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)