APG eyes middle market next year

The Jakarta Post, Jakarta

Responding to already tight competition in the high-end apartment and trade center market, leading property player Agung Podomoro Group (APG) said on Friday it might turn to middle class apartment projects starting next year.

"Next year, the potential market will be the middle class as the population in that segment is expanding," said Veri Y. Setiady, one of the company's executive directors.

Veri, head of one of APG's high-end apartments The Peak, added that the upper market would probably have enough supply by next year, as many of the on-going projects were nearing completion.

"The middle to lower market is still a huge one," he said.

However, his company would not likely enter into the lower residential markets, citing fears of declining purchasing power in the lower-to-middle classes.

Concentrating on middle-upper class property development in the capital, Agung Podomoro Group are working on nine projects, mostly commercial centers and apartments, such as the Jakarta City Center, The Peak, Senayan City, The Pakubuwono Residence and CBD Pluit.

The Peak, a Rp 1 trillion (US$100 million) project, is scheduled to deliver 351 strata-title apartment and 120 serviced apartments by mid 2006.

Currently, the take-up rate in The Peak, sold starting from Rp 1.4 billion (about $140,000) to Rp 8.5 billion, has reached 87 percent.

Up to 2007, according to Jones Lang LaSalle's research, there would be 54 proposed projects supplying some 32,000 new units across the country -- mostly in Jakarta -- of which 68 percent are middle to upper class projects.

Veri explained that the retail center market had also become saturated, with many kiosks ending up in the hands of the same investors. Meanwhile, the leased shopping center market in the capital still had a lot to offer.

"Malls have been part of the urban life and people increasingly need more upper class one-stop entertainment centers," he said, adding that APG's Senayan City project should serve that need.

Senayan City, consisting of apartment units, a hotel and a shopping mall, represents a Rp 1.3 trillion investment, of which the company expects to reach a break-even point in the next six to seven years.

"We will always look for other potential segments when one has become saturated," said Veri.