Optimism Still in Place for Property Sector

The recent bomb attack in Bali may have spread pessimism over the prospect of the national economy, but in the property sector, however, such negative concern was nowhere to be evidenced by the huge public demand for 1,724 units of assets offered by the Indonesian Bank Reconstruction Agency (IBRA) who is launching a Property Asset Selling program.rnrnu0026nbsp;rnrnThe overwhelming response is obvious by the number of people who deposited down payment worth of Rp10 millions ~ Rp100 millions in all of IBRA’s branches in 6 cities. By the closing day that fell on Wednesday, 23rd October 2002, the number of applicants has reached an astonishing figure of 4,994 – far surpassing the estimated figure of 3,500 to 3,800 by Mr Panangian, the IBRA property consultant.rnrnu0026nbsp;rnrnu0022This reflects that the property business isn’t affected at all by the bomb accident in Bali,u0022 said Panangian.rnrnu0026nbsp;rnrnAccording to him, the growth of the property sector will be a great pull for all the other sectors of the economy. u0022So far, the heaviest hit is the tourism sector, but I am sure it will be only temporary. If hotels in Bali, which are the worst-hit can get over the negative effects by means of higher discounts, I am sure Bali will recover in no time.u0022rnrnu0026nbsp;rnrnThe vibrancy of the office sector is clear before the Bali tragedy. According to a research conducted by PT Procon Indah in the third quarter of year 2002, a building in Central Business District (CBD) changed hands to a local investor despite poor interest shown by investors in that office building. Other ongoing negotiations were also vigorous for office buildings in and out of the CBD area. In the third quarter of year 2002 alone, capital value has increased by as much as 1.3% to Rp 8.2 million per square meter!rnrnu0026nbsp;rnrnThe effects of the Bali tragedy on the office sector? Vibrant before the Bali tragedy, and a sector that has shown to be one to have the slowest recovery in any crisis?rnrnu0026nbsp;rnrnAccording to another report by PT Procon Indah, the Bali tragedy has indirectly affected the office sector as the lessee is bound to the lease term that may have been agreed in the contract prior to the tragedy. On the brighter side however, the tragedy has also thrown caution to entrepreneurs with expansion plans or office relocation; with the number of new supply limited, occupancy rates in buildings are thus expected to increase on a small scale.rnrnu0026nbsp;rnrnFrom such inference, it can be said that the effects of the recent Bali bomb attack has till now, been little felt. Dina Salem, a Senior Manager of CEO SUITE – the leading serviced office provider in CBD Jakarta agrees. According to her, the occupancy rate for their 80 office suites remains steady at 85%. The company rents offices, 90% of which are leased to foreign investors with rental value ranging from USD800 to USD3,500 per month.rnrnu0026nbsp;rnrnu0022There isn’t a single foreign client in CEO SUITE who has terminated their lease agreement as yet. In fact, in October alone, we added 3 more international firms to our clientele list.u0022 said Dina.rnrnu0026nbsp;rnrnInvestors who wanted to withdraw from Indonesia after the bomb tragedy has been presented with an offer to rent CEO SUITE’s offices in Kuala Lumpur and Singapore. u0022We offered them relocation alternatives in our other centers in Kuala Lumpur and Singapore, while in Jakarta they will be provided with our virtual office service. This way, if any of their business colleagues should contact Jakarta at CEO SUITE Jakarta, we will act on their behalf and divert all incoming calls and mails to wherever they want.u0022 said Dina.rnrnu0026nbsp;rnrnQuite a number of foreign investors now start their businesses in Indonesia via a Virtual Office in CEO SUITE. u0022There are now over 100 local and foreign businessmenu0022, Dina added.rnrnu0026nbsp;rnrnWhat is the future for property business in Indonesia? One may be interested.rnrnu0026nbsp;rnrnAccording to the Chairman of real estate companies Center of Indonesia, Yan Mogi, u0022Well, if the terror does not continue, the healing process in the property sector can carry onu0022.rnrnu0026nbsp;rnrnIn Yan Mogi’s opinion, property business still has its chance to recover in 2002 and 2003.rnrnu0026nbsp;rnrnLike Yan Mogi, Panagian is also rather optimistic about the future of this business. It is generally predicted that year 2007 will be the crux point for a big boom in the property business in Indonesia.