Property sector may stay sluggish until December

Property sector may stay sluggish until December

JAKARTA (JP): Indonesia's ailing property sector has not shown
any positive sign of recovery and will continue to be sluggish
until the end of the year, property research agency The Burwood
Report Indonesia has said.

The monetary crisis, which has hit Southeast Asia since early
July, has greatly destroyed the country's property sector,
resulting in decreasing sales and forcing many developers out of
business.

Burwood predicted that total investment in the property sector
this year would only reach Rp 14.44 trillion (US$1.7 billion), 50
percent of its initial target of Rp 30 trillion.

"Indonesia's property sector will remain sluggish this year
because demand from local consumers will continue to decline,"
Burwood said.

Burwood's research shows that monthly investment in the
property sector showed a decreasing trend since July. It drop to
below Rp 1 trillion per month in the past three months, from an
average of Rp 3 trillion to Rp 4 trillion before the currency
crisis hit the country.

Property investment in July reached Rp 3.08 trillion, Rp 2.7
trillion in August, Rp 983 billion in September, Rp 1.22 trillion
in October, Rp 1.18 trillion in November, and Rp 1.04 trillion in
December.

In the first three months of 1998, property investment was
recorded below Rp 1 trillion per month. It reached Rp 909 billion
in January, Rp 853 billion in February and Rp 650 billion in
March.

The property sector has been the worst hit by the economic
turmoil, which has seen the rupiah plunge to as low as Rp 17,000
to the dollar from Rp 2,400 in July. Currently, the rupiah is
traded at about 8,500.

The plunging currency has made it impossible for companies to
service their unhedged overseas loans.

Foreign investors have, so far, shown no interest in the
property sector, especially in the office, apartment, retail and
residential subsectors due to the various constraints.

Many developers have stopped operations, and others have
switched to other sectors.

Burwood said it would be difficult to develop big projects in
the coming two years because the weak purchasing powers of local
consumers could not be encouraged in the short-term. (gis)