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)