Arief Rahardjo , Jakarta Post, Contributor, Jakarta Property and Apartment
The early period of 2008 was marked by the launch of government-subsidized condominiums. This is a type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have a title.
Approximately 11 of these proposed lower-middle class projects were offered on the pre-sales market. These condominium projects were part of a government program to build 1,000 blocks of lower-middle segment condominiums, working together with several developers. These condominium projects targeted people in the lower-income group, with tax exempts and subsidized mortgage rates.
Over 70 percent of these proposed subsidized-condominiums have been absorbed in the pre-sales market, indicating a good demand for these condominiums. Approximately 40 to 50 percent of the committed buyers were in fact investors from higher income groups, making this program (to provide houses to the lower income group) partly miss its target. Lack of regulations and weak control by the government could be attributed to this.
A number of new condominium developments within large mixed-use developments close to the city center were also recorded, mostly targeting the upper-middle class.
Despite the large addition of the subsidized-condominiums in the first quarter of 2008, the pre-sales rate of proposed condominiums in Greater Jakarta increased slightly by 0.24 percent from the previous quarter's level to 68.65 percent. The high take-up of these proposed projects was boosted by the strong sales performance of the low-cost condominiums as well as the good take-up in several newly launched upper-middle class developments.
The cumulative sales rate of existing condominiums in Greater Jakarta was recorded at 94.67 percent at the end of the first quarter of 2008, and the number of unsold existing units has been pressed further down to 3,170 units. Despite creeping up by 0.39 percent from the previous quarter, occupancy rates remained low at 65.92 percent, compared to the more than 70 percent occupancy rate in 2006.
What about supply? Several condominium projects were completed over the review period, despite the delay of several projects. The newly completed condominiums in the first quarter were Hampton's Park (Tower A), Rasuna The 18th (North Tower) and Marbella Kemang (Tower A). These new deliveries bring the cumulative supply of Greater Jakarta strata-title condominiums to 59,429, as of the end of the first quarter.
The proposed supply of condominiums in Jakarta got an additional five new government-subsidized condominium projects and a significant number of middle- to upper-class condominiums during the review quarter. These condominiums include Gandaria Heights (Tower B), Essence (East Tower), Denpasar Residence (Kintamani Tower), Central Park Residence (Tower C), The Wave (Coral & Breeze Towers), MT Haryono Square and Centro City.
Meanwhile, subsidized condominiums launched in the first quarter were Modernland's Yellow & Green towers, East Park Apartment, Kalimalang Residence and Gateway Apartment. All of these newly launched condominium projects brought the total proposed supply in Greater Jakarta to approximately 40,264 units, the largest number of total proposed condominium supply ever recorded in one quarter.
With land availability dwindling in the CBD area and an increasing preference for condominiums in good residential settings, condominiums in prime residential areas experienced better price appreciation than those in the CBD area. In rupiah terms, the price of CBD condominiums remained unchanged in the first quarter at Rp 13.44 million per sqm, while the price of condominiums in prime residential areas grew by approximately 1.25 percent to Rp 12.11 million per sqm.
Rental and serviced apartments
The global economic slowdown has not had any effect on the apartment rental market in Jakarta. Demand from expatriates remained strong although not from the dominant Japanese and Korean market, but from nationals from India, Spain and several Asian countries. Demand from local tenants in serviced apartments dropped by 6 percent in the review quarter, as living in serviced apartments became more and more expensive, and in large good quality condominiums-for-lease.
Occupancy of purpose-built rental apartments was stable and increased by only 0.03 percent to 78.30 percent, in the review quarter. The number of local tenants in purpose-built rental apartments dropped slightly and represented only 8.6 percent of tenants in the purpose-built rental apartments.
In the serviced apartments sub-sector, local tenants represented approximately 20 percent of the lease demand, mainly due to the frequent use of serviced apartments for family holidays in Jakarta, especially in holiday seasons and on long weekends. The occupancy rate of serviced apartments at the end of the first quarter was recorded at 64.08 percent or a 5.69 percent decline from the previous quarter's level.
As condominiums completed in the previous period have started to be occupied and leased back to tenants in the review quarter, the condominiums-for-lease sub-sector saw an increase in occupancy by 1.48 percent to 72.43 percent. Condominiums-for-lease continue to attract local tenants and have the least proportion of expatriate tenants.
The overall rental apartment market saw an increase of occupancy rate from 71.50 percent at the end of 2007 to 72.03 percent at the end of the first quarter of 2008.
With a limited number of condominium projects entering the market in the first quarter, there was no significant increase in the supply of condominiums-for-lease.
Meanwhile, the serviced apartments sub-sector got additional supply from the newly operated Oakwood Premier Cozmo in Mega Kuningan, and Shangri-La Residences, both in the CBD area of Jakarta. The rental apartment market got 373 additional serviced apartments, and 646 more condominiums-for-lease.
All of these new additions brought the cumulative supply of rental apartments in Greater Jakarta to 28,343 units.
The continued increase of rental rates of serviced apartments due to the introduction of several brand name operators into the market in the past two years has widened the rental rate difference between purpose-built rental apartments and condominiums-for-lease. These professional operators are able to charge higher prices, through the offering of first-class service and ample facilities of a five-star brand.
The rental rate in serviced apartments and condominiums-for-lease grew by 1.17 percent and 1.23 percent, respectively in U.S. dollars. Meanwhile, rental rates of purpose-built rental apartments dropped by 0.38 percent from the previous quarter.
The average rental rate of condominiums-for-lease was recorded at US$13.78 per sqm per month, while the average rental rates of purpose-built rental apartments and serviced apartments were recorded at $14.97 and $18.39, per sqm per month respectively.
Outlook
The occupancy rate of condominiums will continue to creep up, as newly completed condominiums near their handover date. The occupancy rate of serviced apartments is expected to increase slightly as no more new serviced apartments are due to start operation in the second quarter.
As for the government-subsidized condominium projects, tighter control will be required on sales implementation of these subsidized projects, to ensure that the units don't go to the wrong segment. Launches of these government-subsidized condominiums are expected to slow down in the next period.
The biggest recent issue in the market would be the high increase of construction costs. New projects, therefore, are expected to be further reviewed before being launched on the market.
Wednesday, June 18, 2008
Apartment Cheap and Home Tips
Letter: On 'Details of apartment ownership'
Jakarta Post Property and Apartment
ADPARA>I refer to an article titled "Devil in details of apartment ownership", (The Jakarta Post, June 2, p. 5). This article is a bit misleading due to the lack of understanding of laws on apartment and agrarian ownership.
According to the law on apartments, strata unit ownership includes the unit itself that is owned exclusively by its owner, shared properties including spaces and properties inside and outside of the building and the land where the building stands. Ownership of land is regulated by the agrarian law.
Because apartment units can be owned by non-Indonesian citizens, the land title is only an HGB or its siblings mentioned in the article (leasehold), not hak milik (fee simple).
HGB can be extended and can be revoked if the land is badly needed for public use when the lease expires. It is not easy to revoke an HGB, especially when the land zoned for its present use and the structure constructed is permanent (last longer), such as an apartment building.
Therefore, the lease most likely can be extended for another 20 years and then for another 20 years. The HGB lease time period does not apply to the property developed under a BOT scheme, since the leasehold terminated with the handing over the property to the owner of the land (life of the BOT project).
Strata ownership is considered new in Indonesia, therefore confusion and lack of understanding, which leads to manipulation, is common when dealing with the development of properties.
Precedence from other countries, especially when dealing with leasehold land, is in abundance. The strata unit monthly fee should include the sinking fund for major renovation and leasehold extension.
So when the time comes, the owners of the units do not have to pay/contribute lots of money for HGB extension. Consumer organizations and the government should make developers transparently explain the property they develop, including the status of the structure and the land title.
TEGUS UTOMO ATMOKOJakarta
Jakarta Post Property and Apartment
ADPARA>I refer to an article titled "Devil in details of apartment ownership", (The Jakarta Post, June 2, p. 5). This article is a bit misleading due to the lack of understanding of laws on apartment and agrarian ownership.
According to the law on apartments, strata unit ownership includes the unit itself that is owned exclusively by its owner, shared properties including spaces and properties inside and outside of the building and the land where the building stands. Ownership of land is regulated by the agrarian law.
Because apartment units can be owned by non-Indonesian citizens, the land title is only an HGB or its siblings mentioned in the article (leasehold), not hak milik (fee simple).
HGB can be extended and can be revoked if the land is badly needed for public use when the lease expires. It is not easy to revoke an HGB, especially when the land zoned for its present use and the structure constructed is permanent (last longer), such as an apartment building.
Therefore, the lease most likely can be extended for another 20 years and then for another 20 years. The HGB lease time period does not apply to the property developed under a BOT scheme, since the leasehold terminated with the handing over the property to the owner of the land (life of the BOT project).
Strata ownership is considered new in Indonesia, therefore confusion and lack of understanding, which leads to manipulation, is common when dealing with the development of properties.
Precedence from other countries, especially when dealing with leasehold land, is in abundance. The strata unit monthly fee should include the sinking fund for major renovation and leasehold extension.
So when the time comes, the owners of the units do not have to pay/contribute lots of money for HGB extension. Consumer organizations and the government should make developers transparently explain the property they develop, including the status of the structure and the land title.
TEGUS UTOMO ATMOKOJakarta
Subscribe to:
Posts (Atom)