Foreign investors eye RI property market

Foreign investors eye RI property market

JAKARTA (JP): Billions of dollars worth of property in the
country could be bought up by foreign investors by the end of the
year, a real estate analyst said yesterday.

The president of the Center for Indonesian Property Studies,
Panangian Simanungkalit, said local property owners strapped for
cash due to the economic crisis might sell up to 30 percent of
the country's office buildings located in the central business
districts of Jakarta and other cities.

"The office buildings (that could be sold) could total at
least US$15 billion in value," he told The Jakarta Post.

Panangian said the country's centrally located office
buildings were worth $50 billion. Office buildings in Jakarta's
central business district alone are worth $21.85 billion, he
added.

He said most of the country's developers were currently
putting their properties on the market for foreign investors in
order to service their debts.

Foreign investors, mostly from the U.S, Hong Kong and Taiwan,
have shown interest in office buildings located in the central
business districts of large cities as well as star-rated hotels
in Bali, he said.

Most investors, however, have been reluctant to purchase
properties due to the country's political and economic
uncertainties.

Other factors also inhibited foreign investors from entering
the local market, including a lack of legal certainty for
property ownership by foreigners.

Panangian said building owners were also still setting their
prices at higher levels than the market would bear and were not
being transparent over their financial status.

"But, I believe they (foreign investors) will start buying in
the second half of the year as a conducive atmosphere will take
form in that time period," he said.

Panangian was optimistic that the country would regain its
political and monetary stability in the second half of the year
provided that the next cabinet was filled with reliable people.

He said the government was preparing a bankruptcy law,
expected to be enacted in the second half of the year, which
would force companies to be transparent over their financial
performances.

Panangian expected the government would soon permit foreign
investors to take over all shares of local developers and enable
them to buy properties as quickly as possible.

According to existing laws, foreign property investors can set
up wholly owned companies but can only buy property shares
through the stock exchange.

"Foreign investors want it so that the transaction can be done
in one or two months," Panangian said.

Panangian said a takeover of many of the country's properties
by foreign investors would help heal the country's ailing
economy, as it would bring in large amounts of foreign funds into
the country.

"It's time for us to consider property as part of our natural
resources which we can sell to add to our foreign currency
earnings," Panangian said.

"We have sold our fish, agricultural products and mining
deposits to foreigners. Now it's time to sell our urban spaces,"
Panangian said. (jsk)