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Jakarta is a huge and growing city. Every year more and more people come to the city to work and they need somewhere to live. But the supply of land for property development is limited and land prices are now very high. As a result, the development of high rise apartment buildings has taken off in recent years. Although apartment units are often small in size (compared to a house), they are easy to maintain and often come with good facilities like 24 hour security, safe car parking and a swimming pool, etc.

From a financial viewpoint, apartments can offer good rental yields as well as the prospect of capital appreciation. No wonder many people consider them a good investment.

But how to choose an apartment in Jakarta? Here are some of the things to take in consideration:

1) Location, location, location. Consider the location of the apartment very carefully. This is very important in determining the desirability of the apartment (which obviously influences its future resale value) and the ease with which you can rent the apartment. Centrally located apartments are usually very desirable – but of course very expensive. If you can only afford an apartment located in the suburbs, consider the transportation links. Is the apartment within walking distance of the Jakarta busway or the future planned MRT? How close is the nearest toll gate?

2) Do you want to buy a new apartment or an existing apartment on the secondary market? If you buy an apartment on the secondary market the advantage is that you can use it straight away. It may also already be furnished, although, on the other hand, you may find it in need of some refurbishment!

Some people, though, want a new apartment and they buy directly from a developer. In this case you must be very careful. Buying an apartment before it is built is not without risk. What if the developer delays construction of the building? What if they fail to build the apartment at all (perhaps because of weak financial conditions due to a market crash or inept/corrupt corporate management?).

If you buy an apartment directly from the developer, you will receive a discount on the selling price. This essentially represents the interest costs that the developer saves from getting payment for the apartment before it is built. Expect a discount of about 10 percent if the apartment will be handed over to you after one year.

3) Choose the property developer carefully. If you are buying from the developer, it is best to purchase an apartment developed by one of the large bona fide developers rather than from a small developer which does not have a strong track record. You do want to be able to sleep at night! In my experience, do NOT buy an apartment unless construction of the apartment is well under way. If construction has not been started, there may be problems. Ask to see the AMDAL (planning permission) certificate. If they cannot show it, walk away.

Like most things in life, you generally get what you pay for. Understand the difference between high end, mid end and low end apartments.

4) Do the Math. Can you afford to purchase the apartment? What if you are unable to find someone to rent the apartment? Don’t forget to take into account the service charge which you must pay each month.

5) NEVER RUSH a decision. If you are interested in buying a certain apartment find out as much information as you can – either by looking on the internet (but watch out for false reports!) or by asking friends or even getting professional advice.

Good luck!
 





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