Apartment sales predicted to rise next two years
JAKARTA (JP): A property executive predicted yesterday that demand for apartments among Indonesia's middle class will boom in the next two years.
Henry Tjokrohartono, the marketing director of Colliers Jardine's residential sales division, said that until 1996, apartment sales would continue at the present level.
"Prices may not decline, but demands may increase as Indonesians become more familiar with living in high-rise buildings, and feel that it has greater advantages," he said.
Ria Fariani, associate director for residential leasing, considered that Indonesians needed a "model", which would show how an Indonesian family could live in a high-rise building, and not necessarily in a conventional ground-level house.
Currently, she said, up to 95 percent of the apartment tenants in Jakarta are expatriates.
According to Colliers Jardine's research division, the cumulative number of apartments in Jakarta has increased 20 fold from 170 apartments in 1987, to 3,963 last year.
The figures are expected to continue rising to 9,276 this year and soar to 39,240 in 1997.
In spite of the growing demand in the property business, Henry said, a number of developers have either postponed or canceled the construction of apartment buildings.
He said that this was mainly caused by financial problems, legal and regulatory matters, and what developers considered was a low demand.
"Often the case is actually not low demand, but that the expectations of developers are too high," he said.
Ria said that apartment sales in Jakarta did not always reflect a corresponding occupancy level because many apartments were purchased as investments.
Contrary to what several business analysts say, she said, oversupply of apartments only occurred in several parts of Jakarta, especially in North Jakarta; whereas demand in other parts of Jakarta, particularly in South Jakarta, was constantly high.
"Oversupply only happens where the target market consists of the middle and lower-middle income classes. There is no oversupply for upper-class apartments," she said.
Townhouse
Aside from the booming apartment business, Ria said the townhouse business was also on the rise.
"Expatriates usually prefer townhouses, especially those which have complete supporting facilities, because they are more like a house," she said.
However, developers are reluctant to build townhouses because, with the same plot of land, it is more profitable to build a high-rise building.
"For a plot of land measuring 4,000 square meters, a developer can build only 20 townhouses but hundreds of apartments," she cited.
Townhouses are currently rented for US$2,500 to $4,000 a month, while rents for apartment ranges between $15 and $26 per square meter per month.
Between 1991 and 1993, strata title apartments were priced between $1,500 and $2,300 per square meter.
Currently, prices are $800 to $1,299 for the lower-middle income category, $1,300 to $1,799 for the upper-middle category, $1,800 to $2,299 for the lower-upper and up to $3,600 per square meter for the upper income category. (pwn)