Local property market shows sign of recovery
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)