Will this happen here? Sydney 'ghost-tower' apartments increase as rental vacancies rise, market hits peak-supply

[harryopal1]

Sydney 'ghost-tower' apartments increase as rental vacancies rise, market hits peak-supply
https://www.abc.net.au/news/2019-06...market-hit-by-ghost-tower-phenomenon/11193132

With so many massive projects with tower apartments exploding across Indonesia I wonder if many of these will be just partially used after completion. Apart from towers, at least in Bali, there are still new places being built while there seem to be so many empty places seeking tenants

 

[jstar]

Kind of funny to see that they seem to think more than 21 levels is astounding ? Nowadays the 'standard' here is up to 60 floor numbers, obviously without all the 4's so that makes approx. 45 levels. But unlike in Europe or so, the top floors are not that popular and not more expensive; people are afraid and rather stay in a lower level.

Anyway, it's already happening here of course. Some examples where they already have a surplus and are still building like crazy: Kuningan, Kelapa Gading, Pantai Indah Kapuk, Pluit, Cempaka Putih (Holland Village), Grogol (Taman Anggrek), etc. etc.

If you consider the DKI itself it might make sense since there simply is still a growth of the population. But the weird thing is they also create more and more apartment blocks in areas where there is still a lot of space. For instance Cibubur, Cikarang (Meikarta) but even north Bogor, and South Tangerang (Gading Serpong and BSD)?! There are many acres available on these locations for traditional housing projects. I guess for the developers it is more easy money...

 

[scouser59]

I think with the poor build quality and the unstable nature of these islands ,a dwelling on terra firma is the preferable option ,.

 

[jstar]

11 cm per year.... ?

Of course the main problem is that the construction of apartment blocks and malls etc. uses a huge amount of groundwater, even if that is not allowed anymore.

 

[waarmstrong]

Yes, terra firma in Indonesia is not all that firma. Best to be able to run out into the street or court yard when the earth starts shaking.

 

[scouser59]

Ya thats why I live in a bungalow ,"wobbly" terra firma is no more than 5 quick paces from any point in the house , iv done it a few times

 

[BPNBound]

Im not sure of Jakarta's growth stats, but Sydney currently is gaining net ~100k new souls per year from births and net immigration. A lot of those investment grade properties are far from ideal but i suspect that in several years based on current trends they will fill up.

 

[Mitian_Indau]

there are still new places being built while there seem to be so many empty places

The same goes for many of the new housing complexes I've seen, so many vacant homes without tenants and new complexes still springing up.

I've never lived in an apartment complex in Indonesia, the closest would be a townhouse. Even though the complex was well established, we still had a few vacant houses there too.

A lot of those investment grade properties are far from ideal but i suspect that in several years based on current trends they will fill up.

I agree that they will most likely fill up eventually. In the meantime, capital gains will keep accumulating for the owners. I'm generally against higher taxation, but it'd be interesting to consider what the impact would be if they rejigged capital gains tax on vacant units to a higher rate (than had this been occupied).

I think that might do more than the current 'vacancy tax', since it seems that investors are just 'storing value' while banking on capital gains later down the track.

It's interesting that this trend is happening in so many places - I'm thinking of Vancouver, being similar to Sydney - but China has entire cities sitting empty. It really boggles the mind.

 

[jstar]

Tax on capital gains here were a hot topic two years ago. So then the traditional sales tax on the object (NJOP) would be replaced by the tax on sales profit. Now it's a bit of hybrid where the higher value should be selected.

But as so often here, a minister gets in the news with a brain fart and when it's time to implement they realize it's too complicated or has unforeseen consequences and they retreat back in their shell.

A splendid example, covering Sri and Hanif:

Sri Mulyani: Government to Limit Foreign Worker Numbers in Indonesia

Indonesia's Minister of Finance, Sri Mulyani has stated that the government will limit the number of foreign workers allowed into Indonesia.

indonesiaexpat.biz

 

[jstar]

The building management of many of the apartment blocks have forbidden short term (vacation) rental btw, to keep the upscale image of the building; groups of tourists with suitcases every day would not help. The owners sometimes got desperate and put it on AirBNB. To bypass the rule, they rent out long term to companies that are specialized on short term rentals.

 

[Helpful Herbert]

The service charges in the blocks can be very high. So it's a double hit to the owner who can't find a tenant. 3-5jt per month for the service charge is normal.

 

[jstar]

Ya, depending on type of dwelling (apartment, condo, ....) the service charge is approx. 20.000-30.000 IDR per square meter per month.

I've seen many apartments for sale at the coasts of Western Europe which were used as vacation (2nd) homes, where the owner could not affford the €300 per month. And they get hit with a additional yearly city tax of €1.500 also.

 

[jstar]

Btw, that is a bit different here; when you rent out, the tenant pays everything, including the service charge. Of course there are exceptions where the (company of the) person only wants to pay a lump sum without having to deal with the administration.

 

[Helpful Herbert]

I don't see how the tenant could pay the service charge, and that has never been the case at apartments I've seen or rented out in Jakarta. For a start the service charge can vary, sometimes by a lot if there are big repairs to be done to the building.

 

[snpark]

I've never paid the s/c here. And my apartments overseas my tenants also don't pay. Owner is always responsible (usually)
Poor tenant if get lumbered to pay the s/c also