The national economy has yet to fully recovered, but the property sector is enjoying slightly better business.
This is indicated by the increasing purchase demand for condominiums and transactions in the third quarter of the year. The cumulative sales rate increased by 0.27 percent and the pre-sales rate of condominiums under construction increased by 2.44 percent.
While some potential buyers were in a wait-and-see mode, because several projects were still experiencing hardship, the demand increased compared to the first two quarters of the year, especially demand for projects scheduled for completion. The Marriott and Ritz-Carlton bombings in Jakarta early in the third quarter did not have any significant impact on condominium sales. While the Tasikmalaya earthquake, which was also felt by Jakartans, made potential buyers more careful in choosing property by the quality of building construction.
Several projects, especially those designed for the lower segments, including subsidized or low-cost apartments, still have problems in completing construction on time. This can mean further project delays or even cancellations.
The condominium cumulative sales rate in Jakarta and its surroundings was 94.1 percent at the third quarter of the year, increasing by 0.3 percent from the previous quarter. The pre-sales rate was 59.0 percent, increasing by 2.5 percent from the previous quarter and 0.3 percent from the same quarter last year. The increase, both in sales and pre-sales rates, in the third quarter of the year indicates that the market is picking up.
Condominiums targeting the middle-upper class continued to have the highest pre-sales rate or 67.7 percent. The pre-sales rate for the upper segment was 60.2 percent and for the lower segment was 56.1 percent, while the pre-sales rate of low-cost apartments this quarter dropped by 0.3 percent to 79.6 percent.
The cumulative supply of condominiums in Jakarta and its surroundings was 73,963 units, increasing by 1,528 units from the previous quarter, thanks to the completion of three condominium projects: Maple Park (Tower A), Permata Hijau Residences (Tower B), Thamrin Residence (Edelweiss Tower) and Thamrin Residence (Daisy Tower).
The completion of Menara Cawang and Kebagusan City (Tower A) brought the number of constructed low-cost apartment units to 5,588 with a 95.7 percent sales rate. In the low-cost apartment market, Sunter Parkview, which was launched in the third quarter of the year, received a positive market response.
However, some low-cost apartment projects suffered from a drop in sales, which happened because many buyers' loan applications were turned down.
How about rental apartments? The business of serviced apartments and purpose-built rental apartments mostly serving expatriates remained slow this quarter. Expiry of leases and the completion of the tenants' terms in Indonesia are the two main reasons behind the low occupancy rate in purpose-built rental apartments.
Several serviced apartments that relied on the short stay domestic market experienced hard times during Ramadan, which fell in the third quarter of the year, when the occupancy rate dropped along with slow business activities. Some serviced apartments with a significant number of Middle East tenants also experienced a decrease in occupancy rate during the fasting month, which continued until the end of the long holiday.
The total occupancy rate of rental apartments in Jakarta in the third quarter was 62.6 percent with 24,633 rented units, increasing 1.14 percent from the previous quarter.
The rental condominium subsector, which was the least affected by the fasting month and the global crisis, enjoyed a 1.97 percent increase in the occupancy rate from the previous quarter to 61.89 percent. Domestic tenants who represented 45 percent of the total tenants helped stabilize the occupancy rate of rental condominiums during Ramadan. The proportion of local tenants in rental condominiums increased by 9 percent compared to the same period last year.
Both serviced and purpose-built rental apartments suffered a drop in their occupancy rates to 62.79 percent and 72.08 percent, decreasing 4.39 percent and 1.50 percent, respectively.
Despite the drop in the occupancy rate, about 1,211 serviced and purpose-built rental apartments were rented out during the quarter, mostly condominiums. Overall, this indicates improvement in the market compared to the absorption rate in the previous quarter, which was negative at -44 units.
The third quarter of the year saw an addition of 1,238 rental apartments, mostly condominiums, bringing the cumulative supply to 39,346 units, increasing by 3.2 percent from the previous quarter.
There was no supply of new serviced or purpose-built rental apartments entering the market this quarter. Only rental condominiums experienced a change in supply. New purpose-built rental apartments that will be launched in the future is the Q Apartments in Pluit, North Jakarta, which is expected to start operation in mid-2010.
The writer is associate director of PT Cushman & Wakefield Indonesia
