Property sector still optimistic
Property sector still optimistic
JAKARTA (JP): Property construction in Jakarta and its surrounding areas will remain active until 1998, Procon Indah/Jones Land Wootton (JLW) property consultants predicted yesterday.
A director of JLW Pacific, Craig William, told journalists at the launching of the company's Property Market Outlook here that although high interest rates reduced residential sales last year, developers' intentions to build commercial projects have not been curbed because many of them have access to overseas financing sources.
"Net absorption was very high in most sectors last year, although it was unable to keep pace with the large increase in supply," the report noted.
At the end of 1995, the general market performance, represented by average occupancy rates or cumulative take-up rates, was strong and the demand is expected to remain high in forthcoming years, the report said.
"However, if all planned projects proceed to completion, the effect of oversupply will adversely affect overall occupancy rates, prices and rental levels," Williams added.
The outlook said that the net absorption of office space last year reached 244,000 square meters, indicating a 27 percent increase.
Net demand, according to the report, came from business expansion and relocation from non-Central Business District areas and newly established joint venture companies as well as representative offices.
Rio Kondo, a senior associate director of Procon Indah/JWL, said 92 percent of new prime office space scheduled to be completed was precommitted or under advanced stages of negotiations.
Decline
"However, the market performance will temporarily decline toward the end of 1996 due to higher additional supply during the year. This will make it difficult for the owners to increase rentals despite expected high demand," he said.
He said retail prices for office space were likely to fall by 10 percent over the next two years because of tight competition.
The average base rentals remained stable at US$14-16 per square meter/month for high-quality buildings and $10-12 for standard-quality buildings.
Another Procon Indah/JLW associate director, Jani Rimba, said that during 1995 the retail market achieved the highest annual demand since the early 1980s.
Jani said that despite a high level of new supply during the year, average rentals in prime centers rose by 9.2 percent to $77.1 per square meter/month due to a strong demand from foreign brands or international chain retailers.
"In 1996 and 1997, the market will see several new retail centers open in the Jakarta Central Business District but the retail sector is expected to maintain its current performance in the short term," said Jani.
The average occupancy rate at the end of 1995 remained stable at 92 percent.
The total retail supply is estimated to reach 1,930,000 square meters by 1999, which suggests that the sector is potentially heading into oversupply, but the report projected the occupancy rates will stay at 90 percent this year and remain above 80 percent until 1999.
The overall stock in the multifamily residential market, which includes rental apartments, rental townhouses, serviced apartments and condominiums increased by more than 75 percent to 7,870 units.
The report said that in the rental market, the overall tenant- occupancy rate decreased to 81.3 percent last year.
"The demand in the rental market in 1996 is expected to remain stable due to a growth in numbers and movement of expatriates in the Greater Jakarta Area," said Luci Rumantir, a JLW director.
The property consultants also noted high levels of supply and demand in the industrial estate market in the Greater Jakarta Area with 530 hectares entering the market last year.
"The average land prices in Bekasi, West Java, increased by 25-30 percent last year to $50-85 per square meter," the report said. (08)
Housing -- Page 8