Apartment sales boom<\/p>\n
The Nov. 17 regulation issued by the public housing minister
\non the sales of apartments should be welcomed as an effort to
\nprotect the interests of consumers. We are not sure, though,
\nwhether the ruling, which we think should have been issued last
\nyear, will be effective enough to prevent a bust, as predicted by
\nmany analysts, in the apartment market boom. The fact is that
\nbased on the projects under construction and preparation, the
\nsupply of apartments is estimated to double this year to more
\nthan 5,000 units and to skyrocket to about 35,000 units by 1997.<\/p>\n
Indonesia, like other countries, has a fair share of its own
\nboom-and-bust cycles in the property market. We don't want to be
\nthe purveyor of a grim message, but given the trends within the
\napartment sales boom in Jakarta which started in 1992 as a result
\nof the introduction of the strata-title system, we are afraid
\nthat the seeds of a bust have been sown. Whether the bust will
\noccur or not will depend largely on whether the long-expected
\ngovernment regulation allowing foreigners to buy strata-title
\napartments is issued next year or not.<\/p>\n
We think there are several factors besides the introduction of
\nstrata-title ownership, which have fueled the apartment market
\nboom. The first factor, which is simply sound, is the increasing
\nnumber of middle-income people as a result of the robust growth
\nof the business sector.<\/p>\n
The second factor is the worsening traffic conditions in the
\ncity. Owning a house and land near the central business district
\nis only a dream for most people, but buying a lower-priced house
\nin the suburbs means daily punishment in the clogged traffic.<\/p>\n
The other reasons are the declining mortgage rates and the
\nbank lending spree fueled by the sales boom. Moreover, lending
\nthat is secured by property is relatively safe. The dramatic
\nincrease in licensed domestic and foreign investment projects has
\nfurther fueled investor interest in apartment housing, assuming
\nthat the expatriate population will surely rise along with the
\nreinvigorated pace of investment.<\/p>\n
The problem is that the boom has caused excesses in that many
\nbuyers, either investors or intending occupiers, have put up
\ndeposits for property which exist only in architects' plans. It
\nis indeed amazing to observe how many people have rushed to pay
\ndeposits during the pre-sales launch period without knowing what
\nstrata title really means. Most buyers snapped up apartment units
\nfor prices of US$55,000-$150,000 without bothering to ask for the
\nassistance of a lawyer to read the contract provisions. Many of
\nthem don't even know what the so-called owners' association,
\nwhich is supposed to rule over the order of their living in their
\napartments, means.<\/p>\n
The sales boom naturally has tempted a number of developers to
\ntake advantage of the ignorant buyers and launch pre-sales for
\napartment projects which have not even obtained licenses (in
\ntotal 11 permits are needed) from the government. Worse still,
\nsome developers have joined the boom by building high-rise
\napartments amid residential areas outside the central business
\ndistrict.<\/p>\n
Set against these unhealthy trends and the potential problems,
\nwe think the public housing minister's regulation will help to
\nbring order to apartment housing development and marketing. This
\nis especially so because many of the apartment buildings which
\nhave been pre-sold will not be completed for the next year or
\ntwo. Or at the very least, the ruling will be able to contain any
\ndamage that might be incurred with a sudden market downturn.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/apartment-sales-boom-1447893297",
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