Office space demand predicted to rise in 2001<\/p>\n
JAKARTA (JP): The demand for office space in the capital may
\nincrease in 2001 if the country's social, political and economic
\nstability returns as expected, leading property consultant PT
\nProcon Indah\/Jones Lang LaSalle has said.<\/p>\n
The increase in inquiries following the smooth general
\nelections in June and the strengthening of the rupiah indicated
\nthat the demand may recover relatively quickly, the company said
\nin its biweekly property market report.<\/p>\n
\"We have therefore revised our absorption forecast from
\nnegative 110,000 square meters to negative 66,000 square meters
\nin 1999, and from negative 42,000 square meters to negative
\n21,000 square meter to positive 21,000 in the year 2000,\" the
\ncompany said, adding that the absorption was expected to reach
\npositive 42,000 by the year 2001.<\/p>\n
The vacancy level would continue to rise until year 2000
\nthough no new development activity was expected to commence until
\nmid-2000, it added.<\/p>\n
The recent increase in inquiries was mainly due to existing
\ncompanies reviewing their requirements and looking to reduce
\noccupancy costs, it said, adding that the active industries
\nincluded securities, accounting, business, law consultants,
\nforeign banks, shipping and trading.<\/p>\n
It said overall physical occupancy has decreased by two
\npercent to 75.7 percent over the quarter.<\/p>\n
Currently, around 696,150 square meters of office space in
\nJakarta's Central Business District (CBD) is vacant as a result
\nof some companies' closures and tenant relocations.<\/p>\n
Jones Lang LaSalle said the current high vacancy level of 24.3
\npercent and the weak new demand levels would prevent rentals from
\nmoving upwards, especially in rupiah terms as majority rentals
\nwere in U.S. dollars with a fixed exchange rate.<\/p>\n
It said that the average effective rupiah rents had declined
\nby 4.5 percent during the second quarter of this year, while the
\nineffective dollar rentals rates increased by 23 percent due to
\nrupiah's appreciation by 29 percent against the greenback during
\nthe same period. The concessionary exchange rate remained at
\nbetween Rp 4,000 and Rp 5,000 per dollar.<\/p>\n
The company also predicted investment activity would increase
\nin line with the government's bank restructuring program, of
\nwhich it has set a target for the Indonesian Bank Restructuring
\nAgency (IBRA) of Rp 17 trillion in asset sales of troubled banks
\nby March 31, 2000.<\/p>\n
Currently, most investors continued to adopt a wait and see
\napproach due to concern over the coming presidential election in
\nNovember and the large difference between asking and offering
\nprices, it said.<\/p>\n
Interest from prospective local investors remained high,
\nfocusing on good quality office buildings in good locations with
\nprices in the region of Rp 100 billion. However, no transactions,
\noccurred in the second quarter of 1999. (cst)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/office-space-demand-predicted-to-rise-in-2001-1447893297",
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