Net occupancy of Jakarta office space hits record high

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.