Most high-rise building owners 'in fiscal trouble'

Most high-rise building owners 'in fiscal trouble'

JAKARTA (JP): The majority of building owners in Jakarta's
central business district cannot keep up with their bank loan
repayments, property analyst Panangian Simanungkalit said
yesterday.

Panangian, president of the Center of Indonesian Property
Studies, said 80 percent of the high-rise buildings in Jakarta's
"golden triangle" central business district had been developed
with financing from 47 local banks.

The banks were currently experiencing financial troubles due
to their huge nonperforming loans to the property sector, mostly
to owners of high-rise buildings in the business district, he
said.

"Sooner or later, the owners of the high rise-buildings in
Jakarta's central business district will have to sell their
properties to pay their loans."

Panangian valued the financially troubled high-rise buildings,
excluding hotels, in Jakarta's golden triangle at US$21.85
billion.

He noted that many foreign investors from the United States,
Hong Kong, Taiwan, the Middle East and Germany had expressed an
interest in buying property in Jakarta's business district, but
none of them had thus far bought any buildings because the owners
valued their properties too highly.

"The owners are marking up the prices," Panangian said.

Panangian also criticized the government for its hesitation to
sell the properties it confiscated from the 23 closed and
suspended banks.

Last November the government closed 16 private insolvent banks
and earlier this month suspended the operation of seven other
ailing banks.

He said it would be better for the government to sell the
properties now when Indonesian properties were still valued
relatively highly by foreign investors.

Prices could drop, he warned, once the government issued a
bankruptcy law. This would make many developers officially
bankrupt and force them to sell their properties at whatever
price they could get.

The country's property market was also experiencing an
oversupply which would subdue prices, he added. (jsk)