Monthly rental rates continue upward trend
The average asking gross rent of mid-up leased apartment units continued to climb upwards in the second quarter of this year, partly due to the increase in the oil price in the first three months.
Colliers International Indonesia (CII) property consulting company reported the average monthly rent of mid-up leased apartment units for two-bedroom increased to US$18 per sq m from $17 per sq m.
"However, the asking rent of lower-segment apartments was recorded to stabilize at $11 per sq m per month," CII said in its Quarterly Research Report.
According to CII, existing leased apartments were facing tough competition from converted strata-title units in the market.
In the secondary market, selected fresh strata-titled units from some completed projects offered lower rent, ranging from $5 up to $8 per sq m a month for middle class apartments located outside the Central Business District (CBD) area, such as Mediterania Tanjung Duren, Gajah Mada Mediterania Residence and Mediterania Palace Kemayoran. Units offered were mostly of small size averaging 45 sq m.
Meanwhile, the upper class units which were mostly located in the CBD area -- Sudirman Mansion, Bellagio Residence and Daksa Residence -- offered rental prices at between $13 and $19 per sq m per month.
Serviced apartment with daily service were priced higher. In the CBD area rent for two-bedroom units with the average size of 139 sq m was around $20 per sq m per month, while in the non-CBD area, the asking rent stayed at $16 per sq m per month.
Supply
Similar to the condition in the previous quarter, there was non additional supply entering the market for leased and serviced apartments.
As the result, in the second quarter the total stock was maintained at 6,180 units which comprised 57 percent of leased units and 43 percent for serviced units.
New supply is predicted to enter the market in the next quarter by the completion of three apartment projects in south and north Jakarta.
CII estimates that during the period between 2005 and 2007, leased and serviced apartment would increase by 7.3 percent which will bring total stocks to more than 7,500 units in 2007.
"By that time, serviced units with hotel services will dominate the leased and serviced market to 53 percent," it said.
As purpose-built leased and serviced apartments aim at expatriates, who mostly prefer to live in the CBD and South Jakarta areas, development of such apartment were concentrated on these locations.
Consisting of 2,850 units from the total of 25 projects, the CBD area leads the market, followed by South Jakarta with its 2,130 units generated from 30 projects.
Demand
In the second quarter, 2005, modest demand for leased and serviced apartments continued to prevail. Leased apartments maintained its occupancy rate from lease renewal plus some portion new tenants.
Favorite locations like South Jakarta and CBD area enjoyed good occupancy rates at 84 percent and 82 percent, respectively during the quarter.
Demand for leased and serviced apartments still has the potential following investment influx to Indonesia both from overseas and domestic sources primary in infrastructure and energy sector.
"Based on expatriates living in Indonesia who need short- and medium-term accommodation, the leased and serviced apartment market will benefit from its flexible leasing terms," CII said.
Outlook
The apartment market is becoming popular for Jakartans and other domestic market with specific buyers' profiles like students, executives, young couples and investors.
CII estimates that purpose-built leased and serviced apartments are likely to record a sustainable demand from expatriates, while strata-titled apartments target domestic buyers.
Development, which emphasizes the expatriate market, should take into account the companies' budgets to keep the premise competitive. Apartments located in the CBD area with reasonable rental rates are highly demanded.
Anticipating a massive supply in the market in 2006-2007 period, developers will be more aggressive selling the unsold units in the second half. However, due to the tight market competition in the CBD, North and West Jakarta, selling will be tough, CII predicts. -- The Jakarta Post