Demand for industrial estates continues to fall

JAKARTA (JP): Demand for industrial estate land will decline in the coming year by as much as 75 percent to 77 percent of available supply due to political and economic uncertainties, leading property consultant Jones Lang LaSalle/PT Procon Indah said on Saturday.

The total land sold at the end of the first half of 1999 was 79 percent of the total supply of 4,844 hectares, the consultant said in a biweekly property report.

Demand will decline in spite of falling prices of between 5 percent and 22 percent, it said.

"Most investors continue to adopt a wait-and-see attitude prior to making an investment commitment," it said, citing the November presidential election and political and economic stability among factors critical to market recovery.

The rupiah's unstable exchange rate has also deterred investors from making long-term investments, it added.

The report said there had been no further development of industrial estates in the first six months of 1999.

For the 1999 to 2001 period, the projected new industrial land supply is 235 hectares, with 200 hectares of land predicted to be ready by the end of 1999.

Total land sold in the first six months of this year was nine hectares, compared to five hectares in the entire year of 1998.

The appreciation of the rupiah has not induced any considerable changes to sales, although most transactions offered flexible concessionary exchange rates, the report said.

There was no shortage of inquiries, Jones Lang LaSalle said.

Leasing appeared to be the more attractive market than land sales, with most investors showing preference to short to medium- term investment commitments.

Current rentals range from Rp 10,000 to Rp 20,000 per square meter.

Given the activities in the secondary market, where factory owners offer existing premises at lower rates than developers' prices, the trend toward leasing would increase, it said. (02)