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.