Surabaya apartments ready for economic development

Surabaya apartments ready for economic development

By Sirikit Syah

SURABAYA (JP): Surabaya is ready for more business activities
in the region, even if active business means many expatriates
living in Surabaya. At the moment, in the four-star and up
apartment complexes, there are about 600 apartments available.
Only about 48 percent are occupied.

The director of Grand Interwisata, which manages Graha
Residen Serviced Apartments, A. Adelie, said, "The availability
of accommodation is a significant factor for investors to
consider when doing business in this region." Graha Residen,
which has 151 residences, has an occupancy rate of about 45
percent.

Built in early 1989 and opened in 1991, this successful
business of Dharmala Land reached its peak in 1997. It was the
start of the economic crisis but the management had long-term
contracts, and occupancy was 97 percent. "The major hit for us
was when the contracts ended, mostly in 1998. It is hard for us
to rise again."

Although a 45 percent occupancy rate is considered fine in the
apartment business, Adelie is not happy with the condition. But
he is optimistic about the future, and seems to have a strong
belief in the government. "The government said we have had an
economic growth of about 3.5 percent, so it should be fine. Of
course, it is much less than the growth during the New Order era,
which was 7 percent to 8 percent. But 3.5 percent is hopeful
enough."

What makes him optimistic? "The constant and stable economic
growth that we are experiencing now." He said that within three
years, most apartments would be occupied, on the condition that
there are no more apartment developments until the crisis is
over. "It will take three years before it is healthy enough to
start building again."

Mercure Hotel & Residence General Manager John Gardner agrees
with Adelie. He also sees a better future for Surabaya's
apartment business: "Many overseas investors and large
corporations will want to invest and expand their businesses
here."

Mercure holds the highest occupancy rate, about 60 percent of
its 105 apartments. "Although we have the highest percentage of
occupancy, we will not be satisfied until it reaches 100
percent," said John. The Mercure hotel was opened in 1996 and its
apartments in 1998. The Mercure complex has a very strategic
location, near the Darmo toll gate, which is one of its
strengths.

Mercure PR Manager Bill said, "It is easier for our tenants to
go to the airport and surrounding cities where they do business."
He said most tenants worked for companies or industries in the
areas of Gresik, Tuban, Lamongan and Sidoarjo, and the toll gate
access is very convenient for them. "They don't have to
experience city traffic jams or floods in the rainy season."

Mercure Hotel & Residence is managed by French international
hotel company Accor, which also manages the Novotel and Ibis
hotels. The tenants, mostly Japanese, can live simple and
comfortable lives at Mercure. There is daily housekeeping, direct
telephone lines, satellite television, no additional charge for
electricity and water, discounts on food and beverages, a laundry
service, telephone and business center services, free use of the
fitness center, swimming pool, tennis court and complimentary tea
and coffee in the apartment building's lobby. The majority of
tenants at Mercure are single, and maybe that is why it is
important for the general manager to hold regular cocktail
parties. It could stop them from being lonely.

The majority of tenants are from Japan, Thailand, Australia
and Singapore. There also are some Indonesians. "Due to the large
number of Japanese guests, Mercure is looking to open a small
Japanese restaurant in the near future," said John.

Business and shopping district

Floods and traffic jams could be constraints for the marketing
of the Sheraton apartments. They are located in the city center,
where the streets are always crowded and sometimes flood in the
rainy season. But once you are inside the building, you can
forget all your problems, for this is one of Surabaya's most
luxurious apartment buildings.

Besides, being located in the East Java golden business
triangle of Tunjungan, Embong Malang and Basuki Rachmat, you have
access to almost every important point of business and trade. The
governor's office is within walking distance and the most
sophisticated plazas in town -- Tunjungan Plaza One, Two and
Three -- are neighbors of the Sheraton. In fact, they are owned
by the same company, Pakuwon Jati. Sheraton Residence is managed
by Sheraton Surabaya Hotel and Towers.

Opened in 1996, it has 54 apartments, with an occupancy rate
of between 48 percent and 53 percent. Sheraton Public Relations
Manager Tetty Siringgo Ringgo said they were not satisfied with
the present conditions: "The economy is getting better but market
recovery is slow. However, there is more demand this year
compared to last year."

Sheraton is well-known among its competitors and consumers for
luxury and professionalism. The rooms are big and have fully
equipped kitchens with large refrigerators and microwave ovens.
Daily housekeeping services include fresh bed and bath linen,
dish washing and newspaper delivery. Also, all hotel facilities
can be used freely by tenants. This includes the swimming pool,
fitness center, sauna, jacuzzi, tennis courts and a jogging
track.

The majority of guests are expatriates from Japan, Germany,
France, the United States, Australia and Singapore.

Mercure's rates are from Rp 7 million to Rp 12 million per
month; the Sheraton's rates are between US$1,600 and $3,500 per
month.

Other apartment complexes in Surabaya include Puri Darmo (92
apartments), Paragon (55), Novotel (70) and Westin (31). The
occupancy rate for these apartments average between 50 percent
and 60 percent.