Return of expatriates helps boost apartment sales

Grace Emilia, Contributor, Jakarta

After a more than four-year slump, the apartment sector is showing signs of life again thanks to the return of expatriates, according to property consultant Koll IPAC.

Lynnette Johnson, an expatriate coordinator of the property consultant's relocation services, says the increase in the number of expatriates in Jakarta has had a positive impact on the Indonesian apartment business.

"Though we are told that there are 40 percent less work permits issued for expatriates compared to the precrisis era, our estimate is that the current number of expatriates is 20 percent higher than the same period last year," Johnson said in a recent interview.

A notable increase is seen in those working in the oil and gas industry. These people, who come to Indonesia to work both on short-term and long-term contracts will usually look for an apartment or house to rent.

Those coming for a short stay of between one to twelve months, often look for fully-serviced apartments, whilst those staying longer and those with families usually prefer a condominium or rented house, he said.

There are two kinds of apartments -- the leased apartment which is fully serviced and the strata-titled one, usually called the condominium type, the units of which are usually privately owned and rented out again to other parties.

The fully-serviced apartment tends to be more restrictive in amount of payment, while the condominium type is more negotiable

"One problem in selling an apartment is that people compare the prices of the fully-serviced apartments with those of the unserviced ones. In serviced-apartments like ours, we provide everything -- TV, gas, electricity, kitchen sets and in certain units even an aquarium and its fish," said Cheah Hooi Theng, the general manager of The Allson Residence.

According to Johnson, prices for a condominium depends on a variety of factors. Sometimes the landlord may need quick money and therefore rents it out cheaply. If the unit has special furniture that makes it more expensive than other units of the same size or number of rooms.

He said the overall pricing of apartments in Jakarta was similar to those in Malaysia and Thailand, but higher than those in Australia.

"Low-end apartment' rental rates are usually between US$500 to $1,000 per month, while the mid-end is around $1,500 to 2,500 per month. The high-end apartments are between $3,000 to 4,500 per month." said Johnson adding that the high-end apartments have an occupancy rate of between 90 percent to 100 percent." He believes that the unit's large space is one reason for the high demand for the high-end apartments.

"We have sold 92 percent of our 234 condominiums since we first opened in late 1998. The unit's selling price is between $250,000 and $450,000 per unit. Usually the landlord rents it out again with prices ranging between $2,800 to $2,900 per month for an unfurnished unit and about $3,200 for a fully furnished one." said Sudiwati Atailah, sales manager of Four Seasons Regent Residences.

Meanwhile, Aston Hotel Jakarta which also sells condominium and serviced-apartments is enjoying good returns mostly from its serviced-apartment type. "With prices ranging from $1,600 to $1,800 per month, we currently have 60 percent occupancy for our serviced-apartment type as the market demand for condominiums is not that high yet." said Sentot Lasiyanto, marketing analyst manager of Aston Hotel.

According to the latest data (up to March 2002) issued by Bank Indonesia in its commercial property survey carried out in Jakarta, Bogor, Tangerang and Bekasi, the average occupancy rate of leased apartments in the first three months of 2002 was 94.3 percent, a slight decrease from 95.4 percent in the last three months of 2001. However, the average leasing rate increased quite significantly from Rp 103,561 per square meter per month at the end of 2001 to Rp 111,970 per sq meter per month in March 2002.

At the same time, the selling rate of the strata-titled apartment was 84.9 percent with an average selling price of around Rp 6.48 million per sq meter. On an annual basis, the overall selling price showed a 20.7 percent increase compared to the same period last year.

Though business looks good, Cheah Hooi Theng says that the level of overall confidence is still weak compared to before the economic crisis.

"Before the crisis, people used to pay two years in advance. Currently they only dare to pay in advance on a monthly or quarterly basis."

He added even if the contract was for one year, they are only willing to pay six months in advance though the rate for long- term payment is 20 percent to 30 percent lower.