FOCUS ISSUE: Sunday - Feb.26 -- APARTMENT<\/p>\n
Jakarta will have 54 more apartment buildings<\/p>\n
Hendarsyah Tarmizi
\nThe Jakarta Post\/Jakarta<\/p>\n
At least 54 new condominium (strata-titled apartment) projects
\nare under construction in Jakarta, adding more than 3,400 new
\napartment units to the growing condominium market in the capital.<\/p>\n
According to a quarterly research report by Colliers
\nInternational Indonesia, 19 of the new condominium projects will
\nbe completed this year, other 25 projects in 2006 and the
\nremaining 10 projects in 2007.<\/p>\n
The new condominium projects, which will enter the market this
\nyear, will include Airlangga Apartment, Bellagio Mansions and
\nBellagio Residence which are now under construction at Mega
\nKuningan, South Jakarta.<\/p>\n
Other new condominiums scheduled for opening in 2005 include
\nBelleze Permata Hijau in Permata Hijau housing complex in South
\nJakarta, Mediterania Gajahmada Residence on Jl. Gajahmada,
\nCentral Jakarta and Mediterania Palace Residence in Kemayoran,
\nCentral Jakarta.<\/p>\n
The construction of the new strata-titled apartments reflects
\nthe continued recovery of the strata-apartment market, which
\nrecorded an impressive sales performance in 2004.<\/p>\n
In its report Colliers said that strata-titled apartments
\ndominated the apartment market in 2004, accounting for 83.4
\npercent of the total apartment stock in Jakarta.<\/p>\n
The cumulative supply of condominiums during the year reached
\na total of 31,500 units, the highest during the past six years.
\nTwo large apartment blocks, Mediterania Garden Residence I in
\nSlipi, West Jakarta and Laguna Pluit Apartment in Pluit, North
\nJakarta contributed about 4,000 units to the total supply.<\/p>\n
The take-up rate was recorded at 75.4 percent, meaning that
\nabout 2,375 units of the total supply were sold during the year.
\nThis represented an eight-fold increase compared to the number
\nrecorded in 2003.<\/p>\n
A similar impressive performance of the country's condominium
\nmarket was also reported by property consultants Jones Lang
\nLaSalle and Procon in their quarterly property market reviews.<\/p>\n
The property industry, including the apartment sector, had
\nalmost came to a halt between 1998 and 2002 due to the impact of
\nthe worst ever financial crisis to hit Indonesia in late 1997.<\/p>\n
The property sector began to show signs of recovery only in
\nearly 2003 thanks to an improvement in the country's economy. The
\nrecovery in the economy had resulted in a drop in the inflation
\nrate, which in turn enabled Bank Indonesia, the central bank, to
\nlower the interest rate of its promissory notes.<\/p>\n
The interest rate continued to drop in 2004 to a range between
\n5 percent and 6 percent. The low interest rate has apparently
\nresulted in an increase in condominiums sales as many investors,
\nboth individuals and institutions, shifted their investment funds
\nfrom bank deposits to apartment units, which promise a higher
\nreturn.<\/p>\n
Like, Collier, Jones Lang LaSalle and Procon also attributed
\nthe remarkable growth in the condominium market in 2004 to the
\ncontinued improvement of the country's economy and the low
\ninterest rate policy adopted by the central bank.<\/p>\n
The drop in the interest rate for bank deposits made them
\nunattractive for investment, and this has encouraged people to
\nseek more promising investment options.<\/p>\n
To many people, when interest rates are low, buying an
\napartment or other residential property is the best investment
\noption.<\/p>\n
With the current rate of between 5 percent and 6 percent
\noffered by banks, an investor will have the chance to get a
\ncheaper bank loan to purchase an apartment.<\/p>\n
By investing in an apartment unit, one can earn a regular
\nincome from the rental of the apartment, which would be large
\nenough to help pay the monthly installments. And if the investor
\nsells the apartment unit, he or she will also have the
\nopportunity to get a high return thanks to the appreciation of
\nthe price of the property.<\/p>\n
Investing in property carries a relative low risk. Unlike
\nstock prices, the price of property rarely goes down.<\/p>\n
Lucy Rumantir, the national director of Jones Lang LaSalle
\nproperty consultant, said condominiums or strata-titled
\napartments have become one of the most popular investment options
\nfor Indonesian investors.<\/p>\n
\"In fact, most of the condominium buyers bought the property
\nfor investment. Only 20 percent bought the apartment to live in,\"
\nshe said.<\/p>\n
Colliers said that the construction of the new condominiums,
\nwhich will provide 31,463 new strata-titled apartment units, will
\ndouble the existing stock, and potentially result in an over
\nsupply especially in 2006 because about 65 percent of the new
\napartment projects will enter the market in the year.<\/p>\n
The three property consultants share the view that the
\nincrease in the supply would further tighten competition in the
\ncondominium market. But they rule out the possibility of a drop
\nin prices.<\/p>\n
According to Colliers' report, the average asking price for
\nmiddle to upper class strata-titled apartments within the central
\nbusiness district (CBD) area along Jl. Sudirman, Jl. Thamrin and
\nJl. Rasuna Said, Kuningan ranged from Rp 14 million (US$1,500) to
\nRp 24 million per square meter. In the non-CBD area, the price
\nwas somewhat competitive ranging from Rp 6 million to Rp 9
\nmillion per sq meter. However, for several middle-up apartment
\nprojects, the asking price was higher and offered at Rp 10
\nmillion to Rp 15 million per sq meter.<\/p>\n
Procon and Colliers estimate that some developers would
\ncontinue to offer incentives either in the form of price
\ndiscounts or facilities to attract the buyer.<\/p>\n
Colliers said that in anticipation of the tight market, some
\ndevelopers have offered a distinctive living concept to win
\nbuyers. For example, the Peak by Agung Podomoro Group that offers
\nhigh-tech computerized units within its 55-story apartment tower
\nand The City Loft by Duta Anggada Group that brought in the
\nconcept of a dual function of living and working called Small
\nOffice Home Office (SOHO).<\/p>",
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