Slump in office demand, rental rates down
Slump in office demand, rental rates down
JAKARTA (JP): Weak demand encouraged suppliers of office space
in Jakarta to lower rental rates in the third quarter of this
year. It has also led developers to delay completion of projects,
a property company says.
However, the third quarter saw a higher demand for apartments
and retail facilities, PT Colliers Jardine Indonesia said in the
latest quarterly edition of its Jakarta Property Market Review.
The review said the slowdown in office space rentals resulted
mostly from oversupply while the demand remained weak.
It also recorded that a significant number of project
completion dates have been delayed to 1995 due to the low demand.
This year's supply of office spaces is forecast to be some
111,500 square meters, which is the lowest in the last five
years. Next year, it is expected to triple to 375,600 square
meters.
"An interesting issue is how owners of the existing buildings
will cope with the influx of new offices being marketed over the
next 12 to 18 months," the review said.
It noted that owners will fight hard to ensure their cash flow
with existing tenants is not eroded by the new development.
The review predicted owners offering a reduction in their
leasing rates of up to US$2.5 per square meter per month for
existing tenants who renew their leases.
Rentals of office space leveled at a low of $10 per square
meter per month in the third quarter of this year.
Apartments
Meanwhile, activities in the apartment leasing remained
promising, especially for one-bedroom and studio apartments,
while for two-room or three-room units the market looked tired.
"This is indicative of a new trend in the profile of
expatriates coming to Indonesia. They now tend to be single and
are likely to be involved in technical assistance on short-term
projects," the quarterly asserted.
However the market is aware of the possible oversupply of
proposed apartments. Up to 1996, no less than 76 additional
apartment buildings are scheduled for completion.
The review recorded that the average rentals for the last
quarter had decreased a few percent to between $15 and $27 per
square meter per month.
In the retail sector the average occupancy of prime shopping
centers in the city was between 85 percent and 90 percent during
the third quarter. "It is envisaged to remain stable as demands
continue to be strong."
The review noted that the confidence in the city's retail
market is indicated by the high level of interest by foreign
retailers and developers to invest their money here.
"However, the main impediment to foreign retailers entering
the Indonesian market is that the retail sector is still closed
to foreign investment," it said. (rid)