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Jakarta property market stagnates amid election, mall moratorium

Publication Date : 17-07-2014

 

The property business, particularly office and retail space, in the capital city of Indonesia has recorded stagnant growth during the first half of this year compared with the same period last year, due to the legislative and presidential elections and the ongoing moratorium on mall development by the Jakarta administration, property consultants say.

Between January and June, the total net absorption reached 37,500 square metres (sqm), far below last year’s absorption during the same period at 213,400 sqm, according to data from Jones Lang LaSalle (JLL).

“[The lower absorption figure] is due to the anticipation of the election result,” JLL research head Anton Sitorus said in a press briefing on Wednesday.

Most of the absorption in the first half was achieved from April to June, amounting to 21,500 sqm.

Data from Cushman and Wakefield showed a similar trend, with managing director David Cheadle saying that the general and presidential elections, on April 9 and July 9 respectively, had resulted in a wait-and-see attitude among tenants.

Cheadle also attributed the low takeup to the zero supply in the office market during the second quarter of the year.

Total office space remained at 4.65 million sqm with an occupancy rate of 94.4 per cent as of June.

The stagnant level of growth was also seen in Jakarta’s retail market, caused by the city administration’s moratorium on mall construction, according to Cushman and Wakefield.

The occupancy rate in Jakarta’s retail market reached 84.3 per cent as of June, up 1.4 per cent on a year-on-year basis.

In contrast, sales of condominiums remained resilient during the first half of the year, despite a slowdown in the country’s economic growth and the collective hesitancy during the election year.

In fact, JLL forecast that condominium sales would break a new record by year-end.

“The number of condominiums sold between January and June reached around 7,400. Meanwhile, the total number of condos sold last year was only around 13,000 units,” Anton said.

“We are expecting to see a record-breaking number of sales in condos by the end of the year,” he continued.

JLL’s residential head, Luke Rowe, said the healthy growth in Jakarta’s condominiums had been supported by increased urbanisation and the positive sentiment surrounding the result of the presidential election.

On the assumption that non-active Jakarta governor Joko “Jokowi” Widodo became Indonesia’s next president, sales growth in condominiums would be boosted to at least 16,000 units being sold throughout this year, Rowe said.

Lifestyle changes as well as poor public transportation infrastructure had also driven residents to opt for vertical living, he added.

“Transportation is becoming more and more difficult; therefore, it makes sense for the city to go vertical. And the people are changing in terms of their attitude toward owning and living in apartments,” he added.

Jakarta currently has 92,490 condominiums with a take-up rate of 94 per cent, according to data from JLL. Around 53,000 further units are currently under construction, of which 73 per cent have already been sold.

Similarly, data from Cushman and Wakefield shows that the condominium market remains robust and appears sustainable.

The condominium market had not been overly influenced by the country’s macroeconomic situation or the elections this year, according to the property consultant.

 

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