Uncertainties impede demand in property sector

Uncertainties impede demand in property sector

JAKARTA (JP): Growing risk factors and economic uncertainties
befalling the country have impeded demand in the property sector
during the first three months of the year, property consultant PT
Procon Indah/Jones Lang Lasalle said.

In its Jakarta Quarterly Property Market Review, the company
said performance of most property sectors will be lower this year
than the previous projection, and will continue to be very
sensitive to internal and external uncertainties that negatively
impact demand.

In the first quarter of 2001, the total office stock in
Jakarta stood at 4.84 million square meters (sq.m.), comprising
2.93 million sq.m. within the central business district (CBD) and
1.91 million sq.m. outside the CBD.

Office stock outside the CBD rose by 7,000 sq.m. from the
completion of Gedung Jasa Rahardja in South Jakarta during the
quarter.

Inquiries and leasing activities slowed down significantly
between January and March and mostly came from the expansion and
relocation of companies already based in Indonesia instead of
from new investors.

The overall Jakarta office market vacancy level decreased to
22.1 percent at the end of March 2001, along with increased net
take-up within the CBD of 10,000 sq.m. and 2,600 sq.m. outside
the CBD.

A total of 1.07 million sq.m. of office space remains
unoccupied.

The rupiah depreciation of 7.7 percent against the U.S. dollar
during the quarter caused an increase of 3.5 percent in the
average gross rent of offices in rupiah terms and a decrease in
dollar terms by 4.6 percent.

Between January and March there were no transactions concluded
for strata title offices, and the sales rate remained at 84
percent, with 36,900 sq.m. of unsold space.

"Despite political uncertainties, net take-up in the office
market will continue to be modestly positive in the next few
quarters," Procon Indah said in its report.

In the retail sector, the total stock of Jakarta retail
floorspace decreased by 1.02 percent to 1.17 million sq.m.,
caused by the loss through fire of two floors of Plaza Pondok
Gede early this year.

Leasing activities were relatively slow, and were dominated by
the expansion needs of existing tenants.

Net take-up in Jakarta retail centers in the first quarter of
2001 was only 6,125 sq.m., compared with 43,463 sq.m. leased at
the end of last year, due to the limited availability of prime
retail space within quality retail centers.

Average gross rental in rupiah terms increased by 16.2 percent
and in dollar terms by 7.2 percent due to the continuing high
demand and limited quality space available.

Net demand for retail space in the second quarter of this year
is expected to be slightly higher than the first quarter, and the
vacancy level is expected to decline further and will continue
causing upward pressure on rental growth.

Jakarta rental apartments remained at 14,711 units, as no new
supply came into the market between January and March; around
8,717 units are strata-title condominium and townhouse units.

Leasing activities increased significantly as companies
started to increase further the number of expatriates employed.

Net take-up was recorded at 141 units compared with only 26
in the previous quarter, and the vacancy level decreased to 41.8
percent from 42.8 percent, leaving some 6,154 units unoccupied.

Rental rates of serviced apartments and prime location rental
apartments increased by 2.2 percent to US$17.5 per sq.m. and 0.9
percent to $13.9 per sq.m. respectively, while in the secondary
area they decreased by 1 percent to $9.5 per sq.m.

Demand for rental apartments is expected to increase slightly
over the next quarter.

The supply of condominiums in Jakarta also remained at 26,015
units at March 2001, comprising 25,558 strata title apartment
units and 457 strata title townhouses.

Local end-users dominated the buyer profile, with most
transactions occurring at secondary locations, and are expected
to continue so throughout the year. New take-up was 33 units,
compared with 54 units in the last quarter of 2000.

In the Greater Jakarta industrial estate market, no new supply
entered the market between January and March this year and total
stock remained at 5,439 hectares.

A total of 10.6 hectares were sold in the primary market,
compared with 23.9 hectares in the fourth quarter of last year,
mostly purchased by local industrialists for business expansion
and by a few Asian investors.

A total of nine standard factory buildings were sold between
January and March 2001 from BSD and Jababeka Industrial Estate,
with an average rental of Rp 15,250 per sq.m. per month, an
increase of 1.4 percent from last quarter.

Demand for industrial land is anticipated to remain weak
throughout the year, while demand for leasing and buying
industrial buildings will remain strong, mainly from local
industrialists. (tnt)