FOR FOCUS ISSUE -- Real Estate
FOR FOCUS ISSUE -- Real Estate
Property market shows signs of life amid fall in interest rate
Sudibyo M. Wiradji The Jakarta Post Jakarta
Residential property has shown signs of life during the past few months amid a decline in lending rates offered by the country's banks.
Property developers estimate that the more favorable business climate will provide a turning point for the Indonesian property sector, which almost ground to a halt after the financial crisis hit the country in late 1997.
Chairman of the Jakarta chapter of the Association of Indonesian Real Estate Developers (REI) Alwi Bakir Mulachela said that a number of major property developers had commenced construction on new housing projects to meet the surge in demand.
"The fall in interest rates has resulted in an increase in demand for new houses," he told The Jakarta Post in an interview recently.
According to Alwi, most developers are now focused on the construction of moderate houses priced below Rp 200 million and luxury houses carrying a price tag of more than Rp 1 billion.
Such housing projects are mostly located in Jati Waringin, East Bekasi; Gandul, South Jakarta, and several others in Bekasi. More expensive and luxury housing estates also under construction are mostly located in Kelapa Gading, North Jakarta.
Construction of houses priced at Rp 200 million to Rp 1 billion had yet to start, as the demand for such properties remained low, he added. "Developers of houses in this category are still waiting for buyers," he said.
Property developers are upbeat that the low interest rates will be sustainable, given stable improvements in the country's economic fundamentals, as indicated by the low inflation rate and strong rupiah.
"If low interest rates can remain the property market will have a chance to return to its peak level achieved before the crisis," said Bumi Serpong Damai's (BSD) marketing and promotion manager Dhony Raharjoe.
Gading Mediterranean Ville (GMV) in Kelapa Gading, North Jakarta, Taman Giri Loka (TGL) and View of Europe (VoE), both in BSD, Tangerang, and the Kemang Real Estates, South Jakarta, -- to name but a few -- are among planned housing estates that are under construction.
PT Agung Podomoro Group, developer of GMV, started to market its planned 79 exclusive and luxury three-story houses in April of this year.
"About 80 percent of them have been sold," said a marketing staffer at PT Agung Podomoro.
The GMV project is designed for high-income people. Houses in this estate sell at Rp 735 million to Rp 2 billion.
Construction of GMV, an expansion of Bukit Gading Mediterranean (BGM), is expected to start in August of this year and to be completed in June next year, said BGM's marketing manager Ho-Mely Suryani.
Meanwhile, BSD said it planned to construct several other luxury housing estates following the success of previous projects, Fontainebleu Golf Residence and Taman Provence?.
The company's two projects -- TGL, which will have 70 houses, and VoE, which will have 300 -- were sold out several months before construction started. "The other project, Taman Chrysant (TC), which will have 100 houses, is also under way, but the marketing still continues," said Dhony of BSD.
TGL will be built in neoclassical style, incorporating replicas of long and simply decorated columns, while VoE will be built in classical style. "We strive to meet customers' tastes and requirements. Classical and neoclassical styles are now popular in luxury housing estates," he said.
With middle- and upper-income groups as the target market, the price range of housing estates at BSD is from Rp 96 million per unit to over Rp 500 million.
The TGL and VoE projects will be constructed this year and are expected to be completed next year.
TC will be built in a cluster, with an exclusive entrance gate to ensure security, he said. "TC is in close proximity to Granada Square shopping center," he said.
Dhony said that occupants of housing estates at BSD would have excellent facilities, with the planned construction of BSD Market Place, a modern and clean market with integrated trade complex.
As with PT Agung Podomoro Group and BSD, PT Umawar Isasa Bluza will also undertake a luxury housing estate project to take advantage of the rise in demand.
The developer plans to build an exclusive and luxury housing complex for expatriates in Kemang, South Jakarta.
The residential housing complex, with a planned 130 units offered for rent, has started to be marketed. "We have received an enthusiastic response from the market," said company owner Alwi Bakir Mulachela.
Facilities planned include a swimming pool, fitness center and children's playground. He said that expatriates working in Jakarta continued to represent a market with potential for rented housing.
The complex, on some seven hectares of land, will commence construction in December this year and is expected to be completed in mid-2005.
Alwi expressed confidence that the complex would attract expatriates in Jakarta, saying that with improved security and order in Indonesia, more expatriates were expected to live in the country.