Office space occupancy rates fall to 80 percent in Jakarta's CBD
Office space occupancy rates fall to 80 percent in Jakarta's CBD
JAKARTA (JP): Office occupancy rates in the Jakarta commercial
business district (CBD) dropped to around 80 percent or 2.27
million square meters by the end of September, compared to 84.4
percent in the second quarter of this year, according to a firm
of property consultants.
In a biweekly report, Procon Indah and its partner, Jones Lang
Wooton, said the office market in the CBD area had suffered the
decline as the result of a drastic drop in demand for office
space combined with an increase in supply.
"Companies predominantly from finance, insurance, oil,
telecommunications and other service sectors... reduced space
by 20 to 30 percent from previous tenancies," the company said.
It said vacancies had risen by 4.4 percent over the third
quarter of 1998 to about 568,700 square metres or 20 percent of
the CBD's total office space.
Based on the contraction in the economy, the amount of
occupied space is projected to decline by a further 135,000
square metres by the end of the year and by a further 85,000
square metres next year.
Continuing rationalization, downsizing and relocation
strategies implemented by many companies will result in a further
increase in vacancies to 25 percent by the end of this year, then
to 31 percent in 1999 and to 32 percent in 2000.
Increasing vacancies and deteriorating demand has forced a
further decline in rental rates.
The vale of rentals dropped by 9.1 percent in rupiah terms
over the third quarter.
The majority of grade A offices now offer monthly rents
ranging from US$11 to $15 per square metre at fixed exchange
rates of between Rp 4,000 and Rp 5,500 against the dollar.
Grade B and C offices continue to be offered for monthly rents
of between $9 to $12 per square metre at the same fixed exchange
rates.
Some grade A offices are now offering rents quoted in rupiah
ranging from Rp 60,000 to Rp 80,000 per square metre per month.
The company said service charges characteristically remain at
US$6 to $7 per square metre per month, which again are levied at
similar fixed exchange rates.
Some building owners are also offering service charges in
rupiah at levels ranging from Rp 25,000 to Rp 45,000 per square
metre per month.
Shorter lease terms of two to three years are being offered
for renewals and quarterly payment terms can be negotiated, the
report said.
Almost all existing strata-title offices are now priced in
rupiah and the average asking price for such accommodation has
fallen by between 10 percent and 15 percent over the past
quarter. Strata-title offices can now be found for between Rp 8
million and 11 million per square metre.
In U.S. dollar terms, strata-title rents have fallen in price
by between 50 percent and 60 percent on their pre-crisis
levels.
Industrial space
Separately, another firm of property consultants, Colliers
Jardine Indonesia, said the industrial property market remained
the most active.
The company's managing director, Piers Brunner, said Indonesia
was extremely competitive and in this market and the low cost of
acquiring property here made investments a very attractive
proposition.
The capital cost of establishing an industrial facility in
Greater Jakarta costs one-eight per square metre of floor space
than it does in Sydney and Manila and one-thirtieth of what it
costs in Taipei, Brunner said.
"Our observations are evidenced by a number of transactions we
have concluded," he said.
In the last few months deals closed include leasing 24,000
square metres of land with a 7,000 square meters factory building
to an American automobile component manufacturer, and a 55,000
square metre plot of land with an 8,000 square metre facility to
a Taiwanese investor, he said.
Both transactions were concluded in the secondary market,
which Brunner said was more active because of its realistic
pricing and flexibility in negotiations.
Procon said investment in office space had remained sluggish
because owners had not been prepared to dispose of their
properties at the currently depressed values, despite the great
interest shown by prospective foreign investors.
It estimated average capital values to have fallen by 30.7
percent from Rp 9.7 million per square metre in June to Rp 6.7
million per square metre in September. In dollar terms, this
represents a 72.2 percent drop in capital values from pre-crisis
levels. (das)