Jakarta's property market shows no growth: PwC

Jakarta's property market shows no growth: PwC

Viva Goldner, The Jakarta Post, Jakarta

Jakarta's depressed property market showed no immediate signs
of improvement, with regional and global economic factors
contributing to minimal growth last year, according to consulting
firm PricewaterhouseCoopers (PwC) Property Group.

PwC technical advisors Katherine Harberd and Jay Smith painted
a gloomy picture of the local market during a presentation of
Jakarta Property Trends for the fourth quarter 2001 on Wednesday.

Harberd said negative business confidence following the US
terror attacks of Sept. 11 was reflected in the condition of
Indonesia's property market.

"The government has indicated that during 2001 there were
substantial decreases in the number of approved foreign direct
investment (FDI) projects -- FDI was actually down 41 per cent
from the previous year," she said.

"These statistics on approvals demonstrate a more cautious
approach to investment in Indonesia, and clearly this has an
impact on all business sectors -- and ultimately property, in
offices, apartments, hotels, industrial and retail properties,"
Harberd said.

Minimal growth was most evident in sectors reliant on
expatriate demand, such as apartments and hotels, while the
office sector suffered from reduced multinational corporate
investment.

Jakarta office occupancy increased just 0.5 percent to 78.5
percent from the third quarter, with net take-up for 2001 falling
54 per cent from the previous year.

New tenants were in shipping, trading, telecommunications,
insurance, media, and expanding tenants in consulting, banking
and energy.

"Certainly by the end of last year, it was very clear that
office take-up was considerably down on the previous year. There
aren't any signs at present of increasing take-up or recovery in
the office sector," Harberd said.

However, sectors reliant on the domestic market, such as
retailing and shophouses, reported higher growth.

Occupancy in the Jakarta retail sector rose from 93.8 percent
to 94.6 percent in the fourth quarter, while in Jakarta's
surrounding areas, occupancy rose from 90 percent to 92 percent.

Shopping center stock increased by 41,000 square metres
through the operations of Glodok Plaza, Pasar Glodok, Citra Grand
Mal and Plaza Cibubur.

In particular, Harberd said investors were increasingly
attracted to the low risk and potential high returns offered by
shophouse developments.

The shophouse sector experienced strong growth towards the end
of 2001, after plummeting from 1998-2000 due to the economic
crisis.

At least 1,800 units (about 540,000 square metres) were
completed or marketed in 2001, with good demand in the Kelapa
Gading, Pondok Indah and Dharmawangsa areas, despite high prices.

However, Smith said domestic conditions, such as the
government's recent decision to increase fuel and electricity
rates, would also impact on the local property market.

"Certainly, fuel and electricity rate increases do have an
impact on property investment, as well as property operating
costs and, ultimately, property values," he said.

Overall, PwC forecast limited growth for Jakarta's property
market in 2002.

"The property sector depends so much on the local, regional
and global economy, and all of the local social and economic
issues that the country has to deal with," Smith said.

"Our forecast for this year is hopefully for stability -- not
a lot of growth, but hopefully no loss of momentum from last
year."