Local retail market still promising: Expert

Local retail market still promising: Expert

JAKARTA (JP): The retail market in Jakarta is expected to
increase this year as consumer confidence has recovered with the
strengthening of the rupiah to the greenback, according to
property consultant Jones Lang LaSalle/PT Procon Indah.

The increase of consumer purchasing power and declining
deposit rates from over 60 percent in mid-1998 to only 13 percent
last month has improved retailer confidence levels, the
consultant said in a biweekly property report.

In July and August, the opening of two refurbished retail
centers in Mega ITC, Central Jakarta and Duta Merlin, West
Jakarta increased the retail supply by 42,600 square meters,
bringing the total to 1.12 million square meters as of the end of
August, it said.

Additional supply was also generated by the newly refurbished
Lippo Karawaci in Tangerang, which was damaged during the May
riots last year.

The consultant said no retail project was under active
construction at present except for renovation work in Plaza Slipi
Jaya, West Jakarta. The work for Plaza Glodok will commence soon,
and both centers are likely to enter the market in the year
2000/2001.

Jones Lang LaSalle said a total of 8,800-square-meter retail
space was occupied in the second quarter, resulting in an
increase in occupancy rate to 83.6 percent from 82.8 percent in
the corresponding period last year.

By the opening of two retail centers recently, an additional
24,700-square-meter retail space was absorbed, it said.

The consultant said, however, assuming stable occupancy in
other centers in the last two months, market occupancy would
decrease to 82.8 percent by the end of the third quarter based on
physical occupancy.

It also said foreign hypermarkets and retailers such as
Continent, Carrefour and Sogo Department Store expanded their
businesses by opening new outlets in Jakarta this year.

Inquiries received by the consultant increased by 30 percent
in the second quarter. Potential buyers were showing more serious
interest after the general election than those prior. The
inquiries mostly came from new retailers, both foreign and local,
from fashion, accessories and food sectors.

The company also said that the average face rentals remained
relatively stable during the second quarter, where prime space
ground floor rented in prime centers was priced at US$48.80 per
square meter a month. Rents for secondary centers were stable at
$35 per square meter with particular exchange rates introduced by
owners, it added.

It expected rentals in rupiah terms to gradually increase with
higher demand.

Despite uncertainty over the presidential election, aggressive
expansion by major foreign retailers is expected to continue and
will increase average occupancy of Jakarta retail centers to 86
percent in 1999, it said. (01)