Local property market shows sign of recovery
JAKARTA (JP): The property market in Jakarta showed signs of recovery in the first quarter of this year with demand in the retail sector growing faster than in the office and apartment sector, property consultant PT Procon Indah/Jones Lang LaSalle said.
Further growth in the property sector is expected, but will still be subject to sustainable economic recovery and the existence of political and social stability, the company said in its newly released quarterly property market review.
It predicted that the retail space market would continue to see stronger growth up to the end of the year compared to the office and apartment sectors.
"The office and apartment sectors will not likely see vigorous growth like that in the retail market because of the current high vacancy level in both sectors," the company said.
Procon Indah said the retail space market had experienced stronger demand so far, thanks to increased consumer spending, which had prompted new small to medium size businesses to start operating in the last quarter.
The retail sector managed to transform from a tenant's market in 1998 into a landlord's market this year because of a stable strong demand in the last three quarters and limited new supply, the company said.
The average vacancy level in the retail space market stayed well below 10 percent in the first quarter this year with many prominent centers almost fully leased, pushing the average rental fees up 41.9 percent over the period.
The company predicted that the occupancy level in the retail space market would remain above 90 percent until the end of the year.
In the office space market, Procon Indah said investors had started to indicate higher offering prices in the first quarter compared to last year's prices, although the growth of demand for available spaces had only been modest.
The company said investor interest in the office sector, both for investment and operational purposes, would continue to rise. Local investors will particularly remain most interested in offices with high occupancy levels.
As the business climate improved in the first quarter, the inquiry level about office spaces will likely increase further towards the end of the year, subject to continued political stability.
Net take up on office spaces will likely remain modestly positive as the banking sector will continue to lease again currently occupied spaces as a result of the liquidation and ongoing merger process.
A slight increase in the service charges on office spaces will likely be unavoidable as a result of an electricity rate hike in April.
In the apartment space market, the company said leasing inquiries and transactions, particularly for units in the central business districts and prime residential areas, increased in the first quarter this year.
"Leasing activities in the apartment space market continued to be dominated by expatriates," the company said, adding that many companies had started to employ more expatriates as the business climate in the country was gradually improving.
Two and three bedroom units are now more sought after than one bedroom units as many of the expatriates either bring their family members or anticipate that their families will join them later on.
The individually owned strata-tiled units, however, recorded the highest take up this quarter as they offer more flexible lease terms and are relatively more competitive than purpose- built rental apartments.
Procon Indah predicted that the demand for rental apartments would increase further toward the end of the year, providing that the country could sustain the economic and political stability.
Average rental in the overall apartment market, however, is expected to decline slightly due to a high vacancy level of 43.7 percent and stiff competition from the individually strata-tiled condominiums, which have many units available for lease. (udi/cst)