Gloomy outlook forecast for office space market

Gloomy outlook forecast for office space market

JAKARTA (JP): Owners of office buildings in Jakarta's central
business district are in for more tough times over the next two
years, with a slump in demand and falling rent forecast, property
consultants PT Procon Indah/Jones Lang Wootton said on Tuesday.

The amount of occupied space in Jakarta's main commercial
district is expected to decline by 110,000 square meters in 1999,
and by a further 42,000 square meters in 2000, the company said
in its biweekly Indonesian Property Brief.

Continued rationalization, downsizing and relocation
strategies being pursued by many companies would lead to higher
vacancy rates this year, the report said, adding that Indonesia's
political and social instability would also contribute to the
downward pressure.

Average vacancy is projected to rise to 28 percent by the end
of this year and to 31 percent in 2000. "Pressures on landlords
to reduce rent are likely to persist due to higher vacancy," it
said.

In 1998, the majority of office buildings in the central
business district offered rents ranging from between US$10 and
$13, plus monthly service charges in the region of $6 and $7 per
square meter. However, most rents were fixed at an exchange rate
of between Rp 4,000 and Rp 5,000 to the U.S. dollar to prevent
tenants from leaving in hordes.

The rupiah plunged in 1998, at one time reaching Rp 17,000 to
the dollar before ending the year just above Rp 8,000.

The report, which reviewed conditions in the office market in
the last quarter of 1998, said that around 626,800 square meters
of office space in the central business district was vacant by
the end of the year.

Office space supply in the district increased by 81,500 square
meters to 2.84 million square meters by the end of 1998.

Many planned office construction projects have been put on
hold, the report said, citing Menara Jamsostek, Wisma Mulia and a
former Danamon Data Center building.

Nevertheless, 48,000 square meters of new office space will be
opened this year, with a further 85,000 square meters scheduled
for completion in 2000. (02)