Return of expatriates helps boost apartment sales

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.