Real Estate Down and Out As Jakarta Market Hits Skids
The Jakarta property market is in a serious slump, with first-quarter demand sharply down across almost all sectors, and the industry is unlikely to see improvement until next year, analysts said on Wednesday.
Lucy Rumantir, chairwoman of property consultancy firm Jones Lang LaSalle Indonesia, said the global economic downturn had pushed the property market to its “lowest ebb,” with all segments, including condominiums, rental malls and central business district, or CBD, offices seeing declines in demand in the first quarter of this year.
“The retail sector has seen a sharp decline, as people withhold unnecessary purchases,” Lucy said during a media briefing on Wednesday.
Retail space had been hit the hardest, followed by the condominium-apartment segments and office space.
Anton Sitorus, the agency’s head of research, said that in the first quarter of this year, only 25,000 square meters of rental mall space were taken by tenants, from 63,000 square meters available space. “This brought the [overall] occupancy rate down to 82 percent, in the first quarter of 2009, down from about 84 percent in 2008,” Anton said.
Local investors who are regular purchasers of condominiums are also withholding purchases this year, he said.
“Condo sales were cut by half, from 1,400 units in the last quarter of 2008, to just 700 units in the first quarter of this year,” he said. Anton added that leasing demand also plunged more than 60 percent in the first quarter of this year.
The only bright spot was demand for office space in non-CBD areas “which rose by 62 percent, compared to the last quarter of 2008,” Anton said.
He said that growth outside of the central city was driven mostly by multinational firms that did not need to be near banking and financial centers, such as mining companies. Non-CBD areas were cheaper and often closer to employees’ houses, he said.
“This is especially true while the supplies in the non-CBD areas are limited, particularly in South Jakarta, where there’s strict limitations on high-rise building permits,” Anton said. Commuting concerns tend to be a major consideration when companies operate in Jakarta.
Lucy advised property developers to partner with one another to cope with the lack of liquidity in the market, which she said was similar to the city’s situation after the Asian financial crisis in 1998.
However, she added, the current subdued property sector could mean pent-up demand in the coming year.
“Just like what happened after the Asian crisis, we think that investors may buy more apartments by next year,” she said, adding that inversely, the retail property segment would recover first, followed by condominiums and office space.
Photo: Mall occupancy rates are falling in the wake of the global economic slump. (Supri, Reuters)
Lucy Rumantir, chairwoman of property consultancy firm Jones Lang LaSalle Indonesia, said the global economic downturn had pushed the property market to its “lowest ebb,” with all segments, including condominiums, rental malls and central business district, or CBD, offices seeing declines in demand in the first quarter of this year.
“The retail sector has seen a sharp decline, as people withhold unnecessary purchases,” Lucy said during a media briefing on Wednesday.
Retail space had been hit the hardest, followed by the condominium-apartment segments and office space.
Anton Sitorus, the agency’s head of research, said that in the first quarter of this year, only 25,000 square meters of rental mall space were taken by tenants, from 63,000 square meters available space. “This brought the [overall] occupancy rate down to 82 percent, in the first quarter of 2009, down from about 84 percent in 2008,” Anton said.
Local investors who are regular purchasers of condominiums are also withholding purchases this year, he said.
“Condo sales were cut by half, from 1,400 units in the last quarter of 2008, to just 700 units in the first quarter of this year,” he said. Anton added that leasing demand also plunged more than 60 percent in the first quarter of this year.
The only bright spot was demand for office space in non-CBD areas “which rose by 62 percent, compared to the last quarter of 2008,” Anton said.
He said that growth outside of the central city was driven mostly by multinational firms that did not need to be near banking and financial centers, such as mining companies. Non-CBD areas were cheaper and often closer to employees’ houses, he said.
“This is especially true while the supplies in the non-CBD areas are limited, particularly in South Jakarta, where there’s strict limitations on high-rise building permits,” Anton said. Commuting concerns tend to be a major consideration when companies operate in Jakarta.
Lucy advised property developers to partner with one another to cope with the lack of liquidity in the market, which she said was similar to the city’s situation after the Asian financial crisis in 1998.
However, she added, the current subdued property sector could mean pent-up demand in the coming year.
“Just like what happened after the Asian crisis, we think that investors may buy more apartments by next year,” she said, adding that inversely, the retail property segment would recover first, followed by condominiums and office space.
Photo: Mall occupancy rates are falling in the wake of the global economic slump. (Supri, Reuters)