Fri, 22 Dec 2000

Looking skyward for future housing needs

JAKARTA (JP): Expatriates love apartments. Indonesians, as observed by those who make such overly general observations, prefer landed housing; i.e. they like to live close to the ground.

Given these factors, take away the expatriates and there is not much of an apartment sector here, which was the case between 1997 and May 1998. However, things are beginning to pick up as the economy starts to get back on track, and expatriates are again returning to the country.

The PriceWaterhouseCoopers property group says that occupancy rates of leased and serviced apartments in the Central Business District (CBD) for the year 2000 were 79 percent and 68 percent, respectively. In "secondary areas" (a property euphemism for those areas in less demand) the rates are lower at 67 percent and 65 percent, respectively. These figures represent gains of 15 percent in the CBD since the fourth quarter of 1998, and 7 percent for secondary areas since the second quarter of 1999.

Pricing for the good "Upper Grade" apartments in the CBD are still mainly in US dollars. If you set your sights a little lower, i.e. Middle Grade apartments in the CBD, you might get a rupiah-denominated price. In secondary areas, all Upper Grade leased and serviced apartments are in dollar prices, while strata units are split between the dollar and the rupiah.

Good news though for leaseholders and bad news for landlords. Over the next one or two years a new supply of apartment space is expected to arrive, says the PWC property group. These include the Permata Eksekutif Apartments, Taman Gloria Apartments, two more towers for the Four Seasons, Permat Senayan, Pantai Mutiara and Boulevard Park Plaza. This, in addition to the competition of individual owners trying to lease their units, should help bring down prices.

Building upward

Given the ever-increasing population and the demand to house all of these people, it is no surprise that some people are beginning to discuss the need for the city to begin building upward. In the United States, for example, this is seen as natural, and people in large cities often expect to live in apartments. In nearby Singapore, where land is limited, the same is true.

While it may be true that Indonesians prefer to live in houses firmly set on the ground, the advantages of apartment blocks in a large city like Jakarta are many and most people who get the opportunity to live in an apartment, be they Indonesian or expatriate, will attest to this fact.

But when building apartments are aimed at housing the masses, the emphasis is firmly placed on affordability, not luxury.

Take as an example, rumah susun, the low-cost apartment block in Pejompongan, and its residents. Darmy, who spoke to the Post in October, lived by the railroad tracks in a shanty with no running water. Now she has a low-cost apartment with water and electricity. Is it simple? Yes. Is it an improvement from where she used to live? Definitely.

The apartment has three blocks, each nine stories tall with 30 apartments on every floor, and all of the units have been sold. While the larger property consultants and analysts may focus on luxury apartments in the Golden Triangle and the expatriates who rent them, low-cost apartments could be a very important housing trend for Jakarta over the coming years.

While the signs may seem to point in this direction, property development expert Andri Sutandinata told the Post property developers had to find out what people wanted before going out and building housing for them. In other words, will Indonesians take to apartments like the nouveau riche to faux 16th century Italian villas? (David Eyerly)