Thu, 07/29/2010 9:40 AM

Developers are moving southward to construct new office buildings in the capital city in a search for cheaper land prices and a specific image, say property consultants at PT Procon Indah.

The company’s data shows that as of the second quarter of 2010, South Jakarta had almost 20 percent of all high-rise offices in the capital city, based on a total supply of 138,900 square meters (sqm) and a cumulative demand of 103,500 sqm.

Over the past five years, the demand for office space in South Jakarta has grown 29 percent, while demand in other parts of Jakarta has increased by 15 percent.

South Jakarta added 64,000 sqm of new office space in the second quarter, while other areas of Jakarta recorded no new development in the same period.

Procon Indah’s research and consulting head Utami Prastiana said Wednesday that the shift in office building development to South Jakarta was motivated by high demand in the area, which encouraged property owners to develop office buildings to accommodate the demand.

She said that several factors, such as location image, accessibility, land availability and price affordability, led to more vibrant growth in the South Jakarta office space market than in other areas of the city.

“South Jakarta has a prime neighborhood image. It is surrounded by established prime residential and commercial developments,” she told reporters at a press conference at the company’s office at the Indonesia Stock Exchange Building in Jakarta.
“South Jakarta has a prime neighborhood image. It is surrounded by established prime residential and commercial developments”

The operation of Jakarta’s outer ring road provides easier access to the South Jakarta district for people from other parts of the city, she added.

The affordable price of office spaces in the area, as compared to space in Jakarta’s central business district (CBD), was also among the reasons why the strata title office market in South Jakarta had been growing more active, she said.

Procon Indah chief executive officer Lucy Rumantir said that domestic companies operating in non-financial sectors dominated office space in South Jakarta. Financial institutions preferred to have offices in the CBD because it was near the Indonesian Stock Exchange and major banks, she added.

She said that as many as 90 percent of companies in South Jakarta preferred to buy office spaces instead of renting.

“It is more economical for them to buy space than to pay monthly or yearly rental fees,” she said.

The price of office space in South Jakarta is US$1,500-$1,700 per sqm, while the monthly rental fee is between $10 and $13 per sqm.

Lucy said that companies chose to have offices in South Jakarta because most of their employees lived in nearby municipalities such as  Cibubur, East Jakarta; Cirendeu, Tangerang and Pamulang, South Tangerang.

South Jakarta currently has five existing strata title office buildings: Victoria Building, Graha Simatupang, MTH Tower, Belleza Office Tower and Gandaria 8. Two buildings — Sovereign Tower and Alamanda Tower — are now under construction. (rdf)

Developers are moving southward to construct new office buildings in the capital city in a search for cheaper land prices and a specific image, say property consultants at PT Procon Indah.

The company’s data shows that as of the second quarter of 2010, South Jakarta had almost 20 percent of all high-rise offices in the capital city, based on a total supply of 138,900 square meters (sqm) and a cumulative demand of 103,500 sqm.

Over the past five years, the demand for office space in South Jakarta has grown 29 percent, while demand in other parts of Jakarta has increased by 15 percent.

South Jakarta added 64,000 sqm of new office space in the second quarter, while other areas of Jakarta recorded no new development in the same period.

Procon Indah’s research and consulting head Utami Prastiana said Wednesday that the shift in office building development to South Jakarta was motivated by high demand in the area, which encouraged property owners to develop office buildings to accommodate the demand.

She said that several factors, such as location image, accessibility, land availability and price affordability, led to more vibrant growth in the South Jakarta office space market than in other areas of the city.

“South Jakarta has a prime neighborhood image. It is surrounded by established prime residential and commercial developments,” she told reporters at a press conference at the company’s office at the Indonesia Stock Exchange Building in Jakarta.
“South Jakarta has a prime neighborhood image. It is surrounded by established prime residential and commercial developments”

The operation of Jakarta’s outer ring road provides easier access to the South Jakarta district for people from other parts of the city, she added.

The affordable price of office spaces in the area, as compared to space in Jakarta’s central business district (CBD), was also among the reasons why the strata title office market in South Jakarta had been growing more active, she said.

Procon Indah chief executive officer Lucy Rumantir said that domestic companies operating in non-financial sectors dominated office space in South Jakarta. Financial institutions preferred to have offices in the CBD because it was near the Indonesian Stock Exchange and major banks, she added.

She said that as many as 90 percent of companies in South Jakarta preferred to buy office spaces instead of renting.

“It is more economical for them to buy space than to pay monthly or yearly rental fees,” she said.

The price of office space in South Jakarta is US$1,500-$1,700 per sqm, while the monthly rental fee is between $10 and $13 per sqm.

Lucy said that companies chose to have offices in South Jakarta because most of their employees lived in nearby municipalities such as  Cibubur, East Jakarta; Cirendeu, Tangerang and Pamulang, South Tangerang.

South Jakarta currently has five existing strata title office buildings: Victoria Building, Graha Simatupang, MTH Tower, Belleza Office Tower and Gandaria 8. Two buildings — Sovereign Tower and Alamanda Tower — are now under construction. (rdf)

Developers are moving southward to construct new office buildings in the capital city in a search for cheaper land prices and a specific image, say property consultants at PT Procon Indah.

The company’s data shows that as of the second quarter of 2010, South Jakarta had almost 20 percent of all high-rise offices in the capital city, based on a total supply of 138,900 square meters (sqm) and a cumulative demand of 103,500 sqm.

Over the past five years, the demand for office space in South Jakarta has grown 29 percent, while demand in other parts of Jakarta has increased by 15 percent.

South Jakarta added 64,000 sqm of new office space in the second quarter, while other areas of Jakarta recorded no new development in the same period.

Procon Indah’s research and consulting head Utami Prastiana said Wednesday that the shift in office building development to South Jakarta was motivated by high demand in the area, which encouraged property owners to develop office buildings to accommodate the demand.

She said that several factors, such as location image, accessibility, land availability and price affordability, led to more vibrant growth in the South Jakarta office space market than in other areas of the city.

“South Jakarta has a prime neighborhood image. It is surrounded by established prime residential and commercial developments,” she told reporters at a press conference at the company’s office at the Indonesia Stock Exchange Building in Jakarta.
“South Jakarta has a prime neighborhood image. It is surrounded by established prime residential and commercial developments”

The operation of Jakarta’s outer ring road provides easier access to the South Jakarta district for people from other parts of the city, she added.

The affordable price of office spaces in the area, as compared to space in Jakarta’s central business district (CBD), was also among the reasons why the strata title office market in South Jakarta had been growing more active, she said.

Procon Indah chief executive officer Lucy Rumantir said that domestic companies operating in non-financial sectors dominated office space in South Jakarta. Financial institutions preferred to have offices in the CBD because it was near the Indonesian Stock Exchange and major banks, she added.

She said that as many as 90 percent of companies in South Jakarta preferred to buy office spaces instead of renting.

“It is more economical for them to buy space than to pay monthly or yearly rental fees,” she said.

The price of office space in South Jakarta is US$1,500-$1,700 per sqm, while the monthly rental fee is between $10 and $13 per sqm.

Lucy said that companies chose to have offices in South Jakarta because most of their employees lived in nearby municipalities such as  Cibubur, East Jakarta; Cirendeu, Tangerang and Pamulang, South Tangerang.

South Jakarta currently has five existing strata title office buildings: Victoria Building, Graha Simatupang, MTH Tower, Belleza Office Tower and Gandaria 8. Two buildings — Sovereign Tower and Alamanda Tower — are now under construction. (rdf)

Source: The Jakarta Post

By Alci Tamesa

The President Post — The climate in Indonesia is much more encouraging as indicated by the good performance of property stocks on the capital market as well as by rising domestic demand that results from a steady increase in the size of the middle-class segment of society.

Unlike what’s hap­pening around the region, Indo­nesia’s real estate market is going its own direction with analysts expecting a boom as of next year, thanks to an in­creased inflow of foreign capital and rapid expansion of the mid­dle class segment of society that boosts property sales.

Over the past 12 months, real estate prices and rentals in the Asia-Pacific region have seen sig­nificant declines but the senti­ment in Asia has remained pos­itive because of the resilience of Chinese economy following the communist government’s intro­duction of a series of fiscal and monetary stimulus.

China has since been leading the Asian property market boom over the past few years with 2009 being the peak of its real estate success. This signal sent good sentiment across Asia with trans­action volumes rebounding and prices going up again to benefit real estate developers.

According to PriceWater­houseCoopers, many large in­vestment institutions in the re­gion have been able to recapitalize via the capital markets (especially in Australia and Singapore), al­lowing them to pay down debt. This causes the region’s business sentiment to remain “generally sanguine,” it says.

PWC is of the opinion that in spite of this, conditions re­main extremely tight because “historically, real estate invest­ment in Asia has been financed overwhelmingly by bank lend­ing, and in the aftermath of the crash, banks are reluctant to pro­vide funding to all but their best (and usually largest) clients.”

Based on investment prospect ratings, the top five markets in 2010 are Shanghai, Hong Kong, Beijing, Seoul, and Singapore.

Chinese cities dominate the rankings this year—a reflection of a remarkable resurgence in Chinese commercial real estate as the government-mandated li­quidity boom lifts markets across the country.

Another city that has moved significantly is Sydney, which has become a popular destination for foreign funds seeking shelter in Australia’s mature property mar­kets and commodity-based econ­omy, PWC says.

The climate in Indonesia is much more encouraging as indi­cated by the good performance of property stocks on the capi­tal market as well as by rising do­mestic demand that results from a steady increase in the size of the middle-class segment of society.

A PriceWaterhouseCoopers re­port obtained by The President Post says that government-spon­sored liquidity has helped keep Asian interest rates low while li­quidity is returning via the cap­ital markets. Meanwhile, even though bank credit remains scarce, reluctance to lend is grad­ually easing.

Nevertheless, the banking sec­tor in Indonesia expects to a 45 percent increase in lending, an indication that banks will now amplify their role as “true agents of development”.

Meanwhile, according to Mar­ketBeat Economic Summary re­leased recently by Cushman & Wakefield, all general econom­ic indicators showed an improve­ment trend over the first quarter 2010. Indonesia’s GDP contin­ued to show positive growth at an estimated YoY growth of between 5.0% and 5.5%.

Rupiah was strengthening against US$, and the stock mar­ket also showed more favorable activity. At the end of March 2010, the Composite Index closed at 2,610, a significant in­crease from the 2,443 in Decem­ber 2009.

Due to these positive devel­opments, leasing inquiries and transactions have shown more fa­vorable activities during the first quarter 2010, compared to that in the previous quarters.

The MarketBeat reports saw banking and mining sectors as the two most aggressive sectors for office inquiries and transac­tions during the reviewed quar­ter.

The ‘return’ of the bank­ing sectors to the market gave a strong indication that the con­fidence and optimism on Indo­nesia’s economic growth on and business activities have improved and will continue this year.

Another positive sign is the higher demand for office space that is expected to occur in the next quarters. The banking and financial sectors are projected to be the largest demand generator for Jakarta offices, mostly for re­location and expansion reasons.

Similar trend to the rental of­fice, inquiry and transaction ac­tivities for strata title office space within strata title buildings were also more favorable over the first quarter 2010, the report says.

The asking price for the high­er quality strata title space was quoted in the market at between US$1,900 and US$2,300 per sq.m, whilst lower quality space was offered at around Rp.13 mil­lion per sq.m.

The macroeconomic stability is also the reason for an increase during the 1st quarter of 2010 both in terms of cumulative real estate sales rate and pre-sales rate.

The cumulative sales rate of ex­isting condominiums was record­ed at 94.1%, a slight increase of 0.1% from the previous quarter’s figure and remains the same as the last year’s figure.

The pre-sales rate was record­ed at 60.83%, also an increased by of 0.5% from the last quarter’s figure 60.35% and 3.8% from the last year’s figure, 57.46%.

The upper-middle segment condominiums continued to re­cord the highest pre-sales rate of 65.4%.

During the review quarter MarketBeat saw the increment of the pre-sales rate of Upper seg­ment projects, from 58.9% in the previous quarter to 65.1%.

The recent low interest rate has positive impact on demand as in­vestment motivated buyers start­ed to consider investing in con­dominiums, the MarketBeat report says.

Real estate practitioners say that even with the current prop­erty law, the growth has been so encouraging, how much more when the government revises the law to allow foreigners to own property for 90 years, instead of 25 years stipulated by the 1960 Agrarian law that is still in force.

“The issue to revise regulation of foreign ownership on proper­ties has been discussed and urged for clarity this year. If the revise regulation is issued and govern­ment allows foreign nationals to buy houses and condominiums, it will potentially boost condo­minium sales,” the report says.

Knowledgeable sources say the government had actually planned to reveal a revision of the proper­ty law prior to the FIABCI con­ference in Bali this month, but the plan was postponed because of a sudden change in the posi­tion of Finance Minister Sri Mu­lyani—who will occupy her new chair in the USA as the World Bank’s Managing Director.

Nevertheless, Chairman of In­vestment Coordinating Board (BKPM), Gita Wirjawan, has said tat he expects the revision to be announced toward the end of this year. That incentive is ex­pected to be the prelude to In­donesia’s biggest property boom next year.

From The President Post print edition.

As a young entrepreneur, Taufik Hidayat (30), Director of Sarana Grafika Indonesia, decided to expand his business through the acquisition of Standard Factory Buildings (SFB) and live in The Veranda Golf Town House in Kota Jababeka.

“I was the first resident of The Veranda Golf Town House when I moved from my house in Jakarta to Kota Jababeka 3 years ago. I feel safe living in The Veranda Golf Town House because Jababeka is very concerned about creating a safe environment; so far everything is secure”, Said Taufik.

“I bought a house in The Veranda Golf Town House because I already owned a factory and ran a business in Kota Jababeka. Initially I thought about buying a house in another residential area in Cikarang, which is developed by another residential developer, because they are more advanced with regards to residential facilities. However, travel time to and from work exceeds 20 minutes as a result of traffic. In comparison, now I need only 5 minutes to go to my factory”.

He loves the view of the green grass of the golf course behind his house, “A good location to live, a beautiful view, and at lunchtime I can go home to have my lunch. Veranda is one of the best residential areas in the region” He added.

In the end of 2003 Taufik bought an SFB and started his printing and packaging operations in 2004. Considering that his employees need housing, Taufik bought them a house in the Gardenia Residences complex. On the other hand, the acquisition of property serves as a good investment, since the price of properties in Jababeka has increased significantly over the past years. In 2007, Taufik bought a housing unit in The Veranda Golf Town House and he bought 1,200 square meters of raw land next to his factory in 2008, which is intended for expansion.

Taufik does not only run Sarana Grafika Indonesia, he also runs a food and snack business with his friends. The snacks are made from mushrooms and sweet potatoes. For now it is still a small business but once it increases in size he will not hesitate to open more factories in Jababeka, because Jababeka is the biggest industrial estate in South East Asia.

His life guideline in running his business is very simple, “Do your best and think positive”. By doing your best, the result will be the best and if we are not doing our best, we won’t get the best result. Sometimes Taufik and his employees have a different point of view when they think less positive. However, Taufik tries to bridge their point of view and remind them to always think positive.

Jeannifer Filly Sumayku | The President Post, Jakarta | Property

The Indonesian property industry has experienced rapid changes in its orientation, shifting its focus from development of residential compounds to office blocks, integrated complexes, and is now set to realize the concept of “green property” development.

The concept of “green property”, also known as “eco-property”, is basically about developing property projects that are friendly to the environment in order to create and preserve a good ecological balance.

This property development philosophy will be amplified on a global scale when property magnates, practitioners and government policymakers gather in Bali to attend the 61^st International Real Estate Conference which is organized by FIABCI, the federation of international real estate developers.

According to Pingki Elka Pangestu, chief organizer of the conference and Asia-Pacific president of FIABCI, Indonesian property industry leaders who will address the conference include James Riady from the Lippo Group and Ciputra from the Ciputra Group. They will share their views on the future of property industry development in the Asia-Pacific region.

The theme of the conference is “Green Shoot for Sustainable Real Estate”, in reference to efforts to explore the resurgence and the empowerment of the property sector that has in recent years declined on a global scale.

Participants will take this opportunity to conduct some kind of introspection, in the sense that while there is a need to continue developing the industry, greater attention must now be given to environmental and ecological considerations.

They will even talk about the need to strike a good balance between property development and preservation of local cultures. This apparently is the reason why the government will be represented by Minister of Tourism and Culture Jero Wacik and Governor of Bali I Gde Mangku Pastika, both of whom will address the conference.

Pangestu says that green property is now the direction of the Indonesian property industry. In some areas, including Bali, he added, developers have begun to readjust their business strategies to this new trend as they consider ecological balance a high priority.

Industry specialist Teguh Satria, who is also involved in the FIABCI conference, says that Indonesia should have hosted the conference in 1998 but a political crisis that led to a change in national leadership derveloped and prevented it from doing so.

Indonesia was then competing against Norway and Italy to be the host of the 61^st conference but not until the crisis was over did it regain international recognition to host the prestigious international meeting which will be held at the Grand Hyatt, Nusa Dua, Bali, on May 24-28, 2010.

Property Trends 2010 and Key Players

In a related development, industry leaders say that the Indonesian property development has taken a new route, namely development of integrated complexes comprising residential space such as apartments and office blocks. This is expected to be the trend as of 2010 because of rising demand for such kind of property.

Jabebeka City is an example of such property development concept, combining residences, shopping and office areas with educational facilities, including President University.

Under this grand strategy, Jababeka Group—led by Setyono Djuandi Darmono—has developed 5,600 hectares of integrated compounds for almost a million people occupying 30,000 houses.

The tiny city in the eastern outskirts of Jakarta also houses 1,400 companies, including Unilever, Samsung Electronics, ICI, Mattel, United Tractor, KAO, Nissin, and Akzo Nobel, representing international investors from 27 countries. This integrated concept employs around 3,000 expatriates and a huge number of local workers.

Jababeka’s integrated property development concept also includes eight hotels and condominiums, 24 shopping malls, 55 hospitals and clinics, two driving ranges, 16 sport clubs and 18 public transportation lanes.

The annual production value of this integrated area is US$31.5 billion, with export worth estimated at $10.3 billion. At least US$21 billion worth of investments have poured in to turn Jabebeka into one of Indonesia’s most popular new cities.

This is apparently the reason why industry analysts are saying that developers cannot survive the tough competition unless they implement a strategy similar to Jababeka’s.

“We realize that such is the preferred trend today,” says Rosihaan Saad from PT Perdana Gapuraprima Tb, another key player in the industry.

He was quoted by vivanews.com as saying the sales of such property are on the rise because buyers prefer to live near their offices and in areas where they can easily obtain everything they need.

As an example, he said, every single space in the GP Plaza, which is owned by Gapuraprima, is already sold out even before work on the building is completed. People buy them up because they like the integrated concept of the compound, he added.

Tirta Setiawan, another property industry analyst, says that nowadays buyers prefer residences that are close to their offices or business fields.

In other developing countries, Setyawan adds, buyers prefer to live not at the city center but outside of it because they don’t like noise.

In Indonesia, it is the other way around—people actually prefer to live at the city center because that is where they can easily get whatever they want.

Given this situation, developers must build residences that are integrated with shopping malls, business centers or offices, education and sport facilities. So, Indonesia’s concept must be an all-in-one concept, he theorizes.

“In the past, price was the primary consideration; today that is no longer the case. The primary consideration is completeness of a location and its comfort,” he was quoted by Kompas.com as saying.

In recent years, many Indonesian developers have shifted attention to developing integrated complexes. Lippo Karawaci is another example of integrated property development.

Established in 1990 under the name of PT Tunggal Reksakencana, Lippo Karawaci Township, which came to being in 1996, was its maiden success.

It is now listed among Indonesia’s well-developed townships, housing Universitas Pelita Harapan (UPH), Sekolah Pelita Harapan (SPH), thousands of offices and residences, sports facilities, and such popular shopping malls as Matahari, Hypermart and Debenhams.

It also features Times Bookstore,  a joint project of Matahari Department Store and Times Bookstore Singapore, thereby providing local and expatriate communities with access to quality and globally-oriented reading materials.

Lippo Karawaci is also where Siloam Hospital is situated. It is one of Asia’s best centers for neurosurgical treatments, attracting patients from Singapore and other neighboring countries.

Meanwhile, the property philosophy of Dr. (HC) Ciputra is another towering example one must learn from.

He has developed many integrated townships in Indonesia, Vietnam and India, and has in recent years developed educational facilities as an integral part of its property development philosophy.

The Ciputra University and Ciputra schools in Surabaya are good examples of how one-stop property compounds should be developed. And they don’t stop there, as Ciputra is in fact the pioneer of Indonesia’s entrepreneurial education.

At all of his schools, entrepreneurship is the main stream of education, while the Ciputra Entrepreneurship Center provides training to lecturers from private and state-owned universities, enabling them to work not just as teachers but business trainers as well.

This way Ciputra is building a new generation of entrepreneurs who will are expected to give added ballast to the development of Indonesia’s economy, including the property sector, which is his main line of business.

With all these developments going on, Indonesia is well-positioned to share its experience with property developers and realtors who will gather in Bali next May. At the same time, it can also  learn from the experiences of overseas property industry players.

(The President Post printed edition. February 24, 2010)