Great promotions launched despite uncertainties

Great promotions launched despite uncertainties

JAKARTA (JP): Housing and property developers are currently
promoting their projects with attractive advertisements in the
media. Property exhibitions are also held regularly in the
capital.

However, the property market is still down, at least according
to stock market analysts and property consultants.

"The demand for mid and low-cost houses still exists, but
there's a greater demand for luxury houses," said market analyst
Yenny Fadjar of PT Harita Kencana Securities.

Therefore, many developers prefer to develop more luxury
houses, she added.

Among the developers which offer medium-cost and luxury houses
are PT Mekarnusa Cipta, the developer of Kota Wisata in Cibubur,
and PT Miyasa Properindo, the developer of Legenda Wisata also in
Cibubur. Both companies are the subsidiaries of the Sinar Mas
Group. Kota Bunga in Puncak, West Java was also developed by the
group.

House prices at Kota Wisata range between Rp 251 million (105-
square-meter plot) and Rp 1.3 billion (450 square meters). The
prices at Legenda Wisata, which was developed after Kota Wisata,
range between Rp 237 million (119 square meters) and Rp 1.4
billion (480 square meters).

Another developer, Bumi Serpong Damai, also had grand
promotions for its new houses whose prices reached hundreds of
millions of rupiah.

Lippo Karawaci is promoting its new houses in Karawaci,
Tangerang, Banten, worth Rp 832 million. Citra Raya of Ciputra
Group, also in Tangerang, sets its houses at Rp 66 million, Rp
94.8 million and Rp 166.3 million.

Yenny said demand for medium-cost and luxurious houses
remained high. Therefore it is no surprise if developers focus on
promoting expensive properties.

The method of payment has also been designed to attract
potential buyers. Some developers offer competitive interest
rates and installments for the down payment.

Buyers are offered an interest-free down payment and a 36-
month installment if they chose a house in Citra, a housing
complex developed by the Ciputra Group.

In spite of the economic crisis, there are still many people
who can afford expensive houses, and developers have taken
advantage of this.

Apartment

Apartment leasing, as part of the residential sector, is also
seeing good prospects.

"This market is mainly for expatriates. Presently, expatriates
are coming to Indonesia as a couple or by themselves, so they
prefer to stay in apartments, not houses. Therefore, there has
been good demand for the new apartments in the capital's central
business district," said Dina Pattiasina, director of residential
property consultant Colliers Jardine.

She said some of the apartments also offer attractive and
flexible terms of payment.

"Payments can now be made for a six-month period, instead of
the one or three-year advance payment," she said.

She said many people were on the waiting list to lease some of
the popular apartments. "And at the moment, there is no new
supply."

Those with high occupancy include Kempinski, Four Season-
Regent, Lippo Aston and Menteng Executive.

Dina said the high occupancy had caused an increase in rentals
which now reached between US$3,500 and $4,000 per month for a
three-bedroom unit.

The total number of apartments in the CBD has reached 9,800
units and about 19,200 units in secondary areas.

Jakarta has several apartment projects in the pipeline,
including those located near Shangri-La Hotel and Grand Hyatt
Hotel. There are also apartments, because of financial problems,
are not operating although the construction has been completed.

The property sector was the first to be affected by the
economic crisis that hit the country in mid-1997. The sector
slumped the following years. As a result, many firms defaulted on
their debt payments. Banks were forced to transfer the assets of
heavily indebted property developers to the Indonesian Bank
Restructuring Agency (IBRA).

However, two projects that managed to be completed include the
Four Season-Regent, which will soon open its two remaining
towers, and J.W. Marriott Hotel in Kuningan area, which will
launch its grand opening in the near future.

Office

There is a different situation in the office sector.

In its latest report, Collier said plagued by political
uncertainties and slow progress in the country's economic
restructuring, Jakarta's office property market remained inactive
in the first quarter this year, with a weak demand, stagnant
rentals, high vacancies and a steady stock supply.

The report forecasted that the stagnant market trend would run
throughout the year, with no major recovery in sight until the
first quarter of next year, pending a global economic rebound and
the return of political stability in Indonesia.

"Aggravating the downward trend in this first quarter is the
sluggish demand, in relation to a plentiful office stock supply
that totaled 3.88 million square meters," said Richard Rossiter,
Colliers Jardine's managing director.

He said an additional supply of 160,000 square meters would
enter the market in 2002 with the completion of the Wisma Mulia
and Wisma Asiatic office projects.

Wisma Mulia totals 107,000 square meters and Wisma Asiatic
totals 53,000 square meters. Both are scheduled for completion by
mid-2002 and to be launched by late next year.

In this year's first quarter, Jakarta's office vacancies
totaled 932,000 square meters with a vacancy rate of 24 percent.

According to Colliers, recovery of the Jakarta office sector
is subject to the influence of macropolitical and economic
factors.

Meanwhile, director of industrial and commercial sales and
investment of Colliers Jardine, Riko Perlambang, said the
industrial sector had also been stagnant with trivial
transaction.

"There is transaction only at the secondary level. This
include the asset sales of bankrupt companies, so the prices are
very low," he said.

He said the situation was related so much to the
multidimensional crisis in Indonesia.

"When there are still uncertainties, no new companies will be
interested in investing in Indonesia, thus the industrial sector
will remain stagnant," he said.

He said the labor issue had also hindered foreign investors
from entering Indonesia in recent years.

He added that it was very hard to forecast when the situation
would get better as it was related to the unpredictable domestic
situation. (I. Christianto)