Jakarta prime office rents predicted to increase

JAKARTA (JP): Grade A office rents in the Jakarta Golden Triangle will increase in the last quarter of 1996 and in 1997, after four years of stagnation, a property analyst said yesterday.

"Due to continuing strong demand in the office sector and a substantial decrease in new grade A office supply, we expect prime office rentals to increase as much as 15 percent during next year," Martin Steens, a director of First Pacific Davies Indonesia, said in a statement.

Property consultant PT Procon Indah said in its latest report that the average rent for prime office space was US$13.00 a square meter a month in the third quarter of this year. This is cheap compared to office rents in most cities of Southeast Asia.

First Pacific Davies Indonesia said that rents had increased modestly in the last three months, and that this should continue in 1997. The company was established in 1991 as an affiliate of the Hong Kong-based First Pacific Davies.

"With new grade A office supply decreasing by more than 35 percent and demand remaining strong, we further expect vacancies to decrease to 8 percent," Martin said.

He said demand in 1996 would outstrip the record 250,000 square meters taken up last year.

Office demand in the Jakarta Golden Triangle -- covering Jl. Sudirman, Jl. Gatot Subroto and Kuningan -- is expected to rise given that the government continues its deregulation and trade liberalization programs and that foreign investment remains strong.

"Our research indicates strong demand particularly in the telecommunication and financial sectors," said Elizabeth Gunturjudio, the consultancy director at First Pacific Davies.

She said that over the last three months, Siemens, Alcatel and Ericsson had agreed to rent new offices with more than 3,000 square meters each.

As the service sector develops and expands in Jakarta, demand will continue to increase because this has traditionally been a strong source of office demand, she said.

According to Martin, office tenants are maturing: "We have evidenced a more thorough approach to the relocation of office premises, particularly from larger international tenants. Rentals are no longer the sole factor in determining suitable office accommodation."

He said tenants were becoming more diligent on buildings' technical specifications and were scrutinizing contracts more carefully.

It is now common for office relocation decisions to be made by corporate real estate representatives who may be in Singapore or Hong Kong.

"Often these head office teams will work side by side with the local country manager in order to source and secure the most suitable office accommodation," Martin said. (bnt)