Overseas property investments unaffected by crisis

Overseas property investments unaffected by crisis

By Sylvia Gratia M. Nirang

JAKARTA (JP): Foreign realtors have muscled in to the local
market in the past several months, exploiting the anxiety-fueled
desire of some to emigrate to safer shores after the May riots
and on-again, off-again demonstrations.

While the desire may be there, the crisis has bit hard into
the spending power of the prospective buyers.

Teddy Tjandra, general manager of PT Austanah Permai, local
agent of Australian developer PRD Austpac, said his firm had not
recorded a marked jump in sales since May.

"As far as I know, many Australian property developers are
also experiencing the same situation. There are still many people
who want to buy houses and apartments in Australia, but there has
been no significant increase after the riots," Teddy told The
Jakarta Post.

Teddy said sales were very good in recent years because
Australia boasted simple and attractive property ownership
regulations.

Indonesians' purchases of property Down Under increased
sharply in 1991, he said, and boomed in 1996.

"Sales are still good amid the current economic crisis, but
not as good as we expected because the prices of the property has
already tripled from its precrisis level due to the rupiah's
depreciation."

Australian property managers Jones Lang Wootton Research said
in a recent report that Asian investors had quit the market and
left local developers stuck with floor space. DPA quoted the
report as saying that plans to build 3,000 apartments in the
central Sydney had been put on hold after slack sales and the
falling value of existing units.

Asians have been net sellers of property in the 18 months
since the regional meltdown hit, and this is now being reflected
in the demand for inner-city apartments, some of which have lost
a quarter of their value since the start of the crisis.

Although Teddy refused to reveal his company's sales in
Indonesia, he expected figures this year to exceed those in 1997.

"Many Indonesians prefer Australia because it still near
Indonesia and the cost of living there is not as high as European
countries or the United States."

He said most Indonesian buyers were parents whose children
studied in Australian colleges and universities.

"They prefer buying a house or apartment for their children
because it is cheaper than renting a place. They feel it is more
convenient if they visit their children because they will not
have to stay in hotels," Teddy added.

"Besides, after their children finish their studies, they can
lease the house or the apartments. It will be a very good
investment."

Jenny H., sales associate of Sheraton Suites Calgary, an
apartment complex in Calgary, Canada, admitted sales were not
good as she had expected after the unrest.

"To attract more buyers, we held exhibitions in several big
cities in Indonesia which were accompanied by immigration
seminars," she told the Post.

Before the crisis, she said, most Indonesian buyers were
businesspeople seeking to expand their enterprises to the United
States, but who preferred to live in big cities in Canada which
they often said were "not as noisy and as terrifying as American
cities".

"But since the crisis began, there has been a change in their
reason for buying properties. Many of them are buying houses and
apartments in Canada because they want to invest their money in
property. They said they cannot trust the local banks anymore."

Marihad Simbolon, chief commissioner of a local chemical
company, said he considered buying a house in Australia to be a
good investment.

He bought a house in Melbourne in 1991 when he started sending
his four children to study in the country.

"It is better to have a house there because my children could
live together. The situation is more pleasant for study than
living in dormitory. My wife and our relatives can also visit
them frequently," Simbolon said.

"Besides, if I make a business visit to Melbourne I do not
have to stay in hotels."

The house served as his family's shelter for several weeks
after the May's riots.

A famous Chinese-Indonesian hairdresser who asked to remain
anonymous admitted he bought a house in Los Angeles after the
riots.

"I feel more safe there. But since my business is here, I have
to come back. I bought the house as a preparation in case there
are riots again. If that happens, I will directly flee to L.A."

He said his wife, two children, mother and two sisters had
lived in the house since May and refused to return.

Zoemrotin K.S, executive director of the Indonesian Consumers
Foundation (YLKI), warned prospective purchasers to first read up
on a country's specific property ownership regulations before
making a purchase.

"Every country has a different property ownership regulation
that has to be studied before buying the property. But most of
the developers or marketing agents never touch on the matter when
offering their products," she told the Post.

Zoemrotin said buyers should educate themselves on the
pertinent regulations, the location of the properties and
surroundings.

"It is very risky for people to buy properties in countries
they have never visited because they can only imagine the
location and the environment from the sellers, who will usually
only tell them the good parts," she said.