Property market dampened by numerous factors
Property market dampened by numerous factors
JAKARTA (JP): An international property consultant firm claims that while high foreign investment approvals have propelled demand for property in Indonesia, a number of other factors have dampened the industry's prospects.
PT Colliers Jardine Indonesia blames this year's relatively subdued performance of the property industry on rising interest rates, the quick appreciation of the Japanese yen, a credit squeeze on property loans to developers and consumers as well as new luxury taxes on houses, apartments and condominiums above 400 square meters.
In the April edition of its quarterly Jakarta Property Market Review, the company said the apartment market is the most affected sector and suggested that this is the best time for buying.
"The slowdown of sales and fierce competition have pushed developers to offer substantial discounts and more attractive financing schemes. Prices are now down and there is a choice of units," the review quoted the company's managing director, Peter A. Collins, as saying.
The review recorded a slowdown in middle sector apartment sales since the end of last year. The drop in sales occurred because over 4,000 units entered the market in the fourth quarter of last year.
"Currently, Jakarta enjoys some of the lowest prices in South East Asia, benefits from some of the highest rentals and shows some of the best yields for prime residential units," Collins said.
He said, however, the prices of top-end luxury strata title apartments are still relatively expensive, ranging between US$2,500 and $3,700 per square meter.
Collins noted that last year's investment approvals of US$23.7 billion, almost three times higher than the previous year, have driven demand for office spaces although office space supply remains high due to the completion of a number of projects.
"We expect more enquiries from foreign companies," Collins said.
As of last March, total office space was recorded at 2.3 million square meters. It is estimated that 456,162 square meters more will come on stream during the rest of this year, with a further 412,239 square meters next year.
Supply
"The next three years will see a disproportionately large amount of supply coming on stream causing a rise in vacancy levels and a general downward pressure on rentals," Collins said.
Current rentals range between US$10 and $15 per square meter per month, continuing the downward trend of the past five years. This figure is expected to stay still until the next quarter of this year.
The demand for industrial estates has been also driven by the high volume of foreign investment. Enquiries for industrial land and factories for rent have risen 50 percent during the first quarter of this year.
"The first positive sign signaling the resurgence of demand for industrial estates is a hike in sale prices of industrial land," Collins said.
Selling prices of established industrial estates have increased by about 30 percent to 60 percent, ranging from US$162 to $182 per square meter, while the prices for the lower class estates remain quite the same, ranging from $40 to $55 per square meter.
In the hotel market, the review recorded that three-star hotels were the most active category in the market during the first quarter of this year.
As of last March, the stock of star-rated hotels in the greater Jakarta area is 12,467 rooms. It is estimated that a total supply of 3,190 new rooms, 60 percent of which will be four-star rated, will enter the market.
"Fiercer competition is expected from the four-star hotels," Collins said, adding that last year's occupancy rate was recorded at 65 percent with an average rate of US$105 to $150 for most five-star hotels.
Out of all property sectors, the retail sector remains most attractive. Middle class consumer growth is the primary force driving the development of over 22 shopping centers estimated to complete by the end of next year.
Current rentals for prime shopping centers range between $40 and $120 per square meter per month, with service charges of between $7.50 and $9. Rentals in regional malls range from $25 to $80. (rid)