economic recovery would affect the investment climate. (nia)