Property market needs several years to recover

Property market needs several years to recover

JAKARTA (JP): The capital's property market still needs two or
three more years to recover, the city's Development Planning
Board (Bappeda) estimated on Thursday.

Head of the board's construction section Sarwo Handayani told
a meeting of Jakarta real estate developers that during the next
two or three years the city and it's suburbs would not witness
any new property developments.

"The city's top priority is to restart the abandoned projects
during this period," she told participants in the discussion,
held in conjunction with the third regional meeting of the
Jakarta chapter of the Association of Indonesian Real Estate
Developers (REI).

Today, Jakarta still has a total of some six million square
meters of building space abandoned by developers due to the
economic crisis, Handayani said.

The city authorities, she added, had started to help promote
the sale of the neglected buildings to both local and foreign
parties.

In addition to the abandoned spaces, the administration
will also market its 2,700-hectares reclamation area in North
Jakarta.

"We expect not only domestic buyers but also foreigners to buy
the property," Handayani said.

She also agreed with one of the participants in the meeting
that the Jakarta administration should review certain business
regulations, such as the gubernatorial decree which requires
developers provide 20 percent of their land to be used for low-
cost housing.

"We can review regulations like that," she promised.

The property sector was severely affected when the monetary
crisis hit the country in mid 1997. It was among the first
sectors to collapse.

Many developers tried to sell their products at discounted
prices but received few responses.

The unfavorable conditions become worse when the government
liquidated several banks in the following months, leaving both
customers and developers without a source of financing.

They cumulated in May of the following year when riots rocked
the capital, destroying many buildings and leading to a large-
scale exodus of Chinese-Indonesians.

After the success of the recent presidential election, many
businessmen, including property developers, have started to see
the first signs of economic recovery in the country.

Prominent developer Ciputra, who attended Thursday's meeting,
expressed his optimism about the market.

"The property business is a cycle. We are ready to start our
business again," said Ciputra firmly.

Changes

In the meeting, he urged the authorities to immediately make
sweeping changes in property regulations to speed up the recovery
of the business in the city.

He also called on the government not to be hasty in selling
the properties which are currently under the custody of
Indonesian Bank Restructuring Agency (IBRA), since current
Indonesian property prices were too low.

"Moreover, the properties won't run away like thieves,"
Ciputra told reporters on the sidelines of the meeting.

At the moment, he said, only foreigners have the money to buy
property at already reduced prices, although the original prices
here were cheap.

He said the price of Indonesian properties "are just one
twentieth of those in Singapore".

Some of the participants in the discussion disagreed with
Handayani. They believed the recovery of the property sector
would be much quicker than the board estimated.

Chairman of the Jakarta chapter of the real estate association
Ma'roef estimated the recovery would start in the next five
months.

"I believe developments will be positive, and that we have to
anticipate these conditions," he said, without further
explanation.

Developer Erick Natsir commented, "It will start getting
better in the year 2000, and in 2002 everything will be normal
again."

Ali Hanafiah, another participant, shared the view, saying

"The bank rates have been decreasing, while security is
improving nowadays."

However, he said it would take a very long time before a real
estate bonanza occurred on the same scale as that which happened
in the past.

"But that's not the main priority right now," he said. (05)