Demand in property sectors on upward trend: Consultant
JAKARTA (JP): All property sectors showed a positive net take up during the second quarter of this year, with demand in the retail sector showing exceptionally strong, international property consultant Jones Lang LaSalle (JLL) has said.
The strong demand in the retail sector was attributable to increased consumer spending, low interest rates and bank liquidity, JLL states in its second-quarter report.
JLL predicts that given a strong demand level and increasing rentals in the retail sector, several postponed projects would likely resume construction in the short term.
JLL cited that foreign hypermarket Carrefour and wholesaler Makro have opened their seventh and sixth outlets respectively in Jakarta at independent stores, and local major retailers Ramayana, Matahari, Hero, Tops and Alpha have either announced expansion plans or have opened new stores around Jakarta.
Retail stocks in Jakarta increased to 1.15 million square meters with the reopening of Plaza Slipi Jaya in West Jakarta, while in the Bogor-Tangerang-Bekasi (Botabek) area, the total modern retail stock as of June 2000 stood at 264,000 square meters, the report states.
Net take up of Jakarta retail space during the second quarter of 2000 was recorded at 9,100 square meters compared to 34,150 square meter in the previous quarter, and in the Botabek area net take up was 4,400 square meters, it says.
JLL says that the lower net absorption does not represent weaker real demand.
The average gross rental of premium space at ground floor in Jakarta stood at Rp 214,600 (about US$26 at the current rate) per square meter a month, reflecting an increase of 8.2 percent over the quarter, and in the Botabek area it was Rp 114,000 per square meter a month.
JLL predicted that the net take up in the Jakarta retail market would likely be more substantial toward the end of the year with many tenants completing their fitting-outs and renewing leases in anticipation of the increase on consumer spending toward Christmas and Ramadhan.
In Botabek, demand growth is likely to remain modest due to limited quality space available, the report says.
Office
In the Jakarta office-market sector, office rental has been relatively flat given its high vacancy level and is likely to remain so until the end of the year, after which it is likely to increase with the expected demand improvement, JLL says.
Total office stock in Jakarta stood at 4.78 million square meters, with 2.88 million square meters in the Jakarta Central Business District (CBD) and 1.90 million square meters outside CBD.
The Jakarta office market's total vacancy level is 22.7 percent or 1.09 million square meters unoccupied as of the end of June 2000.
Gross rental of Jakarta's CBD offices increased by 4.8 percent to Rp 83,000 per square meters a month, and the average rental outside CBD increased 0.8 percent to Rp 33,500 per square meter a month, it says.
Total cumulative stock of Jakarta's CBD strata-title office space remained at 234,013 square meters as no new supply came on stream during the second quarter of 2000.
Sales rates for Jakarta's CBD strata-title offices remained at 84 percent and the occupancy rate increased by 0.4 percent to 86.1 percent between April and June, of which 73.4 percent are occupied by owners.
Outside the CBD, total stock of strata-title office space remained at 100,435 square meters, the bulk of which is located at Gajah Mada Office Tower, which was converted recently into strata-title units.
JLL predicts that net take up would likely remain modest this year as a result of mergers and consolidations by major local banks and multinational companies.
The majority of demand is anticipated to come from the insurance, IT and telecommunications sectors.
Apartments
In the rental apartment sector, the consultant says that while the average rental of apartments have been flat, rental in quality prime apartments is likely to increase slightly given the relatively stronger demand in this submarket.
Total rental apartment supply in Jakarta currently stands at 14,586 units, including some 8,610 individual strata-titled apartments that have the potential to enter the leasing market.
Leasing activities continues to be dominated by expatriates, with CBD and prime residential areas remaining the most preferred locations, JLL states.
Political uncertainty since the beginning of the second quarter has resulted in a decline of net take up to 84 units compared to 156 units during the last quarter, the report says, adding that average vacancy levels decreased to 43.5 percent from 43.7 percent leaving some 6,337 apartments unoccupied.
The average gross rental of prime apartments stood at $13.7 per square meter a month, it says.
JLL predicts that rental sales for prime apartments in preferred locations increase slightly in line with increasing demand for the submarket, but the average rental of the overall apartment market will remain flat due to high vacancy levels and stiff competition from the individual strata-titled units available for lease.
In the Jakarta Condominium market, a total of 25,526 apartments were recorded during the second quarter, comprising 25,150 strata-titled apartments and 376 strata-titled townhouses, JLL says.
During the months of April and June, 23 apartments were sold in the primary market, with an average price of Rp 5.7 million per square meter for condominiums in the prime residential area.
Prices for condominiums in Jakarta's CBD increased 1.6 percent to Rp 9.1 million per square meter from Rp 9 million per square meter in the last quarter. (10)