Retail, hotel sectors to lead property recovery: Consultant

Retail, hotel sectors to lead property recovery: Consultant

JAKARTA (JP): The retail space and hotel subsectors are expected to lead the recovery of the property sector next year, followed by the industrial and office subsectors, according property consultant PT Colliers Jardine Indonesia.

The company's senior manager for property, tourism and hospitality, Djoko Sarwono, told a news conference on Monday that the retail space subsector had been more dynamic compared to other subsectors.

"The retail subsector will lead the recovery in the country's property business," Djoko said. "The assumption is that economic recovery should improve consumer purchasing power next year."

The occupancy rate of the retail space subsector in Greater Jakarta had shown a significant improvement from 81.9 percent in the first quarter to 90.5 percent in the third quarter, Djoko said.

However, Djoko predicted that the occupancy rate in the retail space subsector would remain stable at its current rate in 2000 but rental rates would increase notably before the second half of next year.

The average monthly rent per square meter during the first three quarters of this year stood at between Rp 116,000 (US$16.50) and Rp 120,000 in Jakarta and between Rp 51,000 and Rp 67,000 in areas surrounding Jakarta such as Bogor, Tangerang and Bekasi, according to a Colliers Jardine research report.

But for premium retail centers, the rental rate could reach as high as Rp 550,000 per square meter per month, the report said.

It said retail centers located in several commercial districts and those within an established residential area enjoyed a high occupancy rate of nearly 100 percent.

These include Plaza Indonesia, Plaza Senayan, Melawai Plaza, Kelapa Gading Plaza and Bintaro Plaza, the report said.

Colliers Jardine says another 80,900 square meters of retail space is scheduled for completion next year, making the total supply 1.66 million square meters in Greater Jakarta by the end of 2000.

Besides the retail space subsector, fast recovery is likely to be enjoyed by the hotel subsector due to an expected sharp increase in foreign tourist arrivals next year.

"Demand for star-rated hotels will further increase in year 2000 with the improvement of the Indonesia's political and economic environment," Djoko said.

The government has predicted tourist arrivals will grow some 50 percent to between 5.2 million and six million people next year, from only 3.93 million people this year.

The number of tourist arrivals should serve as an indicator for room demand for the hotel business, he said.

Colliers Jardine research report also said five-star hotels dominated the market with a market share of 41 percent, followed by four-star and three-star hotels with 37 percent and 22 percent respectively.

The total hotel market size in Jakarta, according to the report, is 21,126 hotel rooms in 33 three-star, 26 four-star and 18 five-star hotels.

The report said the average room rate per night in the first three quarters of the year stood at between Rp 350,000 and Rp 400,000.

The apartment and industrial subsectors have been relatively stagnant and are expected to remain so next year. These subsectors are projected to grow significantly in future years.

According to the report, not many sales of apartment and industrial sites were concluded in 1999.

The leased apartment market was sluggish as demand was limited due to a reduction in the number of expatriates living in Jakarta due to the prolonged economic crisis in the country.

For the industrial subsector, the report said investors were still concerned about the country's lack of conducive business environment because investors were still taking a wait-and-see strategy.

The vacancy rates of industrial estates in Jakarta stood at 11 percent, or 319.2 hectares, for the first nine months of the year.

For areas outside Jakarta the vacancy rate was recorded at 27 percent, or 1,876 hectares, during the first nine months of the year.

Djoko said the office space subsector was the slowest to recover.

Decreasing demand for office space would further pressure rental rates until the first half of 2000, he said.

"A real market recovery in the office space subsector is expected to begin in year 2001 and onward," Djoko said.

With an estimated 3.83 million square meters total office space available in 2000, according to Colliers Jardine's report, demand for office space will still be limited due to unfinished bank and corporate restructuring. (udi)