Condo market to remain buoyant until the end of this year

The condominium market in Jakarta, particularly in secondary locations, is expected to remain buoyant until the end of this year, encouraged by a strong take-up and the entry of enormous supply, according to a survey conducted by property consultant Coldwell Banker Commercial.

In its latest property market overview, the property consultant estimates that some 68 projects that are either in the pipeline or under construction will bring a total of about 45,000 condo units onto the market within the next three years, more than doubling the current stock.

"This scenario will undoubtedly result in keener competition, falling occupancy levels and declining selling prices, ingredients leading to a buyers' market," CBC said.

On the supply side, the company said that during the first quarter of this year there was no new supply in the condominium market due to delays in the completion schedules for several projects.

As a consequence, the total stock of condominium units as of the first quarter of 2005 stands at 35,001 units, consisting of 7,977 units in primary locations and 27,024 units in secondary locations.

Expected to come on stream in the second quarter are some 1,718 condos coming from several projects, including Sudirman Mansion, SCBD Suites, Bellazio Tower 1, Poin Square Apartment, Airlangga Apartment, Bellagio Mansion and Bellagio Residence.

About 576 condominium units were sold in the first quarter of 2005, resulting in a cumulative take-up of 30,676 units. Recently completed projects have always taken precedence in the market.

Projects in advanced stages of construction -- the likes of Sudirman Mansion, SCBD Suites, Senayan Residence, Mediterania Lagoon Residence and Mediterania Boulevard Residence -- achieved 90 percent to 100 percent absorption rates.

According to CBC, buyers of condo units are predominantly investors motivated by potentially higher yields and capital gains. "Thus, the condominium units held by investors will eventually enter the secondary sales and leasing market," it said.

Average selling prices of condo units during this year's first quarter rose by about five percent to Rp 8.31 million per sq meter over the level at the end of 2004. On average, condos in prime locations are priced at Rp 11.96 million per sq meter, a 7.65 percent increase, while those in secondary areas are sold at Rp 6.84 million per sq meter, an increase of 4 percent compared to the previous semester. --The Jakarta Post