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.