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.