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)