U.S. attacks shatter hopes for property sector
Dadan Wijaksana, The Jakarta Post, Jakarta
The global economic and political turmoil that occurred after the terrorist attacks on the United States on Sept. 11 has shattered expectations of a recovery in the country's property market in the third quarter of this year, a property analyst has said.
Director of PricewaterhouseCoopers' (PwC's) property division Katherine Harberd said that after gloomy conditions in the first half of the year, the country's property market had showed more optimism at the start of the third quarter, following the improvement in macroeconomic indicators after the election of President Megawati Soekarnoputri.
However, she said, the positive sentiments had been shattered by the September attacks.
The U.S. retaliatory attacks on Afghanistan and the anti-U.S. rallies in the country had affected investor confidence in the country's investment prospects and dashed hopes for a recovery in the property sector, she said in a statement.
Jay Smith, PwC's technical adviser, said that recovery of the property market would depend on stable economic and political conditions, both nationally and globally.
However, he warned people against jumping to conclusions too quickly that the property business in the country would suffer next year because of the tragic attacks.
"Perhaps a 'wait-and-see' approach is the best way to predict the market in 2002. The global economy was already slowing down when the attacks occurred. Therefore, it will simply slow down a bit more," he said during a meeting with media on Wednesday, at which he released the company's third-quarter property market review.
"Certainly it's slowing down in the office sector, but we have to wait for further developments if we want to forecast the sector for next year."
According to PwC, the occupancy rate in Jakarta's office market stood at 78 percent in the third quarter, or only 0.6 percent higher than the previous quarter.
Another property analyst, Koll IPAC, which also released its third-quarter review on Wednesday, said the occupancy rate in Jakarta's office sector relatively remain stable.
It noted, however, a rise in demand for space in the retail sector, which, it said, remained "a winner in the Jakarta property market" for this year.
"In line with the public's improved purchasing power, demand for retail space has also increased. The vacancy rate decreased to seven percent in 2001 and should drop further to five percent in 2002."
"During the last three years, foreign retailers, in particular, have indicated their interest in opening outlets in Jakarta and this trend should continue in 2002,"
In the industrial sector, Koll IPAC said that demand remained stagnant in the third quarter of the year, as industrial users had applied a "wait-and-see" approach, due to concern about security and labor issues.