Jakarta Property Market Report

Colliers Quarterly Q1 2018 8 May 2018 JAKARTA PROPERTY MARKET REPORT

Accelerating success. Colliers Quarterly JAKARTA | OFFICE Q1 2018 8 May 2018

Rents Ferry Salanto Senior Associate Director | The overall change in the asking rental Jakarta rates very much depends on the availability of expensive office spaces Demand rose slightly this quarter, highlighted by supplied by Grade A and premium several transactions involving large space. The buildings. In a tenants’ market, however, office market, and particularly the CBD, is we believe that landlords are generally anticipating the highest ever amount of new supply, in the stance of prioritising occupancy, which is scheduled for completion in 2018. becoming more flexible in rental Landlords should ideally pursue a minimum of 60% negotiations. We believe that contracted occupancy to cover their operating costs. However, rents will still receive more pressure in in this tenant market situation, tenants demand more the current market. room for negotiation. In anticipation for market Prices recovery in the next two or three years, contractual Landlords maintain their price levels leasing should not exceed five years. from last quarter. Going forward, we do not see any room for price adjustment primarily when the market is expecting a substantial amount of new supply going Forecast at a glance forward. Demand YOY demand in the CBD is should increase by 15% through the end of Central Business 2018. Flexible workspace and ecommerce will continue to actively expand their operations, benefiting from the current tenant’s market. Over the District (CBD) next three years, the expanding sectors will include a contractor (from the infrastructure works) and technology- Office Space for Lease based, mining and energy companies. Supply

Cumulative Office Supply in the CBD Supply More sizeable future office buildings (as 8,000,000 compensation of higher plot ratio) are in 7,000,000 For more information: Contributors: the pipeline to come online through 2021. From 2018 to 2021, the total 6,000,000 Market Contact Name Market Contact Name Market Contact Name Market Contact Name anticipated supply is 1.8 million sq m in 5,000,000 Title | Market Title | Market Title | Market the CBD and approximately 890,000 sq 4,000,000 Title | Market m outside the CBD. 3,000,000 +1 00 000 0000 +1 00 000 0000 Occupancy 2,000,000 [email protected] Market Contact Name Market Contact Name The large quantity of future supply will 1,000,000 [email protected] push occupancy rates to erode further this year. Occupancy rates in the CBD 0 Title | Market Title | Market

should hit bottom at 79.1% by the end of

2011 2012 2013 2014 2015 2016 2017

2018. 2010

Source: Colliers International Indonesia - Research The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed

Adding office inventory in the CBD are two new Annual Office Supply in the CBD Based on buildings, Prosperity and Treasury Tower, located in the Marketing Scheme SCBD area. These high-rise buildings contributed approximately 200,000 sq m, bringing cumulative supply 500,000 to 6.2 million sq m as of Q1 2018. This is an increase of 10.6% YOY. 400,000 Furthermore, the CBD office market is projected to see 300,000 another 470,000 sq m of new supply in 2018. We expect approximately 10 new buildings will begin operation this 200,000 year, the largest addition of new supply ever. From 2018 to 2020, the total new supply will be 1.2 million sq m. 100,000 Projected annual new supply for 2019-2020 should be 0 lower compared to previous years, however, we expect

this will rebound with projects in the pipeline from 2020

2010 2011 2012 2013 2014 2015 2016 2017

2020E 2019E onward. Three future establishments, namely Icon 2018E Tower, Mori Building and Daswin Tower, have started For Lease For Sale construction. In addition, future projects including Mangkuluhur and The City Center are planned to be built Source: Colliers International Indonesia - Research next to the office building within their mixed-use complex. Other future plans include the redevelopment of SSI (Surya Semesta Internusa) Tower and Wisma

Sudirman. Cumulative Office Supply in the CBD Based on

Area Annual Office Supply in the CBD Sudirman 700,000 Rasuna Said 600,000 500,000 Gatot Subroto 400,000 Thamrin 300,000 Mega Kuningan 200,000 100,000 Satrio 0

0 1,500,000 3,000,000 4,500,000

2010 2011 2012 2013 2014 2015 2016 2017

2019E 2020E 2018E Cumulative Supply Q1 2018 Future Supply 2018E - 2020E

Additional Supply 2018 YTD Future Supply Source: Colliers International Indonesia - Research

Source: Colliers International Indonesia - Research

2 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International SUPPLY PIPELINE IN THE CBD

OFFICE BUILDING LOCATION SGA (SQ M) MARKETING SCHEME STATUS DEVELOPMENT

2018

Menara Astra Sudirman 80,000 For Lease Under Construction

Revenue Tower Sudirman 40,000 For Lease Under Construction

The Tower Gatot Subroto 56,492 For Sale Under Construction

Sequis Tower Sudirman 78,000 For Lease Under Construction

Sopo Del Tower B Mega Kuningan 24,300 For Sale Under Construction

Sudirman 7.8 Tower 1 Sudirman 52,000 For Sale Under Construction

World Trade Center III Sudirman 70,000 For Lease Under Construction

World Capital Tower Mega Kuningan 72,000 For Sale Under Construction

2019

Lippo Thamrin Office Tower MH Thamrin 16,500 For Sale Under Construction

T Tower Gatot Subroto 24,000 For Sale Under Construction

Thamrin Nine MH Thamrin 97,500 For Lease Under Construction

Millenium Centennial Tower Sudirman 93,588 For Lease Under Construction

Social Security Tower HR Rasuna Said 23,500 For Lease Under Construction

2020

Graha Binakarsa (redevelopment) HR Rasuna Said 20,000 For Lease Under Construction

Chitaland Satrio 90,000 For Lease Under Construction

Indonesia Satu North Tower MH Thamrin 43,000 For Lease Under Construction

Indonesia Satu South Tower MH Thamrin 88,500 For Lease Under Construction

Gayanti City Gatot Subroto 25,000 For Lease Under Construction

2021

Daswin Tower HR Rasuna Said 100,000 For Lease Under Construction

Jakarta Office Tower by MORI Sudirman 90,000 For Lease Under Construction

Icon Tower Sudirman 200,000 For Lease Under Construction

SSI Tower (Graha Surya Internusa) HR Rasuna Said 80,000 For Lease In Planning

Mangkuluhur Tower II Gatot Subroto 81,000 For Sale In Planning

Tower Two at The City Center Sudirman 101,260 For Sale In Planning

The Hundred Mega Kuningan 45,000 For Lease In Planning

Synthesis Square Gatot Subroto 20,000 For Lease In Planning

Wisma Sudirman (redevelopment) Sudirman 35,000 For Lease In Planning

Source: Colliers International Indonesia - Research

3 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International Occupancy through Q3 2018. A similar situation is likely for Grade A buildings, despite their stable occupancy since last year. Average Occupancy Rates in the CBD Pre-Committed Absorption of Office Supply in 100% 2017 – 2018

80%

60% 2017 40%

20%

2011 2012 2013 2014 2015 2016 2017

2010 2018E

2018E Q1 2018 Q1

Source: Colliers International Indonesia - Research 0 100,000 200,000 300,000 400,000

Average Occupancy Rates in the CBD Based on sq m Building Grade Space Absorbed

Q1 2017 Q4 2017 Q1 2018 Source: Colliers International Indonesia - Research Premium 78.9% 76.0% 68.7% Grade A 78.2% 78.5% 77.8% Rents Grade B 90.6% 91.7% 91.9% Average Asking Base Rents in the CBD Grade C 88.7% 86.7% 86.2% IDR400,000 Source: Colliers International Indonesia - Research

Average Occupancy Rates in the CBD Based on IDR320,000 Area IDR240,000 Q1 2017 Q4 2017 Q1 2018 IDR160,000 Thamrin 91.8% 91.3% 91.6%

Sudirman 85.9% 85.3% 80.0% IDR80,000 Rasuna Said 86.7% 86.2% 89.3% Mega Kuningan 67.2% 71.5% 68.5% IDR0

Gatot Subroto 75.0% 77.1% 76.7%

2010 2011 2012 2013 2014 2015 2016 2017

Satrio 80.2% 68.1% 76.0% Q1 2018 Q1 Source: Colliers International Indonesia - Research

Occupancy fell to 81.1% in Q1 2018, particularly from Source: Colliers International Indonesia - Research vacant spaces in office buildings completed in 2017 and The average base rental rates for office buildings in the 2018. Furthermore, several office buildings that were CBD strengthened by 10% to reach IDR322,866/sq completed in 2015 and 2016 are still approximately 50% m/month, mainly because of the new premium office occupied as of Q1 2018. buildings. Premium and Grade A office buildings saw The sharp decline in occupancy in Premium Grade office rental increases of 15.6% and 4.1% YOY respectively. In buildings was more due to the influx of new supply in Q1 contrast, rental rates for Grade B and C buildings were 2018. Several Premium Grade buildings showed down 6% to 16% YOY respectively, particularly because moderate improvements in occupancy. Due to additional landlords are prioritising lifting the occupancy level. new supply of upscale buildings coming online this year, we anticipate a declining occupancy trend at least

4 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International CBD Average Asking Base Rents by Grade Strata-title (IDR/sq m/month) CBD Average Asking Prices Q1 2017 Q4 2017 Q1 2018 Premium 397,050 449,283 459,110 IDR60,000,000

Grade A 298,929 280,854 311,055 IDR50,000,000 Grade B 240,069 234,746 226,399 IDR40,000,000 Grade C 207,706 177,343 175,445 IDR30,000,000 Source: Colliers International Indonesia - Research IDR20,000,000 CBD Average Asking Base Rents by Submarket (IDR/sq m/month) IDR10,000,000 IDR0 Q1 2017 Q4 2017 Q1 2018

Thamrin 351,369 291,535 275,499

2016 2010 2011 2012 2013 2014 2015 2017

Sudirman 304,556 310,964 355,228 2018 Q1

Rasuna Said 273,105 246,696 250,929 Mega Kuningan 268,183 252,665 255,862 Source: Colliers International Indonesia - Research

Gatot Subroto 303,144 338,600 349,096 The cumulative supply of office space for sale in the Satrio 262,000 234,679 268,810 CBD was 1.6 million sq m, representing about 26% of the total office supply in the CBD as of Q1 2018. The Source: Colliers International Indonesia - Research new Prosperity and Treasury Tower are offered as Service Charges strata-title offices. Thus far in 2018, the total office space for sale in the CBD is around 415,000 sq m. CBD Service Charges by Grade Almost 70% of the strata space was precommitted for IDR200,000 supply coming online in 2018. Although this is relatively high, the level was flat QOQ. Without any significant IDR160,000 increase in absorption, prices were also flat at IDR55 million/sq m in Q1 2018.

IDR120,000 Pre-Committed Absorption of Strata-title Office Buildings in 2017 – 2018 IDR80,000

IDR40,000 2017 IDR0 Premium Grade A Grade B Grade C

Source: Colliers International Indonesia - Research 2018E The overall service charge tariffs were relatively stable at IDR78.344 /sq m/month as of Q1 2018. The maintenance tariff of buildings for lease was quoted at 0 150,000 300,000 450,000 an average of IDR88,633/sq m/month, whilst for strata- sq m title buildings for sale the tariff was IDR48,329/sq Space Absorbed Space Unabsorbed m/month. Source: Colliers International Indonesia - Research About 20% of the total office buildings in the CBD have service charge tariffs starting at IDR100,000/sq m/month. Surprisingly, the most expensive service charge tariff was offered by Grade C office buildings, even higher than their basic rental rates.

5 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International Annual Supply Based on Marketing Scheme

Outside the CBD 300,000

250,000 Office Spaces Offered for Lease 200,000

Supply 150,000 Cumulative Office Supply Outside the CBD 100,000

4,000,000 50,000 3,500,000 0

3,000,000

2014 2010 2011 2012 2013 2015 2016 2017

2019E 2020E 2,500,000 2018E 2,000,000 For Lease For Sale 1,500,000 1,000,000 Source: Colliers International Indonesia - Research 500,000 Annual Office Supply Outside the CBD Based

0 on Area

2012 2010 2011 2013 2014 2015 2016 2017

2019E 2020E 2018E TB Simatupang

South Jakarta Source: Colliers International Indonesia - Research Central Jakarta This quarter marked two notable buildings coming online, although comparatively smaller to those in the West Jakarta CBD. The Premium Office Suites (located in Sunter, North Jakarta) and Hermina Tower (located in North Jakarta Kemayoran, Central Jakarta) officially opened in Q1 East Jakarta 2018. The total additional 40,000 sq m from these two buildings brought the cumulative supply outside the CBD 0 400,000 800,000 1,200,000 to 3.1 million sq m, an increase of 3.2% YOY. In the remainder of 2018, there should be additional supply Cumulative Supply Q1 2018 Future Supply 2018E - 2020E from 11 office buildings that will complete construction and start operation. These 11 office buildings will contribute around 250,000 sq m of space. Source: Colliers International Indonesia - Research

Pantai Indah Kapuk (PIK), one of the main commercial areas in North Jakarta, should see the addition of at least two buildings through the end of 2019. The increase of commercial office buildings at PIK, namely Arcade Business Center and Agung Sedayu Office Tower, will complement the concept of an integrated business area, where retail centres and upscale residential developments already exist.

TB Simatupang are expecting two office buildings in 2018, The Sima and Zuria Tower. These establishments will bring the cumulative supply in TB Simatupang to 1 million sq m in 2018.

6 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International SUPPLY PIPELINE OUTSIDE THE CBD

OFFICE BUILDING LOCATION AREA SGA (SQ M) MARKETING STATUS DEVELOPMENT SCHEME

2018

St Moritz Office Tower Puri Indah West Jakarta 30,000 For Sale Under Construction

SOHO Pancoran Pancoran South Jakarta 30,000 For Sale Under Construction

One Tower Kemayoran Central Jakarta 21,400 For Sale Under Construction

The Sima TB Simatupang South Jakarta 60,000 For Lease Under Construction

Ciputra International Office Tower 1 Kembangan West Jakarta 34,603 For Lease Under Construction

Arcade Business Center Pantai Indah North Jakarta 22,000 For Lease Under Construction Kapuk

Zuria TB Simatupang South Jakarta 6,584 For Lease Under Construction

Tamansari Parama Wahid Hasyim Central Jakarta 10,800 For Sale Under Construction

Robina Tower Tendean South Jakarta 9,600 For Lease Under Construction

Wisma Kartika Grogol Central Jakarta 11,770 For Lease Under Construction

One Belpark Office Pondok Labu South Jakarta 17,800 For Lease Under Construction

2019

Jakarta Box Tower Kebon Sirih Central Jakarta 36,000 For Lease Under Construction

The Unity Casablanca South Jakarta 80,000 For Lease Under Construction

Arkadia Tower G TB Simatupang South Jakarta 30,000 For Lease Under Construction

Agung Sedayu Office Tower Pantai Indah North Jakarta 50,000 For Lease Under Construction Kapuk

Beltway Office Park Tower 4 TB Simatupang South Jakarta 10,000 For Lease In Planning

MNC Tower II Kebon Sirih Central Jakarta 60,000 For Lease In Planning

2020

Ciputra Twin Tower 1 Kemayoran Central Jakarta 40,000 For Sale Under Construction

Ciputra Twin Tower 2 Kemayoran Central Jakarta 40,000 For Lease Under Construction

Ciputra International Office Tower 2 Cengkareng West Jakarta 20,000 For Lease In Planning

The Manhatan Square Tower 2 TB Simatupang South Jakarta 39,375 For Lease In Planning

Source: Colliers International Indonesia - Research

Occupancy The occupancy rate moderately increased in early 2017 to 84% in Q1 2018, which is a 2.5% increase YOY. Meanwhile, the occupancy performance of five Grade B office buildings in South Jakarta, particularly in TB Simatupang, reported an increasing in occupancy of more than 5% QOQ. This helped push occupancy in TB Simatupang to 80.1% in Q1 2018, an increase of 6% YOY.

7 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International Average Occupancy Rates Outside the CBD Pre-Committed Absorption of Office Spaces for Lease in 2017 – 2018 100%

80%

60% 2017

40%

20% 2018F

2015 2010 2011 2012 2013 2014 2016 2017

2018E 0 50,000 100,000 150,000 200,000 Q1 2018 Q1 Space Absorbed (sq m) Spaces Unabsorbed (sq m)

Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research Average Occupancy Rates Outside the CBD vs TB Simatupang Rents Average Asking Base Rents Outside the CBD 100% IDR300,000 80% IDR250,000 60% IDR200,000 40% IDR150,000

20% IDR100,000

0% IDR50,000

IDR0

2010 2011 2012 2013 2014 2015 2016 2017

Q1 2018 Q1

2010 2011 2012 2013 2014 2015 2016 2017 Outside the CBD* TB Simatupang 2018 Q1

*exclude TB Simatupang Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research

Asking rents outside the CBD were IDR215,051/sq m/month as of Q1 2018, dropping by 6.4% YOY. Some

office buildings lowered rents by IDR50,000 – IDR75,000/sq m/month to push occupancy upward.

Decreasing rental rates were recorded across all classes of office buildings; with Grade A and C office buildings experiencing the biggest YOY drop. The average rent of Grade A office buildings outside the CBD is currently IDR280,553/sq m/month, which is about 10% lower than Grade A office buildings in the CBD.

The rental rate in South Jakarta was IDR234,643/sq m/month, the highest in all regions outside the CBD. This is mainly underpinned by the expensive buildings in TB Simatupang. Some office buildings in TB Simatupang are still confident in offering rents starting at

8 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International IDR250,000/sq m/ month, bringing the average rental Strata-title cost to IDR284,537/sq m/ month, an increase of 16.4% YOY. Average Asking Prices Outside the CBD

Asking Base Rents Outside the CBD vs IDR40,000,000 TB Simatupang IDR30,000,000 IDR300,000 IDR20,000,000 IDR250,000 IDR10,000,000 IDR200,000 IDR0

IDR150,000

2011 2012 2013 2014 2015 2016 2017

IDR100,000 2010 Q1 2018 Q1 IDR50,000 Outside CBD excluding TB Simatupang IDR0

TB Simatupang

2017 2011 2012 2013 2014 2015 2016 2010 Source: Colliers International Indonesia - Research

Outside the CBD* TB Simatupang 2018 Q1 In 2017, prices of strata-title office space outside the *exclude TB Simatupang CBD hovered around IDR37 to IDR38 million/sq m (IDR37.6 million/sq m on average). Through Q1 2018, Source: Colliers International Indonesia - Research strata-title office building asking prices were flat. Service Charges Pre-Committed Absorption of Strata-title Offices Service charges are currently quoted at IDR59,544/sq in 2017 – 2018 m/month with South and Central Jakarta having higher tariffs, averaging IDR63,865 and IDR60,473/sq m/month respectively. In fact, some office buildings in Central and South Jakarta have already set their maintenance tariff 2017 above IDR100,000/sq m/month. Meanwhile, the average tariff for leases is IDR62,441, whilst strata-title building tariffs are IDR57,399/sq m/month.

Service Charges Tariffs Outside the CBD Based on Building Grade 2018F

IDR140,000

IDR120,000 0 50,000 100,000 150,000

IDR100,000 Space Absorbed (sq m) Spaces Unabsorbed (sq m)

IDR80,000 Source: Colliers International Indonesia - Research IDR60,000

IDR40,000

IDR20,000

IDR0 Grade A Grade B Grade C

Source: Colliers International Indonesia - Research

9 Colliers Quarterly | 8 May 2018 | Jakarta | Office | Colliers International

For more information: Contributors: Ferry Salanto Eko Arfianto Senior Associate Director | Research Senior Manager | Research +62 21 3043 6730 [email protected]

Copyright © 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Ferry Salanto Senior Associate Director | Price Jakarta Overall, the asking price of apartments experienced a moderate correction of With sales performance hitting a plateau, developers 0.4% QOQ. This is likely because newly are conservative about their sales targets for 2018. launched projects applied a price that is This fact is reflected in the limited number of lower than the overall market. Currently, projects being introduced or launched in Q1. Since developers are being more competitive the middle class is considered the pillar of the in setting prices. As a result, we expect apartments prices to increase a property market, developers have been forced to moderate 4 to 5.5% per annum over the rethink their marketing strategy to cater to the sweet next three years. spot of apartments priced at between IDR500 million and IDR1.5 billion. This range reflects the buying power of Indonesia’s growing middle class. Forecast at a glance Strata-title Demand Overall, the Jakarta apartment market Apartment has yet to change from Q4 2017 and still features slow take-up. Looking ahead, we think Indonesia’s property market will Supply stabilise, but expect a slow recovery until 2019. We also expect the average After a dismal period in 2017 with supply projection off take-up rate to be 83-85% by end-2019. the mark, the first quarter of 2018 witnessed 5,589 units Furthermore, with the expectation that of additional supply coming from the completion of nine the new government will settle well after projects. This figure is more than double last year’s the election in 2019, the take-up rate is supply and represents 22% of the total projected supply expected to reach 87% in 2020. in 2018, consisting of 25,410 units. Furthermore, five of the nine projects completed this quarter, namely

Sudirman Suites, District 8, Signature Park Grande, Supply Bassura City and St. Moritz, were previously expected to We expect heavy supply of new open in 2017. Including the newly completed projects, apartments in the next three years, with a total of 59,968 units, 32% increase the total number of existing apartments in Jakarta has from current stock. The fact that Jakarta reached 189,882 units, or an increase of 3% compared For more information: Contributors: is the most populated province with to the previous quarter and 6.1% YOY. limited vacant land will induce new Market Contact Name Market Contact Name Market Contact Name Market Contact Name developers to develop their land, either We revise our supply projection for 2018-2020 in the Title | Market Title | Market Title | Market with JV or in collaboration with local land light of slow construction progress, delayed ground- Title | Market owners or overseas developers. breaking schedule and prevailing issues of receiving +1 00 000 0000 +1 00 000 0000 timely development permits. We expect the total supply Rent from 2018 to 2020 to reach 59,968 units, more [email protected] [email protected] Market Contact Name Market Contact Name The average rental rate has increased specifically 25,410 in 2018, 20,234 in 2019 and 14,324 by 1.7% QOQ in the CBD and 2.5% units in 2020. Title | Market Title | Market QOQ in South Jakarta (including non- prime). With additional future supply and

weak demand, we expect rents to come Copyright © 2015 Colliers International. under more pressure. We forecast the average rent to increase by 1.5-2.5% in The information contained herein has been the next three years. obtained from sources deemed reliable.

While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed

COMPLETED APARTMENT PROJECTS DURING Q1 2018w

APARTMENT NAME LOCATION REGION DEVELOPER NAME NO. OF UNITS

Sudirman Suites Sudirman CBD Pikko Group 380

District 8 (Tower Eternity & Infinity) Senopati CBD Agung Sedayu Group 901

Signature Park Grande MT Haryono East Jakarta KSO Fortuna Indonesia 1,100

Bassura City (Tower Jasmine & Heliconia) Basuki Rahmat East Jakarta Synthesis Development 1,180

Pondok Indah Residences Pondok Indah South Jakarta PT Metropolitan Kentjana 880

Gallery West Kebon Jeruk West Jakarta AKR Group 280

St Moritz (The New Ambassador Suite Tower) Puri Indah West Jakarta Lippo Karawaci 200

Ciputra International Puri Indah (Tower Lingkar Luar West Jakarta Ciputra Group 412 Amsterdam) Barat

Citra Lake Suites (Tower A & B) Raya Kresek West Jakarta Ciputra and Mitsui Fudosan 256

Source: Colliers International Indonesia - Research Looking forward, developers are becoming more Sales Target and The Realization of Some conservative with their 2018 sales target, as the market Property Developers

has been performing slower than expected. Almost all

developers were off their 2017 sales target, with only in IDR tn

8.5

Intiland surpassing their 2017 target. This was also 9.0

7.6 7.2 8.0 7.2 reflected in the limited number of projects introduced in 7.2

7.0

Q1 2018, with only three projects launched for a total of

6.0

5.0

715 units scattered in the CBD and West Jakarta. 4.5

5.0

3.9

4.0

3.6

4.0

3.3

2.9

2.7 2.5 In general, apartment investors are still taking a wait- 2.6 3.0 2.3 and-see attitude, given the current lukewarm market that 2.0 offers a low yield, since the price is already high but with 1.0 a lower opportunity for capital gains. We believe that

buy-and-hold investors are still active in the market. Ciputra Some evidence may support our thesis, with certain Intiland

upscale projects being launched successfully despite the Damai

Alam Sutera Alam

Summarecon Pakuwon Jati Pakuwon current sluggish market. We believe that nowadays BumiSerpong investors tend to be pickier and more risk-averse amidst 2017 target 2017 realization 2018 target the sluggish economy. Source: Developers Press Release However, as the current market is more driven by end users, the low to middle markets posted better sales last year, bolstering that such markets are resilient even during the slow market condition. Moreover, currently the government of DKI Jakarta declared to promote not only the MRT but also a transit-oriented development (TOD) model that combines transit infrastructure and property development, focusing on delivering better public transport services, whilst at the same time improving connectivity and maximising both the public and private sectors.. Whilst the TOD concept is relatively new for Jakartans, the market seems flat until now since people are waiting to see how the development would progress before making a decision to buy.

2 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International NEWLY LAUNCHED APARTMENT PROJECTS DURING Q1 2018

EXPECTED ESTIMATED NO. OF APARTMENT NAME LOCATION REGION COMPLETION PRICE/SQ M UNITS YEAR

Casa Domaine (Prive Tower) Sudirman CBD 2018 IDR40 - 42 mio 137

Verde Two (Monteverde Tower) HR Rasuna Said CBD 2019 IDR43 - 45 mio 124

Cluny Residence (2 towers) Arjuna Selatan West Jakarta 2021 IDR31 - 32 mio 454

Source: Colliers International Indonesia - Research

NEW PIPELINE

APARTMENT NAME LOCATION REGION DEVELOPER NO. OF DEVELOPMENT UNITS STATUS

2018

Sudirman Suites Jl. Jend. Sudirman CBD Pikko Group 500 Under Construction

Casa Domaine Jl. Jend. Sudirman CBD Lyman Group 302 Under Construction

The Suites Satrio Jl. Prof. Dr. Satrio CBD Ciputra Group 100 Under Construction

Gayanti City (2 Towers) Jl. Gatot Subroto CBD PT Buana Pasifik 137 Under Construction International

Anandamaya Residences (3 Jl. Jend. Sudirman CBD Hongkong Land 614 Under Construction towers)

Lavie Jl. Denpasar Raya CBD Wilsor Group 800 Under Construction

Regent Residences (tower 1) Semanggi CBD PT Kencana Graha Global 1,100 Under Construction

The Elements Epicentrum (2 Jl. HR Rasuna Said CBD Sinarmas Land 480 Under Construction Towers)

T - Plaza Residence (Tower A & Jl. Penjernihan Central Jakarta PT Prima Kencana 700 Under Construction C)

The H Residence Kemayoran Jl. Rajawali Selatan Central Jakarta Hutama Karya Realtindo 186 Under Construction (Amethyst)

Signature Park Grande Jl. MT. Haryono East Jakarta KSO Fortuna Indonesia 500 In Operation (Pikko)

Bassura City (Tower Jasmine Jl. Basuki Rahmat East Jakarta Synthesis Development 980 In Operation

Bassura City (Tower Heliconia) Jl. Basuki Rahmat East Jakarta Synthesis Development 246 In Operation

Regatta London Tower Jl. Pantai Mutiara North Jakarta Intiland Development 435 Under Construction

Pluit Seaview (Tower Ibiza) Pluit North Jakarta Binakarya Propertindo Group 461 Under Construction

LA City Apartment (Tower A) Jl. Raya Lenteng South Jakarta Pancanaka Samaktha 440 Under Construction Agung

Nine Residence Warung Buncit South Jakarta PT Lippo Karawaci 542 Under Construction

Pakubuwono Terrace Grand Kebayoran Lama South Jakarta PT Selaras Mitra Sejati 240 Under Construction Tower

District 8 (Tower Eternity) Jl. Senopati South Jakarta Agung Sedayu 215 In Operation

District 8 (Tower Infinity) Jl. Senopati South Jakarta Agung Sedayu 660 In Operation

Izzara Apartment (South and North TB. Simatupang South Jakarta Grage Group 57 Under Construction Tower)

Bellevue Place MT Haryono, Tebet South Jakarta Gapura Prima 322 Under Construction

One Casablanca Residence Jl. Palbatu South Jakarta Forza Land 350 Under Construction

continued

3 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International APARTMENT NAME LOCATION REGION DEVELOPER NO. OF DEVELOPMENT UNITS STATUS

continuation

The Foresque Pasar Minggu South Jakarta PT Griya Karunia Sejahtera 350 Under Construction (Binakarya Propertindo Group)

The Langham Residences Senopati South Jakarta Agung Sedayu Group 350 Under Construction

The Aspen Peak at Admiralty Jl. Fatmawati South Jakarta PT Harmas Jalasveva 880 Under Construction (Tower D)

Casa Grande Residence 2 (Tower Jl. Casablanca South Jakarta Pakuwon Group 545 Under Construction Angelo)

Casa Grande Residence 2 (Tower Jl. Casablanca South Jakarta Pakuwon Group 381 Under Construction Bella)

Casa Grande Residence 2 (Tower Jl. Casablanca South Jakarta Pakuwon Group 200 Under Construction Chianti)

Pondok Indah Residences (3 Pondok Indah South Jakarta Metro Pondok Indah 500 In Operation Towers)

Pakubuwono Spring (2 towers) Jl. Teuku Nyak Arief South Jakarta PT Simprug Mahkota Indah 280 Under Construction (Agung Podomoro Group)

Branz Simatupang (2 tower) Jl. TB Simatupang South Jakarta Tokyuland 900 Under Construction

Synthesis Residence Kemang (3 Jl. Ampera Raya South Jakarta Synthesis Development 1,050 Under Construction towers)

Gianetti Apartment Jl. Kebon Jeruk Raya West Jakarta Bangun Investa Graha 400 In Operation

Gallery West Jl. Panjang West Jakarta AKR 3,000 Under Construction

Puri Mansion Apartment (Tower Jl. Lingkar Luar Barat West Jakarta Agung Sedayu Group 412 Under Construction Amethyst)

Puri Orchard (Cedar Heights Jl. Raya Adicipta West Jakarta PT Adicipta Graha Kencana 300 Under Construction tower) (Serenity Group)

Vittoria Residence (3 tower) Jl. Daan Mogot West Jakarta PT Duta Indah Kencana 116 Under Construction

Taman Anggrek Residence (6 Jl. Tanjung Duren West Jakarta Agung Sedayu 140 Under Construction towers)

Ciputra International Puri Indah Jl. Lingkar Luar Barat West Jakarta Ciputra Group 412 In Operation (Tower Amsterdam)

Grand Madison Park Jl. Tanjung Duren West Jakarta Agung Podomoro Group 300 Under Construction

Citra Lake Suites (Tower Jl. Raya Kresek West Jakarta Ciputra Group 116 In Operation Rosewood)

Citra Lake Suites (Tower Jl. Raya Kresek West Jakarta Ciputra Group 140 In Operation Greenwood)

Ciputra International Puri Indah Jl. Lingkar Luar Barat West Jakarta Ciputra Group 335 Under Construction (Tower Barcelona)

Puri Mansion Apartment (Tower Jl. Lingkar Luar Barat West Jakarta Agung Sedayu Group 700 Under Construction Crystal)

West Vista (2 towers) Jl. Lingkar Luar Barat West Jakarta PT Harapan Global Niaga 2,840 Under Construction

continued

4 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International APARTMENT NAME LOCATION REGION DEVELOPER NO. OF DEVELOPMENT UNITS STATUS

continuation

2019

South Hill Jl. Denpasar Raya CBD Dua Mutiara Group 611 Under Construction

The Residences at The St. Regis Jl. HR Rasuna Said CBD Rajawali Property Group 164 Under Construction Jakarta

Arandra Residence Jl. Cempaka Putih Central Jakarta Gamaland 687 Under Construction Raya

Sudirman Hill Residence Jl. Karet Pasar Baru Central Jakarta PT Muliaguna Propertindo 299 Under Construction Barat Development

Menara Jakarta (Tower Equinox) Kemayoran Central Jakarta Agung Sedayu 396 Under Construction

Menara Jakarta (Tower Azure) Kemayoran Central Jakarta Agung Sedayu 860 Under Construction

The Linq Kemayoran (2 towers) Kemayoran Central Jakarta KG Global 1,020 Under Construction

Menteng 37 Jl. Menteng Central Jakarta Pikko Group & Wijaya 99 Under Construction Wisesa (JV)

Sentra Timur Residence (Tower Pulogebang East Jakarta Bakrieland Development 605 Under Construction Safir)

Pluit Seaview (Tower Bahama) Pluit North Jakarta Binakarya Propertindo Group 650 Under Construction

Regatta Apartment (Tower New Pantai Mutiara North Jakarta Intiland Development 186 Under Construction York)

Sedayu City (Tower Melbourne) Jl. Pegangsaan Dua North Jakarta Agung Sedayu 912 Under Construction Raya

Jaya Ancol Seafront - Oceana Ancol North Jakarta Jaya Ancol 524 In Planning Tower

Orient Residence Jl. Yos Sudarso North Jakarta PT Tri Raton Mega 225 Under Construction

Gold Coast Apartment (Bahama Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under Construction Tower)

Gold Coast Apartment (Carribean Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under Construction Tower)

Gold Coast Apartment (Honolulu Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under Construction Tower)

La Foret Vivante Permata Hijau South Jakarta PT Mahkota Properti Indo 253 In Planning Permata

45 Antasari (2 Towers) Jl. P. Antasari South Jakarta Cowell Development 1,924 Under Construction

Arzuria Apartment Jl. Tendean South Jakarta Tolaram Group 210 Under Construction

Fatmawati City Center - Corona Jl. Fatmawati South Jakarta Agung Sedayu 620 Under Construction Park Suite Tower

Ratu Prabu 3 Residences Jl. TB Simatupang South Jakarta PT Ratu Prabu Tiga 61 Under Construction

Samara Suites Jl. Gatot Subroto South Jakarta Synthesis Development 300 Under Construction

Lavish Kemang Residence Jl. Kemang Raya South Jakarta PT Kemang Karya Utama 474 Under Construction

Permata Hijau Suites Jl. Raya Kebayoran South Jakarta PT Palmerindo Properti 649 Under Construction Lama

TBS Tower Apartment TB Simatupang South Jakarta PT Mahkota Asia Graha 162 Under Construction

Kasamara Residence Jl. Kesehatan Raya South Jakarta PT MGM Propertindo 151 In Planning

19 Avenue Apartment (Tower B) Daan Mogot West Jakarta Margahayu Land 416 Under Construction

continued

5 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International APARTMENT NAME LOCATION REGION DEVELOPER NO. OF DEVELOPMENT UNITS STATUS

continuation

Green Sedayu Apartment (Tower Jl. Kamal Raya West Jakarta Agung Sedayu 644 Under Construction Pasadena)

Daan Mogot City (3 towers) Jl. Daan Mogot West Jakarta PT China Harbour Jakarta 700 Under Construction Real Estate Development

Verde Two (Tower West) HR Rasuna Said CBD Farpoint Realty 152 Under Construction

Royal Suites Kemayoran Central Jakarta Springhill Golf Group 450 Under Construction

Gold Coast Apartment (Atlantic Pantai Indah Kapuk North Jakarta Agung Sedayu 568 Under Construction Tower)

The Kensington Royal Suites (4 Kelapa Gading North Jakarta Summarecon 790 Under Construction Tower)

Selatan 8 (Tower Prabu) Jl. Raya Ulujami South Jakarta Karya Cipta Group 344 Under Construction

St Moritz (The New Ambassador Puri Indah Kembangan West Jakarta Lippo Karawaci 200 Under Construction Suite Tower)

Puri Orchard (Magnolia Spring Jl. Raya Adicipta West Jakarta PT Adicipta Graha Kencana 544 Under Construction tower) (Serenity Group)

Citra Living Apartment (Somerset Jl. Citra 7 West Jakarta Citra Mitra Graha KSO 312 Under Construction Tower)

Citra Living Apartment (Orchard Jl. Citra 7 West Jakarta Citra Mitra Graha KSO 312 Under Construction Tower)

2020

Verde Two (Tower East) Jl. HR Rasuna Said CBD Farpoint Realty 182 Under Construction

Le' Parc Jl. MH Thamrin CBD PT Putragaya Wahana 100 Under Construction

The Newton at Ciputra World 2 Jl. Karet Sawah CBD Ciputra Group 450 Under Construction

Holland Village (Phase II) Cempaka Putih Central Jakarta PT Lippo Karawaci 230 Under Construction

The Stature Jakarta Jl. Kebon Sirih Central Jakarta Capitaland and Credo Group 87 Under Construction

The Sahid Asena Apartment and Ciracas East Jakarta Sahid Group 476 In Planning Garden

Prajawangsa City (8 towers) Jl. Raya Bogor East Jakarta Synthesis Development 4,000 In Planning

East 8 (2 towers) Cibubur East Jakarta Karya Cipta Group 1,172 Under Construction

Sedayu City (Tower Darwin) Jl. Pegangsaan Dua North Jakarta Agung Sedayu 936 In Planning Raya

Regatta (Tokyo, Acapulco, Sydney Jl. Pantai Mutiara North Jakarta Intiland Development 276 In Planning Towers)

Kemang Penthouse Jl. P. Antasari South Jakarta PT Senopati Aryani Prima & 114 In Planning PT Mahardika Gagas Sejahtera

Antasari Heights (One Otium Jl. P. Antasari South Jakarta PT Radinka Quatro Land 360 Under Construction Residence)

Selatan 8 (Tower Sultan) Kebayoran Lama South Jakarta Karya Cipta Group 336 Under Construction

Fatmawati City Center(5 towers) Fatmawati South Jakarta Agung Sedayu 2,080 Under Construction

Aerium Taman Permata Buana Taman Permata Buana West Jakarta PT Itomas Kembangan 366 Under Construction (South Tower) Perdana (Sinarmas Land & ITOCHU)

continued

6 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International APARTMENT NAME LOCATION REGION DEVELOPER NO. OF DEVELOPMENT UNITS STATUS

Green Sedayu Apartment (Tower Jl. Kamal Raya West Jakarta Agung Sedayu 920 In Planning New York)

Tomang Park Apartment (2 towers) Jl. Tawakal Ujung West Jakarta PT Phoenix Property 2,000 In Planning Raya

Citra Lake Suites (Tower Oakwood) Jl. Raya Kresek West Jakarta Ciputra Group 117 Under Construction

Citra Lake Suites (Tower Sherwood) Jl. Raya Kresek West Jakarta Ciputra Group 122 Under Construction

2021

The Hundred Residence Mega Kuningan CBD PT Farpoint Realty 100 Under Construction Indonesia

57 Promenade Jl. Kebon Melati CBD Intiland 496 Under Construction

The Pakubuwono Menteng Jl. Sabang Central Jakarta Pakubuwono Development 340 Under Construction

Southeast Capital (Cattleya Tower) Jl. Bina Marga East Jakarta PT Sayana Integra Properti 823 Under Construction (Trivo Group)

West Point Apartment Jl. Macan West Jakarta PT Andaland Property 272 Under Construction

Cluny Residence (2 towers) Jl. Arjuna Selatan West Jakarta PT Alam Makmur Property 454 In Planning

Source: Colliers International Indonesia - Research

Take-up Rate of Apartments and How It Relates Demand with GDP Growth Overall, the performance of the apartment market in 100% 7%

Jakarta has yet to change from the last quarter of 2017 90% 6% and is still characterised by slow take-up, due to 80% 5%

softening demand, particularly from investors. This is 70% 4% up up rate despite several banks offering aggressive mortgage - 60% 3%

promotions with extremely low rates of 3-5% for the first GDP growth GDP Take 50% 2% two years, applied to certain products from certain 40% 1% cooperating developers. Developers offering attractive 30% 0%

marketing gimmicks and flexible payment methods have

2014 2015 2016 2017 yet to spark demand. However, some upscale 2013

developments have seen some success. We believe that 2018YTD brand image and suitable concepts play crucial roles in Existing projects (LHS) the marketability of an apartment. Furthermore, the Under construction projects (LHS) average take-up rate for both existing apartments and GDP growth (RHS) those under construction experienced a very slight decrease of less than 1% to 85.7% QOQ. Source: Colliers International Indonesia - Research, Statistics Indonesia

Indonesia’s GDP has been trending downward since

2013, which might impact to the overall affordability. Since the middle class is considered as the pillar of the property market, developers have been forced to rethink their marketing strategy to cater to the sweet spot of apartments priced between IDR500 million and IDR1.5

billion. This range reflects the buying power of Indonesia’s growing middle class. Looking forward, we believe Indonesia’s property market will stabilise, but a slow recovery is expected in the near

7 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International to medium term. Indeed, we remain cautious on the Asking Prices of Jakarta Apartment (2013 - prospects for property demand given the upcoming 2018YTD) presidential elections which may create political uncertainty. This, along with the prospect of rising 60 interest rates and the limited room for the Bank 50 Indonesia to conduct further monetary easing leaves 40 buyers taking a wait-and-see stance. 30 Asking Price 20 The asking price of apartments experienced a moderate 10 correction due due to newly launched apartment projects 0

applying a price lower than the overall market price. This

2013 2014 2015 2016 2017 resulted in a 0.4% decrease in price QOQ in Q1 2018 to m) (inmio/sq IDR PriceAsking

IDR32.8 million/sq m. Furthermore, comparing the three 2018YTD submarkets, the price decline in South Jakarta was the CBD South Jakarta steepest, as these projects in the second tier areas such Non-Prime Area Average as Cipulir, Ciledug and surrounding Kebayoran Lama target the low to middle segments. In addition, with a Source: Colliers International Indonesia - Research number of new developments and significant new launches in the market, the competition amongst We believe that developers will continue with their developers is also becoming more intense, thus resulting existing strategy, which is to carefully set the price in in downward pressure on price growth. order to maintain sales volume. Considering the current market condition, when potential buyers are more Average Asking Price (in IDR mil/sq m) in Three cautious in buying an apartment, developers have to Areas provide more incentives and appealing marketing gimmicks, as well as become more competitive on Q1 Q4 Q1 QOQ YOY pricing. Furthermore, we believe that weakening demand 2017 2017 2018 will make it more difficult to sell expensive properties, CBD 49.6 51.0 50.6 -0.7% 2.0% thus higher discounts will be needed to attract buyers. South As a result, we expect a moderation in apartment prices Jakarta 37.2 38.4 37.8 -1.7% 1.4% in the next couple of quarters. Non- prime Area 24.2 24.9 24.8 -0.6% 2.3% Apartment for Average 32.1 33.0 32.8 -0.4% 2.3%

Source: Colliers International Indonesia - Research

Lease Supply No new serviced or non-serviced apartments were completed in Q1 2018, leaving current market supply at

8,860 units. This consists of approximately 60% serviced apartments and 40% non-serviced apartments. The CBD and South Jakarta are irreplaceable as living areas for expatriates due to their proximity to the business district and international schools, with more rental apartments in the CBD than in South Jakarta.

8 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International PIPELINE OF FUTURE SERVICED APARTMENT PROJECTS

APARTMENT NAME LOCATION REGION EXPECTED COMPLETION YEAR NO. OF UNITS

Ascott Sudirman Jakarta Jl. Prof Dr Satrio CBD 2018 192

Oakwood Premier SCBD CBD 2018 180

Somerset Kentjana Jakarta Pondok Indah South Jakarta 2018 148

Somerset Sudirman Jakarta Jl. Kemang Raya South Jakarta 2020 162

Ascott Menteng Jakarta Menteng CBD 2021 151

Fraser Suites Kebon Melati Kebon Melati CBD 2022 TBA

Source: Colliers International Indonesia - Research

Three serviced apartment projects are expected to start Occupancy Rate Changes of Apartment for their operation in 2018, namely Ascott Sudirman Jakarta, Lease by Type Oakwood Premiere at District 8 Senopati, and Somerset Kentjana, bringing the total number of units to 523. Q1 Q4 Q1 QOQ YOY 2017 2017 2018 Distribution of Apartment for Lease Non- 74.6% 74.4% 73.9% -0.5% -0.7% serviced West North Serviced 66.9% 65.3% 65.6% 0.3% -1.3% Jakarta Jakarta 5% 6% Source: Colliers International Indonesia - Research

Occupancy Rates in Different Locations in CBD 44% Jakarta Q1 Q4 Q1 QOQ YOY South 2017 2017 2018 Jakarta 35% CBD 77.3% 75.1% 75.1% 0.0% -2.2% South 68.3% 68.5% 68.0% -0.5% -0.3% Jakarta Non- 69.2% 69.6% 69.3% -0.3% 0.1% Central prime Jakarta Area 10% Source: Colliers International Indonesia - Research

Source: Colliers International Indonesia - Research In early March, the Indonesian government reiterated its intention to simplify the work permits process for foreign Occupancy workers as a move to fulfil the country’s needs for experts, improve the business climate and support the In general, demand for apartments for lease in Jakarta spirit of openness regarding the country’s economy. We remains weak in the first quarter of 2018. Dealing with think that the soon-to-be-released new regulation will increased competition from individually owned strata-title have several benefits for both Indonesia and expatriates apartments and the shrinking number of arriving who wish to work in Indonesia. Expatriates will have expatriates is a double whammy, making it harder for easier access to work, whilst the country will attract more vacant units to be absorbed. This pushed the average investments and at the same time benefit from the occupancy rate from 71.2% in Q4 2017 to around 71% in transfer of knowledge from the expatriates. Q1 2018. On the other hand, there will be a number of new

serviced apartment projects in the upcoming years that are expected to enrich Jakarta's serviced apartment market by providing more choice for tenants, but which will also intensify market competition. As such, we predict the average occupancy level for apartments for lease in Jakarta to be corrected, albeit moderately, to 68- 70% in the next three years.

9 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International Rental Rates Almost all serviced and non-serviced apartments kept Concluding their rental rates unchanged, whilst only a few chains of international serviced apartments confidently increased their average rates by between 3% and 15%. The Thought average rental rate has showed an upward trend by Demand for apartments has been under pressure over recording a moderate increment of 1.7% and 2.5% QOQ the last three years as a result of the overall economic in the CBD and South Jakarta (including non-prime slowdown, weakening purchasing power and areas) respectively. discussions of a revision of the property tax. Big developers with strong financial background had offered Even with the flat rents, it is still tough to attract tenants financing incentives, such as accepting cash instalments in the currently soft rental market. As it is currently a for up to 60 months in an effort to provide payment tenants’ market, landlords or operators are typically open flexibility. Even with the aggressive mortgage promotions for negotiation and willing to reduce rents. Furthermore, provided by several banks, there are still no signs of in order to keep the units occupied, landlords are willing improvement for the apartment market. to offset the reduction in the rents with the long-term leases. Based on our findings in several serviced and On the other hand, the leasing market will benefit from non-serviced apartments, the real transaction rates could the existence of both senior level executives and be reduced by 10% and a maximum of 30% from the younger single Asian expatriates who might be published rental rates. interested in renting individually owned strata-title apartments. Although demand is expected to increase, Average Rental Rates of Apartment for Lease in along with the government’s plan to ease work permit Different Locations in Jakarta regulations, it may be difficult to offset the abundant IDR400,000 supply in 2018 and thus downward pressure on rental

rates may continue for the near to medium term.

IDR350,000

IDR300,000

IDR250,000

IDR200,000 Rental rate/sqm/monthRental IDR150,000 2015 2016 2017 2018YTD

CBD South Jakarta (incl. Non-Prime area)

Source: Colliers International Indonesia - Research

Going forward, rental rates are expected to decline in the next year, particularly for old apartments, as the key drivers of the leasing market remain weak.

With the leasing landscape evolving, from senior level executives to more younger single Asian expatriates, this will benefit individually owned strata-title apartments, where such demand is targeted. However, the supply of new units, particularly in middle-upper to upper class apartments, continues to balloon in 2018 in sought after areas for expatriates. And although demand is expected to increase as the government will ease work permit regulations in Indonesia, new supplies seem to outrun occupancy rate, thus giving downward pressure on the rental rates for the near to medium term.

10 Colliers Quarterly | 8 May 2018 | Jakarta | Apartment | Colliers International

For more information: Contributors: Ferry Salanto Hern Rizal Gobi Senior Associate Director | Research Manager | Research +62 21 3043 6888 [email protected]

substantial amount of space absorption Ferry Salanto Senior Associate Director | in the near term. Jakarta Rent As the fourth-most populous country in the world, With the occupancy rate expected to be Indonesia has a retail market wherein foreign flat, rental growth is also expected to be retailers have always been tempted to target or tepid as the adjustment in rental rates is expand, particularly in upper-middle class shopping very much dependable on the centres in Greater Jakarta. performance of the overall occupancy Several retail brands are eyeing Indonesia even rate, with a strong correlation between during the currently dormant market situation, which the two. was highlighted by flat occupancy and rental rates. On the other front, the spending activities of Service Charges Indonesian millennials have shifted from going to Service charges will still be relatively flat traditional shopping centres to making e-commerce in 2018. transactions, which will add more pressure to this sector. All in all, we still believe that shopping centres should continue to exist because beyond Jakarta simply shopping, they offer experiences and recreation. Considering the shift to e-commerce and the quantity of new supplies coming online, both Supply landlords and retailers should remain updated on the dynamic market especially on accommodating Cumulative Retail Supply in Jakarta millennials. 6,000,000

4,800,000

Forecast at a glance 3,600,000

Demand m sq 2,400,000 We expect the level of retail demand to flatten in the short term, dominated by 1,200,000 enquiries of relatively small to medium sized spaces. F&B will continue to 0

underpin the retail market with space

2011 2012 2013 2014 2015 2016 2017

requirements ranging from 100 to 300 sq 2010

2019E 2020E 2018E For more information: Contributors: m. Market Contact Name Market Contact Name Market Contact Name Market Contact Name Supply Albeit slow, retail supply in Jakarta will Source: Colliers International Indonesia - Research Title | Market Title | Market Title | Market Title | Market continue to increase and reach 4.7 million sq m in 2018. Meanwhile, two The effects from the limiting of permits on new shopping +1 00 000 0000 +1 00 000 0000 shopping centres are anticipated in centres in Jakarta will likely continue up to 2019. The Bogor (Greater Jakarta area) bringing cumulative retail supply in Jakarta remains at 4.6 million [email protected] [email protected] Market Contact Name Market Contact Name the total retail space in Greater Jakarta sq m as of Q1 2018. Only one shopping centre, New to 2.6 million sq m. Title | Market Title | Market Harco Glodok, is projected to come online in Q2 2018.

Occupancy This shopping centre is offered for sale and will be the Occupancy is expected to flat with future first strata-title shopping centre in Jakarta in eight years. Copyright © 2015 Colliers International. supply coming online at a measured The construction of two upcoming shopping centres, pace and the current sizeable vacant The information contained herein has been spaces remaining from 2017. Collier’s including Aeon Mall at South Gate, and a shopping mall obtained from sources deemed reliable. expectation is that there will not be a at Holland Village, are showing progress and would likely While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed meet their scheduled opening in 2019. These three malls will increase the total retail supply in Jakarta by 3% only through 2019.

NEW SUPPLY PIPELINE IN JAKARTA

SHOPPING CENTER LOCATION REGION DEVELOPER NLA DEVELOPMENT (SQ M) STATUS

2018

New Harco Plaza Glodok West Jakarta Agung Podomoro Land 60,000 Under Construction

2019

Shopping Mall at South Gate Lenteng Agung South Jakarta Sinarmas Land & Aeon 35,000 Under Construction

Holland Vilage Mall Cempaka Putih Central Jakarta Lippo Karawaci Tbk 40,000 Under Construction

2020

Menara Jakarta Shopping Mall Kemayoran Central Jakarta Agung Sedayu Permai 100,000 Under Construction

Daan Mogot City Daan Mogot West Jakarta China Harbour 30,000 In Planning

Pondok Indah Mall 3 Pondok Indah South Jakarta Metropolitan Kentjana 60,000 In Planning

Source: Colliers International Indonesia - Research

Annual Supply of Retail Spaces in Jakarta Total Retail Spaces by Region in Jakarta

200,000 CBD 160,000 North Jakarta

120,000 South Jakarta

sq m sq 80,000 Central Jakarta

40,000 West Jakarta

0 East Jakarta

0 400,000 800,000 1,200,000

2010 2011 2012 2013 2014 2015 2016 2017

2019E 2020E 2018E sq m

Annual Supply Future Supply Cumulative Supply Q1 2018 Future Supply 2018E - 2020E

Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research

2 Colliers Quarterly | 8 May 2018 | Jakarta | Retail | Colliers International Occupancy visit stores that focus on specific products but have a complete collection, compared to stores that offer too Occupancy Rates Based on Area in Jakarta many product categories.

100% Japanese retailer Uniqlo is extending its coverage in Jakarta by opening its 12th store in Lippo Mall Kemang. 90% Meanwhile, H&M opened its new outlet in the Mall of 80% Indonesia in early 2018.

70% In our view, the swift influence of online shopping has yet to impact the existence of premium shopping centres, 60% particularly because the merchandise typical of this type 50% of format is not widely transacted online. Since 2010, the

average occupancy rate of premium-class shopping

2013 2014 2015 2016 2017 2012 centres was still recorded at above 90% and was

2018YTD relatively stable at 94.6% QOQ as of Q1 2018.

CBD Outside the CBD

Source: Colliers International Indonesia - Research Occupancy Rates by Mall Grades in Jakarta

The overall retail market occupancy in Jakarta is 100% generally flat in Q1 2018. After falling 2.3% in 2017, the occupancy rate is still 83.5%. 90% 80% Some international brands such as Clarks, Banana Republic, Gap and New Look closed their stores in 70% Indonesia in 2018. Despite their closures, Indonesia 60% remains attractive to foreign retailers. Miniso, a Japanese low-cost retailer and variety store chain that 50%

specialises in household and consumer goods, is ready

2013 2014 2015 2016 2017 to open about 100 new outlets throughout 2018. 2012

Meanwhile, a hypermarket chain and retail company 2018YTD headquartered in Abu Dhabi, Lulu Group Retail Premium Middle - Upper International, will open an additional 10 outlets by 2019. Middle Middle - Lower Since 2017, Lulu has been operating two stores in Indonesia. All Classes

The competition between conventional retail formats and Source: Colliers International Indonesia - Research online shopping will likely continue in 2018. There is a tendency that middle and lower-income groups are benefiting most from being technology savvy, which saves time and even offers cheaper prices. In anticipation of such competition, retailers, such as chain retailer Mitra Adiperkasa Tbk, are preparing a new strategy that will focus on developing speciality stores combined with an F&B format. Such retail chains have become more selective and only maintain the brands that are already proven in the market to provide good profitability.

According to APPBI (Indonesia Shopping Centre Association), the shoppers’ profile is generally dominated by millennials, those aged 24 to 35. This generation has been exposed to digitalisation so that the appearance and composition of tenants within a mall should follow their taste. Nowadays, shoppers prefer to

3 Colliers Quarterly | 8 May 2018 | Jakarta | Retail | Colliers International Rents NEWLY OPENED AND COMMITTED RETAILERS IN JAKARTA Average Asking Rents in Jakarta RETAILERS SHOPPING CENTRE SIZE (SQ M) January 2018 IDR 1,000,000 Planet Sports Pacific Place 500 IDR 800,000 Uniqlo AEON Mall JGC 1,100 Ace Hardware Jatinegara Citi Plaza 1,950 IDR 600,000 H&M Pacific Place 2,000

IDR 400,000 Informa Jatinegara Citi Plaza 2,300

IDR 200,000 H&M Mall of Indonesia 2,400 Ace Hardware One Belpark 2,500 IDR 0

2013 2014 2015 2016 2017 2012 February 2018

Ace Hardware Senayan City 2,500 2018YTD

CBD Outside the CBD April 2018 Uniqlo Lippo Mall Kemang 2,000 Source: Colliers International Indonesia - Research

May 2018

Stradivarius Senayan City 600 Given that occupancy rates have been in a downward Ace Hardware Epiwalk 2,000 trend from 2015 to 2017, quite a few landlords will keep Informa Epiwalk 2,400 rental rates at the same level through 2018. In Q1 2018, Zara Senayan City 4,000 the average rental rates were relatively flat QOQ, reaching an average of IDR/616,491/sq m /month, or a Source: Colliers International Indonesia - Research 5.6% increase YOY. The occupancy cost for space at premium-class Average Asking Base Rents by Mall Grade in shopping centres was recorded at IDR1.42 million /sq Jakarta m/month in Q1 2018, whilst for mid-low class shopping centre, the average was IDR282,755/ sq m/ month IDR1,500,000 (ranging from IDR200,000 to IDR350,000/sq m/month). IDR1,250,000 IDR1,000,000 IDR750,000 IDR500,000 IDR250,000

IDR0

2013 2014 2015 2016 2017 2012

2018YTD Premium Middle - Upper

Middle Middle - Lower

All Classes

Source: Colliers International Indonesia - Research

4 Colliers Quarterly | 8 May 2018 | Jakarta | Retail | Colliers International Service Charges Average Service Charges in Jakarta

IDR180,000

IDR150,000

IDR120,000

IDR90,000

IDR60,000

IDR30,000

IDR0

2012 2013 2014 2015 2016 2017 2018YTD

CBD Outside the CBD

Source: Colliers International Indonesia - Research

The average service charge was quite stable this quarter with a minor 1.6% change YOY to stay at IDR134,350/sq m/month. In fact, there were some shopping centres in the CBD that reported fairly small increases in service charges, below 5%, bringing the average service charge in the CBD at IDR164,359/sq m/month, about 30% higher than outside the CBD.

Average Service Charges Based on Mall Grades in Jakarta

IDR250,000

IDR200,000

IDR150,000

IDR100,000

IDR50,000

IDR0

2012 2013 2014 2015 2016 2017 2018YTD

Premium Middle - Upper Middle Middle - Lower All Classes

Source: Colliers International Indonesia - Research

5 Colliers Quarterly | 8 May 2018 | Jakarta | Retail | Colliers International

Greater Jakarta Annual Supply of Retail Spaces in Greater Jakarta

(Bogor, Depok, 350,000 300,000 Tangerang and 250,000 200,000 Bekasi) m sq 150,000 100,000 50,000 Supply 0

Cumulative Retail Supply in Greater Jakarta

2014 2017 2010 2011 2012 2013 2015 2016

2020E 2018E 2019E 3,000,000 Annual Supply Future Supply 2,400,000

Source: Colliers International Indonesia - Research 1,800,000

sq m sq 1,200,000 Total Retail Spaces by Region

600,000 Bogor 0

Depok

2016 2010 2011 2012 2013 2014 2015 2017

2018E 2019E 2020E

Tangerang

Source: Colliers International Indonesia - Research Bekasi

Two shopping centres, Galeria Vivo Sentul (within 0 400,000 800,000 1,200,000 Cimandala City) and Aeon Mall Sentul City, are nearing sq m their opening dates in 2018. These two will bring more than 100,000 sq m of new retail spaces in Greater Cumulative Supply Q1 2018 Future Supply 2018E - 2020E Jakarta. Whilst waiting the completion of these two malls, total retail supply remains at 2.55 million sq m. Source: Colliers International Indonesia - Research From 2019 to 2021, the supply pipeline shows that Bekasi will have more new retail spaces compared to other regions. Total supply projection during that period is 373,685 sq m, about 75% of which will be contributed by Bekasi.

Two future shopping centres in Depok are part of a mixed use development, highlighting that plot ratio regulation in Depok is pretty high in certain commercial locations.

6 Colliers Quarterly | 8 May 2018 | Jakarta | Retail | Colliers International NEW SUPPLY PIPELINE IN GREATER JAKARTA

SHOPPING CENTER LOCATION REGION DEVELOPER NLA DEVELOPMENT (SQ M) STATUS

2018

Galeria Vivo Sentul Sentul Bogor Megapolitan 35,000 Under Construction

AEON Mall Sentul City Sentul Bogor AEON & Sentul City 71,000 Under Construction

2019

Grand Dhika City Mall Bekasi Bekasi Adhi Persada Property 24,000 Under Construction

Shopping Mall at Pesona Square Juanda Depok Menara Depok Asri 40,000 Under Construction

2020

Plaza Indonesia Jababeka Cikarang Bekasi Plaza Indonesia Realty & 55,685 In Planning Graha Buana Cikarang

AEON Mall Deltamas Deltamas Bekasi AEON & Deltamas 90,000 In Planning

2021

Living World Jababeka Cikarang Bekasi Kawan Lama 18,000 In Planning

Kota Harapan Indah Kota Harapan Bekasi Hasana Damai Putra 51,000 In Planning

Shopping Centre at Kota Wisata Cibubur Bekasi Sinarmas Land 45,000 In Planning

Mall at Transpark Cibubur Cibubur Depok Transcorp 30,000 In Planning

Source: Colliers International Indonesia - Research 2018, suggesting that upscale shopping centres in buffer Occupancy zones attract the attention of local and even international brands in line with the growing middle-upper housing Average Occupancy by Region in Greater compounds. Some international brands are actively Jakarta expanding their presence outside Jakarta, including 100% Miniso that opened its new stores at Lagoon Avenue (Bekasi) and Cinere Bellevue (Depok), and has also 90% partnered with Lulu Hypermarket and became the 80% anchor tenant at their retail project, Galleria Mall VIVO 70% Sentul. 60% NEWLY OPENED RETAILERS IN GREATER JAKARTA 50%

RETAILERS SHOPPING CENTRE SIZE (SQ M)

2013 2014 2015 2016 2017 2012 January 2018

2018YTD JYSK Lagoon Avenue Bekasi 2,320 Bogor Depok Tangerang Bekasi All Areas March 2018

Ace Hardware Teraskota 2,000

Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research The overall occupancy rate for all regions in Greater Jakarta was relatively flat for the last three years. Today, Rents it hovered at 82.2% or only rose mildly below 1% QOQ. The average rental rates of shopping centres in Greater Whilst the general market in this region has been stable, Jakarta jumped 9.2% YOY to IDR386,509/sq m/month. average occupancy performance of high-end shopping Some middle class shopping centres adjusted the base centres in Greater Jakarta is slightly better than in rents higher than 20% in one year. A shopping mall in Jakarta. Serpong (Tangerang) even offered rental tariff at 50% higher than last year for vacant spaces on the ground The average occupancy rate of middle-upper class floor. This situation reveals how desirable spaces in well- shopping centres in Greater Jakarta was 91.8% as of Q1

7 Colliers Quarterly | 8 May 2018 | Jakarta | Retail | Colliers International located shopping centres are still commanding premium charges, starting at IDR130,000 to IDR160,000/sq rents despite the overall flat occupancy rate. m/month. On the contrary, there were also some shopping centres that quoted their tariff far below market The average rental rates for middle and middle-upper average. As such, the overall service charge tariff in class shopping centres in Greater Jakarta were Tangerang is below Bekasi and Bogor. IDR372,318 and IDR525,550/sq m/month, respectively. This is 20-30% lower than in Jakarta. The expectation on Average Service Charges in Different Regions strengthening consumer demand and the fact of in Greater Jakarta relatively low rental rates have triggered local and foreign retailers to expand at middle-upper class IDR 120,000 shopping centres in the Greater Jakarta area. IDR 90,000

Average Rents in Several Regions in Greater IDR 60,000 Jakarta IDR 30,000 IDR 500,000 IDR 0

IDR 400,000

2014 2012 2013 2015 2016 2017

IDR 300,000 2018YTD IDR 200,000 Bogor Depok Tangerang IDR 100,000 Bekasi All Areas IDR 0

Source: Colliers International Indonesia - Research

2013 2012 2014 2015 2016 2017

2018YTD

Bogor Depok Tangerang Bekasi All Areas

Source: Colliers International Indonesia - Research Service Charges Service charges adjusted by 2.6% higher YOY and are now at IDR103,074/sq m/month on average. The gap of service charge costs amongst the regions was very thin, mainly determined by the different regional rate of minimum wages.

Some middle to middle-upper class shopping centres in Tangerang are quite sanguine to quote higher service

For more information: Contributors: Ferry Salanto Eko Arfianto Senior Associate Director | Research Senior Manager | Research +62 21 3043 6730 [email protected]

along an industrial township in the eastern part of Ferry Salanto Senior Associate Director | Greater Jakarta. This includes the construction of an Jakarta elevated toll road, the LRT and high-speed train (HST) The industrial market started 2018 with very few connecting Jakarta and Bandung. Another key issue sales, marking it the worst first quarter for the past behind the expansion of some industrial estates is the few years. However, last year started similarily but future Patimban seaport project located in Subang, sales gradually increased through the end of 2017. further east of Greater Jakarta. This new port would Despite the lackadaisical sales performance in Q1, likely reduce dependence on the existing Tanjung Priok we still believe sales will increase in 2018 given the port and provide more accessibility and time for industrial demand pipeline on the horizon. Like the other activities in the eastern part of Greater Jakarta. sectors, the industrial market is expected to start There is an indication that Subang, where the Patimban picking up at least in early 2020. seaport will be located, is the next target of expansion by several industrial estate developers. The development of Forecast at a glance the port will also trigger existing industrial estates within the port’s catchment area, such as in Karawang, Demand The logistics, food, automotive and Purwakarta and even Subang, to expedite their manufacturing sectors will continue to expansion plan in anticipation of the growing market. propel the overall demand for industrial land in the future, given their indicated Industrial Land Stock Status in Some Active interests and recent transactions. and Future Industrial Estates

Supply 4,000 New industrial land supply will be heavily

concentrated in the Karawang area, due 3,000 to the existing and future industrial estates of almost 1,952 hectares in the long term. Immediate future supply 2,000

might be available from the expanding Hectares industrial estates or from some active 1,000 industrial lands located in Trans Hexa Karawang. 0 Land Price

There is no rationale to expect industrial Bogor

Bekasi Contributors:

Serang For more information:

land prices to increase in 2018, Karawang particularly considering the current Tangerang Market Contact Name Market Contact Name Market Contact Name Market Contact Name market situation. We expect to see price Existing Stock adjustment most likely at the end of Title | Market Title | Market Title | Market Remaining Unsold Land Title | Market 2019. Potential Land To Be Developed +1 00 000 0000 +1 00 000 0000 Source: Colliers International Indonesia - Research [email protected] [email protected] Market Contact Name Market Contact Name Land Supply The growth of a new industrial land supply will be heavily Title | Market Title | Market concentrated in Karawang area, particularly in Trans Indonesia’s GDP expanded by 5.1% in 2017, on the Hexa Karawang, where several new industrial estates back of strong investment and export demand. We are located. Thus far, there are two active industrial Copyright © 2015 Colliers International. expect the momentum to carry into 2018, with further estates, Artha Industrial Hill and Karawang New Industry growth of 5.3%. Furthermore, infrastructure investment City, developed by CFLD. Another estate, GT Techpark The information contained herein has been will likely be the main driver of growth, with more projects at Karawang, developed by Gajah Tunggal, has not obtained from sources deemed reliable. in the pipeline, including transportation developments While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed been very active in the market, mainly focusing on Griya Idola reported only two small deals totalling 384 sq preparing facilities for use by their group companies. m for industrial buildings from companies that buy chemical and medical equipment. KIEC in Serang also Bekasi and Karawang will soon be transformed into an reported one sale from a local oil and gas company integrated city underpinned mainly by the mature buying around 5,000 sq m of land. industrial sector. Quite a few industrial estates, primarily estates with highly density tenants, are now focusing on Beside sales activities, leasing transactions also developing commercial areas. In the future, the face of occurred in two industrial estates that specifically offer Bekasi and Karawang will not merely be about land or building for lease. In Kota Bukit Indah (operated industrials, but more about providing facilities and by Besland Pertiwi/Salim Group), a plastic packaging properties for the growing population. company will occupy one 540-sq m warehouse unit. Meanwhile, after having small leasing transactions last Land Sales Activity quarter, CCIE in Bogor concluded an 8,000 sq m lease for warehouse use in Q1 2018 from a new tenant. The first quarter of 2018 was not an impressive period for the industrial sector and probably the worst for the Due to internal consolidation in the company, GIIC’s past few years with only 12.27 hectares transacted in a sales performance update will not be included in this few transactions. Modern Cikande was responsible for periodical report and will become available in the second the largest amount of land transacted, and despite being quarter. We believe that the sales volume occurring in only approximately 3.55 hectares, was good enough to this estate will distinguish the overall sales performance compare with other industrial estates. Meanwhile, Bekasi in the region, as shown in past several periods. Fajar has been quite consistent in selling. In fact, land availability in that area is the main issue for most Land Absorption in Q1 2018 industrial estates. Industrial estates, such as MM2100, highlighted that they do not have land to sell and Modern Cikande transactions only occurred in the secondary market. Bekasi Fajar The 3.55 hectares sales recorded by Modern Cikande in Jababeka Q1 2018 were composed of three new transactions and two expansions from existing tenants in the food, KIIC pesticide and building materials industries. The companies expanding comprised the steel and auto Karawang New Industry City parts sectors. Going forward, we expect to see more CCIE contributions from this estate with some upcoming sizeable transactions, probably in the next quarter. Krakatau Industrial Estate…

Meanwhile, the automotive sector has concluded more Kota Bukit Indah (Besland… transactions, with two each in Both Bekasi Fajar and Griya Idola KIIC. Two local automotive companies accounted for a total of 2.52 hectares of land in Bekasi Fajar. Two other 0 1 2 3 4 land sales were reported by KIIC from expanding tenants hectares and a new company totalling 1.80 hectares. Albeit small, the expansion of the automotive sector is interesting to Source: Colliers International Indonesia - Research highlight after the domination of the food and logistic sectors for the past few years. However, we think it is too According to Oxford Economics, in Indonesia there is early to expect that the automotive sector will dominate solid growth in consumer and investment goods imports since some demands in the pipeline are quite varied. that suggests signs of improvement in domestic demand. Jababeka reported a 2-hectare sales of either land or After registering sound growth for the past few years land with industrial buildings from a variety of industries before being taken over by the logistics sector, the including food, FMCG and healthcare. Both local automotive sector is the main driver for demand early companies and companies from Japan, Korea and this year. Although it is too early to conclude in the Europe accounted for this demand. Meanwhile the new beginning of the year, this sector will at least be Karawang New Industry City also reported sales of important going ahead in propelling industrial market this around 1 hectare from Chinese e-commerce company. year. The manufacturing activities on the other hand have probably improved on stronger domestic demand, Other notable transactions this quarter have been which also impacts the growth of other sectors. relatively small, less than a hectare. Early in the year,

2 Colliers Quarterly | 8 May 2018 | Jakarta | Industrial Estate | Colliers International Types of Active Industries During Q1 2018 Realisation of Domestic and Foreign Direct Involved in the Transaction Investment

Building IDR 600 Logistics/Packaging Material Warehousing 0.4% 13.9% Oil & Gas 6.5% Medical Related 4.2% IDR 500 4.1%

Chemicals IDR 400

Others 5.0% 12.2% Steel-related IDR 300 5.3%

Consumer trillion in Goods IDR 200 4.1% IDR 100 Food 8.2% Automotive IDR 0 36.1% 2015 2016 2017 2018E 2019E

Domestic Direct Investment Foreign Direct Investment

Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research Annual Industrial Land Absorption Land Price and Maintenance Costs 1,400 Given the overall sluggish sales condition, industrial 1,200 landlords are generally at a stance to maintain their 1,000 price. With tight market competition as in Bekasi or Karawang, industrial estates in the region are in the

800 position to keep their price at the current level. In Q1

600 2018, none of the industrial estates in Bekasi or Karawang reported any price adjustment, as the market 400 is getting tougher. Serang is one of the regions that Hectares recorded consistent sales every quarter with only two 200 operating industrial estates. Land prices in Serang have 0 been adjusted several times in line with sales

performance. Meanwhile, one industrial estate in Bogor

2015 2007 2008 2009 2010 2011 2012 2013 2014 2016 2017 2006 with very limited land stock is now quoting the most

Q1 2018 Q1 expensive price in Greater Jakarta. Bogor may not be a Jakarta Bogor Tangerang preferred location for most of the industrialists, but its Karawang Bekasi Serang proximity to Jakarta, good access and limited land for industrial uses have driven the increase in rents. Source: Colliers International Indonesia - Research The newest industrial estates operating in Tangerang The amount of money invested in Indonesia may reflect are now offering the highest price in the region, because expansion activities in industrial estates. As shown in the the region is equipped with good facilities, infrastructure following chart, we expect industrial sales activities to and is very close to Jakarta, amongst other reasons. still grow this year, but probably in a moderate quantity. This explains the land price surge in Tangerang for the past few years.

The majority of industrial estates still quote service charge tariffs in USD of around IDR1,000/sq m/month.

The lowest tariff is found in Serang, ranging from IDR600 to 650/sq m/month. For some periods, the service charge tariff has remained unchanged. This will probably continue to stay flat, unless the operating costs increase

3 Colliers Quarterly | 8 May 2018 | Jakarta | Industrial Estate | Colliers International considerably, which is normally triggered by regional Greater Jakarta Industrial Maintenance Costs minimum wages, fuel and electricity tariffs. USD0.10 Greater Jakarta Industrial Land Prices USD0.09

USD300.00 USD0.08 USD0.07 USD250.00 USD0.06 USD0.05 USD200.00

USD0.04 USD150.00 USD0.03

USD/sq m/month USD0.02 USD100.00

USD/sq m USD/sq USD0.01

USD50.00 USD0.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

USD0.00 2006

Q1 2018 Q1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Bogor Bekasi Tangerang Q1 2018 Q1 Bogor Bekasi Tangerang Source: Colliers International Indonesia - Research Karawang Serang

Source: Colliers International Indonesia - Research

INDUSTRIAL LAND PRICES AND MAINTENANCE COSTS (IN USD EQUIVALENT)

Land Price (/sq m) Maintenance Cost (/sq m/month)

Lowest Highest Average Lowest Highest Average

Bogor 184.2 350.0 267.1 0.06 0.06 0.06

Bekasi 176.8 235.8 219.5 0.06 0.08 0.07

Tangerang 147.4 240.1 190.3 0.03 0.08 0.06

Karawang 170.0 185.0 177.0 0.05 0.10 0.06

Serang 147.4 170.2 158.8 0.03 0.05 0.05

Source: Colliers International Indonesia - Research

For more information: Ferry Salanto Senior Associate Director | Research +62 21 3043 6888 [email protected]

Ferry Salanto Senior Associate Director | Jakarta

Several events held in Q1 2018 have made hotels a bit busier, with several meetings and events Occupancy scheduled for last year being pushed to happen in As of Q1 2018, the AOR in Jakarta was early 2018. This resulted in a better occupancy 60%. Going forward, demand for hotel performance in January and February, compared to rooms will be mainly fuelled by several the same time last year. In 2019, occupancy is big events, thus we expect the overall projected to remain stable, but in 2020 it will likely to AOR to reach 62% by the end of 2018. climb mainly due to the limited amount of new hotel room supplies. Room Rate The overall room rate performance will likely remain steady at US$79, particularly in anticipation of several group events that will push hotel rates Forecast at a glance down. Demand Initial meetings that occurred prior to the Supply upcoming Asian Games and the IMF- WB annual meeting have made hotel New hotel supply in Q1 2018 is very limited, with only operators a bit busier in Q1. We also one 4-star hotel opening. Currently, 4-star hotels anticipate a series of meetings and dominate the star-rated hotel market in Jakarta. This intense political activity in preparation for hotel category generally offers a decent rate that is the 2019 election, which will help lift closer to what is offered at 3-star establishments, but is hotel enquiries. commonly equipped with complete facilities, making it the most preferred accommodation class. Supply Jakarta is expecting 2,488 new rooms through the end of 2018. This consists of 836 3-star hotel rooms, 815 4-star hotel rooms and 837 5-star hotel rooms. Four- star hotels will continue to dominate the

hotel room supply in Jakarta accounting for 39.1% of the market. For more information: Contributors:

Market Contact Name Market Contact Name Market Contact Name Market Contact Name

NEWLY OPERATING HOTEL DURING 2018 Title | Market Title | Market Title | Market Title | Market HOTEL NAME STARRED STR CHAIN LOCATOIN REGION NO. OF OPENING TIME RATING SCALE RATE ROOMS +1 00 000 0000 +1 00 000 0000 Upscale Pantai Indah North Jakarta 240 Q1 Mercure PIK Avenue 4-star [email protected] Market Contact Name Market Contact Name Kapuk [email protected] Source: Colliers International Indonesia - Research Title | Market Title | Market

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed

NEW PIPELINE

HOTEL NAME STARRED STR CHAIN LOCATION REGION NO OF PROJECT PROJECTED RATING SCALE RATE ROOMS STATUS COMPLETION TIME

STARRED RATING HOTELS

Holiday Inn Express 3-star Upper Matraman East 190 Under 2018 Matraman Midscale Jakarta Construction

Ibis Styles TB Simatupang 3-star Upper TB Simatupang South 110 Under 2018 Midscale Jakarta Construction

Dalton Jakarta Hotel 3-star Undefined Otista East 147 Under 2018 Jakarta Construction

Hotel by Graha Gatsu 3-star Undefined Gatot Subroto South 100 Under 2018 Lestari Jakarta Construction

Front One Boutique Hotel 3-star Undefined Arjuna Raya West 100 Under 2019 Arjuna Jakarta Construction

Des Indes Boutique Hotel by 3-star Undefined HOS Central 97 Under 2019 Preference Tauzia Cokroaminoto Jakarta Construction

Aston Titanium Cijantung 4-star Upscale Cijantung East 225 Under 2018 Jakarta Construction

Swiss-Belhotel Kirana 4-star Upscale Kelapa Gading North 316 Under 2018 Avenue - Kelapa Gading Jakarta Construction

Erian Hotel 4-star Undefined Jl. Wahid Hasyim Central 150 Under 2018 Jakarta Construction

Novotel Cikini 4-star Upscale Cikini Central 274 Under 2019 Jakarta Construction

Aloft Jakarta Simatupang 4-star Upscale Jl. TB South 180 Under 2019 Simatupang Jakarta Construction

Alila - SCBD lot 11 5-star Luxury SCBD CBD 250 Under 2018 Construction

Park Hyatt Hotel 5-star Luxury Jl. Kebon Sirih Central 150 Under 2018 Jakarta Construction

InterContinental Jakarta 5-star Luxury Pondok Indah South 300 Under 2018 Pondok Indah Hotel & Jakarta Construction Residences

Regent 5-star Luxury Jl. Gatot Subroto CBD 160 Under 2018 Construction

St Regis 5-star Luxury Jl. HR Rasuna CBD 280 Under 2019 Said Construction

The Langham 5-star Luxury SCBD CBD 200 Under 2019 Construction

Waldorf Astoria 5-star Luxury Jl. MH Thamrin CBD 181 Under 2020 Construction

Rosewood Jakarta 5-star Luxury Jl. Prof. Dr. Satrio CBD 200 Design 2020

BUDGET HOTEL

Amaris Kebon Sirih Economy H. Fachrudin Central 53 Under 2018 Jakarta Construction

POP! Hotel Lenteng Agung Economy Lenteng Agung South 150 Concept 2020 Jakarta

Source: Colliers International Indonesia - Research

2 Colliers Quarterly | 8 May 2018 | Jakarta | Hotel | Colliers International Cumulative Hotel Rooms Top 5 Most Active Hotel Chains by Number of Operating Room in Jakarta 20,000

16,000 Accor Hotels

12,000 Archipelago International 8,000 Santika Hotel & Resorts 4,000

Marriott International 0

Tauzia Hotel Management

2014 2010 2011 2012 2013 2015 2016 2017

2019E 2020E

2018E Indonesia Q1 2018 Q1 0 2,000 4,000 6,000 8,000

3-star 4-star 5-star Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research Top 5 Most Active Hotel Chains by Number of Cumulative Hotel Projects Operating Project in Jakarta 100

Accor Hotels 80

Archipelago International 60

Santika Hotel & Resorts 40 Tauzia Hotel Management 20 Indonesia

0 Marriott International

0 10 20 30

2010 2011 2012 2013 2014 2015 2016 2017

2019E 2020E

2018E Q1 2018 Q1

3-star 4-star 5-star Source: Colliers International Indonesia - Research

Source: Colliers International Indonesia - Research So far, Accor Hotels, an international hotel chain, manages the largest proportion of rooms in Jakarta, with The addition of new hotel supply in Jakarta has slowed 7,097 rooms in 29 hotels. since 2016. In 2016, the number of new rooms declined by 45% YOY and the number of projects dropped by 24% YOY. This decline continued in 2017, with the number of rooms and projects dropping by 64% and 69%, respectively, compared to 2016. The appetite to build new hotels declined, as occupancy and room rates have yet to recover. Also, financing for new hotel projects is limited, as banks are now more prudent in disbursing loans for hotel development. At the same time, demand for hotel rooms grew moderately, but not in line with the growth in room supply.

3 Colliers Quarterly | 8 May 2018 | Jakarta | Hotel | Colliers International Performance delegates looking for better facilities or with higher budgets. Average Occupancy Rate (AOR) Average Occupancy Rate (AOR) in the Outside 80% CBD 70% 80% 60% 70% 50% 60% 40% 50% 30% 40% 20% 30% 10% 20% 0%

10%

Jul

Apr Oct

Jan Jun

Mar

Feb

Nov Dec

Aug May

Sept 0%

Jul

Apr Oct

Jan Jun

Mar

Feb

Nov Dec

Aug May 2014 2015 2016 2017 2018 Sept

2014 2015 2016 2017 2018 Source: STR

Average Occupancy Rate (AOR) in CBD Source: STR

80% Ramadan, which will fall in May (Q2), has prompted the 70% government to shift several meetings prior to the Holy Month. Thus far, the impact of the upcoming election is 60% still limited, but activities related to this political event 50% have already taken place in several hotels. 40% Average Daily Rate (ADR) 30% 20% USD120

10% USD100 0%

USD80

Jul

Apr Oct

Jan Jun

Feb Mar

Dec Nov

Aug

May Sept USD60 2014 2015 2016 2017 2018 USD40

Source: STR USD20 In Jakarta, Q1 has always seen the softest hotel USD0

performance due to Eid al-Fitr and the fact that the

Jul

Apr Oct

Jan Jun

Mar

Feb

Aug Nov Dec May

corporate market is still warming up in the new year. Sept

In 2018, we anticipate big events in Jakarta which will 2014 2015 2016 2017 2018 drive hotel demand including the Asian Games 2018 from 18 August to 2 September 2018 and the Asian Para Source: STR Games from 6 to 13 October 2018, among other events. The Asian Games are the main event, despite the short- During the first two months of the year, AOR slightly term impact to hotels located around the venue. For the increased and this will likely continue in March, Asian Games, the government has inaugurated Wisma considering historical trends. The ADR is also expected Atlet in Kemayoran for athletes and participants because to increase slightly through March, however it is too early it can host up to 22,278 people. Despite Wisma Atlet’s to determine the overall condition of Jakarta’s hotel big capacity, other hoteliers are still confident, targeting market.

4 Colliers Quarterly | 8 May 2018 | Jakarta | Hotel | Colliers International Average Daily Rate (AOR) in CBD to carry over to room rates as groups generally demand special pricing. Quite a few hoteliers emphasise that the USD 160 recent competition is pushing them to figure out a way to USD 140 survive in the business. Charging higher room rates is not amongst their options because customers are USD 120 generally price-sensitive. Instead, hoteliers give out USD 100 special offers including weekend packages, residential USD 80 meeting packages and seasonal packages, such as packages for Easter, in an attempt to attract more USD 60 guests. USD 40 USD 20 Several years ago, hotel room rates offered by online travel agencies were generally lower than rates USD 0

published by the hotel. This essentially drove room rates

Jul

Apr Oct

Jun Jan

Feb Mar

Nov Dec

Aug down, making loyalty programs evermore important to

May Sept maintain the loyalty of their guests. To keep up with 2014 2015 2016 2017 2018 sales, most hotel chains are developing their own

booking engine to give a better experience to their Source: STR visitors. Usually, they offer a special price and/or package if the guests book their stay through the hotel Average Daily Rate (AOR) in the Outside CBD website or mobile application. The optimisation of a hotel’s online strategy is in line with the growth of USD70 internet users in Indonesia. Based on a report prepared USD60 by We Are Social, there are 132.7 million internet users in Indonesia, reflecting a 50% increase since 2016. They USD50 also reported that in 2017 the total annual consumer USD40 expenditures in e-commerce from travel categories, including accommodation, was USD2.4 billion, which is a USD30 23% increase compared to 2016. USD20

USD10 USD0

Jul

Apr Oct

Jan Jun

Mar

Feb

Dec Aug Nov

May Sept

2014 2015 2016 2017 2018

Source: STR

Group activities including meetings and social events may increase occupancy rates, but this is not expected

For more information: Contributors: Ferry Salanto Nurul Soraya Senior Associate Director | Research Senior Research +62 21 3043 6888 Executive | Research [email protected]

5 Colliers Quarterly | 8 May 2018 | Jakarta | Hotel | Colliers International