Tutut Handayani
\nContributor
\nJakarta<\/p>\n
Few would have expected that the apartment market would
\nsuddenly accelerate throughout 2002. Marketing of apartments has
\nto a certain degree revived the property business. In fact, the
\napartment market became dormant following the economic crisis in
\n1998 and the May riots in 1998 as expatriates who stayed in
\napartments suddenly returned home.<\/p>\n
About four years ago, the occupancy rate of apartments was
\nless than 20 percent, in fact, much closer to 15 percent. It was
\nvisible to the naked eye how apartment towers were barely
\noccupied. Ironically, this was the situation found in ready-to-
\nstay apartments, some of which had been in operation even before
\nthat eventful year of 1998.<\/p>\n
Lini Djafar, director of research and consulting services of
\nPT Procon Indah, said throughout 2002 there was a rising demand
\nfor apartments as the supply of apartment space continued to rise
\nin all property sub-sectors. This was a clear indication of the
\ndevelopers' restored confidence in the property market in
\ngeneral.<\/p>\n
New properties throughout 2002 came from the completion of
\nmultilevel office compounds both within and outside the Central
\nBusiness District (CBD) in Jakarta. Shopping centers offered as
\ntrade centers with strata title or lease hold of between 20 years
\nand 25 years in Jakarta and its surrounding areas of Bogor,
\nTangerang and Bekasi also added to the new properties available,
\nalong with apartments for rent, apartments offered with strata
\ntitle, town houses and expansion of the existing industrial
\nestates.<\/p>\n
Apartments and retail shopping centers are two sectors that
\nactively revived in 2002. Presales of these projects dominated
\nthe market, given that bank funding for new construction projects
\nwas limited. In the apartment market, the launch of new projects
\nfor the middle-class, upper middle class and upper class market
\nsegments was very active in the second quarter of 2002.
\nNevertheless, the vacancy rate of the apartment market in this
\nquarter remained above 36 percent.<\/p>\n
Another challenge came from foreign apartment developers from
\nSingapore, Malaysia and Australia. They also targeted Indonesian
\nbuyers. Still, some domestic developers were ready to take on the
\nchallenge and adopt an aggressive marketing strategy, advertising
\ntheir products intensively.<\/p>\n
One of the developers seriously returning to the apartment
\nmarket is PT Duta Pertiwi. This company was successful with its
\nInternational Trade Center (ITC) complex in Mangga Dua, West
\nJakarta and later built Ambassador II apartments, which they
\nbegan to market in February 2002. This apartment compound,
\nlocated in Jl. Dr. Satrio in Kuningan, South Jakarta, supplied
\nnew apartment space in post-1998-crisis years. Within the space
\nof one week 225 apartment units were sold out.<\/p>\n
The success of Duta Pertiwi was attributable to their
\nmarketing strategy in requiring buyers to pay the strata title
\nand the lease hold prior to the completion of the apartment
\nconstruction. In this way, they could cover the construction
\nexpenses and could get back their capital quickly. That is why
\nprojects like ITC have sprung up in a number of locations in
\nJakarta. Duta Pertiwi's management envisions that the concept
\nbehind the success of ITC Mangga Dua, ITC Roxy Mas and Mega
\nGrosir ITC Cempaka Mas, a well-known center for wholesale sales
\nof garments, accessories and mobile telephones in Southeast Asia,
\nwill lead to similar hits.<\/p>\n
The revival of the apartment business has eventually led to
\ntighter competition in the property business in general. It is
\nestimated that up to the end of 2004, the total supply of retail
\nspace in Jakarta, Bogor, Tangerang and Bekasi will reach 2.23
\nmillion square meters. If we look closely at some of the trade
\ncenter areas ready for operation, we will easily find a lot of
\nempty space. In fact, these unoccupied and empty-looking units
\nhave been sold out. In this context, Duta Pertiwi should be
\npraised for their courage to speculate.<\/p>\n
In the apartment business many developers have applied the
\nstrata title marketing concept, while the units offered are still
\nin the drawing stage. Using this marketing mode, much to the
\nadvantage of developers, most units of the apartment compound are
\nselling like hotcakes. This is confirmed by about 80 percent of
\ndevelopers that claim there is a run on their products. In fact,
\nyou can hardly see the apartments, in physical form, that is, as
\nconstruction is still at a very early stage.<\/p>\n
Understandably, in this \"pay first, deliver later\" selling
\nmode, during the launch of their projects, developers offer
\ndiscounts of between 20 percent and 30 percent off the selling
\nprice per square meter if a buyer pays cash. They also place
\ngrand and dramatic ads in various media, mentioning the names of
\nfamous property brokerage companies and leading property
\nmanagement service companies. However more cautious buyers
\nscrutinize the products or conduct a careful physical inspection
\nand ask around prior to making any deals.<\/p>\n
In a housing expo held by the Indonesian Association of Real
\nEstate developers (REI) at the Jakarta Convention Center (JHCC)
\nin mid June 2003, the first question that visitors asked was the
\nidentity of the developer.<\/p>\n
If they heard a new name, they would do some background checks
\non the developer to find out whether it belonged to a major
\nproperty company such as the Ciputra Group, Lippo Karawaci, Duta
\nPertiwi or Agung Podomoro Group. Clearly, these would-be buyers
\nwere very critical and could not be lured only by sweet promises.<\/p>\n
Yudia Shinowitri, a social worker, said one of the yardsticks
\nto find out whether a developer was bona fide or not was that a
\nwell-established developer would allow would-be buyers to visit
\ntheir projects and see with their own eyes the actual progress of
\nthe construction.<\/p>\n
Irwan Nurhakim, a young executive working for a foreign oil
\ncompany, agreed, saying that developers were actually selling
\n\"trust\". \"Developers need to have the full confidence of
\nprospective buyers as they sell only the concept and the
\ndrawings. If they are not committed to what they have promised,
\nthey will never get any real buyers.\"<\/p>\n
What Nurhakim said sounds quite reasonable. If there is a
\ngreat demand for apartments, then those with strata title -- the
\nconstruction of which was completed long ago -- such as Taman
\nAnggrek and Taman Rasuna apartments, should have been completely
\nsold out months back. In reality, Taman Anggrek apartment
\ncompound still has 700 unsold units. The same is true of Taman
\nRasuna. Many other apartment compounds like Tropic, Pangeran
\nJayakarta and so forth are in the same boat.<\/p>\n
Rudolf R. Mangowal, marketing manager of Bellagio Residence,
\nhas warned that there will be fiercer competition between new and
\nold apartment complexes. Still, buying an apartment unit will
\nremain more attractive than buying stocks or depositing your
\nmoney in a bank. A unit costing US$70,000 will give a profit of
\nsome US$15,000 a year if it is leased out.<\/p>\n
Meanwhile, Tony Eddy, director of Century 21 Casablanca, said
\nduring the launch of 87 units of Setiabudi apartments owned by PT
\nJakarta Setiabudi International Tbk in March 2003, estimated that
\nan investor would gain a yield of some 10 percent from the lease
\nrate of a ready-to-occupy apartment.<\/p>\n
Market-wise, he added, most buyers were those \"confused\" with
\nhow to invest their money. They do not want to invest in the
\nstock market or deposit their money in the bank because the
\nreturns are minute. That is why they turn to the property
\nbusiness. These are the type targeted by property agents.<\/p>\n
It seems that developers must be careful before concluding
\nthat the apartment market has experienced a revival. There are
\nmany questions about the seeming boom in the apartment market.
\nMaheda Dwinarendra, associate director of PT Koll Ipac-the Real
\nEstate Service Company, suggested that developers, despite their
\nmarketing success, have always to be watchful of any possible
\nchanges. They must have deeper insight into the consumers.<\/p>\n
In other words, now is not the time to make sweet promises
\nthrough attractive brochures and huge banners. They should not
\npromise short-lived profits to would-be buyers. Critical buyers
\nwill buy what they see as real facts, not merely a promise in
\nprint.<\/p>",
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