Housing sector is predicted to increase by 12% this year

Housing sector is predicted to increase by 12% this year

Sari P. Setiogi
The Jakarta Post
Jakarta

The housing sector in the country is predicted to grow by 12
percent this year, with 130,000 houses estimated to be sold on
the market, according to an expert.

"Last year, about 115,000 units were sold, as compared to
98,000 units in 2001. This year, the most demand will be for
houses in the medium price range, from Rp 150 million (US$16,000)
and up," director of the Indonesian Property Study Center (PSPI)
Panangian Simanungkalit told The Jakarta Post on Monday.

He did not express optimism about low-cost housing projects,
explaining that the government was not serious in providing
subsidies.

"Last year, the government set a target to provide Rp 250
billion in subsidies to help low-income people purchase low-cost
houses, but the target was not reached. This year, its target is
about Rp 30 billion," he said.

According to him, the developing areas for housing are in
Serpong and Karawaci in Tangerang, West Bekasi, Cibubur and
Cileungsi and areas close to toll road gates in Bogor.

"The most rapid development is occurring in areas between
Cibubur and Cileungsi," added Panangian, who is also the property
consultant for Indonesian Bank Restructuring Agency (BPPN).

"The property business is now glowing, particularly for the
middle to lower cost segment, like shop houses which fit the need
of small and medium enterprises, or retail outlets at malls."

He even stated that it was now the right time to be involved
in the property business. "While bank interest rates are
declining and inflation is high, the capital which flew out of
the country at the start of the economic crisis is currently
returning and is targeted at the property business," he said.

But he acknowledged that high-end properties were no longer
attractive. "Office buildings, industrial sites and luxury
apartments are now losing their appeal. Most property segments
that usually rely on foreign investment are now hard to develop,"
he said.

In the meantime, commenting on the possibility of over-supply
in retail property business, Panangian said that many retail
buildings had been and were being constructed and an over-supply
might happen in 2005. The additional supply would only cause a
price adjustment, which was both natural and positive, according
to him.

He did not agree that in spite of a possible over-supply,
retail buildings would not be empty.

"Most Indonesians still shop at traditional markets. The ratio
of people compared to shopping center areas is still very small,"
he said. Panangian claimed that in Greater Jakarta alone there
are 32 million citizens, while shopping centers cover only about
2.2 million square meters.

He was optimistic that the number of people shopping at malls
and other shopping centers would keep increasing.