Mansions in the sky

By webadmin on 07:32 pm Feb 02, 2012
Category Archive

Albertus Weldison Nonto

Property developers keep expanding to reap the soaring
demand for apartment and office space in Jakarta, while residential and
industrial estates are also booming.As international investors keep a
close eye on Indonesia’s economy, local property developers just keep on
working to meet soaring demand from domestic customers.

The top players are striving
to complete projects on schedule
and, a
fter exponential growth last year, the outlook of the property
development business is rosy right through to 2014.

In the eyes of many, the positive
outlook for property mirrors the positive position of the Indonesian economy
over the next three to five years. Most investors, small and large, believe
this is the right time to buy.

Fery Salanto, director of research for Colliers
International Indonesia, says the property sector in 2012 will be positive and
will drive growth in other sectors.

All property segments will boom, moving toward
positive and even aggressive trends as a leader in the strong domestic market.

Fery pinpoints apartments and office space as the two segments
likely to see most growth, already putting on 15% over the past three years.

Colliers also recorded an increase of office and apartment
tariffs of 25% compared to 2010. Fery notes that price competition will
continue due to high demand despite construction of new projects, adding to
supply.

Colliers research shows that about 220,000 sq m of office space
was completed last year, with occupancy rates moving up from 88% to 95% over
the year. While prices rose,
demand remains strong for office expansion and new company establishment.

In the apartment market, Colliers reports that about 15,000 units came on the
market last year, with new stock likely to add another 15% during 2012.  

This, historically, is the highest
number ever in Indonesia, the company says in its report, noting that 80% of the
new supply has already been absorbed by the market.

Some developers claim that 60% of their under-construction
projects have sold in a very short time. High demand in the sector has scaled
up prices from about Rp16 million/sq m to Rp18 million/sq m in the Jakarta CBD.

Colliers also indicates that retail sector growth remains
stable, with 70% of new projects absorbed by the market with prices relatively
flat at an average of Rp350,000/sq m for the Jakarta area and Rp250,000 for
outside Jakarta. 

Established players

Ferry adds that big names still dominate the property market.
Agung Podomoro has a market share of around 47%, making it by far the most
active developer of apartments. In second place the Lippo Group continues to
offer prestigious projects such as Kemang Village and St Moritz. Then come
Agung Sedayu Group, Pikko Group, Intiland and Gapura Prima Group.

Artadinata Djangkar, a director of PT Ciputra Group, says
demand for apartments in Jakarta has increased by about 30% compared to 2010.

At
the moment the group is completing its My Home at Ciputra World, a multipurpose development with a shopping mall,
offices, a hotel and apartments.

Artadinata adds that the European crisis hasn’t yet had any
impact on the Indonesian economy and 2012 should remain rosy, but he warns that
in the future companies in Indonesia will need to be more careful in managing
funds and internal cash flow.

“We will need to control our borrowing policies,
so we can self-finance using our own money if the situation gets worse,” he says.

Aburizal Bakrie’s project at Kuningan has done well from the
booming demand in the residential market, particularly the apartment
sector. 

“By the end of last year
the company’s sales surpassed our 30% growth sales target compared to the year
before, totalling Rp1.7 trillion,” says Nuzirman Nurdin, director of Bakrie
Development. He also predicts the bullish mood to continue this year and carry
over into 2013.

The strong domestic market is the main factor behind the property
boom.

“Data released by the central bank shows that holders of bank accounts in
excess of Rp1 billion increased by 20% per year. This means that the market for
property will be huge for the next five years,” says Nuzirman, adding that it is
unprecedented that some banks are offering mortgages at interest rates as
low as 5%. 

At its Rasuna
Epicentrum project, Bakrieland
is building three towers for the middle-class market, two for the middle-up market as well as a five-star hotel. Nuzirman says the group is also getting underway with
its new 12,000-hectare Sentul
Nirwana project in Bogor, in addition to its existing Bogor
Nirwana Resort.

Fery comments that developers have now adopted similar strategies to meet market demand. “I have been
watching the aggressive expansion by developers throughout the country,” he says, adding that macroeconomic conditions promise to maintain forward
progress in the economy as a whole.
 

Local investors,
he says, are right to expect good returns from their investments in apartments
and office space. Over the past year the average
investor achieved returns of around 7-8%, some as much as 20%. By anyone’s
standards, return on investment in five years is a good deal, and plenty of
people will be looking to reap that sort of benefit in the years ahead.  GA