Selasa, 01/01/2008

Asia Pacific Market to Grow Attractively
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Asia Pacific Market to Grow Attractively

LESSONS FROM THE ECONOMIC CRISIS that hit Asia a decade ago has strengthened the economic fundamentals of the affected countries in the region, compared to the pre-crisis period. Even the U.S. subprime mortgage crisis that has infected the global financial market in mid-2007 cannot prevent Asia Pacific economies from growing further. In line with the uplifting development, the region’s property market is also projected to grow more attractively.

Worries about the possible spiraling effects of the U.S. subprime mortgage crisis on the regional property market confirmed to be exaggerating. The macroeconomic condition has still been relatively conducive and strong property market fundamentals have helped property owners and administrators in most Asia Pacific countries generate substantial profits from the property transactions in 2007.

In a report entitling Asia Pacific Market a Safe Haven in a Stormy Sea published last November, Jones Lang LaSalle reported that credit crunch in the U.S. housing sector that spread to Europe has no significant impact on the Asia Pacific property sector. The regional property market is even seen very gorgeous. Office space rental activity sees an upsurge. In Singapore, for instance, the expansion of banking and financing giants has triggered increase in the office space demands at the central business district areas.

The same progress has also been seen in the office market in Hong Kong, Australia, and India. Retail property sales show an exceptional growth as well, thanks to strong consumer confidence. The industrial park market follows suit with growth is faster than the previous year. According to Jones Lang LaSalle, the total value of property transaction in the Asia Pacific region during the first half of 2007 is close to US$54 billion.

The Asia Pacific market is still very attractive to local and foreign investors, Jones Lang LaSalle’s Head of Research, Asia Pacific, Jane Murray said. In Jakarta, the property market showed some optimistic indications at the beginning of the third quarter of 2007. Office space and condominiums recorded the highest increase since the 1998 crisis. “By the third quarter of 2007 the office market had been increasingly well-performed, considering higher absorption rate and fine occupancy rate. The third quarter of 2007 saw the highest absorption and occupancy rates in the last 10 years,” Procon Indah’s Senior Manager Strategic Advisory Group, Utami Prastiana said.

According to Procon, the office occupancy rate has increased by 4.1 percent, despite a 5.5 percent rise in supplies. The office sub-sector saw a fantastic progress, following the rise in office space absorption rate by 133.4 percent, compare to the same period in 2006. Procon also noted that some 70 percent of the office space future supplies in the fourth quarter of 2007 have been absorbed by the market (pre-commitment). ”By end of the year [2007], the demand for office space is projected to reach 270,000 m2 a year, a drastic increase of 117 percent from the same period last year,” Utami said. Upbeat office market

The buoyant trend of office building development is projected to continue in the next few years. Jones Lang LaSalle Indonesia reported that some 11 new office building projects constructed in the next four years will contribute 600,000 m2 of new office space to the market. Optimism on the office sub-sector has also expanded to almost all of Asia Pacific countries. In Hong Kong, for instance, Enterprise Square 5 has recorded an absorption rate of 75 percent before the development is completed.

By the end of 2007 several Grade A office buildings that due to completion in Hong Kong are the 633 King’s Road in Hong Kong East, Enterprise Square 5 and Millennium City 6 in Kowloon East, the Airport World Trade Centre at the Hong Kong International Airport, and 909 Cheung Sha Wan Road in the Cheung Sha Wan area. In response to such a development, Beijing strengthens its position by completing the construction of the China Central Place Phase I (120,000 m2), Wanda Plaza Phase II (50,000 m2), Gemdale International Tower B (60,000 m2) at the CBD Beijing and Excel Centre (40,000 m2). Such a positive situation of the office sub-sector was also seen in Guangzhou Province and Shanghai.

Investor negative sentiment that has continued overshadowing the office market in Bangkok fails to prevent developers from constructing new office buildings. In 2007 at least three new office buildings have been developed. Athenee Tower (40,000 m2) entered the market in the second quarter of 2007, Chamchuri Square (90,000 m2) is scheduled to operate in early 2008, and Sathorn Square (69,000 m2) is projected to be completed in 2009. In the midst of concerns over oversupplies as predicted by the Citigroup, the office market in Singapore has indeed grown very attractively with the occupancy rate of 91-95 percent.

According to the CB Richard Ellis data, in the period 2007-2012 the total supply of office space in the country would reach 10.8 million m2, an increase of 147 percent compared to only 4.4 million m2 in early 2007. Like the office market, the condominium market in Jakarta also looked great when the occupancy rate was stable, showing no indications of a far-reaching rise. The sales of condominiums were strong at 94.3 percent. Thus, the supply and demand in the market will be in the safe zone.

In other words, the risk of oversupplies in the Jakarta condominium market is still far from being materialized. Even, according to Chairman of Agung Podomoro Group Trihatma K. Haliman, the sales of condominiums in November 2007 recorded a fantastic figure, growing more or less 100 percent. Agung Podomoro Group has developed at least 50 condominium towers in Jakarta.

The retail sub-sector has also seen an optimistic prospect in the third quarter of 2007, when new supplies rose by 100 percent compared to the previous quarter, while the new supplies of 143,000 m2 in the fourth quarter of 2007 is projected to weaken the retail occupancy rate to 77 percent at the end of the year. The absorption rate of retail space dropped by 52.9 percent compared to the previous quarter.

But, considering local and foreign retailers positive sentiment, the occupancy rate of retail space is predicted to continue increasing next year as new and future supplies will come from premium locations in Jakarta. Taking into consideration a gradual recovery in consumer spending, developers of the upper-class retail in the Asia Pacific region do not need to worry about the supply-driven shrink of the retail space occupancy rate as foreign retailers have shown positive sentiment in the region.

CBD Superblocks

The construction of several superblocks (mixed use development) scheduled next year at the central business district (CBD) Jakarta is predicted to produce a significant impact on the Jakarta property market. Although the market still looks potential, some observers are worried about the market limitation due to continuous supplies at some superblocks. Developers aiming to develop superblocks at the CBD area next year are Pakuwon Group with the Kota Kasablanka superblock, Ciputra with Ciputra World, and Agung Podomoro Group with Kuningan City on approximately 3 hectares of land. At the Kuningan City superblock Agung Podomoro Group will develop a shopping center integrated with apartment and office building.

The Rp1 trillion project is due for completion in 2010. Then in Kota Kasablanka (9.5 hectares) Pakuwon Group will construct a five-star hotel, 4 apartment towers (32 floors, 90,000 m2), a office tower (48,000 m2) a shopping center, a pool deck (500 m2), a club house (1,000 m2) on the ground floor, and the basement (63,000 m2). Jakarta’s Ciputra World [Ciputra also plans to build the Surabaya’s Ciputra World superblock] will be developed on 11 hectares of land with the investment amounting to Rp4.2 trillion. Jakarta’s Ciputra World Jakarta will be developed in three stages.

The first and second stages are expected to be completed in 2010, while the third stage is due for completion in 2012. On the land, Ciputra Group will construct a mall, a hotel, an apartment complex, an office building, and a luxury condominium. These three superblocks [Kuningan City, Ciputra World, and Kota Kasablanka] are located on Dr. Satrio Street, where Bakrie Group has been developing Rasuna Epicentrum, a superblok on 53.5 hectares of land launched in April 2006.

Mega Kuningan is the only developed superblock in the area. Each superblock will supply condominium units, office space, hotels, mals, or trade centers. Thus, developers should manage their projects carefully, considering the huge potential of the property market limitation at the CBD areas in Jakarta. All of the market limitation preconditions, such as the construction of superblocks in the same areas, similar market segmentation, types of property products that ignore differentiation, and the overlapped timing of development, have been fulfilled. Worse, if the superblock projects are developed based on groundless optimism without taking into account the market developments. (Deddy H. Pakpahan)