Jakarta market up in Q1 despite bad forecast

JAKARTA. Property demand in Greater Jakarta remained high in the first three months of 2014 despite political tensions ahead of the April 9 legislative election, according to property consultant firm Cushman and Wakefield.

According to Cushman and Wakefield research and advisory head Arief Rahardjo, the election and a lackluster economy did not have a negative impact on the property market in the capital city.

Arief said Tuesday that according to his agency’s first-quarter study, most sectors (offices, residences) wrapped up stronger demand during the first three months of this year, with the exception of industrial estates. The positive trend, the study showed, was attributed to strong investor confidence thanks to improving macroeconomic conditions during the first quarter.

“Leasing and transaction activities in office buildings continued both from expansions and relocations of existing tenants during the first quarter of 2014. Moreover, the unavailability of supply has allowed owners to increase average gross rental fees in the CBD [central business district] area by 2.5 percent q-o-q [quarter-on-quarter] and 28 percent y-o-y [year-on-year],” Arief explained.

Average CBD gross rent stood at Rp 311,250 per square meter per month in the first quarter, while the overall occupancy level rose 0.8 percent y-o-y to 94.4 percent.

The property consultant’s managing director, David Cheadle, said that despite the bleak forecast, the study also showed that the capital’s condominium market — both planned and existing condominiums — surprisingly enjoyed strong absorption despite abundant supplies.

Pre-sales were up 5.6 percent to 63.2 percent of 137,901 units, with cumulative supply rising 3.3 percent q-o-q to 123,423 units and occupancy rates increasing 1.3 percent q-o-q to 59.9 percent. More than 60 percent of buyers were investors, indicating the continuing strong investment sentiment toward the condominium sector.

“The nearly 6 percent pre-sale rate increase q-o-q was enormous when we had expected that the market would be more cautious ahead of the election,” Cheadle said.

Rental apartment in the capital also saw stronger demands during the first quarter, standing at 36,736 units or 13 percent increase y-o-y, higher than the supply growth during the same period.

Cumulative supply increased 11.3 percent y-o-y to 57,204 units during the first three month of this year, while the occupancy rate stood at 64.2 percent or a rise of 1.2 percent y-o-y.

While the “political event” did not affect office, condominium and apartment markets, the industrial estate market was hit badly by political and macroeconomic impacts, with Arief saying that the sector saw its lowest quarterly demand since 2009.