Jakarta condominiums and real estate market overview 2011

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Indonesia’s economy remained robust during the second quarter of 2011, with the GDP growth figure forecast at 6.4% for the period. The Rupiah (Rp) further appreciated quarter-onquarter by 1.2% against the USD to reach Rp. 8,598.

During the second quarter, prices increased by 0.1%, with year-on-year inflation recorded at 6.0% (still within Bank Indonesia’s target range of 5% ±1%). Year-to-date FDI realization totaled USD 4,395 million, while the nine month’s SBI rate during the quarter averaged at 7.36%

With conducive economic conditions, developers are in pace to build new condominium projects, as indicated by more new projects being launched since 2010.

With the growth of supply moving at a significant rate, demand has been able to absorb the offered supply even though at a slower rate.

The newly launched projects were still dominant in the non-CBD area, especially in South, North, and West Jakarta as well as greater Jakarta such as Bekasi and Serpong area. The newly launched condominium projects in these areas comprised mostly lower-middle and middle segment developments.

The cumulative sales rate of existing condominium developments was recorded at 94.9%, which remained the
same as that in the previous quarter. The number of sold units, however, increased by about 1.5% quarter-on-quarter and 8.9% year-on-year to 77,627 sold units. About 60% of the sold units in existing condominium developments were dominated by investors, especially in the upper-middle segment projects and the remaining were owner-occupied, mostly in the middle and upper segment developments.

The pre-sales rate of the proposed condominium projects stood at 62.4%, an increase of 1.7% quarter-on-quarter and 2.8% yearon-year, while the number of pre-sold units totalled 25,871 units.

Upper-middle and middle segment condominiums recorded good pre-sales rates, at 64.7% and 62.5%, respectively.
Sales rate of existing low-cost condominium projects increased slightly by 0.2% from the previous quarter’s figure of 91.7%, while the pre-sales rate of low-cost condominium projects stood at 78.9%, a decrease of about 3.3% from the last quarter’s figure of 82.2%.

Distribution of condominium units in Jakarta are concentrated in the secondary area, which holds about 66.9% of the total supply or approximately 54,720 units, while the CBD area holds about 24.6% or about 19,669 units. Prime location contributes 7,408 units or 9.1% of the total condominium supply in Jakarta.

By district, South Jakarta still dominates the supply of Jakarta condominium units with approximately 22,871 units.

Total cumulative supply of Jakarta’s condominium projects in the second quarter of 2011 increased by about 1.8% from that of the previous quarter to 81,797 units, with the completion of Royal Mediterania Garden (Lavender tower) and The Park Residences. Meanwhile, the completion of Menara Latumeten, City Garden and Casablanca East Residence brought the total cumulative supply of low-cost condominium projects to 17,164 units.

The newly launched projects during the second quarter were Sherwood Residence and Green Bay Seaview (tower K), Pluit Seaview in North Jakarta; The New Ambassador Suite tower of St. Moritz and Sky Terrace in West Jakarta; Admiralty Apartment at Fatmawati in South Jakarta; Enviro Apartment Jababeka and Grand Centerpoint in Bekasi; and Serpong Greenview in Tangerang. These newly launched projects brought the total proposed supply to 41,439 units and thetotal proposed low-cost condominium projects to 26,706 units.

The global economic crisis which started to affect Jakarta’s condominium market in end 2008, caused prices in general to remain relatively unchanged, with a growth rate in the range of 4% to 5% per annum. Starting end of 2010, several condominium projects with good take-up confidently increased their asking price and this trend continued until the end of the second quarter of 2011.

Overall, the average price of condominium units has reflected a rising trend. The average condominium price in the CBD area as at the second quarter of 2011, was recorded at Rp.18.07 million per square meters (/sq.m.), a slight increase of 3.6% from that in the previous quarter and by 10.9% from that in the previous year. Meanwhile, the average price in prime area was recorded at Rp.17.29 million /sq.m. increased by 3.5% from the previous quarter and by 12.4% from the previous year.

The inflow of new supply in the market has resulted in the decline of the occupancy rate of existing condominium
projects. In terms of occupancy, only 62.5% of the existing condominium units are occupied, as of June 2011, a drop of about 0.9% compared to that in the previous quarter.

The low occupancy is expected to continue as more time is needed to hand-over the units and for the fit out process, as more proposed condominium projects are expected to be completed up till the end of 2011. Large number of new supply will continue to be launched and to be completed and demand is predicted to be able to absorb the offered supply although at a slower rate. In the long run, developers will be cautious with the fact that demand may not be able to keep up with the supply acceleration.