'Property market weak in Q2'

'Property market weak in Q2'

The Jakarta Post, Jakarta

Demand for property in Jakarta during the second quarter (Q2) of
this year remained weak despite improvement in the country's
macroeconomic condition, property consultant PT Procon Indah
said.

Continuing negative sentiment among foreign investors in the
country had impeded demand for property, the firm said in its
quarterly property market review, released on Friday.

Foreign direct investment (FDI) in the first five months of
the year plunged by nearly 60 percent to US$1.67 billion,
compared with the same period last year.

Security problems, labor conflicts and a weak legal system
have discouraged foreign investors from returning to the country.

The report said that demand during the period was mainly
focused on the office and industrial estate sectors.

It said that demand for offices to rent was relatively stable,
with low positive net take-up during Q2. But average occupancy
rates decreased slightly to 77.6 percent, from 77.9 percent in
Q1.

Approximately 663,000 square meters of office space in the
central business district are currently vacant, mostly in newly
completed buildings and in some older office buildings.

Apartments to rent experienced a decline in net take-up during
Q2, from 143 units absorbed in the first quarter to 125 in the
second.

However, there was a slight increase in the occupancy level of
rental apartments from 60.8 percent to 61.6 percent, leaving an
estimated 5,640 units vacant.

Procon said that during Q2 new supply was dominated by the
retail sector, which recorded an additional 114,000 square meters
of retail space.

The office sector saw an additional supply of 30,000 square
meters following the completion of Menara Danamon.

Future supply in rental apartments will come mostly from
condominium units offered for lease and the completion of Pondok
Indah Golf Apartment Tower II.

Procon observed that changes in rental rates in most sectors
were due largely to the strengthening of the rupiah against the
dollar during Q1.

The company also predicted that short-term supply would be
dominated by the development of retail centers and middle-class
condominium projects offering competitive prices.