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)