Johan and Jenny Wijaya are lucky couple. When they decided to buy property four years ago, around 2010, the time was right: it was before the property market getting "leap". This couple bought an apartment in Kuningan area, Jakarta Selatan, a mall-apartment-office superblock (trending complex built by developer nowaday). The apartment was bought in a value worth of IDR 3 billion.
Lesser than three years afterward, Johan and Jenny realized that the property market indications were starting to get bubbled. Both of them then decided to sell their apartment and were back to rent a house instead.
"The property market seems to be very booming, so rapid, and there is some indications to get bubbled. The opportunity-cost becomes too high for us to be ignored," said Johan (34), an Executive of a stock exchange company. They covered up the property sale amounting to IDR 3.8 billion - what a fantastic value, the capital gain was nearly 200%!
This Wijaya couple's decision expressed a new perspective regarding the particular areas di Jakarta district. An analysis of Collier's International shows that buying properties in expenses areas of the capital city (including Menteng, Kebayoran Baru and Kuningan) is like sloppy and non-calculative decision, if related to buying price and rental revenue.
The list of areas might have been getting longer, covering others areas, such as Tebet, Kemang and Cilandak. The price of property is getting higher and higher which turns out to be uninteresting in comparison to last years. Is that true?
Double-Edged Knife
By using a simple calculation in Excel program, the potential investors and renters will be able to analyze their decisions. In example, someone is willing to buy a house in worth of IDR 2 billion and planning to stay there for seven years. Evidently, it remains being more profitable if they rent that house with charge fee of IDR 12 million monthly.
Then where their money is going to be invested to? With capital market growth of 18-15% in last few years, "The investment in capital market might be an interesting enough choice," answered Johan.
"There are many of high-end property market that have been overvalued comparing with rental revenue," said +Eta Maryani, Marketing Manager of Premium House Real Estate. "In such market circumstance, it is better to rent rather than to buy, even though in national scale the property market is balance enough".
Let's say, Kuningan, the location where Johan and Jenny sell their apartment. Kuningan has been one of favorite area of foreign companies today, includes the openings of some representative offices from Korea and Japan since 2011. "There are a lot of Korean and Japanese with budget around USD 2000, 3000 to 4000 per month," said +Eta Maryani "The issue is later about the inventory. There seem not so many apartments provide their tenants' needs,".
In last 10 years, the chart of property price is growing rapidly higher. In math calculation before, to buy was more profitable that to rent - which covering in almost all areas in this capital city, even when many investors were wrong in predicting that property price could not be jumping this high.
From year of 2009 to 2011, to buy property can be considered as such a profitable decision, but during that time it was surely not so realized. Who would expect that a project that has been being neglected for 10 years and changing owners many times, e.g. could be such a 'pulling wagon' for the property prices surround it?
To be continued: When the interest of housing loans program.../
Rent or Buy? | When the Calculation is Unbalanced [2]
Double-Edged Knife
By using a simple calculation in Excel program, the potential investors and renters will be able to analyze their decisions. In example, someone is willing to buy a house in worth of IDR 2 billion and planning to stay there for seven years. Evidently, it remains being more profitable if they rent that house with charge fee of IDR 12 million monthly.
Then where their money is going to be invested to? With capital market growth of 18-15% in last few years, "The investment in capital market might be an interesting enough choice," answered Johan.
"There are many of high-end property market that have been overvalued comparing with rental revenue," said +Eta Maryani, Marketing Manager of Premium House Real Estate. "In such market circumstance, it is better to rent rather than to buy, even though in national scale the property market is balance enough".
Let's say, Kuningan, the location where Johan and Jenny sell their apartment. Kuningan has been one of favorite area of foreign companies today, includes the openings of some representative offices from Korea and Japan since 2011. "There are a lot of Korean and Japanese with budget around USD 2000, 3000 to 4000 per month," said +Eta Maryani "The issue is later about the inventory. There seem not so many apartments provide their tenants' needs,".
In last 10 years, the chart of property price is growing rapidly higher. In math calculation before, to buy was more profitable that to rent - which covering in almost all areas in this capital city, even when many investors were wrong in predicting that property price could not be jumping this high.
From year of 2009 to 2011, to buy property can be considered as such a profitable decision, but during that time it was surely not so realized. Who would expect that a project that has been being neglected for 10 years and changing owners many times, e.g. could be such a 'pulling wagon' for the property prices surround it?
Since
the latest year of 2011, the prices are hitting higher and higher
without justifications until 200% in Kuningan area, 100% in Senopati and
100% in Menteng. This leap might have been higher in favorite areas in
these location (not all of areas in Menteng are the same, of course).
In
Menteng and Kebayoran Baru, the locations where the price growth is
happening to be the sharpest, the houses for sale prices could reach to 50-150 times
of house for rent prices per year with the same size and specification.
Based on data analysis of rumah123.com website, this ratio is very
different comparing to the situation around year 2007- when the property
market in Kebayoran Baru was still distance from potential bubble, even
the signals toward it had been getting apparent.
To be continued: When the interest of housing loans program.../
Rent or Buy? | When the Calculation is Unbalanced [2]
---
Author: +Leo Ferdinand Rahadian | Premium House
Printed version published by: Property-in Magazine Edition 01 | January 2015
Photo illustration courtesy of Prices for Manhattan Office | Halvorsen Property
+Leo Ferdinand Rahadian has gained 15 years of experiences in the field of real estate agent. He is in charge of Managing Director of Premium House, a real estate company focusing on premium house and apartment units for expatriates in Jakarta. Email: leo@mediapura.com
