'Property market strengthening'
The Jakarta Post, Jakarta
Although demand for property in the greater Jakarta area remained generally weak during the first quarter, some developers are moving ahead with their construction projects, indicating early signs of recovery in the property sector, consulting firm PricewaterhouseCoopers (PwC) property group said in its first quarter Jakarta property trend report released on Tuesday.
"Signs of a property market recovery may be gleaned from the activities of optimistic local investors and developers, who are continuing construction work," said PwC property group director Katherine Harberd.
"Since this is probably not driven directly by real demand, it may be the result of a more positive perspective by developers and investors," she added.
The firm, however, said that investors would continue to wait for signs of more significant progress in demand before making large commitments.
PwC predicted that developers were turning their attention to Jakarta's suburbs and hinterland, such as Bogor, Tangerang, Bekasi and Cibubur, where residential developments were growing along with retail demand.
These areas have been targeted by major retailers, such as Carrefour, Giant and Diamond, over the next couple of years. The company added that larger retailers would continue to open new outlets, both as freestanding stores and as anchor tenants in shopping centers.
Minimal growth was most evident in sectors reliant on expatriate demand, such as apartments and offices, while hotels showed a positive sign.
"Demand continues to vacillate, without any sustained positive trend," the PwC report said.
Sectors reliant on the domestic market, such as retailing and shophouses, reported modest growth.
Greater Jakarta hotels in all star categories saw increased occupancy to 48.5 percent -- higher than the same quarter last year due to growing business activities and the strengthening of the rupiah.
PwC said that many office buildings had increased their service charges during the first quarter, by 10 percent to 20 percent.
"The planned increase in rental withholding tax is more bad news for landlords, as it would be difficult to recover the loss of cash flow in the near term," it said.
PwC reported that there was no new shopping center supply in Jakarta during the first quarter and occupancy rates in Greater Jakarta shopping centers remained stable at 93.8 percent, from 93.9 percent in the fourth quarter last year.
The total stock of apartments remained at about 9,800 units in the central business district (CBD) and about 19,800 units in secondary areas, as there was no new supply in the first quarter.
PwC believed that a number of the purchasers were investors rather than prospective owner-occupiers and their investments demonstrated renewed hope of an upturn in this sector of the market.