Property market picking up: Report

JAKARTA (JP): The property market in the capital showed signs of recovery during the third quarter of the year in line with the strengthening of the rupiah to the U.S. dollar and the fall in interest rates during the period.

According to the latest survey of FPDSavills property services company, overall occupancy rates, except for office buildings, increased slightly from June to September.

The company said the Jakarta office occupancy rate decreased to an average 72.6 percent from 73.2 percent in the previous quarter.

A decline of 2 percentage points occurred in the Central Business District (CBD) to reach an average of 74 percent and an increase was recorded of 1 percentage point in the secondary area to an average of 68 percent.

In the office building sector, there was no new supply over the quarter, with the exception of the previously owner-occupied Danamon Data Center (14,000 sq meters in Mega Kuningan), which is now offered for lease, and the reopening of Futura Office Building (4,500 sq meters on Jalan T.B. Simatupang) following refurbishment.

Stocks of office space in the CBD and secondary areas total 2.9 million sq meters and 1.1 million sq meters respectively, of which approximately 10 percent represents strata title.

"The next quarter we expect some 6,000 sq meters of new supply from Wisma Soewarna (Phase I) in the Soekarno-Hatta International Airport," the company said in its report.

Average asking rents in the office sector remained generally the same as last quarter, while transaction rents declined in the CBD area but increased in the secondary area, FPDSavills said.

According to the company, average transacted Grade "A" CBD gross rents approximated US$10 (based on an exchange rate of Rp 7,500) per sq meter per month over the quarter. Grade A transaction rents were mostly in rupiah priced in the range of Rp 65,000 to Rp 95,000 per sq meter per month. Tenants included oil, consumer goods and insurance companies, airlines and banks.

"Some companies relocated to less expensive new buildings, while others were upgraded to Grade A stock," it said.

Retail

The occupancy rates for retail space increased 4 percent, 1 percent and 5 percent for grades A, B and C non-strata-title shopping centers respectively.

The average occupancy rate for all grades reached 95 percent, up from 93 percent in the previous quarter, the company said, adding that the increase might reflect growing confidence in the retail market.

Stock of shopping center space increased to a total of 1.14 million sq meters over the quarter, which included 140,000 sq meters of strata title and one million sq meters of leased stocks. Hypermarket stock increased to 74,500 sq meters area.

"Next quarter the 27,000 sq meter Sogo Department in Plaza Senayan shopping center will open. Some projects on hold are rumored to be starting construction next year," FPDSavills said.

Apartment

Occupancy rates in the apartment sector increased, except for leased units in the secondary area. The increase was primarily experienced by relatively new and higher quality apartments occupied by foreign business residents.

The occupancy rate of CBD leased and serviced units increased by 4 percentage points and 2 percentage points respectively to 69 percent and 58 percent.

Some strata title sale transaction were recorded at $3,200 and $2,500 per sq meter for upper-upper-class units and $933 per sq meter for middle-middle-class units. "Of the CBD strata title units, approximately 73 percent are sold," the property service company said.

In the secondary area, occupancy rates of leased units declined 1 percentage point to 65 percent, while it increased 1 percentage point to 48 percent for serviced units.

FPDSavills said that more than 50 percent of leased units in both CBD and secondary areas were occupied by Japanese tenants.

Rents for upper-class leased units in the secondary area fell to $9.5 from $11 per sq meter per month last quarter, but the middle class rents remained the same at $6 per sq meter per month. For secondary area serviced units, upper-class rents fell to $11 from $13 per sq meter in the previous quarter, while the middle-class serviced units declined to $9 from $12 last quarter.

Hotel

Following the peaceful June elections, the overall hotel occupancy rate experienced an increase.

The company said that a significant increase was recorded by four and three star hotels with 39 percent and 54 percent respectively during the third quarter.

A more modest increase was experienced by five-star hotels with a 31 percent occupancy in the same period as compared to 26 percent the previous quarter.

Average rupiah room rates for five and four star hotels continued to decline during the quarter by approximately 3 percent and 2 percent respectively.

However, three star hotel rates experienced an almost 11 percent increase in terms of rupiah value. The average rupiah room rates (excluding tax and service) for five, four and three star hotels were Rp 590,000, Rp 255,000 and Rp 200,000 respectively.

Hotel stock remained the same since the Treval International hotel opened in June. Last quarter's supply projection for 2000 decreased by 300 rooms to only about 600 rooms, while the total stock by 2000 is estimated to reach about 20,700 rooms. (hen)