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JAKARTA RENTAL APARTMENT REPORT 1Q11

ECONOMY

The economy remained strong over the first quarter of 2011, with most economic indicators showing improvement. GDP continued to grow at the estimated rate of between 6.4% and 6.6% year-on-year. The Rupiah appreciated by 3.9% during the quarter, from Rp.9,050 per US Dollar at the end of December 2010 to Rp.8,707 per US Dollar by the end of March 2011. National inflation during the period reached 1.5%, higher than the 1.0% from the same period last year. This inflationary growth was mainly attributable by the increase in food prices. Meanwhile, the SBI rate saw further increase from 6.50% to 6.75% quarter-on-quarter.

ECONOMIC INDICATORS

GDP Growth CPI Growth Central Bank-Rate 2009 4.5% 4.8% 6.5% 2010 6.0% 6.0% 6.5% 2011F 6.6% 7.0% 7.0%

Source: Government data (BPS, BI, Ministry of Finance) and CEIC; 2010-2011 forecasts by IMA Asia

OVERVIEW

L ea s ing A c t i vit i e s The 1st quarter of 2011 experienced soft market as indicated by the declining occupancy rate of all rental apartment sub-sectors. Group meeting from government institution and daily accommodation which usually become demand generators for purpose built rental and serviced apartment, slowed down during the review quarter. Meanwhile, the long stay guest for these 2 sub-sectors remained the same. This quarter also saw new proposed project from condominium hotel and serviced apartment which expected to add the new serviced apartment supply in 2013. Additional supply to the condominium-for-lease sub-sector came from completion of new condominium projects in end 2010 and early 2011 and the sub-sector experienced decline in occupancy level pending to hand-over, fit-out and market the units. L ea s ing De mand The total occupancy rate of Jakarta rental apartment in the review quarter was recorded at 65.4%, a decline by about 0.9 percentage point from the last quarter's figure of 66.3%. The occupancy rate of condominium-for-lease was recorded at 64.0%, declined by about 0.7% from the last quarter's figure. The occupancy rate of serviced apartment and purpose built rental apartment also experienced decline by about 1.3% and 1.2% from the previous quarter's figure, to 74.3% and 71.6%, respectively. Whilst most middle-segment condominiums are occupied by local Indonesians, the majority of tenants in the condominiums-for-lease are still expatriates. The expatriate tenants represent approximately 52% of the total occupied condominiums-for-lease units. Similar trend is also observed in the overall Jakarta rental apartment market. With the number of total occupied rental apartments in the 1st quarter of 2011 reaching 25,736 units, expatriate tenants represented around 56% of the total rental apartment tenants. Active demand generators came mainly from the oil/mining, telecommunications, embassies, insurance, financial consultants, and banks. JAKARTA RENTAL APARTMENT REPORT 1Q11

USD / sqm / Month 25 20 15 10 5 0 2006

NEW PROPOSED

Project Sub-sector Approx units* 189 117 Schedule completion Q1-2013 Q2-2013 Area

Paramount Residence Premiere Best Western

Serviced Apt Serviced Apt

Serpong Pondok Indah

RENT & VACANCY

Vacancy % 40% 35% 30% 25% 20% 15% 10% 5% 0% 2007 2008 2009 2010 2011Q1

SA & PB Rent SA & PB Vacancy

CFL Rent CFL Vacancy

Note: SA: Serviced PB: Purpose Built CFL: Condoforlease

1

JAKARTA RENTAL APARTMENT REPORT 1Q 2011

Suppl y The cumulative supply of rental apartments in Jakarta has recorded at 39,331 units, an increase by 2.8%, compared to previous quarter. The completion of condominium projects during this quarter added about 1,064 units to the condominium-for-lease market, bringing the total cumulative supply of the market from 32,064 units in the previous quarter to a total of 33,128 units. The newly completed condominiums-for-lease projects were Central Park Residences (Alaina Tower), Royal Mediterania Garden (Marygold tower), Kemang Village (Ritz, Cosmopolitan, and Empire towers), MT Haryono Square, [email protected] Ditiro, and Seasons City (A, B towers). New condominium hotel project that was launched during the review quarter was The Premier Best Western, which will be managed by hotel operator, Best Western as serviced apartment and hotel. This project will start construction this year and is expected to commence operation in mid 2013. The other proposed serviced apartment project was Paramount Residence in Paramount Serpong residential estate. This project will be operated by Aston and will start operation in early 2013. No new supply from purpose-built rental apartment subsector was recorded during the review quarter. Re nta l Gr ow th There was increment in the asking monthly rental price starting early 2011, especially in serviced apartment and several purpose-built rental apartment sub-sectors. The average gross rental of purpose-built rental apartments and serviced apartments stood at US$16.31 and US$22.12 per sqm per month, respectively. Meanwhile, the average gross rental of selected prime condominiumsfor-lease was recorded at US$13.96 or about Rp.121,523 per sqm per month. The 3-month rental rate growth in the selected rental apartments in Jakarta at the end of 1st quarter 2011 was recorded at 3.7% in USD term. These include several serviced apartments, purpose-built rental apartments, and upper/upper-middle segment condominiums. The annual growth of rental rate from the early of 2010 was approximately 4.7%.

Rental per sq.m in USD

RENTAL APARTMENT PRICE

LOCAL CURRENCY (RP/SQ.M/MONTH) LOCATION Q110 Q410 Q111 EUR O/ SQ.M /YR 139.1 188.6 US$ / SQ. FT./ YR 18.2 24.7 12MONTH

OUT LOOK

PB Rental Apt Serviced Apt Condo-forlease

143,468 186,269

142,511 188,115

142,006 192,559

Stable Rising

124,181

123,551

121,523

119.0

15.6

Stable

SUPPLY BY SUB-SECTORS

PB Rental Apt, 6.2% Serviced Apt, 9.5%

Condo for Lease, 84.2%

RENTAL RATE IN JAKARTA

24.0 22.0 20.0 18.0 16.0 14.0 12.0 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 Condo-for-lease

PB Rental Apt

Condo-for-lease

OUTLOOK

Demand for long stay tenant in serviced apartment and purpose-built rental apartment is expected to remain active. Inquiries usually are from expatriates from oil companies, the banking, insurance and finance industries.

High competition from strata-title apartment owners will still continue in condominium-forlease market, especially with the incoming completed condominium project. This will lead to the offer of more flexible lease terms and payment. But some favourite condominium-for-lease units such as in South Jakarta and CBD area will still enjoy good demand and price.

For industry-leading intelligence to support your real estate and business decisions, go to Cushman & Wakefield's Knowledge Center at www.cushmanwakefield.com/knowledge Research & Advisory Department PT. Cushman & Wakefield Indonesia Indonesia Stock Exchange Building Tw.2, 15th fl. Jakarta, Indonesia +62 21 2550 9500

Please consider your environmental responsibility before printing this report.

This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ©2011 Cushman & Wakefield, Inc. All rights reserved.

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