Foreign investors still wary of property sector
JAKARTA (JP): Foreign investors have held off on big buys of properties of local debt-ridden developers because they find no signs of imminent economic recovery, property consultant First Pacific Davies said on Thursday.
Company executive Jay Smith said that although local properties were priced relatively cheaply in U.S. dollar terms, cost was not the only concern for investors.
"Other considerations are signs that the economic recovery will start soon," Smith said at a news conference to release the firm's third-quarter analysis of the local property market.
"When it will start to recover? How strong will the economy be when it starts to recover? And how about the politics."
He said property investors would only start to reenter an ailing market when they found indications it was ready for recovery.
Some analysts predicted earlier that the low price of the country's properties in the crisis would be a strong draw for foreign investors.
Smith said many property investors considered Southeast Asia as one entity, meaning they would only enter Indonesia once the whole region was on the road to recovery.
"As a professional consultant, I myself advise them to just monitor the situation. The reason is that there are still no clear signs today of when the prices (of properties) or rents will be going up."
The manager of the company's consultancy and valuation division, Diana Herutami, noted that property owners in the office, retail and apartment market were forced to cut rents in dollar terms because of falling occupancy rates.
"Some 70 percent of CBD grade A building owners would like to negotiate for the exchange rate or directly quote the rate in rupiah."
Over the third quarter, the rental rate for grade A office buildings in the CBD area averaged US$8.6 per square meter per month, plus service charge of $4 per sqm per month.
The occupancy rate for the office space continued its downward trend over the third quarter. The greatest fall was noted for grade A, with the occupancy rate sliding 5 percentage points to 78 percent.
Total vacancies of all grades stood at 834,000 sqm, rising from 300,000 sqm in the first quarter.
Diana said her company recorded no new supplies of office and retail space over the third quarter, and expected none in the fourth quarter.
Occupancy in the retail sector over the quarter, however, stayed stagnant at 87 percent.
In the apartment market, Diana said her company noted the new supply from the Apartemen Plaza Senayan in South Jakarta.
Occupancy rates in leased apartments in the CBD area fell 3 percentage points to 81 percent, but occupancy of serviced apartments rose by 3 percentage points to 67 percent. Occupancy of strata title apartments increased by 6 percentage points to 86 percent.
Average rental rates for leased apartments in the CBD area dropped 17 percent to $15 per sqm per month, but for serviced apartments remained steady at $20.
The hotel market recorded marginal growth in occupancy rates in the third quarter to 33 percent for five-star hotels, 40 percent for four-star and 46 percent for three-star.
"We think this is because there is an increase in tourist arrivals. People are no longer afraid of coming to our country," Diana said. (jsk)