Apartment market expected to fully recover in 2001

JAKARTA (JP): The demand for apartment rentals in the capital may return to a pre-crisis level in 2001 if the country's social, political and economic situation stabilizes, a leading property consultant at PT Procon Indah/Jones Lang LaSalle said on Thursday.

The consultant's associate director for residential leasing, Ina Zamar, said an increase in the number of inquiries for apartment rentals, which started following the unexpected peacefully general election in June, was promising.

But she said that the current demand was still far from the pre-crisis level.

She said that assuming better conditions for business expansion occurred in mid-2000, demand was expected to return to the pre-crisis level from 2001.

The company also predicted increased vacancy rates, to 44 percent by the end of this year, which would further increase to 46 percent next year.

She said inquiries were in the main received from foreign banks, airlines, consultants, embassies and oil and mining companies.

"We usually have from three to 10 inquiries every day, mostly from Japanese and Korean expatriates who have remained active in seeking accommodation, particularly in the rental apartment market."

She said leasing transactions during the second quarter of the year were dominated by tenants moving from townhouses to apartments located in the central business district, which was more accessible to their workplaces, embassies and the airport.

"The main reason for expatriate tenants' relocation was to find a relatively more secure place to live in," she said, citing heavy demand for apartments in Menteng, Central Jakarta and Kuningan and Kebayoran in South Jakarta.

Ina said in anticipation of problems during the general election, local tenants had had a high take-up of rental apartments in the secondary area, apartments located outside the so called central business districts areas.

She said that as a result of this trend, occupancy levels in the central business district area and secondary locations increased by 0.9 percent, bringing the total rate to respectively 52.6 percent and 53 percent.

She said that in the primary residential area outside the business area, occupancy levels increased by 0.6 percent to 81 percent, while townhouse occupancy levels dropped by 4.5 percent to 63 percent, with 71 apartments vacated in this third quarter.

Mina Ondang, head of research at PT Procon Indah/Jones Lang Lasalle, said that due to the completion of the Sailendra condominium in Mega Kuningan, South Jakarta, the total number of rental apartments increased by 26 in this third quarter.

She said that as of the end of June, the company's accommodation options numbered 14,010, of which 41.3 percent comprised purpose-built rental apartments, serviced apartments and rental townhouses, while the remainder were individual strata-title apartments for lease.

She said construction activities were sluggish, reducing the total number of apartments expected to enter the rental apartment market in 2001 to 914 apartments, compared to an initial estimation of 1,189 apartments last quarter.

Mina said about 76 percent of future accommodation options would come from individual condominiums, with the remainder derived from two serviced apartment projects, which are nearing completion.

She said an additional 670 apartments of purpose-built rental apartments and 240 serviced apartment projects were under active construction.

She said the company's research found that as of June there were 7,798 expatriate employees registered -- a figure which excluded family members. The vacancy rate stood at 42.1 percent and was estimated to remain stable over this quarter.

Mina said a negative take-up of 108 and 15 apartments respectively occurred in the first and second quarter this year, in line with a fewer number of expatriates leaving the country during those periods.

According to the Ministry of Manpower, the total number of registered expatriate employees declined by 8.3 percent and 2.3 percent in the first and second quarter respectively.

She said the small negative take-up in the second quarter was influenced by the large demand from local tenants who decided to temporarily stay in rental apartments.

Ina Zamar said that rentals in primary locations, including the business area, showed a decrease by 11.3 percent to US$14 per square meter per month.

Rentals in the secondary area, which are mainly dominated in rupiah, increased slightly by 5 percent, equivalent to $10.70 per square meter per month, Ina said, adding that some apartments located in North, West and East Jakarta accepted lower rentals.

"Some of apartments even give away discounts of up to 60 percent," she said.

Ina said that due to an increased demand for short-term rentals, landlords were currently accepting more flexible lease terms, which also boosted a tenant's bargaining position.

"Some landlords are willing to provide additional electrical appliances and crockery without additional charges," she said. (01)