Office space demand buoys Jakarta,s property market

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)