Office rental market set to remain weak in 2002

The Jakarta Post, Jakarta

Demand for office space in Jakarta this year will remain weak due to unfavorable domestic and global economic conditions, according to property consultant Koll IPAC in its latest report issued on Monday.

Koll IPAC, however, predicts that only prime office buildings in good locations will continue to enjoy high occupancy rates, assuming there is improvement in the local economy, which would generate demand for office space.

Koll IPAC said that in the fourth quarter of last year, 81 percent of office buildings in Jakarta's central business district (CBD) was occupied and 19 percent was vacant (about 560,000 square meters).

The report explains that currently Jakarta's office supply stands at 4.3 million square meters, which will increase by 70,000 sq m within three months due to the completion of several office development projects.

The report emphasizes that rents in 2002 should not increase excessively because of continued modest demand as rental rates both in rupiah and U.S. dollars remained steady during the last quarter.

It said that base rent in the CBD averaged Rp 60,000 per sq m per month while non-CBD averaged Rp 49,000 per sq m per month. Monthly service charges averaged Rp 32,000 per sq m (CBD) and Rp 27,000 per sq m (non-CBD).

The report says that U.S. dollar base rent in the CBD and non- CBD was between $12 per sq m and $8 per sq m per month with a respective service charge of $6 per sq m and $5 per sq m per month.

The report, nevertheless, says that service and overtime charges quoted in rupiah needs to be adjusted to allow for the rise in electricity rates.