Apartments abound, between necessity and prestige<\/p>\n
Burhanuddin Abe, Contributor, Jakarta<\/p>\n
An apartment seems to be the right choice for those living in
\nmajor cities. In the next few years, as traffic congestion in
\nJakarta becomes increasingly intolerable and every second is
\nmoney, for people with money living in an apartment will no
\nlonger be an option, but rather a necessity.<\/p>\n
It is true that apartment ownership today is still largely
\nconfined to investors wishing to lease their apartment units.
\nHowever, leasing apartments or condominiums is not really
\nlucrative given the oversupply in the lease market.<\/p>\n
The reason? Lots of expatriates, many of whom live in
\napartments, have left Indonesia since the economic crisis hit the
\ncountry in 1997.<\/p>\n
Who needs these apartments now? The trend is that apartments,
\nformerly bought as investments, are being used by the buyers
\nthemselves.<\/p>\n
This trend notwithstanding, more and more apartments continue
\nto be put up in Jakarta and all offer their own concepts and
\nattractions. On Jl. Setiabudi, for example, The Peak, an
\napartment compound in twin buildings, each with 55 floors and
\nlocated about 150 meters from Chase Plaza on Jl. Sudirman in
\nCentral Jakarta, is under construction. Interestingly, over 70
\npercents of the units in The Peak have been sold.<\/p>\n
Likewise, the developer of Menara Gading Apartment, located in
\nKelapa Gading, has said that 70 percent of units in three towers
\nthat will be completed in December have been sold. Half of the
\nunits in the other four towers, which will be handed over to the
\nbuyers in March 2006, have also been sold.<\/p>\n
On Jl. Karet in Central Jakarta, you can find the twin
\napartment complexes of Sudirman Park. In Mayestik, Kebayoran
\nBaru, South Jakarta, five apartment towers called The Pakubuwono
\nResidence are under construction.<\/p>\n
For both Sudirman Park and The Pakubuwono Residence,
\ndevelopers say over 50 percents of units have been booked. Other
\napartment complexes in Jakarta that have been well received
\ninclude the Park Royal, Kempinski, Da Vinci, Four Seasons,
\nBellezza and Bellagio.<\/p>\n
According to data from the Indonesian Center for Property
\nStudies (PSPI), between 1999 and 2004 about 35,000 apartment
\nunits were sold. \"Only\" 25,000 apartment units were sold between
\n1976 and 2001. Total capitalization of apartment projects that
\nwere marketed in the five years between 1999 and 2004 reached no
\nless than Rp 28 trillion.<\/p>\n
According to a report in the Jakarta Quarterly Property Market
\nReview, released by PT Procon Indah, in the fourth quarter of
\n2004 a number of developers have intensively sold their apartment
\nprojects on a presale basis. These include Puri Jimbara and Lotus
\nPalace, both located in North Jakarta and supplying a total of
\n125 apartment units, the construction of which will be completed
\nin 2005. What about next year?<\/p>\n
For 2006, new apartment compounds ready to enter the market
\ninclude Mediterania Garden Residence 2 in West Jakarta, which
\nboasts 3,000 units, Hollywood Residence Tower 2 in South Jakarta,
\nwhich will have 311 units, and The Thamrin Nine Residence in
\nCentral Jakarta with 133 units.<\/p>\n
Cibubur, whose population density has been increasing, will
\nhave The Times Square Residence, a 600-unit apartment compound
\nthat will enter the market in 2007. Other apartment projects that
\nhave also been intensively marketed include Graha Cempaka Mas,
\nKondominium Rajawali, Apartemen Laguna and Apartemen Riverside.
\nIt is no exaggeration, therefore, to say that Jakarta fairly
\nteems with apartments.<\/p>\n
Surprisingly, although these apartment units generally cost
\nbetween Rp 2 billion and Rp 30 billion, they sell like hotcakes.
\nIt would be interesting, in this context, to find out just how
\nrich the people are who snap up these luxury apartments.<\/p>\n
A property broker in Jakarta has his own thoughts on the
\nmatter: The higher the price of an apartment, the more sought
\nafter it will be. When buying an apartment, a rich buyer
\nconsiders the prestige related to the apartment, not the price.
\nEven if an apartment is very expensive, he will buy it.<\/p>\n
\"It is obvious that some urban people have shown a strong
\ninterest in staying in an apartment because if you live in an
\napartment, you can avoid traffic congestion and enjoy your life
\ncomfortably with your security and privacy well maintained,\" said
\nthe executive director of PSPI, Panangian Simanungkalit.<\/p>\n
From a developer's point of view, a simple calculation will
\nshow that the break-even point will be reached when 40 percent to
\n50 percent of luxury apartment units are sold. With such alluring
\nprofits, a number of property businesspeople like Ciputra, Agung
\nSedayu, Tan Kian and Alex-Melinda Tedja have become engaged in
\nthe apartment business.<\/p>\n
However, not all developers enjoy a profit from their
\napartment projects. There are several factors to consider,
\naccording to Ahmad Gozali of Auto Cyber Center, especially the
\npoint that the apartment business in Jakarta is close to its
\nsaturation point.<\/p>\n
That does not mean, however, that investing in apartment
\ndevelopments is no longer a good idea. It has to be borne in mind
\nthat apartment compounds are not evenly spread across Jakarta
\nand, also, that traffic congestion in the capital has become
\nincreasingly intolerable.<\/p>\n
\"This simply means that consumers will be segmented on the
\nbasis of location. In this context, location becomes a very
\nimportant consideration to determine whether or not a property
\ninvestment is still prospective,\" he noted.<\/p>\n
Given this, it is clear that some areas, particularly the
\nbuffer zones around Jakarta like Bekasi, Tangerang and Depok, are
\nstill good bets for property investment. The key is the right
\nchoice of location. Using the same analogy, Bali is also an
\nattractive place for property investment, especially if the
\nproperty has its own uniqueness and is run by a bona-fide
\ndeveloper with strong management.<\/p>\n
The First Quarter 2005 review issued by Coldwell Banker
\nCommercial indicates about 85 apartment units in Jakarta were
\nleased during the first quarter of this year, increasing the
\ncumulative leased units to 7,776.<\/p>\n
According to the report, occupancy level during the first
\nquarter of 2005 was stable at 73.25 percent, an increase of less
\nthan 0.5 percent over the level at the end of 2004. Apartments in
\nprime locations posted an 80.67 percent occupancy rate, while
\nthose in non-prime sections settled at 69.71 percent.<\/p>\n
Apartment rentals, the report says, remained relatively stable
\nin the first quarter, ranging from US$2.84 to $27.06 per square
\nmeter monthly. Supply will continue to outstrip demand. The fact
\nthat many condominium units have been unloaded to the releasing
\nmarket will further increase supply.<\/p>",
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