Affordable apartment market needs boost

Affordable apartment market needs boost

The Jakarta Post, Jakarta

Standing in front of a booth at a property exhibition,
businessman Lucas was speaking with a marketing officer from an
upmarket condominium group about adding a luxury apartment to his
list of property assets.

"This year, I am planning to buy another one," said Lucas,
adding that he had already leased two apartments located
strategically in the heart of Jakarta.

The country's property sector -- which was blamed as one of
the factors that caused the mid-1997 monetary crisis in the
country -- is on the rise again as evidenced by a big
construction push, which started after 1999. And the
capitalization was reported to be 10 times higher in 2003.

Apartments, as part of the property sector, have also been
rising in number due to land efficiency and shift of lifestyle in
the metropolis.

According to research done by the Center for Indonesian
Property Studies (CIPS), there will have been 65,000 new
apartments made available in the 1999 to 2007 period.

By comparison, during the 1980 to 1998 period, there were only
about 25,000 units available.

Unlike a lot of other countries, apartments in Jakarta are
built almost exclusively for the high-end market instead of
middle or working classes. However, it is those latter two that
most in need of affordable housing and efficient living.

Moreover, for the low-cost apartments that are built, most of
the units end up in the hands of property investors and
speculators instead of low-income families, which is one of the
reasons why such property is not an answer to the city's housing
problems.

"We have to consider the skyrocketing land prices in strategic
locations, and that means we need to cater to the wealthier
people to make a profit," claimed Gapura Prima managing editor,
Djohan Fang. "But we cannot detect whether the buyers are end-
users or investors."

The Gapura Prima group is the developer of plush apartments
The Bellagio, The Bellagio Mansion and The Belleza, located in
Kuningan and Permata Hijau, South Jakarta.

But several marketers of apartments at the property expo said
that at least 50 percent of their buyers are not end-users, such
as Lucas who himself lives in a house in South Jakarta.

"For now, there is already enough supply for the high-end
market," said leading property consultant Panangian
Simanungkalit. "The most potential market is actually the middle
class, with prices ranging between Rp 150 million and Rp 200
million."

Unfortunately, he added, there have been few developers
interested in that market segment due to smaller profits.

According to the CIPS research, total housing needs in Jakarta
is about 71,650 units per year. Some 60 percent of it is the
potential for middle-lower market apartments, leaving some 10,000
units of demand per year.

The figure does not include the suburban population on the
outskirts of Greater Jakarta.

"As long as there are no additional market players in this
segment, there will be a constant demand potentially served,"
Panangian said.

He mentioned that tax incentives and cross-subsidies in
housing could be offered to developers in a bid to lure them to
build for the middle and lower class markets, which still have
great potential.

Urban planner and lecturer at the Bandung Institute of
Technology's School of Architecture, Achmad Tardiyana, backed the
idea that property market, especially in the capital, needs
intervention from the government so that it can provide
affordable and efficient housing for all segments of society.

"It is just the developer's choice in targeting upper class
markets due to the already high land prices in the downtown
area," he said. "The government must intervene in the market
through a social housing subsidy."

Achmad explained the contrasting income gaps among people will
force the weak to be marginalized and have less access to reside
in the city's central areas. (003)