T

he property business, particularly condominiums and apartments, will slow down ahead of the April 9 legislative election and will not rebound until after the July 9 presidential election, according to business players.

Developers have said they planned to sell their property units by the end of this year when demand was expected to bounce back after the elections.

'€œThe rise in [bank] interest rates and new regulations on residential ownership have diminished the enthusiasm to buy property since the second half of last year,'€ PT Ciputra Property (CTRP) director Artadinata Djangkar said, referring to the higher down-payment for the purchase of a second house.

He predicted interest in buying property would only pick up again in the fourth quarter of this year.

Property observers have said that investors deemed purchasing property prior to elections as risky, given that it was hard to foretell if the elections would run smoothly.

Artadinata added that under these conditions, Ciputra Property would act more '€œcautiously'€ in launching new projects, although it would not halt ongoing ones.

'€œWe are planning to launch at least two new projects this year,'€ he said.

Ciputra Property'€™s key projects include the superblocks Ciputra World 1 and Ciputra World 2 in Jakarta. Ciputra World 1 features roughly 306 apartment units, in addition to 80 luxury apartment units, while Ciputra World 2 boasts at least two condominium buildings and serviced apartments.

He added that the developers preferred to hold back unit sales until demand had returned as this would allow them to sell at better prices.

'€œWe still have to sell approximately 20 percent of the remaining stock at Ciputra World 2. But we are in no rush to sell now because demand is down, which will dampen prices,'€ he said.

PT Agung Podomoro Land (APLN) finance director, Cesar M. Dela Cruz, meanwhile said that condominium and apartment sales for the middle and upper income market would, however, be more resilient in the face of the slowdown.

'€œThere will be a slowdown although the extent depends on the properties being offered,'€ he said.

Consequently, he noted that APLN would maintain this year'€™s sales target within the range of sales earnings in 2013 at Rp 6.3 trillion (US$518 million).

APLN projects include Green Bay Pluit, a superblock with 12 apartment towers housing approximately 9,000 units, in North Jakarta.

Jones Lang LaSalle senior technical advisor Luke S. Rowe pointed out that condominium sales were already dipping sharply in the third and fourth quarter of last year.

Based on Jones Lang LaSalle data, condominium sales had surpassed 4,000 units in the second quarter of 2013 before plunging to slightly less than 2,500 units in the third and fourth quarter.

Property analysts reported that the strata condominium market saw an existing supply of approximately 90,000 units in the fourth quarter of 2013, and forecast a future supply of around 42,160 units from projects scheduled for completion up to 2016.

'€œWe predict that this trend will continue in the first, second and third quarters whereby sales volumes would be around 2,000 units per quarter,'€ he said.

He added that sales volumes would move back up moving into the fourth quarter of this year to previous levels of 3,500 units to 4,000 units per quarter.

'€œBut if there is a clear front runner amid the jockeying for position during the election campaigns and making it clear which party is likely to win, the confidence of buyers could return in the third rather than fourth quarter,'€ he added.