T

he first quarter of 2009 saw fewer sales than the previous quarter, indicating a further market slowdown as the impact of the financial downturn. However, based on interviews with seve-ral marketing agents, the last two months of the review quarter saw increasing inquiries for condominiums compared to the last quarter, although potential buyers are delaying the decision to purchase.

Although the overall presales rate declined by 3.7 percent from the previous quarter due to the completion of several previously proposed projects, this quarter managed to record a higher net take-up of about 1,260 condominiums compared to the 943 in the previous quarter. Newly launched projects in this quarter recorded an average 28 percent presales rate.

On the other hand, government-subsidized condominiums continued to experience a good response from the market with a presales growth rate of 6.4 percent from the previous quarter.

A cumulative sales rate of existing condominiums in Greater Jakarta was recorded at 94.1 percent, dropping 0.2 percent from the previous quarter, leaving 4,161 unsold units, the biggest number since the end of 2004.

Meanwhile, the presale rate was recorded at 56.9 percent in the review quarter, decreasing 3.7 percent QoQ to 56.9 percent and by 9.9 percent YoY, indicating the continued slowing down of the market during the review quarter.

Upper-middle class condominium projects performed the best, with the highest presales rate of 64.9 percent, while the middle and upper segments recorded 53.4 percent and 55.8 percent presales rates, respectively. Government-subsidized condominiums still enjoyed a good presales rate. Of the total 44,366 units, around 79.9 percent were apparently sold by developers.

Despite the delay of several projects, the newly completed condominium projects in this review quarter were Best Western Mangga Dua Residence, Thamrin Residence (Tower Chrysant), Permata Hijau Residences (Tower A), The Boulevard, Boutique Residence, The Kuningan Place and Graha Seibu Mansion.

These new deliveries brought the cumulative supply of Greater Jakarta strata-title condominiums to 70,614 units or an additional 2,100 units from the last quarter.

The proposed supply of condominiums in Jakarta got an additional three middle segment condominium projects during the first quarter of 2009 and brought the total of proposed supply to 30,391 units. These condominiums included Green Palace (part of Kalibata City Developments), De Paradiso and Thamrin Executive Residence (phase two of Thamrin Residence Complex.

Meanwhile, government-subsidized condominiums launched during the review quarter were Center Point (Tower A and B) and Puri Park View, bringing the total of proposed government-subsidized condominiums supply to 44,366 units, an increase of about 12 percent from the previous quarter.

Most of the condominium projects did not increase their asking price due to the slowing down market condition. Overall, the average condominium price was stable during the first quarter. The average price in the CBD slightly increased by 0.8 percent to Rp 15.28 million per square meter, while the average price in prime areas also slightly increased by 0.2 percent to Rp 15.10 million per sq meter.

Most transactions were arranged through installment or balloon payments. To make the product more attractive, some developers offered a longer installment period of up to 60 months or provided a bigger discount for hard cash payments. In addition, due to the high interest rate, some developers subsidize the interest rate to accommodate buyers taking on a mortgage.

Some developments are expected to hold or reschedule the launch of their new projects. As a supply driven market, with the declining number of proposed projects entering the market in the near future, the presales rate is likely to drop. This condition is worsening because some major proposed projects either have been put on hold or delayed, which might further erode buyers' confidence.

What about rental apartments? The global economic recession has negatively affected the performance of the Jakarta rental apartment market.

Demand from expatriates as the main demand generator has started to weaken with several postponed or cancelled reservations observed during the review period. Early lease termination was also noted due to many cancellations of short-term project assignments.

Expatriate demand for purpose-built rental apartments and condominiums for lease slightly dropped by 1.11 percent in the review quarter.

On the other hand, serviced apartment projects with well-known operators such as the Marriott, Ritz-Carlton, Ascott, Oakwood and Aston still gained a higher market share from short stay expatriate guests.

Occupancy of the overall rental apartment market decreased by 1.33 percent to 62.41 percent during the review quarter. The occupancy rate of serviced apartments at the end of the first quarter was recorded at 69.82 percent, a 1.75 percent decline from the previous quarter although several long weekends in January and March helped maintain occupancy levels as many local families decided to stay in serviced apartment during the holidays. Domestic tenants represented 24 percent of serviced apartment tenants during the review period.

As an impact of the recession, many local tenants in middle-class condominiums relocated to cheaper leased landed houses. This phenomenon caused a decrease in occupancy by 1.14 percent to 60.71 percent in the condominium-for-lease market. With relatively cheaper rental rates compared to other leasing apartment sub-markets, condominiums for lease attract both price-conscious domestic tenants and limited budget expatriate tenants.

Purpose built rental apartments experienced the largest decline in occupancy as the sector faced severe competition from newly completed condominium-for-lease projects. The purpose built rental apartment market saw a decrease in occupancy from 76.80 percent at the end of 2008 to 74.29 percent at the end of the first quarter 2009.

Net take-up in the first quarter of 2009 dropped significantly to 88 units, compared to the 1,700 units absorbed in the previous quarter. However, rental demand may also be stimulated by a higher number of condos for lease entering the market and offering competitive rates to secure either expatriate or local tenants.