Demand for offices up 40% as businesses begin to expand

Nani Afrida, The Jakarta Post, Jakarta | Thu, 04/15/2010 10:42 AM

The demand for office space in Jakarta continues to expand, as companies begin to carry out expansion programs and resume delayed projects, property consulting company Jones Lang LaSalle says.

The Chicago-based property consulting firm on Wednesday said the demand for rented office space in the capital had jumped 40 percent in the first quarter of this year to 30,000 sq meters, from the level in the fourth quarter of 2009.

Jones Lang LaSalle Indonesia chief researcher Anton Sitorus estimated demand to double to 200,000 sq meters this year from about 100,000 sq meters in 2009.

“We expect growth will be even higher in next quarters,” he said in a press briefing.

The property consultancy also revealed that during the January-March period in 2010, demand for offices in prime areas was higher as most tenants preferred to lease offices in grade-A areas such as the central business district (CBD) area of Sudirman-Thamrin rather than non-CBD locations.

“Most tenants preferred to lease grade A office buildings during the first quarter,” he said. According to the company’s data, the average rent on office space in the CBD was Rp 133,030 per sq meter per month, slightly higher than the Rp 100,647 for spaces in non-CBD areas.

Although the growth in demand would continue until the end of this year, Anton expected most landlords would maintain their leasing rates to attract more tenants.

“There are around 3.9 million sq meters of vacant office space in the CBD, while in non-CBD areas there is about 1.36 million sq meters. This means tenants still have many options to choose from”, Jones Lang LaSalle strategic consulting chief Vivian Harsanto said.

However, she said if electricity rates and fuel prices were increased 15 percent this year, the increase would also affect the rental rates.

Besides rental offices, the sale of condominiums also recorded a significant increase in the January-March period, the company said. “About 780 condominiums were sold in the first quarter of this year, or a 50 percent increase from 500 units in the forth quarter of last year,” Anton said.

“We estimate about 4,500 condominiums will be sold this year, rising from 2,500 units in a year earlier,” Anton said.

He contributed the sharp growth in the condominium sales to the low borrowing rates.

The prices are also expected to remain stable because many of the existing condominiums are still unoccupied, he added.