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)