Property market remains stagnant, awaits recovery

JAKARTA (JP): The country's property market would remain in the doldrums this year despite the current improvement in the macroeconomic indicators, but could rebound next year if the economic and political conditions continued to improve, consultancy firm PricewaterhouseCoopers (PwC) said on Wednesday.

Jay Smith, a technical adviser for PwC, said that the property market this year would be weaker than last year's due to a very low "take-up" in the first half of 2001.

"It's difficult for the property market to achieve last year's level although economic and political conditions have become better recently," Smith told The Jakarta Post on the sidelines of a media conference.

But he expected a recovery in the sector to take place in 2002 if the current positive developments on the political and economic fronts continued.

Director of the PwC property division Katherine Harberd said the property market was generally stagnant in the first half of this year in line with the bleak political and economic conditions.

In the office sector, the demand remained relatively flat with a total net take-up in the second quarter of only 18,000 square meters, while the total office space stock was about four million square meters, the company reported.

"Occupancy rates in Jakarta's office market (in the second quarter) stood at 77.5 percent, only a slight 0.5 percent increase from the previous quarter," PwC reported.

New tenants included securities firms, law offices, and trading companies, while expanding tenants were telecommunications and trading businesses, it added.

That said, however, demand for retail space in Jakarta was strong amid the growing retail business in the country.

The occupancy rates remained relatively stable at 94.2 percent in the second quarter as compared to 94.0 percent in the first quarter, the company said.

Total stock of lettable floor space in shopping centers in the Greater Jakarta area stood at 1.2 million square meters, it said.

"New tenants are mostly restaurants, clothing boutiques, and health and beauty centers," PwC said.

Separately, property consultant PT Procon Indah also painted a gloomy outlook for the country's property market this year, except for the retail sector.

The company said in its Jakarta Quarterly Property Market Review that in line with the business slow down, demand was generally weak during the second quarter.

With regard to the rental apartment sector, Procon said that the total stock of Jakarta rental apartments remained at 14,711 units, as no new supply came onto the market during the first half of this year.

"The vacancy level decreased slightly to 41.1 percent in the second quarter from 41.8 percent in the first quarter as a result of a positive take up of 106 units," Procon said.

Procon said rental apartments would face strong competition from condominium units if the rupiah weakened against the U.S. dollar again because condominiums could be leased in rupiah.

Some 298 townhouse units entered the market in the second quarter, bringing the total stock in Jakarta's condominium market to about 26,313 units, Procon said.

In the Greater Jakarta industrial estate market, Procon said that inquiries for this year had been lower than last year with many decisions being put on hold due to the worsening political situation over the last two quarters.

But, demand from small enterprises for standard factory buildings was expected to continue, it said.

According to the report, the total area of Greater Jakarta industrial estates stood at 5,439 hectares. (03)