Developers upbeat about high demand

Developers upbeat about high demand

JAKARTA (JP): Developers remain optimistic about high level
demand in the property market due to high economic growth and
investment commitments, Craig Williams, Senior Technical Advisor
to PT Procon Indah, said.

"As demonstrated historically, the two economic indicators --
high performance level of economic growth and investment
commitment -- have a strong correlation with demand for various
property sectors," Williams, who is also managing director of
Jones Lang Wootton Pacific, said here yesterday upon releasing a
quarterly report on the property market outlook.

Procon Indah is a property research and consultancy company in
association with Jones Lang Wootten.

The government has revised the target for national economic
growth to 7.1 percent per year during the 1994-1999 period.
Meeting the target will require a total of nearly US$400 billion
in investment over the entire period.

This year seems to be bringing another success for the
investment coordinating board with high levels of investment
approvals.

Foreign investment commitments in the first eight months
reached $30 billion, which surpassed the total for the whole of
last year by 26.3 percent. Domestic investment commitments
reached Rp 43 trillion ($18.8 billion) during the same period, or
80.5 percent of last year's total.

A director of Procon Indah, Susan Pranata, said that the
demand remains high for the Jakarta office market in prime
locations.

She said total net absorption during the first nine months of
1995 reached 163,200 square meters and the figure is likely to be
between 200,000 to 220,000 square meters for the whole year.

The company's report stated that the average annual net demand
in the Jakarta central business district since 1990 has been
higher than all other major cities in Asia.

The Jakarta central business district covers Jl. H.R. Rasuna
Said, Jl. Jendral Gatot Subroto, Jl. Jendral Sudirman and Jl.
M.H. Thamrin.

Compared to other major cities in the region, Jakarta ranked
first in the average annual net demand for prime office space
during the first nine months of the year with 163,200 square
meters.

The central business districts in Kuala Lumpur, Bangkok and
Taipei ranked second, third and fourth respectively in the same
period with a demand average of below 150,000 square meters,
while the averages of Hong Kong and Singapore were below 5,000
square meters.

The company's senior manager of research development, Bayu
Utomo, said that the largest demand for office buildings came
from the banking and finance sectors, at 32 percent,
manufacturing 18 percent, business services 16 percent and
trading 15 percent.

Occupancy

Susan said that the average physical occupancy improved by
almost two percent over the last quarter to 93 percent as of
September.

The average rental levels range from US$14 to $16 per square
meter per month for high quality buildings and $10 to $12 per
square meter for standard quality buildings, excluding service
charges of between $6.50 to $7.50 per square meter.

The office market in secondary locations, in the outskirt
areas, is seeing continuing strong demand, with almost 90,000
square meters within the first semester.

The average occupancy level of the retail sector remained high
at over 90 percent despite the entrance of a large amount of
space during the period.

In the residential estate market, the report shows that
current house purchasers are mostly end users. The number of
investors or speculators buying houses has declined due to high
interest rates and the high level of supply.

The rental apartment market in the third quarter of 1995
registered a net take-up of 435 units, 30 percent higher than the
previous quarter. During that period, an additional 400 rental
apartments and condominiums were added to the market, increasing
the total stock of multi-family housing to 6,353 units as of
September.

The report's analysis on the condominium situation indicates
no real change prices, although the Procon Indah research has
confirmed cases of lower achieved prices being transacted.

Home financing rates, which rose to 22 percent from 15 percent
a year ago, have had an adverse impact on the market, the report
said. (kod)