U.S. attacks shatter hopes for property sector

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.