Leased apartments expect more guests
With the improvement in business sentiment, the demand for leased and serviced apartments in Jakarta is likely to continue to revive this year.
New demand is expected to come from the increase in the number of short-term business visitors and expatriates working for multinational companies in the capital.
"Inquiries for leased and serviced apartments are expected to increase in South Jakarta in line with the concentration of the new business area on Jl. Simatupang," property consultant Colliers International Indonesia said in its quarterly research report.
The property consultant predicts that existing and newly built offices in the Jl. Simatupang area will generate fresh demand for leased apartments as most of the occupants are multinational companies involved in oil and gas, mining, telecommunications and consumer goods.
With its close proximity to a number of international schools such as the Jakarta International School, Singapore International School and the Netherlands International School, as well as supporting facilities such as shopping centers and hospitals, the Simatupang area might be an attractive alternative for those looking for apartments.
Another property consultant, Procon, also sees promising demand for leased and serviced apartments in Jakarta this year.
Like Colliers, Procon also believes a projected increase in the supply from new serviced apartment projects and from the conversion of strata-titled apartments into leased apartments will make the competition among operators even fiercer, despite the expected higher demand.
According to Procon, the occupancy rate will consequently drop due to the high supply but lease rates will most probably increase on the impact of the expected increase in fuel prices.
Procon estimates that serviced apartments will continue to be an attractive accommodation option for long-term visitors because they offer the same quality of service and facilities provided by five-star hotels at lower rates.
On the supply side, Colliers reported that the supply in the rental apartment market increased by 2 percent in 2004 to about 6,280 units. About 56 percent of these units are managed as leased apartments while the remainder are operated as purely serviced apartments.
Of the total supply, about 45 percent are located within the central business district (CBD) around Jl. Thamrin and Jl. Sudirman in Central Jakarta and Kuningan, South Jakarta.
According to Colliers, as a long-term investment, leased apartments are not as popular as strata-titled apartments because there are only 1,038 potential leased and serviced apartments scheduled to enter the market between 2005 and 2007.
Similar to the situation experienced by the strata-titled apartment market, 2006 will be a peak period for the leased apartment supply.
"2006 supply is around 75 percent of the annual supply in 1998 when the highest annual supply was recorded," Colliers said.
Of the 1,038 units of leased apartments coming into the market in the next three years, serviced apartments will dominate the supply, with 995 units.
About rental rates, Colliers estimates there will be an increase of between 5 percent and 7 percent within the next 12 months due to the expected increase in fuel prices.
In general, rental rates of leased and serviced apartments during 2004 were stable. The average monthly rental rate for middle-class and up apartments was about Rp 117,800 ($US12.70) per square meter with an additional service charge of Rp 29,300 per square meter a month. For luxury apartments like The Dharmawangsa Residence in Kebayoran, South Jakarta, units were offered at Rp 165,000 per square meter a month, plus a monthly service charge of Rp 14,940 per square meter.
Serviced apartments naturally charge higher rates and charge in US dollars. The asking gross rent of selected apartments within the CBD area was about $19.90 per square meter a month, while several developments outside the CBD were offered at $11.40 per square meter a month. -- The Jakarta Post