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Jakarta Expat· 26 September - 9 October 2012
Finding a Home
up front?
“Up Front?”
followed by a hard swallow. That is the normal reaction for a first time expatriate when they initially learn about the common practice in Indonesia where the entire amount of a lease is paid in advance. Indonesia is one of the few countries in the world where this practice exists. When asking long time landlords when this practice became common place, some suggest that during the “oil boom” of the late 80”s and early 90’s when suitable expat housing was sparse, multinational oil and gas companies started offering landlords the entire rent in advance in order to secure multiple houses for their employees. Savvy landlords had no objections as this practice allowed them to take the entire lease amount and use it for a down payment on another property. It is not surprising that many landlords in Jakarta have multiple properties. Once the initial shock has worn off, expatriates then need to decide what type of accommodation would be best suited for their family during their stay in Indonesia. After schooling, the choice of housing is perhaps one of the biggest decisions that the newcomer will be faced with.
Apartments vs Houses: what works best? Apartments Jakarta has a wide range of apartments. According the Colliers 4th Quarter Market report, over 15,000 new apartments where finished in 2011. This is a record number, however with the schedule of at least two major apartment buildings being completed in 2012, that number is expected to double with a large number of these units in the Central Business District. Apartment living remains a popular choice for young couples and empty nesters. Small families can take advantage of the community atmosphere that exists in many of the preferred apartments. It is easy to meet the other tenants through the shared facilities such as the swimming pools, gym and play areas. Creating a new network of friends quickly is always an important part of a smooth transition into Jakarta. Neighbours can help with suggestions regarding daily life issues but perhaps
By Gene Sugandy
more importantly offer emotional support that is a vital part of a successful posting overseas.
influx of newcomers over the last 6-8 months it is becoming extremely difficult to find vacancies.
Newcomers to Jakarta often want to take advantage of the two-point and often three-point security that most of the popular apartment blocks have in place. If the working spouse will be travelling frequently, leaving family members in a secure environment becomes one of the first priorities. 24 hour security, closed security TV as well as private lifts are standard features in most of the newer apartments.
Colliers International reported that rental prices have not seen any significant increase over the last quarter however with the higher number of expatriates inbound than outbound it has created a situation where landlords are more dominate than tenants. Rather than increasing what some say is already a high priced rental market, landlords are demanding two and three years lease payments in advance. Multinationals are expressing concern regarding the strain on cash flow that this creates especially with a high number of expats on payroll that are receiving housing benefits. Average house rentals are between USD$ 2,500 – USD$ 4,000 per month.
Traffic cannot be ignored in Jakarta so living close to the workplace has become a serious consideration. Senior managers and upper management often have grown family overseas who will not be joining them on their posting therefore being close to the international schools is not necessary. Many of the more popular apartment buildings are in the Central Business District or very close proximity which cuts travel time drastically to most of the multinational offices. Serviced apartments continue to be in high demand. Colliers research indicates that approximately 1,000 more serviced apartments will become available in 2012. This is encouraging as currently there is a limited supply of serviced units and occupancy is often in the 85-90% range. This fully furnished accommodation is targeted at the business traveller and the short term contract worker. If the expat is not planning on bringing a lot of personal items, serviced apartments could be an excellent solution. This is one of the few lease options that offer the tenants less than one year terms.
Houses Expats with families often prefer houses rather than apartments. Houses typically offer larger living and play areas for the children and gardens and pools that can be enjoyed by the entire family. South Jakarta remains to be the most popular area for expats because of its close proximity to the majority of the international schools. Gated communities are the first choice of expats because of the added security they offer however with the high
Four bedroom homes are considered standard. With homes of this size it is necessary to have domestic staff which initially is a concern for some expatriates. This concern is typically short-lived as expats soon realize what an asset it can be to have help in the home especially with a young family. Often the domestic staff become very close with the family and it is hard to say goodbye when the family has to repatriate. Indonesia is currently experiencing a sharp increase not only with expansion of existing companies that have operations here but the start up of many new international offices. This is creating a high demand for mangers and upper level management where there is a current void in the Indonesian work force. As a temporary solution, companies are seeking this expertise of expats and asking them to take postings in Indonesia until local talent can be trained to take over. In the meantime, it is likely that landlords will continue to enjoy to lease to expats with the terms “Up Front”!
Gene sugandy Gene is a long-term resident of Jakarta and has extensive knowledge of expatriate life in the city. She is one of the founding members of the Living in Indonesia web site (www.expat.or.id). You can contact her at gene.sugandy@colliers.com