Office for Lease Office Tower 2, Which Is Part of the Existing Ciputra World Jakarta Compound and Is Planned to Be Operational in 2015

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Research & Forecast Report

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“After a gloomy 4Q 2013, leasing and sales of office space Similar to the same period last year, no new office supply began to pick up momentum in 1Q 2014. Further, average entered the market in the CBD as of 1Q 2014. With no new office asking base rental rates in the CBD showed a growth of buildings beginning operations, the cumulative supply was still 8.6% that brought the average rent to IDR247,444 / sq 4.77 million sq m as of 1Q 2014. m / month. Similarly, asking base rents in US dollar- Despite no new supply, construction activity for office buildings denominated buildings moved upward slightly by 3.7% in the CBD was seen to continue progressing. Besides the q-o-q to USD35.91 / sq m/ month. The average occupancy buildings that were mentioned in previous reports, construction rate in the CBD stabilized at 96.5%. In terms of strata- for some new office buildings began to appear. At least five title office buildings, average asking prices also increased leading buildings will potentially become new icons in Jakarta, both in US dollars and in rupiah to USD4,750 / sq m and which include Thamrin Nine (in Jalan Thamrin), Astra Tower and World Trade Centre III (in Jalan Sudirman), PCPD Tower IDR45.9 million / sq m respectively.” (in the SCBD) and World Capital Tower (in Mega Kuningan). - Ferry Salanto, Associate Director | Research These five future high-rise buildings will be completed in 2017. A high-rise office building is also in planning and will be built at the Ciputra World 1 Complex. However, construction was not in progress as monitored during this quarter. Ciputra, as the developer, is currently starting construction of Ciputra World Office for Lease Office Tower 2, which is part of the existing Ciputra World Jakarta compound and is planned to be operational in 2015. An office Supply in the CBD building that is also projected to be operational in 2015 and has begun its construction is Satrio Tower. These office buildings will The CBD Office Cumulative Supply be part of the 700,000 sq m of projected total new supply in 2015. The CBD office market is still waiting for construction of several 8,000,000 office buildings that have been announced previously, including 7,000,000 Gran Rubina Tower 2 and Thamrin Twenty. Based on numbers, from 2014 to 2017, there will be 32 new office buildings in the CBD 6,000,000 with a total space of 2.21 million sq m. Sudirman will become the 5,000,000 most active region by contributing 11 projected office buildings (933,141 sq m). On the contrary, future supply in Thamrin will be 4,000,000 the smallest with only two office buildings. sq m

3,000,000 Despite having not been legalized, issues about increasing 2,000,000 building coverage and plot ratio area became the highly anticipated information for developers. This will be related to 1,000,000 strategic areas that are owned by developers, especially in the 0 CBD. This is because those areas can be developed with higher and larger office buildings. For the existing old and mid-rise

2011 buildings, this condition will present the option to demolish the 2013 2012 2010 2009 2008 2017F 2015F 2016F 2014F old buildings and re-build new ones, maximizing the plot ratio. 2014YTD At least two existing office buildings, located in Sudirman, and Existing Supply Annual Supply one office building in Setiabudi are planned for redevelopment.

Source: Colliers International Indonesia - Research Future Supply in the CBD Based on Area In line with high demand, additional supply for office buildings will continue to record significant growth in 2015 and 2016. The supply of office buildings in the Outside CBD is projected to 2017F grow by 33% over the previous year with total space of around 385,000 sq m in 2015. Office buildings such as The Suites (in Pantai Indah Kapuk, North Jakarta), Menara Sentraya (in Blok 2016F M, South Jakarta) and St Moritz office tower (in Puri Indah, West Jakarta) are continuing their construction progress and will begin operations in 2015. 2015F Based on area, South Jakarta is still the main contributor of office supply in the Outside CBD. Of the 1.06 million sq m projected office supply from 2014 to 2017, 67.6% will be in South Jakarta 2014F and 75.5% of the 713,390 sq m total future supply in South Jakarta will be in the TB Simatupang area. 0 200,000 400,000 600,000 800,000 1,000,000 Future Supply in the Outside CBD Based on Area sq m Sudirman Thamrin Mega Kuningan 2017F Rasuna Said Satrio Gatot Subroto

Source: Colliers International Indonesia - Research 2016F Supply in the Outside CBD Gedung Aneka Tambang 2, which is located in TB Simatupang 2015F (South Jakarta), was the only office building to begin operations in the Outside CBD as of 1Q 2014. This office building for lease brought 16,000 sq m of new additional supply and raised the 2014F cumulative supply to 2.29 million sq m.

A total office supply for 2014 is projected to reach over 289,000 sq 0 100,000 200,000 300,000 400,000 500,000 m a historic high after a significant office supply in 2012. Based sq m on the construction progress, after Gedung Aneka Tambang 2, Wisma 77 Tower 2 and Green Kosmo Mansion will soon be ready Central Jakarta South Jakarta North Jakarta to begin operations. Based on marketing scheme, the majority or East Jakarta West Jakarta 63% of the projected annual supply in 2014 will be for strata-title sale. Source: Colliers International Indonesia - Research Outside CBD Office Cumulative Supply

7,000,000

6,000,000

5,000,000

4,000,000

sq m 3,000,000

2,000,000

1,000,000

0 2011 2013 2012 2010 2009 2008 2017F 2015F 2016F 2014F 2014YTD

Existing Supply Annual Supply

Source: Colliers International Indonesia - Research

2 Research & Forecast Report | 1Q 2014 | Office | Colliers International Supply in TB Simatupang Future Supply in TB Simatupang

TB Simatupang Office Cumulative Supply 2017F 1,100,000 1,000,000 900,000 2016F 800,000 700,000 600,000 2015F

sq m 500,000 400,000 300,000 2014F 200,000 100,000 0 100,000 200,000 300,000 400,000 500,000 0 sq m 2011 2013 2012 2010 2009 2008 2017F 2015F 2016F 2014F Outside CBD exclude TB Simatupang TB Simatupang 2014YTD Source: Colliers International Indonesia - Research Existing Supply Annual Supply

Source: Colliers International Indonesia - Research

As of 1Q 2014, the additional supply in Jakarta was only contributed by Gedung Aneka Tambang 2, which is in TB Simatupang. Despite the rapid growth and availability of infrastructure still being debated, this area is constantly evolving. As of 1Q 2014, 513,086 sq m of total space of offices has been in operation in TB Simatupang. By the end of 2014, TB Simatupang will see an additional supply of 219,637 sq m. This total projected supply in 2014 will be the largest since 1990 and even higher than the additional supply of office space in TB Simatupang from 2010 to 2013. However, we noted that no new office buildings have started construction in TB Simatupang in early 2014. All construction activities are carried out by office buildings that started construction last year.

3 Research & Forecast Report | 1Q 2014 | Office | Colliers International New Supply Pipeline

projected Office building projects name location SGA Marketing scheme status development completion

CBD Area

2014 Sinarmas MSIG Sudirman 75,000 For Lease Under Construction 2014 Lippo Kuningan Rasuna Said 30,500 For Lease Under Construction 2014 The Noble House Office Tower Mega Kuningan 45,000 For Lease Under Construction 2014 Gran Rubina Tower 1 Rasuna Said 31,438 For Sale Under Construction 2014 Convergence Rasuna Said 36,367 For Lease & For Sale Under Construction 2015 Ciputra World Jakarta 2 Satrio 70,000 For Lease & For Sale Under Construction 2015 International Financial Center 2 Sudirman 50,000 For Lease Under Construction 2015 AIA Center Sudirman 36,596 For Lease Under Construction 2015 Cemindo Tower Rasuna Said 60,995 For Lease Under Construction 2015 Sahid Sudirman Center Sudirman 138,500 For Lease & For Sale Under Construction 2015 Office Tower @ ST Regis Gatot Subroto 90,511 For Lease Under Construction 2015 Telkom Landmark Tower II Gatot Subroto 65,000 For Lease Under Construction 2015 Satrio Square Satrio 24,600 For Lease Under Construction 2015 Bahana Office Tower Mega Kuningan 50,000 For Lease Under Construction 2015 Satrio Tower Satrio 31,604 For Lease Under Construction 2015 Wisma Mulia 2 Gatot Subroto 80,000 For Lease Under Construction 2015 Lippo Thamrin Office Tower Thamrin 16,500 For Sale In Planning 2016 Mangkuluhur Tower Gatot Subroto 53,000 For Lease & For Sale Under Construction 2016 Menara Palma 2 Rasuna Said 50,000 For Lease Under Construction 2016 Gran Rubina Tower 2 Rasuna Said 32,000 For Sale Under Planning 2016 Centennial Tower Gatot Subroto 100,000 For Sale Under Construction 2016 Icon Tower Sudirman 72,500 For Lease Under Construction 2016 The Tower Gatot Subroto 56,492 For Sale Under Construction 2017 SSI Tower Rasuna Said 100,000 For Lease In Planning 2017 Prosperity Tower @ Distict 8 Sudirman 71,545 For Sale Under Construction 2017 World Capital Tower Mega Kuningan 72,000 For Sale Under Construction 2017 World Trade Center 3 Sudirman 70,000 For Lease Under Construction 2017 Sequis Life Tower 2 Sudirman 80,000 For Lease Under Construction 2017 Treasury Tower @ District 8 Sudirman 139,000 For Sale Under Construction 2017 Chitaland Satrio 100,000 For Lease In Planning 2017 Gayanti City Gatot Subroto 25,000 For Lease In Planning 2017 Astra Tower Sudirman 100,000 For Lease Under Construction 2017 Thamrin Nine Thamrin 45,000 For Sale Under Construction 2017 PCPD Tower Sudirman 100,000 For Lease Under Construction

outside cBD Area (exclude tb simatupang)

2014 GP Plaza Slipi 12,204 For Sale Under Construction 2014 Wisma 77 Tower 2 S Parman 24,200 For Sale Under Construction 2014 Kirana Two Kelapa Gading 17,563 For Lease & For Sale Under Construction 2015 Menara Sentraya Blok M 52,072 For Sale Under Construction 2015 ST Moritz Office Tower Puri Indah 19,500 For Sale Under Construction 2015 Puri Indah Financial Tower Puri Indah 38,500 For Sale Under Construction 2015 The Suites Pantai Indah Kapuk 13,200 For Sale Under Construction 2015 MNC Tower II Kebon Sirih 20,000 For Lease Under Construction 2015 Jakarta Box Tower Kebun Sirih 36,000 For Lease Under Construction 2015 Soho Capital S Parman 36,000 For Sale Under Construction continued

4 Research & Forecast Report | 1Q 2014 | Office | Colliers International projected Office building projects name location SGA Marketing scheme status development completion continuation 2015 Altira Yos Sudarso 40,000 For Sale Under Construction 2015 Maxima Tower Kelapa Gading 8,000 For Lease Under Construction 2015 One Tower Kemayoran 21,400 For Sale In Planning 2016 Lippo Tower Holland Village Cempaka Putih 27,000 For Lease & For Sale Under Construction 2016 Gallery West Kebun Jeruk 29,000 For Sale Under Construction 2016 L'Venue Pasar Minggu 41,597 For Sale Under Planning 2016 Sky 18 Tower Pasar Minggu 27,500 For Sale In Planning 2016 Soho Pancoran Pancoran 30,000 For Sale Under Construction 2016 T Tower (BJB Tower) Pancoran 24,000 For Sale Under Construction

tb simatupang

2014 Green Kosmo Mansion Tower TB Simatupang 23,000 For Lease & For Sale Under Construction 2014 The Manhattan Square TB Simatupang 39,375 For Lease & For Sale Under Construction 2014 18 Office Park TB Simatupang 40,000 For Lease & For Sale Under Construction 2014 Plaza Oleos TB Simatupang 39,778 For Lease & For Sale Under Construction 2014 Metropolitan Tower TB Simatupang 44,000 For Lease & For Sale Under Construction 2014 Palma Tower TB Simatupang 20,484 For Lease Under Construction 2014 Graha MRA TB Simatupang 13,000 For Lease Under Construction 2015 South Quarter Tower 1 TB Simatupang 40,778 For Sale Under Construction 2015 South Quarter Tower 2 TB Simatupang 40,778 For Lease Under Construction 2015 AD Premier TB Simatupang 18,900 For Lease Under Construction 2016 The Manhattan Square Tower 2 TB Simatupang 39,375 For Lease In Planning 2016 Naras Tower TB Simatupang 19,000 For Lease In Planning 2016 Beltway Office Park Tower 4 TB Simatupang 25,600 For Lease In Planning 2016 South Quarter Tower 3 TB Simatupang 40,778 For Lease In Planning 2017 The Manhattan Square Tower 3 TB Simatupang 39,375 For Lease In Planning 2017 Signum South Tower TB Simatupang 54,000 For Lease In Planning Source: Colliers International Indonesia - Research

Occupancy As of 1Q 2014, the occupancy of office buildings in the CBD Occupancy Rate in the CBD and Outside the CBD stabilised at 96.5%. With limited office space available in the CBD, however, vacant spaces above 1,000 sq m were still found at several office buildings. The most significant vacant space, 100% approximately 13,000 sq m, is at an office building located in Sudirman that has been in operation since 1991. Two other 95% office buildings in Sudirman also have vacant space of around 1,000 - 2,000 sq m, while in Thamrin, a building is still offering 90% around 2,000 sq m. Nonetheless, a lot of available vacant space is balanced by an invasion of new tenants, keeping the occupancy 85% rate above 95%.

80% Relocation activity was identified from one building to another building, both located in the Mega Kuningan area. 75% This telecommunications company, after being acquired by another telecommunications company, has vacated 70% of the 70% total space they occupied and moved to a newer building. This relocation had no impact on the occupancy rate in the CBD. By 2011 2013 2012 2010 2001 2007 2003 2009 2005 2008 2006 2004 2002 2000 next year they will move entirely to the new building, followed by

2014YTD an expansion. CBD Outside CBD (excl. TB Simatupang) TB Simatupang

Source: Colliers International Indonesia - Research

5 Research & Forecast Report | 1Q 2014 | Office | Colliers International After a continuous upward trend since 2012, the occupancy Future Demand rate in the Outside CBD decreased modestly by less than 1% QoQ to 94.6%. This minor change was mainly driven by the only Expansion by existing tenants will still be the main factor for office building coming this quarter that has secured high a pre- occupancy rates to potentially increase in the CBD. An existing commitment level with some tenants having already started tenant from the chemical industry (fertilizers) will add around operations as of 1Q 2014. 2,000 sq m at an office building in Gatot Subroto. In other corridors, a clothing apparel company (Adidas) will extend their Annual Office Supply and Demand in the CBD space by around 1,000 sq m at an office building in Sudirman.

450,000 Pre-Committed Absorption of Future Office 400,000 in the CBD 350,000 300,000 250,000 2017F

sq m 200,000 150,000 2016F 100,000 50,000 0 2015F 2011 2013 2012 2010 2009 2008

2014YTD 2014F Annual Supply Annual Demand

Source: Colliers International Indonesia - Research 0 200,000 400,000 600,000 800,000 1,000,000 Although the overall occupancy rate in the Outside CBD was sq m Annual Supply Space Absorbed down moderately, office buildings in TB Simatupang noted a slight increase. Office buildings in Pondok Indah have lifted the Source: Colliers International Indonesia - Research occupancy rate by less than 1% to 96.2% as of 1Q 2014. Future office buildings that are expected to begin operations from Annual Office Supply and Demand in the Outside 2014 to 2017 in the CBD have achieved 32.1% pre-commitment. CBD Pre-commitment has reached 40% as of 1Q 2014.

300,000 Pre-commitment levels for office buildings in 2014 - 2017, including those already in operation, are 23.3% lower in the 250,000 Outside CBD. Pre-commitment at office buildings in 2014 reached 37.4% as of 1Q 2014. The sales of strata-title offices have 200,000 contributed around 53% of the total pre-committed absorption in 2014. 150,000 sq m

100,000

50,000

0 2011 2013 2012 -50,000 2010 2009 2008 2014YTD

Annual Supply Annual Demand

Source: Colliers International Indonesia - Research

6 Research & Forecast Report | 1Q 2014 | Office | Colliers International Pre-Committed Absorption for Future Office Asking Base Rental in the Outside CBD Average Base Rental in the CBD Based on Grade

IDR 710,820 USD 60.00 2017F

IDR 592,350 USD 50.00

2016F IDR 473,880 USD 40.00

IDR 355,410 USD 30.00 2015F

IDR 236,940 USD 20.00

2014F IDR 118,470 USD 10.00

0 200,000 400,000 600,000 800,000 1,000,000 IDR 0 USD 0.00 sq m Annual Supply Space Absorbed Grade C Grade B Grade A Premium Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research Pre-Committed Absorption for Future Office in TB Simatupang In early 2014, the office market was forecast to show a slowdown in movement given the lacklustre performance in the last six months of 2013 and in anticipation of the uncertain situation due to the political agenda in Indonesia in 2014. Surprisingly, 2016F despite not yet having recovered, the average base rental rates in the CBD showed growth of 8.6% QoQ, which brought the average rental rates to IDR247,444 per sq m per month for office buildings charging in local currency as of 1Q 2014 or growing by 37.9% YoY. 2015F Based on space availability, some office buildings have adjusted their base rental rates by IDR50,000 to 100,000. Office buildings in the Sudirman area continue to contribute to the increase in the rental rates. No Grade A office buildings adjusted their rates as of 2014F 1Q 2014; only buildings categorised as Grades B and C adjusted their rental rates due to market prices and space availability.

Office buildings charging in US dollars also recorded an increase 0 200,000 400,000 600,000 800,000 1,000,000 of 3.7% QoQ, which is the highest quarterly growth since last sq m year. The main cause of this increase was an adjustment in Annual Supply Space Absorbed the asking base rent of an office complex in the SCBD area. Limited vacant space had caused this office complex to adjust Source: Colliers International Indonesia - Research their asking base rent by more than double. In addition, some office buildings owned by Mulia Group increased their base rent between USD2.00 and 7.00 psm. These raised the average asking base rent for office buildings charging in US dollars to USD35.91 per sq m per month as of 1Q 2014.

7 Research & Forecast Report | 1Q 2014 | Office | Colliers International Average Asking Base Rental in the CBD Strata-title Office IDR 473,880 USD 40.00 IDR 414,645 USD 35.00 Supply IDR 355,410 USD 30.00 Annual Supply and Absorption in the CBD IDR 296,175 USD 25.00

IDR 236,940 USD 20.00 200,000 180,000 IDR 177,705 USD 15.00 160,000 IDR 118,470 USD 10.00 140,000 IDR 59,235 USD 5.00 120,000 100,000

IDR 0 USD 0.00 sq m 80,000 2011 2013 2012 2010 2009 2008 60,000

2014YTD 40,000 IDR USD 20,000

Source: Colliers International Indonesia - Research 0

The average base rental rates for office buildings in rupiah also 2011 2013 2012 2010 2007 2009 recorded an increase by 5.3% QoQ in the Outside CBD. Several 2008 2014YTD office buildings increased their base rental rates by an additional IDR20,000 to 40,000 psm. Newly operating office buildings that Annual Supply Annual Take-up

offer higher rent above the market average also caused the Source: Colliers International Indonesia - Research average rental rates to rise. The average asking rental rate is The strata-title office buildings in all of Jakarta comprised less currently IDR161,418 per sq m per month. For rent in US dollars, than 20% of the cumulative supply as of 1Q 2014. The total office buildings in TB Simatupang characterised much of the space of strata-title office buildings in the CBD is 18.9% of the change. Although less than 1% QoQ, this increase led the average total supply or 816,829 sq m. After the opening of MD Place last base rent to USD21.25 per sq m per month as of 1Q 2014. year, offices for sale in the CBD will see Gran Rubina in 2014. There is another office building that is also located within the A more significant increase was shown by office buildings Rasuna Epicentrum mega-complex in Jalan Rasuna Said, called charging in rupiah in TB Simatupang, including the Pondok Convergence Office Tower. But this office building will only sell Indah area. As a growing area that continues to become a approximately 30% of the total building space to the public. By prioritised location for office tenants, the asking base rent projecting an additional 41,438 sq m from this building, the total currently is IDR155,833 per sq m per month, up 11.4% QoQ. supply of office space for sale will be 858,267 sq m in 2014. Albeit lower, the average base rents in US dollars moved upward by 4.3% QoQ, which brought the average base rent to the current Quite limited additional supply of strata-title office buildings IDR 296,175 USD20.86 per sq m per month. USD 25.00 brought the take-up rate to 99% in 2013 and it will likely remain IDR 296,175 USD 25.00 Average Asking Base Rental in TB Simatupang around that level in 2014. Indeed, the pre-commitment level is high. The pre-commitment level of future strata-title office IDR 236,940 IDR 296,175 USD 20.00 USD 25.00 IDR 236,940 USD 20.00 buildings, which will begin operations in 2014, has reached 60% thus far. Overall, the average pre-commitment level for future IDR 177,705 IDR 236,940 USD 15.00 USD 20.00 strata-title office buildings in the CBD that will begin operations IDR 177,705 USD 15.00 from 2014 to 2017 has reached 62.7%. A high level of demand will have an impact on selling prices. After experiencing a continued IDR 118,470 IDR 177,705 USD 10.00 USD 15.00 increase for the last three years, prices of strata-title offices in the IDR 118,470 USD 10.00 CBD were quite stable in the quarter. The average selling price, IDR 59,235 IDR 118,470 USD 5.00 USD 10.00 based on available space in the CBD, stood at around IDR45.9 IDR 59,235 USD 5.00 million per sq m, while the price at buildings in US dollars was USD4,750 per sq m. These represent average prices of available IDR 0 IDR 59,235 USD 0.00 USD 5.00 office spaces for sale that have been in operation since 2010 to IDR 0 USD 0.00 2013, including future office buildings that have already been 2011 2013 2012 2010 offered this quarter. Although the average prices look high, there 2009 2008

2011 IDR 0 USD 0.00 2013 2012 2010 2009 2008

2014YTD are office spaces in the CBD that are offered at a minimum of IDR USD 2014YTD IDR39 million per sq m. Prices of office buildings quoting in

IDR USD 2011 2013 2012 2010 2009 2008 rupiah range from IDR39 to 55 million per sq m, while prices in 2014YTD Source: Colliers International IndonesiaIDR - ResearchUSD US dollars range from USD3,850 to 5,750 per sq m.

8 Research & Forecast Report | 1Q 2014 | Office | Colliers International Annual Supply and Absorption in the Outside CBD Asking Price

200,000 IDR 59,235,000 USD 5,000 180,000 IDR 53,311,500 USD 4,500 160,000 IDR 47,388,000 USD 4,000 IDR 41,464,500 USD 3,500 140,000 IDR 35,541,000 USD 3,000 120,000 IDR 29,617,500 USD 2,500 100,000 sq m IDR 23,694,000 USD 2,000 80,000 IDR 17,770,500 USD 1,500 60,000 IDR 11,847,000 USD 1,000 40,000 IDR 5,923,500 USD 500 20,000 IDR 0 USD 0 0 2011 2013 2012 2010 2009 2008 2011 2013 2012 2010 2007 2009 2008 2014YTD

2014YTD IDR USD Annual Supply Annual Take-up Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research With total space of 432,526 sq m or 17.7% of the cumulative supply in the Outside CBD, the take-up rate was seen to increase slowly to 95% as of 1Q 2014. This take-up rate only grew by 0.5% QoQ. Similar to the CBD, pre-commitment sales for strata-title offices in the Outside CBD also recorded a quite significant increase. On average, the pre-commitment sales for strata-title offices that will begin operations from 2014 - 2017 in the Outside CBD have reached 46.3% as of 1Q 2014. In 2014 alone, the take- up rate is 52.7%.

However, the asking prices for office buildings in the Outside CBD were not as aggressive as in the CBD area. The increasing asking prices in the Outside CBD were much influenced by offices for sale in TB Simatupang where they are currently IDR27 million per sq m. The average asking price for office buildings in the Outside CBD, excluding TB Simatupang, was IDR26.4 million per sq m or 3% lower than in TB Simatupang. Asking Price Based on Area

IDR 59,235,000 USD 5,000

IDR 47,388,000 USD 4,000

IDR 35,541,000 USD 3,000

IDR 23,694,000 USD 2,000

IDR 11,847,000 USD 1,000

IDR 0 USD 0 CBD (IDR) CBD (USD) Simatupang (IDR) TB Simatupang (IDR) Outside CBD excl. TB TB Simatupang (USD)

Source: Colliers International Indonesia - Research

9 Research & Forecast Report | 1Q 2014 | Office | Colliers International Concluding Thought In the main other business areas like TB Simatupang, business execution was relatively slower than in the CBD although With the background of a gloomy outlook back in mid-2013, a inquiries for office locations is quite high. The challenge for number of companies were indicating a hold on their expansion this location remains at the infrastructure. Nevertheless, TB plans. Decision-makers are presented with a continued Simatupang is still perceived as a location that minimizes weakening of local currency that is anticipated to worsen the commuting distance from home to office. Buildings with back whole economic outlook. The impact of the legislative election access will benefit most from this situation. in early April this year will amplify the worries among business practitioners. Office rent in the CBD keeps getting more expensive and this presents an opportunity for office buildings in the other non- Notwithstanding the dismal perspective for 2014, surprisingly, prime areas. The idea of relocating part of an office division that quite a few companies that held back on expansion plans in 2013 does not need the exposure of the CBD has just started in the started to proceed with their plans during the first quarter of 2014, last few years, however some corporations are not ready for this highlighted by a significant number of office space purchases or concept although the communications technology has become leases. The increasing confidence level implies that the country so sophisticated. The culture in some corporations is not ready, still has long-term business prospects. The expectation of future even with video teleconferencing technology. Physical meetings clean and pro-business leaders has inspired positive sentiment are required frequently and therefore an office location in a non- among leading developers. They strongly believe that political prime area but still easily accessible to the CBD, like the Tanah transition this year will lead to a better Indonesia and will be the Abang area, is becoming quite popular because the rental rates momentum for the Indonesian economy to vibrate. are much lower than in the CBD. Given that, other areas like MT Haryono with close proximity to the CBD will potentially become Thus far, the vacancy rate in 2014 is low while demand is expected secondary locations for companies needing a lower rental rate to become more resilient, which would trigger an increase in for their non-core divisions. office rents.

10 Research & Forecast Report | 1Q 2014 | Office | Colliers International Primary Authors: 485 offices in Ferry Salanto Associate Director | Jakarta 62 21 521 1400 ext 134 63 countries on [email protected] 6 continents United States: 146 Canada: 44 Latin America: 25 Asia: 38 ANZ: 148 EMEA: 84

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Accelerating success.