Jakarta Property Sector Still Sees High Demand
Faisal Maliki Baskoro. The Jakarta Globe, Jakarta - 18/01/2011
The property sector in Greater Jakarta is expected to show positive growth this year, although lower than it managed last year, on the back of positive macroeconomic conditions and the global economic recovery.
Utami Prastiana, head of research and consultancy of property consultant firm Procon Indah, said the supply side of the Greater Jakarta property sector is expected to grow by 4 percent to 5 percent this year, lower than the 5 percent to 8 percent growth recorded last year.
She said property may see a slow growth pace this year as the industry will still feel the hit of the 2009 global financial downturn.
“It takes two years for developers to build their property business. The developers halted their expansions and were in a wait-and-see mode two years ago due to the 2009 crisis,” she said.
On the demand side, Utami said, the sector is expected to continue growing by 4 percent to 5 percent on the back of the improving economy. It will likely come in lower than the 7 percent to 10 percent demand growth last year, though.
“This year’s growth will be supported by the global economic recovery, positive macroeconomic conditions, hotels and restaurants, transport and communication sectors and investment growth,” she said.
However, she also warned of a possible threat from accelerating inflation. Higher inflation and interest rates could trigger volatility in the currency rate, which in turn could affect demand.
“The central bank’s interest rate will affect demand. So far, we’re confident that the central bank will maintain its interest rate at 6.5 percent, but if they do raise it, our pessimistic outlook for demand is 5 percent growth,” she said.
Bank Indonesia has kept its benchmark rate at 6.5 percent since August 2009. It indicated last week that it was ready to raise the rate, though it did not specify a date.
According to Procon research, which covers offices, condominiums, apartments and retail space in Greater Jakarta, occupancy rates and property prices will continue to increase this year.
Utami said the condominium market would grow at a slower pace while apartments would see a modest growth in demand, creating stable rental rates in most apartment blocks.
“Condominium competition will remain tight and developers will continue to offer attractive payment schemes to achieve their sales targets,” she said, adding that supply would grow by 7 percent, mostly catering to the middle- to lower-income segments.
Luke S. Rowe, Procon’s technical adviser for commercial leasing, said the office market in Jakarta’s central business district is expected to continue enjoying a surge in demand, though it will be more challenging with 380,000 square meters in new supply this year.
“Supply of office rooms in Jakarta’s central business district is expected to grow by 4.4 percent, while demand is projected to grow by 5 percent,’’ Rowe said.
Wendy Haryanto, Procon’s head of retail leasing, said demand for retail space will grow by 5 percent in Jakarta and 4.5 percent outside the capital, while rent fees will be relatively stable.
“The retail market will remain active, with food and beverages and fashion retailers still the major contributors,” he said.