Office space demand buoys Jakarta,s property market

JAKARTA (JP): The great need for office space has driven up the overall demand in most sectors of the Jakarta property market, an international property consultant said.

PT Procon Indah, in association with Jones Lang Wooton, said in its Property Market Outlook report issued here last week, that demand in most sectors of the Jakarta property market remained buoyant during the third quarter of this year.

It said that increasing investment -- both foreign and domestic -- will positively influence the property market in general.

In the first eight months of this year, foreign direct investments approved by the government reached US$22 billion, 27 percent lower than the same period of last year. Domestic investment commitments, however, increased to an unprecedented level of Rp 77.3 trillion ($33 billion), surpassing last year's level by 6 percent.

"These continued strong investment levels should continue to generate demand in various property sectors," the report said.

Office space

Net take-up for office space in prime locations during the third quarter of this year totaled over 75,000 square meters, an increase of almost 50 percent over the last quarter's 50,607 square meters.

Financial services, telecommunications, manufacturing, trading and service companies remained the major sources of new demand in the last three months and are expected to continue to dominate the leasing market in the short term.

However, net take-up was lower than net supply in the last quarter, causing the average occupancy level to decrease to 89.3 percent from the 91 percent recorded in the previous quarter and the 92.7 percent in the third quarter of last year.

Based on a selected basket of buildings, average rents for prime office space remained stable at US$13.00 per square meter per month during the third quarter of 1996 -- one of the most competitive rental rates in the Southeast Asian region.

"As one element of the overall investment costs, this could help maintain foreign investment flow into Indonesia which in turn could create new demand for prime office space," the report said.

Prices for strata title office space remain stable. Estimated capital value for prime office spaces is stable at $2,145 per square meter

The construction of four prime office buildings was completed in the third quarter of this year. The buildings are Graha Surya Internusa on Jl. HR Rasuna Said, Graha Paramita on Jl. Denpasar, Wisma Kota BNI '46 on Jl. Jend. Sudirman and Lippo Jiwa I on Jl. Gatot Subroto. Of the four buildings completed in the third quarter, only Lippo Jiwa I is offered on a strata title basis.

The completion of the four buildings with a semi-gross area of 126,980 square meters raised the total prime office stock in Jakarta to 2.37 million square meters.

Procon Indah expects that three more prime office projects will be completed by the end of this year or early next year, with a total supply of 140,653 square meters. They are Plaza BII Tower II on Jl. MH Thamrin, Anggana Danamon on Jl. Jend. Sudirman and Menara Batavia on Jl. KH Mas Mansyur. Menara Batavia is the only building offering strata title office space.

Projected supply for 1997 is likely to reach over 292,000 square meters, of which 77 percent is already under construction, with the remainder in probable development status.

Of the supply scheduled for completion in the next quarter, approximately 75 percent is already precommitted, while the 1997 and 1998 supply has 55 percent and 28 percent in precommitments respectively.

Although prime office space enjoyed high demand, office buildings in secondary locations suffered market doldrums. Net take-up during the first half of 1996 declined by 7 percent over the second half of 1995. The net take-up came mostly from business expansion and relocation from office buildings in the prime area.

The average occupancy level of secondary office space also dropped by 4.1 percentage points to 87.3 percent during the first semester of this year over the same period of last year.

Average rentals from a selected basket of buildings in the secondary areas declined by 3.5 percent to $10.6 per square meter per month in the first six months of this year over the same period of last year.

Fourteen buildings in secondary locations were completed in the first six months of this year, making up an additional 113,100 square meters of new secondary office space.

They included Gedung Grup Humpuss on Jl. Medan Merdeka Timur, Graha Sejahtera on Jl. Gunung Sahari, Menara ERA on Jl. Senen Raya -- all in Central Jakarta -- Graha Kirana on Jl. Yos Sudarso, Mitra Sunter II on Jl. Yos Sudarso -- both in North Jakarta -- Gedung Deka in Green Garden complex and Gedung Sastragraha on Jl. Perjuangan -- both in West Jakarta.

Menara ERA and Mitra Sunter II were offered under the strata title scheme.

Procon Indah projects said that there will be new supply of 96,850 square meters of secondary office space in the second half of this year. Another 198,850 square meters of secondary office space will come on stream next year, of which 96 percent is already under construction.

Projects scheduled for completion in the second half of this year or early next year include Gedung Angkasa Pura in the former Kemayoran airport, Multan Center on Jl. Veteran, Mitra Plaza on Jl. Menteng Raya, Menara Indomonex on Jl. Kebon Sirih Raya, Gedung Bimantara on Jl. Kebon Sirih, Gedung Getraco on Jl. Tanah Abang Timur -- all in Central Jakarta.

They also include Wisma Pondok Indah and Pondok Indah Gallery in Pondok Indah, South Jakarta, Wisma Indograha in Green Garden, Wisma Central Asia on Jl. S. Parman and Graha Kencana on Jl. Perjuangan in West Jakarta, as well as Wisma Eka Jiwa in North Jakarta -- the only new secondary office building to be offered with strata title.

Retail market

In the retail sector, net take-up for the third quarter of 1996 was dampened by lack of new stock. No new centers were opened during the quarter. And approximately 16,400 square meters of retail space was withdrawn from the market in that period. Total cumulative supply of Jakarta retail space in the period dropped by 0.8 percent to 919,702 square meters over the second quarter of this year.

The average occupancy level increased slightly by 1.3 percentage points to 90.5 percent during the third quarter from 89.2 percent recorded in the second quarter.

Average rental rates for prime ground floor space in primary and secondary locations remained unchanged at $77.10 and $51.40 per square meter per month respectively.

The most probable new supply for the rest of this year is expected from the 92,300-square-meter Mal Taman Anggrek in West Jakarta. New supply for 1997 is expected to reach 142,400 square meters from Plaza Sudirman on Jl. Jend. Sudirman, Ambassador I on Jl. Prof. Dr. Satrio, Taman Rasuna on Jl. HR Rasuna Said, Menteng Plaza on Jl. Pegangsaan Timur, Daan Mogot Center on Jl. Daan Mogot and Mal Puri Indah in the Puri Indah estate in West Jakarta.

Condominiums

Approximately 2,180 multi-family housing units entered the market during the third quarter of 1996. The total cumulative supply of apartments, condominiums and townhouses increased to 11,883 units, a rise of 87 percent over the same period of last year.

Purpose-built rental housing, which included apartments and townhouses, represented 26 percent of the multi-family housing market with 3,107 units, while strata title which consisted of condominiums and townhouses accounted for 64 percent of the market or 7,588 units. The remaining 10 percent comprised serviced apartments.

Major projects launched during the third quarter included Apartemen Taman Surya, Menara 7 Gading towers, Apartemen Gading Timur and Apartemen Taman Gloria.

Approximately 4,049 units from 14 projects will come on stream in the rest of this year.

Net take-up for rental units in the third quarter was 481 units. This year's cumulative new supply to date is 949 units, almost 83 percent of 1995's annual net demand.

Net quarterly take-up for strata title units was 1,238, a significant increase from last quarter's 333 units. Net take-up for 1996 to date is 2,465 units, higher than net take-up for the whole of 1995 of 2,438 units.

Overall tenant-occupancy rates continued to decline to 66.3 percent in the third quarter from 72.7 percent in the second quarter.

Tenant occupancy rates demonstrated a decline in all sub- markets. Rental apartment occupancy rates decreased to 84.7 percent from 90.3 percent, tenant-occupancy levels in condominium slipped to 51.8 percent from 55.7 percent, while serviced apartment occupancy rates dropped to 72 percent from 82.2 percent.

From a selected basket of purpose-built rental apartments, average prime rentals for one, two and three-bedroom units were $30.50, $25.7, $21.6 per square meter per month respectively. Average for secondary rentals for one, two and three bedroom units were $22.60, $20.40 and $18 per square meter per month respectively.

Meanwhile, prices for strata title units in prime locations ranged from $1,700 to $1,950 per square meter. And for those in secondary locations ranged from $475 to $1,150 per square meter. (rid)