Market for office space strengthening: Analyst

Market for office space strengthening: Analyst

JAKARTA (JP): The office space market in the capital city was
strengthening during the first half of this year, with demand for
additional space estimated at 120,000 square meters, analyst said
here over the weekend.

"During the first half of this year, the office space market
saw substantial leases by domestic and foreign companies," said
Peter Collins, the managing director of Colliers Jardine
Indonesia, a property consultant company.

He said that the strength of leasing activities is partly
being fueled by large scale floor users taking advantage of a low
rental climate to relocate to newer premises.

He expects that rents will decrease in the long term.

"Precommitments averaging 60 percent of planned space are
being achieved for premium buildings under construction and those
scheduled for completion in the short term," Collins said.

In the July 1996 edition of Asia Pacific Property Trends,
which was published by McGraw Hill, Colliers Jardine reported
that Jakarta's supply of new office space in the first six months
of the year totaled over 100,000 square meters, compared to
approximately 125,000 square meters over the same period of last
year.

Premium buildings completed during the first half of the year
were Wisma 46 (89,500 square meters) and Bapindo Tower II (45,000
square meters).

"Additional new floor space supply of 363,516 square meters is
expected to become available over the remainder of the year,"
said Collins.

He noted, however, that with high interest rates and a squeeze
on property lending, some projects could be delayed.

According to Collins, on the back of the increasing affluence
of Jakarta households, retailers are expected to increase sales
by 22 percent this year in real terms.

He noted that most retail centers to be completed this year in
the capital are already 90 percent leased.

Although inquiries from foreign investors seeking industrial
premises in Jakarta have cooled, domestic manufacturers are
increasingly demanding smaller plots of land between 0.5 hectares
and two hectares, as well as small factory buildings varying from
1,000 to 2,000 square meters in size.

competition for both four-star and three-star hotels in
Jakarta are expected to tighten with the addition this year of
about 1,000 four-star hotel rooms and 2,056 three-star rooms.
"The extra competition should put downwards pressure on occupancy
levels and room rates by the year-end," said Collins.

The total stock of international standard hotel rooms reached
14,518 units in June. During this year, 3,926 hotel rooms are
scheduled to become available, 25 percent of which have already
been released. Next year, the construction of over 2,900 new
rooms will be completed.

According to Collins, the number of Jakarta's stock of high
end apartments reached 7,958 in the first half of this year, an
18 percent increase over last year's stock.

The average occupancy of strata title apartments increased
marginally to 47.3 percent at mid-year from 47.1 percent last
December. However, apartments solely for lease enjoyed an
occupancy rate of 93 percent due to high demand from expatriates
and medium-term occupants. (13)