Net occupancy of Jakarta office space hits record high

Dewi Santoso, The Jakarta Post, Jakarta

The net take-up of Jakarta's office property market in the first quarter of 2004 has hit its highest quarterly figure since 2000, signaling the country's improving economic condition.

Director of property consulting firm PT Procon Indah, Lini Djafar, said on Thursday that based on the company's quarterly review, the net take-up of offices located in the capital's central business district (CBD) recorded a hefty 220 percent jump to 27,500 square meters (sqm) in the first quarter of 2004, from only 8,600 sqm in the same period last year.

Lini said the stronger demand was attributed to expansions and relocations by the business sector particularly the telecommunication and mining industries.

"The significant (player) is PT Telkomsel, which just moved into the recently completed 73,000 sqm Wisma Mulia on Jl. Gatot Subroto in South Jakarta, occupying one floor with a total area of 5,000 sqm," she said.

Telkomsel is a cellular phone operator and a subsidiary of state-owned telecommunications firm PT Telekomunikasi Indonesia (Telkom). Its headquarters was previously located in Graha Surya Internusa on Jl. Rasuna Said, South Jakarta.

The relocations, however, have caused the occupancy rate of offices in the CBD area to decline to 78.1 percent in the first quarter of this year, from 78.8 percent in the same period last year.

According to Lini, the increasing demand for office space reflected a further improvement in the country's economic condition.

The country's economic indicators have been improving during the past year, although critics have said this has not translated into brisker investments by the corporate sector due to lingering problems in other areas.

The country's improving economic picture is shown by the declining trend in the central bank's benchmark interest rate, benign inflation and a stronger rupiah.

Procon said during the quarter there was a slight increase in the monthly average rental rate, by 1.0 percent to Rp 108,000 ($12.56) per sqm, from Rp 107,800 in last year's first quarter period

The firm also said the net new supply of office space during the quarter totaled 65,400 sqm.

Meanwhile, on industrial estates, net take-up declined to 8.8 hectares (ha) from 12.7 ha in the same period last year, Procon said.

It added there was no new supply during the quarter as industrial land supply stayed constant at the June 2003 figure of 6,953 ha.

Net take-up of industrial estates was mostly concentrated on small to medium-size plots of below five ha, with demand coming mainly coming from the automotive, electronic and plastic manufacturers.

Procon said the price of industrial land declined by 0.8 percent to Rp 302,198 per sqm as the local currency strengthened against the dollar.

Lini said demand for industrial land would continue to remain weak ahead of the upcoming presidential elections in July and possible a second round in September.

However, she noted condominium and retail markets were likely to remain active, although supply had not grown.

As of March 2004, the total cumulative supply of condos was at 27,366 units, including two additional units from Permata Senayan. The total cumulative supply of retail space was 1.69 million units.