High interest rates hit property projects<\/p>\n
JAKARTA (JP): High interest rates and banks' reluctance to
\nfinance property development have forced developers to either
\ndelay construction of \"strata-title\" apartments or redesign their
\nprojects for hotels and office buildings.<\/p>\n
PT Colliers Jardine Indonesia, a property consulting company,
\nsaid in its latest Jakarta Property Market Review that in the
\nfirst quarter of this year, Bank Indonesia, the central bank,
\ntook pre-emptive steps to restrict bank funding to the property
\nsector and took measures to push interest rates upwards to curb
\ninflation.<\/p>\n
Such conditions resulted in a lack of local funds for property
\ndevelopment. Lending interest rates also increased to about 21
\npercent to 23 percent per annum, thereby affecting demand for
\napartments sold under \"strata-title\" arrangements, the review
\nsaid.<\/p>\n
Under a strata-title arrangement, a buyer is allowed to own an
\napartment, while the land below it is owned collectively.<\/p>\n
The review said that a survey conducted in June indicated a
\ndecline in the occupancy rate of strata-title apartments to 45.7
\npercent from 48.6 percent last December.<\/p>\n
\"Average occupancy is projected to fall to between 20 percent
\nand 30 percent by the year's end if all of the 4,631 units
\nplanned for completion in 1995 actually finish as scheduled,\"
\nColliers Jardine Indonesia's managing director, Peter Collins,
\ncommented last week.<\/p>\n
Given the prospect of current demand levels continuing over
\nthe next 12 months to 18 months, some strata-title projects have
\nbeen redesigned as hotels, service apartments, or office
\nbuildings, he said.<\/p>\n
Examples<\/p>\n
Two examples of the redesigned strata-title apartments are the
\nCasablanca Apartments in South Jakarta, of which one tower has
\nbeen converted into serviced apartments, and the apartment
\ncomponent of the mixed-use Oasis Square in Central Jakarta, which
\nhas been set aside in favor of an office tower, he added.<\/p>\n
Furthermore, the introduction of luxury tax on apartments has
\nalso dampened demand for the more expensive strata-title
\napartments, Collins said.<\/p>\n
\"Our observations of the market indicate that the public is
\nnot fully aware that the tax only applies to apartments greater
\nthan 150 square meters in size,\" he said.<\/p>\n
Collins noted that in contrast to the strata-title apartment
\nmarket, high average occupancy characterizes the leased and
\nserviced apartment market, where occupancy rates were between 90
\npercent and 94 percent in June.<\/p>\n
\"As the economy is spurred on by increased economic growth and
\ndemand in the industrial sector, the number of expatriate
\ntechnicians, consultants and managers coming to Jakarta has also
\nrisen resulting in higher demand for leased and serviced
\napartments over the last six months,\" he said.<\/p>\n
Market observations indicate a high demand for leased
\napartments with rental rates ranging between $18 and $24 per
\nsquare meter.<\/p>\n
\"We expect rentals at leased apartments to stay firm until the
\nend of the year, between $15 and $25 (net of service charge),\"
\nCollins added.<\/p>\n
In the central business district, new exclusive serviced
\napartments such as Ascott and Sahid Palace Executive Apartments
\nare offering rental rates ranging between $31 and $54 per square
\nmeter, he said. (31)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/high-interest-rates-hit-property-projects-1447893297",
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