More apartment units enter the market

More apartment units enter the market

Business optimism remains strong in Jakarta's strata-titled
apartment market, stimulating the development of new projects
during the past three months.

Colliers International Indonesia (CII) property consulting
company reported that there were an additional supply of 3,534
units during the second quarter of this year.

The additional supplies came mostly from new Airlangga,
Mediterania Gajah Mada, Sudirman Mansion and SCBD Suite apartment
buildings.

The additional stocks have brought cumulative supply to reach
35,904 units in the April-June period, an increase of 11 percent
compared to the first quarter of this year.

In its Quarterly Research Report, Colliers said that six new
projects with total units of 2,865 were introduced during the
second quarter.

"Together with the existing projects, the above units will
increase total Jakarta apartment supply to 67,864 in 2007. When
the above future projects meet their schedule, the apartment
market will grow by 26 percent in the 2005-2007 period," it said.

In the future, middle class apartments will lead the market
with supply composition of 41 percent for middle to upper income
groups and 26.7 percent for middle to low.

The Central Business District (CBD) area continued to be the
largest provider, with 25.7 percent of the total existing supply.
In term of project numbers, the CBD was also the most preferable
location for apartment development with a total of 27 projects
out of 101 developments in total.

"However, with the bulk of the units expected to enter the
market in 2007, North Jakarta is predicted to substitute CBD as
the largest unit provider with total of 24 projects."

Second home

Besides investment, CII also observed that cost and time
consideration has also fueled apartment demand. Some buyers were
interested in buying apartment units based on their proximity to
the workplace and as second home.

Demand for apartments located in CBD area or adjacent to
commercial spots were considered high mostly for small type such
as one and two bedroom. Casablanca Mansion, Sudirman Park and The
Peak apartments were examples of projects under construction that
recorded a good absorption rate of above 80 percent.

According CII, the existing strata-titled apartment units
enjoyed 74 percent occupancy in the second quarter of this year,
leaving 9,335 units unoccupied.

The current under construction developments, on the other
hand, achieved 67 percent take-up rate. "Anticipating double
supply entering the market in 2006, Jakarta apartment take-up
rate is predicted to decrease to between 68 percent and 70
percent.

Price

Competition between new apartment units and secondary units
from the existing developments was quite tight during the second
quarter.

Furthermore, secondary units could offer lower prices with
modern fully furnished facilities which were better compared to
their original specifications, CII said.

Apartment prices ranged from the lowest of Rp 5.5 million per
square meter to the highest of Rp 26.7 million per sq m. On
average price was quoted around Rp 12 million per sq m. In the
luxury class, Four Season Residence and Oakwood Premier Cozmo
commanded higher prices with published price of above Rp 25
million per sq m. -- The Jakarta Post