Property demand stable during second quarter

Property demand stable during second quarter

JAKARTA (JP): The demand for all types of property was stable
even though average office rents rose 1.3 percent in the second
quarter of this year, property consultants from PT Procon
Indah/Jones Land Wootton said yesterday.

"Net take-up in the Jakarta CBD (Central Business District)
office market was over 50,000 square meters during the review
period, bringing the total take-up in the first half of this year
to approximately 143,500 square meters," said Craig Williams, a
senior technical advisor to Procon Indah.

Williams, who is also a director of the Jones Lang Wootton
international real estate company, was speaking at a press
conference to release his company's quarterly property market
report.

He said that the 50,000 square meter take-up recorded in the
second quarter equaled almost 60 percent of the total take-up in
1995.

Williams said that financial institutions, telecommunications,
construction and manufacturing companies were the major sources
of new demand over the last 12 months. These types of companies
are expected to continue dominating the leasing market.

He said that average market occupancy of prime Central Jakarta
offices remained at 90.8 percent. There were 338,500 square
meters available at the end of June 1996.

Based on a selection of buildings, average office rents
increased over the quarter by 1.3 percent from US$12.80 to $13 a
square meter per month.

"Despite another anticipated high annual take-up rate for
1996, we expect average market physical occupancy to decline
later this year due to the higher level of additional supply
during this year," he said.

High demand continued in the Jakarta retail market. After the
opening of Mega Mal Pluit in North Jakarta, 206,336 square meters
of retail space came onto the market in the last 12 months.
During the second quarter alone, new supply was 118,900 square
meters.

The net take-up of retail space in the first half of this year
was 82,100 square meters, or 60 percent of last year's take-up.

He said that there were 9,700 apartments, condominiums and
townhouses by the end of the quarter; a 5 percent increase over
the previous quarter and a 71 percent increase over the same
period 12 months ago.

Residential occupancy fell from 75.9 percent to 72.7 percent
over the last quarter. Compared to the same period 12 months ago,
it fell by almost 7 percent.

The total supply of industrial land for sale in Greater
Jakarta was 3,340 hectares last month, which is approximately 18
percent of the total permitted industrial land in the area.

Bekasi has the largest supply of serviceable industrial land
in Greater Jakarta, contributing 36 percent, or 1,210 hectares,
of the total supply.

Commenting on the new government regulation allowing
foreigners to buy houses in Indonesia, Williams said that it
would not significantly encourage foreign buyers.

"We'll see that there will be no significant impact from the
regulation, at least in the short term," he told The Jakarta Post
after the press conference.

He said the regulation had two weaknesses.

All houses and apartments are traded by what is locally known
as Hak Guna Bangunan (the right to build) and Hak Milik (the
right of ownership).

"But the government requires foreigners to buy property under
the legal scheme of Hak Pakai (the right to use). That means they
have to convert it first from Hak Guna Bangunan and Hak Milik to
Hak Pakai," he said.

The second weakness, he said, was that locals would have to
change properties' titles back into the right to build or the
right of ownership when they bought properties off foreigners.

"Besides, most foreigners here are only to stay for a short
time. If they buy houses they will find it hard to monitor their
property," he said.

He cited an example of falling property prices: "During that
time they have to monitor the market or just sell it immediately
to cut losses. But if they are already abroad how can they do
that."

He said that this seems to be an initial step by the
government to test the market's reaction. "I think they are being
wise. If they find it necessary to change, they will change it to
create a conducive condition," he said.

Asked about investment in property, he said that the
government's recent tight monetary policy had squeezed the credit
needed for property projects.

He said that to overcome this, many local developers were
sourcing funds from overseas or seeking joint ventures with
foreign companies.

He said that the Southeast Asian Property Company (SEAPC),
which is managed by Global Realty Advisors (GRA) of Singapore,
recently bought a 50 percent stake in Apartment Arkadia (Mampang
Arcadia Apartments) and Perkantoran Arkadia in South Jakarta.

He said that the Singaporean company had injected $70 million
into the two property projects. (13)