Jakarta condominium market remains bleak: Consultant

Jakarta condominium market remains bleak: Consultant

JAKARTA (JP): Sales in Jakarta's condominium market are
projected to remain stagnant over the next six months due to
expected political and social tension ahead of the general and
presidential elections.

Property consultant Procon Indah, in association with Jones
Lang LaSalle, said on Wednesday that in the long term, consumers
purchasing power must first be restored for condominium sales to
improve.

"Demand for condominiums will continue to remain slow in the
short term," it said in its first quarter report.

It said the market was expected to see further falls in
prices, although stronger developers might maintain their prices
and try to increase revenue by offering unsold units as rental
apartments.

Procon Indah projected that condominium sales would improve in
early 2001, assuming the elections run smoothly, the economy
begins to recover in the middle of 2000 and interest rates and
inflation drop below 20 percent and 10 percent respectively by
the end of 2000.

It reported that demand in the condominium market continued to
weaken during the first quarter of this year due to a significant
decline in purchasing power, lack of mortgage facilities and
political and social instability.

It pointed out that only a few transactions occurred between
October 1998 and March 1999, mainly in the city's central
business district.

"Inquiries about condominiums remained low over the review
quarter," it said.

The consultant reported that buyer defaults continued to
increase, causing the negative take-up of 62 units in the strata-
title apartment market during the fourth quarter of 1998.

It said almost 90 percent of returned units were lower to
middle-priced segment apartments. These units are priced below Rp
5 million (US$575) per square meter.

This reflected a significant drop in affordability or a lack
of confidence in this market segment during the crisis, it said.

Condominium prices in rupiah terms have declined since the
beginning of 1998, the consultant said.

"The price increase in US dollar terms over the past six
months was due to the strengthening rupiah against the dollar,"
it added.

Procon Indah said the price of prime condominiums in the
central business district declined by 9 percent in rupiah terms
to Rp 9.10 million per square meter over the fourth quarter of
1998.

While in equivalent dollar terms, prices increased by 21
percent over the quarter. However, prices dropped by 46 percent
compared to prices a year ago, it said.

"Prices have fallen by 57 percent since the onset of the
economic crisis in July 1997," Procon Indah said. (rei)