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)