Indonesia's property sector starts its own reconstruction

Indonesia's property sector starts its own reconstruction

The economic crisis all but snuffed out the country's booming property sector when it struck with a vengeance in mid-1997.

It brought to an abrupt halt the huge growth in construction which began in the 1990s. During those halcyon years, gleaming new office buildings and apartments went up around the city as architectural statements of an economy on the make. Jakarta, seemingly overnight, transformed itself from an almost overlooked member of the world's capitals to one boasting a stunning array of modern buildings.

Growth was not limited to upmarket buildings, but also encompassed shopping complexes, such as ruko (shop-houses) in the city's suburbs.

The crisis, a sobering jolt back to reality for those fly-by- night characters behind much of the expansion, brought the property sector to its knees. Forklifts and machinery were put in park and workers laid off in droves; aerial views of the city were spattered by the sight of desolate buildings cut short at various stages of construction.

Today, the property sector is slowly pulling itself up by its bootstraps as the economic engine begins to get back in gear. Problems remain, not least among them the continuing political uncertainty dogging the country and fears of renewed unrest on the scale of the terrible mass riots of May 1998.

In its most recent Biweekly Indonesian Property Market Update, Procon Indah/Jones Lang Lasalle reported that the total stock of strata-title multifamily housing, including condominiums and strata-title townhouses, stood at 23,319 units at the end of June 1999. About 34.8 percent of the condominium supply is located in the Central Business District; 17.3 percent in West Jakarta; 16.5 percent in Central Jakarta and 12.6 percent in South Jakarta. The remaining 18.8 percent is located in North and East Jakarta, Bekasi and Tangerang.

The firm noted that three new projects were completed in September. These were another luxurious apartment, the Four Seasons Regent Residence Towers 1 and 2 with 234 units, located in the CBD; a middle-class apartment, Puri Kemayoran with 466 units in Central Jakarta, and the lower-middle-class apartment, Permata Surya Apartments phase 1, consisting of 752 units, in West Jakarta.

Despite the completion of the projects, the firm characterized construction activity as slow. It noted that 3,076 condominiums were in the finishing stages of development but construction progress remained slow.

"Most are at the internal finishing stage, while some are still completing the external finishes," the consultant said. "These units are expected to be completed between 1999 and 2001."

The blow from the economic crisis was particularly hard on the condominium sector. The report stated that at the end of June 1997, with the crisis imminent, there were 33,600 condominiums in various stages of construction, with a 67 percent presales rate.

Between June 1997 and September 1999, about 12,000 units were completed, with a further 3,000 still in active construction. Construction of 18,000 units has ceased indefinitely, and close to 10,000 units have been either defaulted, canceled by the purchasers or refunded by the developers.

Still, there are signs of an upturn in some areas. Although sales activity for the first half of the year remained quiet, inquiries for upper-class units increased from June 1999 following the smooth General Election, the company said.

Prospective buyers were mainly local businesspeople, with some young businesspeople seeking condominiums in prime locations for primary homes. There were also some medium-long term local investors who expect to gain from property price appreciation in the medium term, with the belief that current prices are close to the bottom of the cycle.

Some prudent investors have realized, however, that there will still be hope once the political dust has settled.

The future-minded companies have put in place the properties which businesses will turn to when the battered country starts to retake its rightful place among the world's economies.

Among them is the appropriately named Midplaza, set in the heart of Jakarta's Golden Triangle on Jl. Sudirman.

Midplaza is distinguished from its competitors by its unique Superblock concept which provides an interconnected block of office buildings, hotels, apartments and retail space. It boasts a veritable compendium of the movers and shakers of the corporate world among its tenants.

It also offers excellent facilities, from telecommunications to restaurants, a post office, local and international banks, a hair salon, printing and photocopy services, a convenience store, travel agent, stationary store, dental clinic and florist. Adjoining it is the Kempinski Hotel Plaza, which provides services commensurate with its five-star status. It has 241 apartments and 376 guest rooms.

Another outstanding office building in the city is the Deutsche Bank Building on Jl. Imam Bonjol. Superior quality and state-of-the-art technology were used in creating an environment which is operationally and financially flexible. The combination of high technology provides an ideal working environment and the answer to all future tenant needs.

With Deutsche Bank as its anchor tenant, the building now has 73 percent occupancy. Most of the other tenants are multinationals, including embassies and consulates, news agencies, exhibition organizers, finance and banking institutions. Its services include video and teleconferencing, serviced apartments within the complex and a function room to accommodate 300.

Advantages of the building are its central location, excellent 24-hour security and building automation system which is Y2K compliant. A raised flooring and sophisticated air-conditioning system from the floor gives all tenants advantages in office space planning. Double-glazed windows act as heat buffers to drain incoming heat directly outside before it reaches the working office space.

Looking to rent office space in rupiah? Among the choices is the Bidakara Complex, an integrated facility straddling 4.5 hectares and with four separate entry points of Jl. Jend. Gatot Subroto, Jl. Prof. Dr. Soepomo, Jl. Rasamala and Jl. H.R. Rasuna Said.

Integrated facilities include a three-star hotel, sports facilities, training center, meeting rooms, auditorium, assembly hall and restaurants. The building, which is owned by Bank Indonesia's pension fund, is solely marketed and professionally managed by Procon Indah/Jones Lang Lasalle.

With all the choice facilities on offer, and most of them now offering rupiah rates, it is a buyer's market. But a major deterrent for many in making a move to a better site is the mental strain, if not anguish, of coordinating the relocation.

It can be a minor headache or a major migraine. An important help for many companies is a company which understands the upheaval involved in moving and can help lessen the logistical nightmare.

Many companies put their trust in Global Silverhawk. Founded in 1972, Global Silverhawk works with its clients to ensure that the planned move creates as little disruption as possible in the firm's business. The company's Office Move Specialists coordinate every step of the move, assuaging worries and assuring the relocation runs like clockwork.

Global Silverhawk recently relocated to a new facility in Cawang, East Jakarta. Its upgraded facilities include air- conditioned storage space, separate storage space for companies and individuals to rent on a long-term basis, carpentry and handyman shops and premium office facilities. (Bruce Emond)