Robust growth boosts Jakarta property market, says LaSalle
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This year’s seemingly robust economic growth would attract more foreign investors into the country and would trigger higher growth in the property market in the capital city, property research firm Jones Lang LaSalle said on Wednesday.
The office segment is predicted to hold the brightest prospects compared to residences, shops and hotels, as new businesspeople will focus on acquiring office space first, especially ones located in premium areas.
Central business districts (CBDs) would remain the jewel of Jakarta’s business crown, but areas outside the CBDs would also thrive, such as South Jakarta and West Jakarta, the firm said.
According to Jones Lang LaSalle chairwoman Lucy Rumantir, it expects the average office occupancy rate, both within and outside CBDs, to stand at around 90 percent this year. “The rate reached 94 percent last year, higher than the 89 percent recorded in 2011. We think this year’s rate will stay at around the same level at best,” she said.
Average office rental costs are predicted to rise 20 percent in 2013. The firm said that premium business sites may become a little more expensive this year for some tenants and the prices might drive them to look for cheaper locations.
As of December 2012, monthly gross rents in CBDs stood at Rp 194,100 (US$20) per square meter (sqm), while outside CBDs, monthly rents reached Rp 129,800 per sqm.
There are currently 4.4 million sqms of existing office space in Jakarta. According to Jones Lang LaSalle, that figure was expected to increase to 6.23 million sqms by 2016, supported by various confirmed projects.
Meanwhile, Jones Lang LaSalle country head Todd Lauchlan said that Jakarta would see new businesses coming primarily from Japan, Singapore and South Korea. “We are also seeing an interest from Malaysia and India, and from a number of Middle Eastern and Asian sovereign wealth funds,” he said.
Several US-based companies with existing representative offices in Asian countries had consulted the firm about doing business in an emerging market such as Indonesia, Lauchlan added.
Jones Lang LaSalle said the new foreign investors would hail from numerous business fields, such as property development and contracting, asset management, investment banking, private equity, sovereign wealth funds, pension funds and real estate investment trusts.
As reported earlier, the Investment Coordinating Board (BKPM) expects foreign direct investment (FDI) to be around Rp 270 trillion in 2013, up from about Rp 206 trillion last year. As of September 2012, the mining sector accounted for the largest share of FDI with 17.3 percent, followed by chemicals and pharmaceuticals with 13.6 percent, and transportation, storage and telecommunications with 10.2 percent.
Singapore leads the FDI list with $3.5 billion invested in Indonesia. Japan and South Korea sit in second and third position with investments totaling $1.8 billion and $1.3 billion, respectively.
Meanwhile, Jones Lang LaSalle said that Jakarta’s residential sector, represented by condominium sales, would also expand. Between 2013 and 2016, Jakarta will see 27,130 new condominiums spring up across the city, of which around 61.4 percent of them have already been sold.