Adrian edited this between 7:30pm and 8pm on May 3

Adrian edited this between 7:30pm and 8pm on May 3
FOR FOCUS ISSUE May 2

;JP;HEN;
ANPAc..r..
Housing-sales-trend

Sales of new houses on an upward trend

I. Christianto
Contributor
Jakarta

After experiencing an economic downturn over the past three
years, sales of new houses are showing an upward trend thanks to
the expansion of housing loans.

The Center for the Study of Indonesian Property (PSPI)
estimates annual sales of new houses will increase by 11 percent
to 110,400 units this year from 99,500 units last year.

Sales of new houses, which suffered a 26 percent drop last
year, have continued to increase in recent months and the
promising trend is likely to continue with the increase in
housing credits provided by banks.

The center estimates housing sales in the greater Jakarta area
will contribute between 20 percent and 35 percent to the total
number of sales across the nation. In 2001, total housing sales
in the greater Jakarta area reached 35,800 units or 36 percent of
the national figure.

"The increase this year is due to an increase in housing
credits provided by both state owned and private banks, and also
a decline in interest rates," the center said.

The total transaction value of house sales is forecasted to
reach Rp 5.5 trillion this year, surging by 36 percent compared
to Rp 3.49 trillion in 2001. The increase is because of the
growth in middle-of-the-range housing projects.

Total housing credits are estimated to increase by 15.6
percent to Rp 38.48 trillion this year thanks to an improvement
in the performance of local banks.

In the secondary house sector (houses that are not newly
built), three leading brokers in Indonesia; Era Realty, Ray White
and Century21 play a major role in the property industry, said
PSPI.

"There is always a demand for secondary houses. When the
demand for primary houses drop, the demand for secondary houses
increases. In recent years, this is due to the increase in
prices, while at the same time purchasing power has decreased."

According to PSPI, the total transaction value of the three
brokers reached Rp 3.5 trillion in 2000 and Rp 4.5 trillion in
2001, slightly lower than the initial target of Rp 6.8 trillion.
This year, PSPI predicted the three brokers would handle a total
of Rp 5.2 trillion in transactions of secondary houses.

In addition to middle and upper houses, low-cost housing
projects have also reemerged in the first quarter this year. The
demand for low-cost housing remains high, but many developers are
still reluctant to begin their projects, as the price is now much
lower compared to the construction cost, according to PSPI.

PSPI reiterated the government should quit issuing new
licenses to any developers planning new projects in the capital,
West Java and Banten, following the recent floods, which hit the
greater Jakarta area earlier this year.

"In the meantime, there has also been a policy to stop
extending new licenses until 2010 for a new location for any
developers as there is now an oversupply of housing plots and
many have become idle."

House prices in the capital's real estate projects are
normally higher than those in surrounding areas such as Bogor,
Tagerang and Bekasi. This is due to the expensive cost of land in
Jakarta. However, as the development cost is about the same, the
differences among upper, middle or lower-cost housing relate to
the characteristic of the projects and the taste of consumers.

The price of a house in the upper market in the Jakarta
greater area ranges from between Rp 101 million to over Rp 500
million, the middle-of-the-range market from Rp 101 million to Rp
500 million, and the lower cost market from below Rp 50 million
to Rp 100 million.

Anton said the floods that hit the capital earlier this year
had affected real estate projects, but it had not slowed their
operations.

"House prices in flood-prone areas will likely drop between
five percent and 10 percent, but prices in Kelapa Gading in North
Jakarta won't change as it is a favorite area. In the meantime,
prices will increase from between 10 percent and 15 percent until
2004," he said.

Anton Sitorus of Research and Consultancy division of property
consultant Colliers International (Indonesia) agreed with the
center's estimate.

He said recovery in the housing sector started last year after
a few major developers completed their debt restructuring plans
with the Indonesian Bank Restructuring Agency (IBRA).

"Though the debt settlements have not been finalized, there
have been indications of solutions, therefore the developers have
restarted their projects. We have witnessed various promotions of
real estate projects in the greater Jakarta area since the middle
of last year," he said.

According to PSPI, out of the total property sector, houses
and shop-houses will be the most wanted items this year.

The most desirable neighborhoods will be Pondok Indah,
Kebayoran Baru, Permata Hijau (South Jakarta), Pulit, Pantai
Mutiara, Pantai Indah Kapuk (North Jakarta), Puri Indah, Permata
Buana, Green Garden (West Jakarta), Menteng in Central Jakarta
and Kelapa Gading in North Jakarta.