Second quarter sales of condominiums, both existing and under construction, have plummeted by half compared to first quarter sales, adding precipitously to the sector's downward trend since 2007.

In the second quarter report from the commercial division of Coldwell Banker Indonesia, only 439 existing units sold, which is 50.73 percent below previous quarter sales.

Meanwhile, condo presales also fell by 30.27 percent. Only 2,626 units sold compared with the previous quarter's 3,766 units sold.

"Currently, massive stocks of condo units are on the market whereas demand is standing still or even declining," Coldwell Banker research and analyst manager Dwi Novita Yeni said during a media conference Thursday.

A total of 57,466 condo units are available, including 14,833 units in the central business district and 42,633 in secondary locations, such as the Mediterania Marina Residence in North Jakarta and Marbella Kemang Residence in South Jakarta.

The property consultant firm reported that in 2007 the condo absorption rate had trended downward by some 50 percent, correlating with recent high inflation and lending rates.

According to the report, developers are thus offering special prices and reducing their profit margins to maintain sales levels.

Dwi, however, said the increase in interest rates would not significantly discourage the condominium market targeting affluent consumers.

The average selling price for a Jakarta condo increased by 5.73 percent in the first quarter and by 4.30 percent more in the second quarter due to rising construction costs.

A condo unit in a prime location is currently sold at between Rp 9.8 million (US$1,077) and Rp 22.1 million per square meter. Those in secondary areas are tagged between Rp 5.3 million and Rp 15.5 million psm.

Adding to the current heavy overstock, the agency predicted condo developers would place 14,885 new units on the market in the next two years.

The ongoing condo construction efforts are usually integrated with office space, retail centers, healthcare and education facilities in the form of mixed-use development projects.

Some of them include PT Lippo Karawaci's St. Moritz in West Jakarta, Ciputra Group's Ciputra World in South Jakarta, Pakuwon Group's Kota Kasablanka in South Jakarta and Agung Podomoro's Central Park in West Jakarta.

Meanwhile, in a bid to cater to the need for affordable homes for the middle and lower classes, the government has launched the construction of 1,000 towers of subsidized apartments, which are expected to be completed in 2011.

An analyst at Coldwell Banker, Makmur Sentosa, said it was unfortunate the subsidized apartments were not reaching the targeted market. "The lack of regulations causes many developers to ignore the requirements customers must meet to purchase subsidized units," he said.

Makmur said he found cases where up to five units of subsidized apartments had been purchased by the same party, encouraging investment or speculation. Other buyers had underreported their income statements to fall under the maximum of Rp 4.5 million monthly income to qualify. He also had seen falsified documents attesting to a family's low-income status.

"The maximum price for a subsidized apartment unit is Rp 144 million but some developers sell units at a higher price, camouflaging the markup through additional charges and fees."

"These violations have become a trend among developers wanting to close on all their apartment units as quickly as possible."

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