Property industry shows improvement<\/p>\n
JAKARTA (JP) The property industry, one of the sectors hardest
\nhit by the economic crisis, showed improvement in the third
\nquarter of this year on rising occupancy rates, according the
\nlatest survey issued by property consultant PT
\nPricewaterhouseCoopers property group.<\/p>\n
The occupancy rates of retail outlets, office space and
\napartments all showed an increase but the company said that the
\ntrend had yet to indicate a recovery in the industry.<\/p>\n
\"Although there were signs of improvement especially since
\n1998, unless we see some new construction activity we cannot say
\nthat a sustained recovery is underway,\" PwC property group
\ndirector Katherine E. Harberd said on Wednesday in a media
\nconference.<\/p>\n
She said that new construction activity would demonstrate
\nlong-term optimism and confidence in the industry.<\/p>\n
Occupancy rates of shopping centers in Jakarta reached 97
\npercent in the third quarter of 2000, a significant increase
\ncompared to only 87 percent in the same period in 1998, she said.<\/p>\n
Occupancy was predicted to increase to 99 percent next year
\nbecause of limited supply, she said.<\/p>\n
In the Bogor-Tangerang-Bekasi (Botabek) area, the rate of
\noccupancy remained stable at more than 90 percent due to limited
\nsupply and high demand, said Sari Wulaningsih, the property
\ngroup's senior associate.<\/p>\n
Harberd said that retail demand would eventually lead the
\nproperty sector recovery as consumer confidence and spending
\nincreases.<\/p>\n
There is increasing interest by foreign retailers who may
\nfollow the lead of foreign supermarket chains that started to
\nenter the market three years ago, she said.<\/p>\n
At the end of the third quarter of 2000 there were
\napproximately 1.2 million square meters of available shopping
\ncenter space, including about 140,000 square meters sold under
\nstrata title.<\/p>\n
\"Grade A and B stock accounts for 60 percent of the total,\"
\nshe said.<\/p>\n
Grade A refers to high quality shopping centers located in the
\ncentral business district (CBD) measuring more than 40,000 square
\nmeters, while grade B refers to medium quality shopping centers
\nmeasuring less than 40,000 square meters in the CBD area, or more
\nthan 40,000 square meters outside the CBD area.<\/p>\n
Market take up for the year 2000 is projected to be at least
\n50,000 square meters compared to 65,000 square meters recorded in
\n1999, she estimated.<\/p>\n
In the period between July and September, grade A and B
\nshopping centers rented at an average of $10.90 per square meter
\na month, Sari said, adding that service charge varies between $7
\nand $9 per square meter a month.<\/p>\n
\"Most shopping centers increased their service charge by $1
\nper square meter a month in June because of the government's
\nelectricity rate hike,\" she said.<\/p>\n
Sari said that rents were likely to increase into 2001 as most
\ngrade A and B five-year leases are subject to renewal or rent
\nreview and increasing demand would pressure rents upward.<\/p>\n
Office space<\/p>\n
Average Jakarta occupancy for office space was 76 percent in
\nthe third quarter of 2000, up 4 percent from the lowest point in
\nthe fourth quarter of 1999, Sari said.<\/p>\n
Whilst new supply is minimal, occupancy will tend to increase
\nand could reach 84 percent in the CBD by 2001, she said.<\/p>\n
Sari said that a positive take up of at least 120,000 square
\nmeters was expected this year compared to a negative take up of
\nminus 300,000 in 1998 and minus 120,000 last year.<\/p>\n
At the end of the third quarter of 2000 there was about 4
\nmillion square meters of office space in Jakarta, consisting of
\n92 percent for lease and the remainder strata title sale, Sari
\nsaid, adding that about three quarters was in the CBD.<\/p>\n
\"Future supply will come from Wisma Mulia, the remainder of
\nJamsostek, and Wisma Asiatic which started construction this
\nyear,\" she said, adding that supply was unlikely to exceed
\n250,000 square meters over the next three years.<\/p>\n
\"Some suspended projects may recommence construction next year
\nor in 2002, which will bring new supply on stream from 2004,\"
\nSari said.<\/p>\n
Apartments<\/p>\n
Diana Herutami, senior associate of PwC's property group, said
\nthat there were no new apartments coming on stream between July
\nand September, and total stock stood at 27,400 units.<\/p>\n
\"About 9,800 units are in the CBD and about 17,600 units in
\nsecondary areas,\" she said.<\/p>\n
Leased and serviced apartments totaled 5,000 units, and strata
\ntitle totaled 22,400 units, Diana said.<\/p>\n
At least 500 units from projects in the secondary area are
\nconfirmed to enter the market in the next quarter, she said,
\nadding that 308 units will come from Permata Eksekutif Apartments
\nand 214 units from Taman Gloria Apartments.<\/p>\n
Between 2001 and 2002 about 1,750 new units will be operated,
\nwhich include another two towers of Four Seasons Apartments and
\nadditional units of Pavilion Park in the CBD area.<\/p>\n
Diana said that average base rents for CBD upper grade leased
\nand serviced apartments were reported at $13.40 and $15.30 per
\nsquare meters a month in the third quarter of 2000, while middle
\ngrade reached $7.10 and $10.50 per square meters a month.<\/p>\n
\"Tight competition from individual strata owners who lease
\ntheir units and forthcoming new supplies will put further
\npressure on rates for leased and serviced apartments,\" Diana
\nsaid.<\/p>\n
The market for leased and serviced apartments is still
\npredominantly expatriate, while strata apartments are dominated
\nby local purchasers, she said.<\/p>\n
CBD leased and serviced apartments occupancy was recorded at
\n79 percent and 68 percent respectively, which is a 15 percent
\nincrease from the lowest point in the fourth quarter of 1998,
\nDiana said.<\/p>\n
In the secondary areas, occupancy rates were recorded at 67
\npercent for leased apartments and 65 percent for serviced
\napartments, an increase of 7 percent from the lowest point in the
\nsecond quarter of 1999, she said.<\/p>\n
In the strata market, 80 percent of supply in the CBD was
\nconfirmed sold, while higher sales were recorded in the secondary
\narea of up to 85 percent.<\/p>\n
Occupancy of strata units, backed by ownership certificate in
\nthe third quarter of 2000 is at 59 percent in the CBD and 68
\npercent in secondary areas, Diana said.<\/p>\n
Diana said that since leasing activities are mostly confirmed
\nto the expatriate market, continued political uncertainty, poor
\nbusiness environment and security concerns might keep leasing
\nquiet. (tnt)<\/p>",
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