Property owners fall to tenant demands<\/p>\n
JAKARTA (JP): Indonesia's currency crisis has prompted owners
\nof office buildings to comply with tenants' request to reduce
\ntheir foreign exchange exposure, property consultant Procon Indah
\nsaid yesterday.<\/p>\n
Procon Indah, in collaboration with Jones Lang Wootton,
\nreported that property owners had agreed to take some measures to
\nreduce or eliminate tenants' foreign exchange risks.<\/p>\n
"In the first two business weeks of 1998, there was a major
\nchange in people's thinking. Owners realized that to retain or
\nattract tenants they would have to consider their requests,"
\nSusan Pranata, a director at Procon Indah, said.<\/p>\n
The measures include reducing the rent in U.S. dollars,
\npegging the rupiah exchange rate, and charging rent and
\nmaintenance fees in the local currency.<\/p>\n
Premium buildings over the first quarter of 1998 reduced their
\nrent charges by up to 44 percent from US$13.40 per square
\nmeter\/month to $7.50 sq.m\/month, Procon said.<\/p>\n
The company also said rental inquiries for such property had
\ndropped considerably over the past three months and a number of
\ntenants were canceling or downsizing their commitments.<\/p>\n
Only the multinational market was showing an interest in
\npremium space, Procon said, adding that local inquiries had all
\nbut ceased as businesses consolidated their organizations and
\nattempted to reduce their dollar rental exposure.<\/p>\n
"Over the last two months, a number of owners have openly
\nstated their willingness to peg the rupiah conversion rate,"
\nProcon said, adding that the rates vary on a case by case basis.<\/p>\n
It pointed out that the non-strata title exchange rates were
\nbetween Rp 3,500 and Rp 6,000, as opposed to strata title
\nprojects where they were averaging Rp 3,000 to Rp 4,000.<\/p>\n
The rupiah has been on a roller coaster since August, plunging
\nto its lowest level of Rp 17,000 to the dollar in January
\ncompared to Rp 2,450 in July. The currency, however, is now
\ntrading at about Rp 8,500.<\/p>\n
Procon continued to say that selected owners had given into
\npressure from tenants and had began to openly market their
\nremaining space in either rupiah based rental, rupiah maintenance
\ncharges, or both.<\/p>\n
"Buildings that can not offer such flexibility are at a great
\ndisadvantage, and tenants are immediately discounting properties
\nthat don't offer such flexibility," it said. (08)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/property-owners-fall-to-tenant-demands-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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