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)