'Property market strengthening'

'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.