Apartment owners now prefer leasing: Agent
JAKARTA (JP): Property consultant Colliers Jardine sees a shift in trends in the Jakarta residential apartment market as more and more developers rent their units out instead of selling them in order to offset the decline in sales in the second quarter of this year.
Colliers Jardine said in a statement on Friday that as of the second quarter of 2001, the number of strata-titled residential apartments in the city totaled 23,975 units, of which 24 percent were left unsold.
The low level of sales was attributed to a lack of confidence in Jakarta's property market caused by political and economic instabilities in the country, as well as the increase in value- added tax on luxury goods, including apartments of over 150 square meters, it said.
It, however, did not provide sales figures for the second quarter period.
"There are no signs of an immediate turnaround yet," Colliers Jardine's managing director for Indonesia Richard Rossiter said in the statement.
Oversupply was likely to continue as 460 units will come on the market over the 12-month period ahead, he said, explaining that this will cause an increase of 1.9 percent in the overall stock level.
Due to the unsatisfactory sales, a large proportion of residential stock has been offered on the rental market, competing with 2,714 serviced apartment units and 3,493 leased apartment units
High profile strata-titled projects such as Puri Casablanca, Casablanca Apartments, Menara Batavia Apartments and Four Season Residences are renting their units out, the company said.
The shift was further highlighted with property developers offering short-term leases of three to six months, whereas during the pre-crisis years a three-year lease term was the norm.
Furthermore, tenants no longer needed to pay rent in advance for periods of two to three years, but for shorter periods, it said.
"Generally, rentals and capital values in the residential market will remain depressed due to deepening political and economic instabilities," Rossiter said. (tnt)