Hotel occupancy rates 'continue to decline'

Hotel occupancy rates 'continue to decline'

JAKARTA (JP): In spite of falling rental rates, virtually all
property sectors showed declining occupancy rates in the second
quarter of 1999. The only exception was the retail sector,
according to property services company FPDSavills.

Occupancy rates for apartments and hotels continued to decline
while office space occupancy was stable, according to the latest
FPDSavills' Jakarta Property Briefing.

A wait and see attitude prevails until Indonesia elects its
next president later this year, it said.

The report noted the strengthening of the rupiah, lower
interest rates and other positive economic indicators, along with
the relatively peaceful conditions in Jakarta as factors
affecting the property market.

The retail sector showed a 2 percent growth in occupancy rates
to 92 percent, with the greatest contribution coming from grade
"C" space -- for the low end of the market.

Rents for the sector increased as owners raised the rupiah's
exchange rate used in calculating the rates to Rp 2,900-3,500 per
U.S. dollar from a Rp 2,750-3,250 range in the first quarter.

Supply of retail spaces remained stable at 1.1 million square
meters. Some 45,000 square meters are forecast to be completed in
the third quarter.

Occupancy rates in star rated hotels declined in the second
quarter due to fears of unrest prior and during the June general
election.

Five star hotels were worst hit, with an average occupancy
rate at 26 percent, four star and three star hotels averaged 27
and 37 percent respectively.

Room rates in four and five star hotels decreased by between 6
percent and 9 percent. Their room rates ranged between Rp 260,000
to Rp 610,000.

Three star hotels, which charge in rupiahs, saw their rates
increase by 12 percent, largely due to the strengthening of the
currency. The average rate for three-star hotels is Rp 180,000.

Some 174 three star hotel rooms were added to the total stock
of 20,200 rooms for all categories with the completion of Treva
International Hotel. Some 900 more rooms from five and three star
hotels are expected to be completed next year.

The report showed a 2 percent decrease in the apartments'
average occupancy rates in Jakarta's primary area the central
business district (CBD), and in the secondary area to 60 percent.

In U.S. dollars, rent for apartments remained stable, except
those in the higher end of the market which declined, reflecting
the stronger rupiah.

Supply of apartments in secondary areas increased by 100 units
to 16,400 units while supply in the CBD area remained at 9,400
units.

Office occupancy rates remained stable at approximately 73
percent, with total vacancies put at 926,000 square meters.

Average office rents fell slightly from the first quarter.

Most building owners charge in dollars but they peg the
exchange rate at between Rp 4,000 and Rp 5,000 to the dollar.

Rents varied between Rp 30,000 to Rp 60,000 per square meter,
and service charges ranged between Rp 20,000 to Rp 30,000.

Some 15,000 square meters of new space was added with the
completion of Arcadia Office Park Towers B&C, bringing the total
supply in the secondary area to 930,000 square meters. Total
supply in the CBD area stood at 2,527,000 square meters. (02)