Demand for luxury condos to soar<\/p>\n
Sari P. Setiogi, The Jakarta Post, Jakarta<\/p>\n
The supplies of luxury condominiums for the middle and upper-
\nend of the market in Jakarta will remain flat this year, while
\ndemand for them is likely to soar.<\/p>\n
Willyanto J. Halim, a property analyst with consulting firm PT
\nProcon Indah, told reporters that supply would remain stagnant at
\n1999's level of 1,946 units due to the absence of new
\ndevelopments.<\/p>\n
Luxury condominiums account for only about 8 percent of the
\n25,633 condominium units currently available in the city. Most
\nluxury condominiums are located in the heart of the city with
\neasy to access to places of work and other parts of the city.<\/p>\n
Willyanto said that demand was likely to surge significantly,
\nso that more than 80 percent of the supply would be sold out by
\nthe end of this year, as compared to 72 percent at the end of
\nlast year.<\/p>\n
He explained that this year's higher demand would be caused by
\nan improvement in market confidence and the presence of pent-up
\ndemand, a side effect of the economic crisis that began in mid-
\n1997.<\/p>\n
The crisis discouraged potential consumers from buying luxury
\ncondominiums, each of which costs US$1,200 or more per square
\nmeter, while the rupiah's value has decreased from Rp 2,400 per
\nU.S. dollar in the middle of 1997 to about Rp 9,000 at present.<\/p>\n
Over the last few years, the growth in demand for condominiums
\nwas also slowed by the imposition of a 20 percent luxury tax on
\nsales.<\/p>\n
\"There is a lot of cash in the city and most Indonesians now
\nprefer to put their money in property as an alternative
\ninvestment. Also, better education means that they place more
\nvalue on the money they pay, and upper segment condominiums will
\nbe their choice,\" Procon Indah's chief executive officer David
\nCheadle told The Jakarta Post.<\/p>\n
Willyanto said the strong demand for luxury condominiums
\nactually started late last year when developers were able to sell
\nabout 20 percent of the condominiums that they planned to
\nconstruct this year and next year.<\/p>\n
\"The construction of most of the planned condominiums will be
\ncompleted in 2005,\" he said.<\/p>\n
The construction of the 55-unit Airlangga Residences
\ncondominium building in Kuningan, South Jakarta, he said, would
\nbe completed in 2004, while the 68-unit SCBD Suites, the 124-unit
\nPinnacle on Sudirman, South Jakarta, and the 180-unit Bellagio
\nMansion in Kuningan would be completed in 2005.<\/p>\n
He said there should actually be one more project, the Thamrin
\nExchange Square with 184 units in Central Jakarta, but its
\nconstruction was postponed due to an administrative problem
\nrelated to the land.<\/p>\n
Willyanto also said that the demand for luxury condominiums
\nwould be even higher this year if luxury sales tax were to be
\nabolished.<\/p>\n
However, developers tried to help buyers avoid paying the
\nluxury sales tax by offering their condominiums under long-term
\nlease (leasehold) agreements, under which buyers could occupy
\ntheir condominiums for the same length as the 35-year term of a
\nstrata title.<\/p>\n
Besides luxury sales tax, condominium sales are also subject
\nto 10 percent value added tax (VAT) and 5 percent charge for land
\nand building acquisition.<\/p>",
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"sponsor": "Okusi Associates",
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