Sat, 25 Jan 2003

Gloomy property market in Jakarta, except retail

Sari P. Setiogi, The Jakarta Post, Jakarta

Property businesses in Greater Jakarta are facing gloomy prospects in 2003, except in the retail sector, which is predicted to grow due to increasing domestic consumption.

"The retail property market will likely expand by some 15 percent to 20 percent over the next 12 months," head of research and consultancy at Colliers International Indonesia Adhitya Wisesa told the press on Thursday.

"Although the economic crisis has taken place in the country in 1998, domestic consumption keeps growing. Many people see the sector as still benefiting during the crisis. But we do not know how long the situation will proceed this way," said property investment services manager Willy Koes.

He said the industrial property sector had been declining in line with the decrease in foreign direct investment after several terrorist attacks and a volatile political situation in the country. Many investors prefer to move their businesses to countries like China and Vietnam.

As of the end of the third quarter of 2002, Greater Jakarta's industrial estates occupied a total land area of 10,243 hectares, indicating an increase by 200 hectares over the previous quarter

In the meantime, the occupancy rate of Jakarta's industrial estates in the third quarter of 2002 declined by 1.2 percentage points from 71.8 percent in the same period of 2001.

"The only bright spot comes from logistics service providers who have increased demand for more warehouse locations," said managing director of Colliers International Richard Rossiter.

A spokesperson from the RPX group, an Indonesian logistics service provider, said that they were going to begin operating more warehouses in the Greater Jakarta area this year, as an addition to the existing ones located in Ciputat, Kebon Jeruk and the Soekarno-Hatta International Airport.

Residential manager of Colliers International Aleviery Akbar said that the decline in the industrial property sector indirectly affected the residential sector. Expatriates, who make up the majority of apartment occupants in Greater Jakarta, now have moved away in large numbers.

"Many of them prefer their family to live in Singapore or Malaysia for security reasons. That is why apartments with one or two bedrooms will now be enough for them," said Aleviery.

"For domestic tenants, demand for cheaper, small apartments is actually high enough. Most are young adults in their early years of working. Unfortunately, no one starts to build apartments with such criteria," he added.

He mentioned Singapore as an example. "They have apartments with luxury conditions for the rich and flats for those with lower budgets. Let's say if it was possible to have an apartment for about Rp 500 million (US$55,555) in Indonesia, many would look for that."