Property market experiences slowdown in Q3
The property market slowed down in the third quarter (Q3) from the previous quarter this year due to the weakening rupiah and fuel-price increases, which altogether affected people’s purchasing power,
a study says.
Real estate advisor Colliers International Indonesia associate director and real estate research advisor Ferry Salanto told a press conference on Tuesday, however, that the condition would be fleeting.
“Investors are in wait-and-see mode, especially after increases in [subsidized] fuel prices in June and the weakening of rupiah [against the US dollar],” he said.
He added that Colliers highlighted the market in four main property sectors, namely offices, apartments, retails and industries.
The four sectors showed a mixed picture of Indonesia’s property prospects in the third quarter.
Ferry said annual office supply and demand had continued to dwindle, starting from the second quarter.
According to Colliers data, annual office space absorption in 2011 and 2012 could reach around 300,000 to 400,000 square meters (sqm), while total office space being absorbed was around 110,000 sqm year-to-date. The released data, however, did not reveal the level of office space absorption on a quarterly base.
Sudirman, Gatot Subroto and Rasuna Said are the prime areas for offices, according to Ferry.
“Indonesia’s recent economic upheaval may have contributed to the recent decrease of office space absorption,” he said.
He forecast that some old office buildings in Jakarta, including those in Rasuna Said and Sudirman, would continue to be demolished until 2016, to be rebuilt with more floors to increase developers’ revenues.
Meanwhile, the apartment sector had shown an increase of supply and demand in the third quarter, he said.
In the third quarter, the cumulative supply of strata-title apartments increased 3 percent to 128,353 units from the previous quarter. The 3 percent increase represented the completion of five towers of two apartment projects in Jakarta.
Ferry said the strata-title apartment market was very active during the third quarter as middle- to upper-class people were looking for a safe place to keep their money from depreciating.
The rupiah has weakened 16 percent year-to-date.
“They thought it was better to buy apartments rather than keep their money in banks,” Ferry said.
In the industrial estate sector, 77.65 hectares of industrial land were sold in the third quarter, down from 83.92 hectares in the second quarter this year and from 117.37 hectares in the same quarter last year.
The drop, Ferry said, was attributed to the weakening rupiah and fuel-price increases, which kept businesspeople from investing in industrial estate.
However, industrial land prices would remain high, he said, despite the sales decline because industrial players preferred areas with better infrastructure as offered in industrial estates.
The cumulative supply for sale in the retail sector has been relatively stagnant since 2009 and is forecast to remain at that level until 2016.
“With no new shopping centers operating in Jakarta, the cumulative supply did not change and was recorded at 4.3 million sqm in the third quarter,” the study said.
Colliers International Indonesia managing director Mike Broomell said that despite the slowdown, Indonesia was still currently the most attractive place in the industry.
“In terms of Asian countries, Indonesia has lower property prices. That’s why many investors are still looking at Indonesia to spend their money and invest in the long-term,” he said. (tam)