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)