Research & Forecast Report 4Q 2013 Jakarta1st Quarter | Office 2014
Jakarta Property Market Report
Accelerating success. Contents
Office Sector 4
Apartment Sector 14
Retail Sector 24
Industrial Estate Sector 33
2 Research & Forecast Report | 1Q 2014 | Contents | Colliers International Highlights
Office Sector
After a gloomy 4Q 2013, leasing and sales of office space began to pick up momentum in 1Q 2014. Further, average asking base rental rates in the CBD showed a growth of 8.6% that brought the average rent to IDR247,444 / sq m / month. Similarly, asking By Ferry Salanto base rents in US dollar-denominated buildings moved upward slightly by 3.7% q-o-q to USD35.91 / sq m/ month. The average Associate Director | Research occupancy rate in the CBD stabilized at 96.5%. In terms of strata- [email protected] title office buildings, average asking prices also increased both in US dollars and in rupiah to USD4,750 / sq m and IDR45.9 million / sq m respectively.
Apartment Sector
The strong sales performance of under-construction apartment projects continued to trigger increases in the average asking price to IDR24.4 million / sq m or a 2.5% increase q-o-q. The CBD fetched the highest average price at IDR 38.3 million / sq m, an increase of 5.8% q-o-q while the average price in South Jakarta was registered at IDR 26.7 million / sq m, which grew by 3.2% from the last quarter. Not only price, but the average gross rental rate of apartments for lease located in the CBD and South Jakarta also trended upward by 3.4% compared to the previous quarter in anticipation of the increase in the operational costs and was recorded at USD26.56 / sq m/month.
Retail Sector
Limited new retail supply in DKI Jakarta brought the occupancy rate up 2% to 89.3%. In contrast, the greater Jakarta area outside DKI Jakarta registered a slight decline in occupancy to 82% due to the opening of two new retail centers. In the meantime, the average asking base rental rate in Jakarta climbed by 3.3% q-o-q to IDR491,675 / sq m / month. Similarly in the greater Jakarta area, the average asking base rent moved to IDR302,618 / sq m / month, representing a 9.2% increase compared to last quarter.
Colliers International Industrial Estate Sector is a leader in global real estate services, defined by our spirit Sales of industrial land in 1Q 2014 dropped compared to the of enterprise. Through a culture of service excellence and previous quarter with only 33.78 hectares of land being transacted collaboration, we integrate the resources of real estate specialists representing only 7.6% of the total sales recorded in all of last worldwide to accelerate the success of our partners. We represent year. Weakening industrial demand and limited industrial land property investors, developers and occupiers in local and availability were the major issues causing the sluggish industrial global markets. Our expertise spans all property sectors–office, land sales. Amid such conditions, two industrial estates in industrial, retail, residential, rural & agribusiness, healthcare & Serang (Modern Cikande and KIEC) and one in Bekasi (Bekasi retirement living, hotels & leisure. Fajar) increased prices. Serang recorded the highest increase in land price (15%) to an average of USD132.95 / sq m. Lack of industrial land stock and infrastructure improvements are two main reasons for the price adjustment.
3 Research & Forecast Report | 1Q 2014 | Highlights | Colliers International OFFICE SECTOR Leased Office
Supply in the CBD CBD Office Cumulative Supply
8,000,000
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
Similar to the same period last year, no new office supply entered the market in the CBD as of 1Q 2014. With no new office buildings beginning operations, the cumulative supply was still 4.77 million sq m as of 1Q 2014.
Despite no new supply, construction activity for office buildings in the CBD was seen to continue progressing. Besides the buildings that were mentioned in previous reports, construction for some new office buildings began to appear. At least five leading buildings will potentially become new icons in Jakarta, which include Thamrin Nine (in Jalan Thamrin), Astra Tower and World Trade Centre III (in Jalan Sudirman), PCPD Tower (in the SCBD) and World Capital Tower (in Mega Kuningan). 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 Tower 2, which is part of the existing Ciputra World Jakarta compound and is planned to be operational in 2015. An office building that is also projected to be operational in 2015 and has begun its construction is Satrio Tower. These office buildings will be part of the 700,000 sq m of projected total new supply in 2015.
4 Research & Forecast Report | 1Q 2014 | Office | Colliers International The CBD office market is still waiting for construction of several Outside CBD Office Cumulative Supply office buildings that have been announced previously, including Gran Rubina Tower 2 and Thamrin Twenty. Based on numbers, 7,000,000 from 2014 to 2017, there will be 32 new office buildings in the CBD with a total space of 2.21 million sq m. Sudirman will become the 6,000,000 most active region by contributing 11 projected office buildings (933,141 sq m). On the contrary, future supply in Thamrin will be 5,000,000 the smallest with only two office buildings. 4,000,000
Despite having not been legalized, issues about increasing sq m 3,000,000 building coverage and plot ratio area became the highly anticipated information for developers. This will be related to 2,000,000 strategic areas that are owned by developers, especially in the CBD. This is because those areas can be developed with higher 1,000,000 and larger office buildings. For the existing old and mid-rise 0 buildings, this condition will present the option to demolish the
old buildings and re-build new ones, maximizing the plot ratio. 2011 2013 2012 2010 2009 2008 2017F 2015F 2016F At least two existing office buildings, located in Sudirman, and 2014F one office building in Setiabudi are planned for redevelopment. 2014YTD Existing Supply Annual Supply Future Supply in the CBD Based on Area Source: Colliers International Indonesia - Research
In line with high demand, additional supply for office buildings 2017F will continue to record significant growth in 2015 and 2016. The supply of office buildings in the Outside CBD is projected to grow by 33% over the previous year with total space of around 2016F 385,000 sq m in 2015. Office buildings such as The Suites (in Pantai Indah Kapuk, North Jakarta), Menara Sentraya (in Blok M, South Jakarta) and St Moritz office tower (in Puri Indah, West 2015F Jakarta) are continuing their construction progress and will begin operations in 2015.
2014F 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 0 200,000 400,000 600,000 800,000 1,000,000 and 75.5% of the 713,390 sq m total future supply in South Jakarta sq m will be in the TB Simatupang area. Sudirman Thamrin Mega Kuningan Future Supply in the Outside CBD Based on Area Rasuna Said Satrio Gatot Subroto
Source: Colliers International Indonesia - Research 2017F Supply in the Outside CBD 2016F Gedung Aneka Tambang 2, which is located in TB Simatupang (South Jakarta), was the only office building to begin operations in the Outside CBD as of 1Q 2014. This office building for lease 2015F brought 16,000 sq m of new additional supply and raised the cumulative supply to 2.29 million sq m.
A total office supply for 2014 is projected to reach over 289,000 sq 2014F m a historic high after a significant office supply in 2012. Based on the construction progress, after Gedung Aneka Tambang 2, 0 100,000 200,000 300,000 400,000 500,000 Wisma 77 Tower 2 and Green Kosmo Mansion will soon be ready to begin operations. Based on marketing scheme, the majority or sq m 63% of the projected annual supply in 2014 will be for strata-title Central Jakarta South Jakarta North Jakarta sale. East Jakarta West Jakarta
Source: Colliers International Indonesia - Research
5 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.
6 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
7 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
8 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
9 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.
10 Research & Forecast Report | 1Q 2014 | Office | Colliers International Average Asking Base Rental in the CBD Average Asking Base Rental in TB Simatupang
IDR 473,880 USD 40.00 IDR 296,175 USD 25.00
IDR 414,645 USD 35.00 IDR 236,940 USD 20.00 IDR 355,410 USD 30.00
IDR 296,175 USD 25.00 IDR 177,705 USD 15.00 IDR 236,940 USD 20.00
IDR 177,705 USD 15.00 IDR 118,470 USD 10.00
IDR 118,470 USD 10.00 IDR 59,235 USD 5.00 IDR 59,235 USD 5.00
IDR 0 USD 0.00 IDR 0 USD 0.00 2011 2013 2012 2010 2009 2008 2011 2013 2012 2010 2009 2008 2014YTD IDR USD IDR USD 2014YTD
Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research
The average base rental rates for office buildings in rupiah also recorded an increase by 5.3% QoQ in the Outside CBD. Several office buildings increased their base rental rates by an additional IDR20,000 to 40,000 psm. Newly operating office buildings that Strata-title Office offer higher rent above the market average also caused the average rental rates to rise. The average asking rental rate is currently IDR161,418 per sq m per month. For rent in US dollars, Supply office buildings in TB Simatupang characterised much of the change. Although less than 1% QoQ, this increase led the average Annual Supply and Absorption in the CBD base rent to USD21.25 per sq m per month as of 1Q 2014. 200,000 A more significant increase was shown by office buildings 180,000 charging in rupiah in TB Simatupang, including the Pondok Indah area. As a growing area that continues to become a 160,000 prioritised location for office tenants, the asking base rent 140,000 currently is IDR155,833 per sq m per month, up 11.4% QoQ. 120,000 Albeit lower, the average base rents in US dollars moved upward 100,000 by 4.3% QoQ, which brought the average base rent to the current sq m USD20.86 per sq m per month. 80,000 60,000 40,000 20,000 0 2011 2013 2012 2010 2007 2009 2008 2014YTD
Annual Supply Annual Take-up
Source: Colliers International Indonesia - Research
11 Research & Forecast Report | 1Q 2014 | Office | Colliers International The strata-title office buildings in all of Jakarta comprised less With total space of 432,526 sq m or 17.7% of the cumulative than 20% of the cumulative supply as of 1Q 2014. The total supply in the Outside CBD, the take-up rate was seen to increase space of strata-title office buildings in the CBD is 18.9% of the slowly to 95% as of 1Q 2014. This take-up rate only grew by 0.5% total supply or 816,829 sq m. After the opening of MD Place last QoQ. Similar to the CBD, pre-commitment sales for strata-title year, offices for sale in the CBD will see Gran Rubina in 2014. offices in the Outside CBD also recorded a quite significant There is another office building that is also located within the increase. On average, the pre-commitment sales for strata-title Rasuna Epicentrum mega-complex in Jalan Rasuna Said, called offices that will begin operations from 2014 - 2017 in the Outside Convergence Office Tower. But this office building will only sell CBD have reached 46.3% as of 1Q 2014. In 2014 alone, the take- approximately 30% of the total building space to the public. By up rate is 52.7%. projecting an additional 41,438 sq m from this building, the total supply of office space for sale will be 858,267 sq m in 2014. However, the asking prices for office buildings in the Outside CBD were not as aggressive as in the CBD area. The increasing Quite limited additional supply of strata-title office buildings asking prices in the Outside CBD were much influenced by brought the take-up rate to 99% in 2013 and it will likely remain offices for sale in TB Simatupang where they are currently IDR27 around that level in 2014. Indeed, the pre-commitment level million per sq m. The average asking price for office buildings is high. The pre-commitment level of future strata-title office in the Outside CBD, excluding TB Simatupang, was IDR26.4 buildings, which will begin operations in 2014, has reached 60% million per sq m or 3% lower than in TB Simatupang. thus far. Overall, the average pre-commitment level for future strata-title office buildings in the CBD that will begin operations Asking Price Based on Area 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 59,235,000 USD 5,000 increase for the last three years, prices of strata-title offices in the CBD were quite stable in the quarter. The average selling price, IDR 47,388,000 USD 4,000 based on available space in the CBD, stood at around IDR45.9 million per sq m, while the price at buildings in US dollars was IDR 35,541,000 USD 3,000 USD4,750 per sq m. These represent average prices of available office spaces for sale that have been in operation since 2010 to IDR 23,694,000 USD 2,000 2013, including future office buildings that have already been offered this quarter. Although the average prices look high, there IDR 11,847,000 USD 1,000 are office spaces in the CBD that are offered at a minimum of IDR39 million per sq m. Prices of office buildings quoting in IDR 0 USD 0 rupiah range from IDR39 to 55 million per sq m, while prices in US dollars range from USD3,850 to 5,750 per sq m. CBD (IDR) Annual Supply and Absorption in the Outside CBD CBD (USD) Simatupang (IDR) TB Simatupang (IDR) 200,000 Outside CBD excl. TB TB Simatupang (USD)
180,000 Source: Colliers International Indonesia - Research 160,000 140,000 Asking Price 120,000 IDR 59,235,000 USD 5,000 100,000 IDR 53,311,500 USD 4,500 sq m 80,000 IDR 47,388,000 USD 4,000 60,000 IDR 41,464,500 USD 3,500 40,000 IDR 35,541,000 USD 3,000 20,000 IDR 29,617,500 USD 2,500 0 IDR 23,694,000 USD 2,000 IDR 17,770,500 USD 1,500 2011 2013 2012 2010
2007 IDR 11,847,000 USD 1,000 2009 2008
2014YTD IDR 5,923,500 USD 500 Annual Supply Annual Take-up IDR 0 USD 0
Source: Colliers International Indonesia - Research 2011 2013 2012 2010 2009 2008 2014YTD IDR USD
Source: Colliers International Indonesia - Research
12 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.
.
13 Research & Forecast Report | 1Q 2014 | Office | Colliers International Apartment for Strata-title
Supply
By the end of 1Q 2014, the cumulative supply of strata-title apartments in Jakarta grew at a moderate pace. The market received 1,246 new units, up by 0.9% QoQ, from the hand-over of several projects like Kemang Village (The Infinity Tower), Pakubuwono Terrace (North Tower), Sherwood Apartment (Wellington Tower) and Woodland Park (Matoa Tower). These 1,246 units, or 7.27% of the total projected 20,889 units that will be completed this year, are scattered in South and North Jakarta. The Infinity Tower is the fifth tower being handed over out of a total of seven towers at Kemang Village Residences. The Pakubuwono Terrace (North Tower) and Woodland Park (Matoa Tower) are brand new projects that are expecting to see more new towers in the next few years. In North Jakarta, Sherwood Residence, located in the Kelapa Gading area, had a new tower completed during the quarter, called Wellington Tower. This project is considered one of the upper-class developments in that area.
Not all apartment projects are completed at the scheduled time. Some experience slow finishing work and are likely to be rescheduled to 2Q or even 3Q 2014.
The outlook for 2014 was predicted to be tough, particularly given the nationwide elections that could impact business decisions. The Central Bank’s policy to increase its benchmark interest rate and the minimum loan-to-value (LTV) caps for housing loans from 80 to 70%, and 60% for second mortgage loans, and 50% for third mortgage loans has dampened property acquisition. In addition, banks are restricted from extending loans used as down payments for home purchases. These measures are expected to reduce demand on residential properties for investment or speculation, instilling more prudent lending and a common prudential standard among banks.
14 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International List of Completed Projecs During 1Q 2014
latest offering development location region Developer No. of Units price per sq m Kemang Village (The Infinity) P. Antasari South Jakarta Lippo Karawaci 175 IDR30 million Pakubuwono Terrace (Tower North) Kebayoran Lama South Jakarta PT Selaras Mitra Sejati 750 IDR15 million Sherwood Apartment (Wellington) Kelapa Gading North Jakarta Summarecon 100 IDR22 million Woodland Park (Matoa tower) Kalibata South Jakarta Group Kalibata 221 IDR16 million Source: Colliers International Indonesia - Research
Nevertheless, the abovementioned condition did not stop Some of the projects in South Jakarta are located in expatriate developers from launching new projects, as was seen in the first community locations, like Pondok Indah and Pangeran Antasari quarter of 2014. In fact, there are 14 newly launched projects and therefore quote high prices compared to other non-prime scattered in four areas of Jakarta including the CBD, East Jakarta, locations like Pasar Minggu, Pejaten and Kebayoran Lama. Most South Jakarta, and West Jakarta. From the total of 5,286 new of the projects in West Jakarta aim at the mid-low segment, apartment units, South Jakarta contributes the largest at 41.5%, characterised by a large number of units at a project and a followed by West Jakarta at 36%, while the CBD area contributes relatively affordable price. Some projects in good locations are only 22.5% from three apartment projects. These new projects offered at higher prices. West Jakarta has been seeing many are expected to be completed in the next two or four years. Some ongoing property developments including offices, apartments, projects will have more than two towers that will be built in stages and shopping centres. Underpinned by good infrastructure, like and therefore the completion time will take more than two years. the toll roads connecting the area to the airport, West Jakarta The South Jakarta and West Jakarta areas are expecting to see continues to appeal to property investors. abundant apartment projects over the next three to four years.
Newly Launched* Apartments During 1Q 2014
expected completion asking price development location region no. of units time per sq m Verde Two (2 Towers) Rasuna Said CBD 304 2016 IDR37 million Anandamaya Residence (3 Towers) Sudirman CBD 500 2017 IDR50 million Gayanti City Apartment (Tower I) Gatot Subroto CBD 198 2016 IDR33 million Domaine (Tower I) Sudirman CBD 186 2017 IDR38 million Bellevue Place Apartment MT Haryono South Jakarta 128 2016 IDR31 million Kebayoran Icon Kebayoran Lama South Jakarta 256 2016 IDR19 million One Otium Antasari South Jakarta 160 2017 IDR30 million Kartika Residence (3 Towers) Pondok Indah South Jakarta 800 2018 IDR40 million Foresque Apartment (3 Towers) Pasar Minggu South Jakarta 650 2017 IDR16 million The Batik @ Pejaten Pejaten South Jakarta 200 2017 IDR15 million Maqna Residence Meruya West Jakarta 380 2017 IDR17 million Vittoria Residence (3 Towers) Daan Mogot West Jakarta 1,100 2017 IDR14 million Wang Residence Kedoya West Jakarta 250 2017 IDR27 million Veranda Kembangan West Jakarta 174 2016 IDR19 million Note: * Newly Launched is when a new apartment development has secured development permit and is only officially introduced and offered in the market. Source: Colliers International Indonesia - Research
15 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International The Distribution of Newly Launched Apartment by Supply of new apartment units during 2014 will be substantial, Number of Units i.e. 20,889 units, and will continue in 2015 when the market is expected to see another 24,228 units. All in all, the total of apartments projected to come onto the market from 2014 - 2017 will be 62,197 new units, mainly supplied by West Jakarta with 22.4% of the total supply, followed by Central and South Jakarta CBD 22.5% with 20.4 and 20.2%, respectively.
South Jakarta 41.5%
West Jakarta 36.0%
Source: Colliers International Indonesia - Research
New Supply Pipeline (2014 - 2017)
Apartment name location region no. of units
2014
Woodland Park (Matoa tower) (1Q) Kalibata South Jakarta 221 Pakubuwono Terrace (Tower North) (1Q) Kebayoran Lama South Jakarta 750 Sherwood Residence (Wellington) (1Q) Kelapa Gading North Jakarta 100 Kemang Village (The Infinity) (1Q) Antasari South Jakarta 175 Ambassade Residence Tower A Puri Denpasar CBD 234 Raffles Residences Satrio CBD 64 MyHome Apartment at Ciputra World Satrio CBD 136 Setiabudi Sky Garden (tower 1) Rasuna Said CBD 426 Verde Apartment (Tower East) Rasuna Said CBD 114 Pasar Baru Mansion (2 towers) Pasar Baru Central Jakarta 520 Elpis Residence Gunung Sahari Central Jakarta 791 Capitol Park Apartment Salemba Central Jakarta 1,700 The Mansion at Dukuh Golf Residence (Aurora Tower) Kemayoran Central Jakarta 522 The Mansion at Dukuh Golf Residence (BellaVista Tower) Kemayoran Central Jakarta 612 The Green Pramuka (Tower Chrysant) Pramuka Central Jakarta 1,000 The Green Pramuka (Tower Bougenville) Pramuka Central Jakarta 1,000 Sentra Timur Residence II (2 Towers) Pasar Rebo East Jakarta 810 Titanium Square Pulo Gebang East Jakarta 725 The Hive @ Tamansari Cawang East Jakarta 422 Sherwood Residence (Regent) Kelapa Gading North Jakarta 100 Pluit Seaview (Tower Maldives) Pluit North Jakarta 940 Gading Greenhill Pegangsaan Dua North Jakarta 700 Northern Ancol Residence Ancol North Jakarta 800 La Venue - South Tower Pasar Minggu South Jakarta 341 Kemang Village (The Intercon) Antasari South Jakarta 400 The East at Essense Complex Dharmawangsa Dharmawangsa South Jakarta 244 continued
16 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International Apartment name location region no. of units continuation The Aspen at Admiralty Fatmawati South Jakarta 860 Pakubuwono Terrace (Tower South) Kebayoran Lama South Jakarta 720 The Pakubuwono Signature Pakubuwono South Jakarta 188 Senopati Penthouse Senopati South Jakarta 63 LA City Apartment (Tower A) Lenteng Agung South Jakarta 980 La Maison Barito Barito South Jakarta 80 Botanica Apartment (3 Towers) Simprug South Jakarta 626 The Bellevue at Pondok Indah Pondok Indah South Jakarta 40 Green Central Tower Cerberra Gajah Mada West Jakarta 420 The Windsor (Tower I) Puri Indah West Jakarta 176 The Windsor (Tower II) Puri Indah West Jakarta 164 Sky Terrace Lagoon Kalideres West Jakarta 525 Metro Park Residence Kebon Jeruk West Jakarta 1,200 Green Palm Residence @ Puri Kosambi West Jakarta 1,000
2015
East Park Apartment (Tower C) KRT Radjiman East Jakarta 550 The Residence (CWJ 2) Satrio CBD 119 The Orchad Satrio (CWJ 2) Satrio CBD 349 Setiabudi Sky Garden (tower 2) Setiabudi CBD 160 The Suite (W Hotel Tower) Satrio CBD 200 T - Plaza Residence (Tower B) Pejompongan Central Jakarta 500 Menteng Park Cikini Central Jakarta 756 The Grreen Pramuka (Tower Orchid) Pramuka Central Jakarta 1,000 The Grreen Pramuka (Tower Penelope) Pramuka Central Jakarta 1,000 The Green Pramuka (Tower Scarlet) Pramuka Central Jakarta 1,000 Eastonia Jatiwaringin East Jakarta 312 Green Signature Apartment MT. Haryono East Jakarta 800 Bassura City (Tower Flamboyan) Basuki Rahmat East Jakarta 1,000 Bassura City (Tower Edelweiss) Basuki Rahmat East Jakarta 1,000 Bassura City (Tower Dahlia) Basuki Rahmat East Jakarta 1,000 Bassura City (Tower Cattleya) Basuki Rahmat East Jakarta 600 Bassura City (Tower Alamanda) Basuki Rahmat East Jakarta 600 Teluk Intan (Tower Saphire) Teluk Gong North Jakarta 1,100 Tifolia Apartment Perintis Kemerdekaan North Jakarta 500 Pluit Seaview (Tower Belize) Pluit North Jakarta 300 Callia Apartment Perintis Kemerdekaan North Jakarta 560 The Oakwood Sky Garden (2 Towers) Pluit North Jakarta 700 Pluit Seaview (Tower Ibiza) Pluit West Jakarta 500 Pluit Seaview (Tower Bahama) Pluit South Jakarta 650 Green Bay Pluit (Sea View) Pluit North Jakarta 2,072 Kemang Village - The Bloomington Antasari South Jakarta 150 The Royal Olive Residence Tower I Buncit Raya South Jakarta 225 Woodland Park (Cendana Tower) Kalibata South Jakarta 218 Senopati Suites 2 Senopati South Jakarta 81 1 Park Avenue Gandaria South Jakarta 279 Nine Residence Warung Buncit South Jakarta 246 Providence Park Permata Hijau South Jakarta 114 continued
17 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International Apartment name location region no. of units continuation Kencana Residence Pondok Indah South Jakarta 173 District 8 (Tower Eternity) Senopati South Jakarta 400 District 8 (Tower Infinity) Senopati South Jakarta 280 Izzara Apartment (2 Tower @ 225 unit) TB. Simatupang South Jakarta 450 Lexington Rersidence (Tower 1) Pondok Pinang South Jakarta 270 Lexington Rersidence (Tower 2) Pondok Pinang South Jakarta 270 The Aspen Peak at Admiralty Fatmawati South Jakarta 644 Belmont Residence (Tower Montblanc) Meruya Ilir West Jakarta 350 Gianetti Apartment Kemanggisan West Jakarta 500 St. Moritz (New Presidential Tower) Puri Indah West Jakarta 150 Satu8 Residence Kedoya West Jakarta 174 The Nest Apartment Meruya Utara West Jakarta 1,100 Point 8 (Air Crew Tower) Daan Mogot West Jakarta 546 Gallery West Kebon Jeruk West Jakarta 280
2016
St Moritz (The New Ambassador Suite Tower) Puri Indah West Jakarta 200 The H Residence MT Haryono East Jakarta 383 Sudirman Suites Sudirman CBD 380 Senopati Suites 3 Senopati South Jakarta 54 Signature Park Grande MT Haryono East Jakarta 1,100 Grand Pakubuwono Terrace Kebayoran Lama South Jakarta 435 Sentosa Residence Cempaka Putih Central Jakarta 687 Gold Coast Apartment (Atlantic Tower) Pantai Indah Kapuk North Jakarta 568 Grand Pancoran Pancoran South Jakarta 120 Sudirman Hill Residence Karet Central Jakarta 255 Apartment Pejaten Park Residence Warung Buncit South Jakarta 380 Belmont Residence (TowerAthena) Meruya West Jakarta 165 Four Winds Permata Hijau South Jakarta 122 Capitol Suites Prapatan Raya Central Jakarta 327 Puri Mansion Apartment (Tower A) Puri Kembangan West Jakarta 900 Madison Park Tanjung Duren West Jakarta 1,200 Gayanti City (2 Towers) Gatot Subroto CBD 318 Verde Two (Tower 1) Rasuna Said CBD 152 Verde Two (Tower 2) Rasuna Said CBD 152 Bellevue Place Tebet South Jakarta 128 Kebayoran Icon Kebayoran Lama South Jakarta 256 Veranda Pesanggrahan West Jakarta 174
2017
Regatta London Tower Pantai Mutiara North Jakarta 276 Central 88 (2 Towers) Kemayoran Central Jakarta 612 Holland Village Cempaka Putih Central Jakarta 400 Domaine Sudirman CBD 186 Rosewood Residences Satrio CBD 160 Skyline Residence (2 Towers) DI Panjaitan East Jakarta 481 Kemang Penthouse Kemang South Jakarta 262 The Foresque Pasar Minggu South Jakarta 600 continued
18 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International Apartment name location region no. of units continuation Puri Orchad (3 Tower) Kembangan West Jakarta 3,000 The Langham Residences Senopati South Jakarta 57 Anandamaya Residences (3 towers) Sudirman CBD 500 Maqna Residence Meruya West Jakarta 380 Vittoria Residence (3 tower) Daan Mogot West Jakarta 1,100 One Otium Residence Antasari South Jakarta 160 Wang Residence Kedoya West Jakarta 250 The Batik @ Pejaten Pejaten South Jakarta 200
Source: Colliers International Indonesia - Research Distribution of Future Annual Apartment Unit Overall, the take-up rate in Jakarta demonstrated an increasing Supply by Area trend with the exception of the CBD area that posted a moderate decrease compared to the previous quarter. With abundant new 30,000 projects during the quarter but mediocre absorption, the CBD area saw a downswing in the take-up rate trend, by 4% QoQ. South Jakarta and non-prime areas continued to show an upward 25,000 trend, due to some on-going projects showing progressive construction activities and offering a relatively affordable price 20,000 compared to the CBD area. Several newly launched projects in middle- to upper-class locations, such as Menteng, Pejaten, 15,000 Puri Indah, Kemang and Pondok Indah, applied NUP (nomor unit pemesanan or an offer to book a reserved unit) due to high 10,000 demand within those areas. This way, developers will disseminate NUP to their loyal customers and other potential buyers who can 5,000 choose good units (usually located on a preferred floor or with the best view, etc.). Interested buyers will then have to deposit a certain amount of money (ranging from IDR20 to 50 million, 0 depending on the class of the apartment) to get the priority to 2014F 2015F 2016F 2017F book the desired units. CBD Central Jakarta South Jakarta The Menteng, Pejaten, Puri Indah, Kemang and Pondok Indah North Jakarta East Jakarta West Jakarta areas are popular residential areas (except for Puri Indah)
Source: Colliers International Indonesia - Research for Jakarta’s expatriate community as they are surrounded by supporting facilities like modern malls, international schools, different chains of supermarkets and other service Demand establishments.
Up until March 2014, sales activity in the Jakarta apartment There were several promotional programmes offered during the market remain stable. The take-up rate of existing strata-title first quarter benefiting the moments like Chinese New Year and apartments in Jakarta reached 94.3%, up by 1% while the pre- Valentine. Other promotional campaigns to entice buyers are sales activities from the on-going projects recorded a 72.6% nothing special and continue to copy previous promotions like take-up rate, falling by 1.5% from the previous quarter. The free holidays to Bali, gold rewards, electronic gadgets or furniture substantial newly launched apartment supply in 1Q 2014 has to furnish the apartment units. reduced the take-up figure of pre-sales apartments this quarter, however continued absorption of the new units has maintained a relatively healthy take-up rate. In general, the overall take-up Average Take-Up Rate Performance in Different rate for both existing apartments and pre-sales apartments was Location (%) steady at 86.1%. Area 1Q 2013 4q 2013 1Q 2014 QoQ change YoY change CBD 88.2% 97.1% 93.2% -3.9% 5.0% South Jakarta 87.8% 88.9% 90.0% 1.1% 2.2% Non-Prime Area 80.3% 83.1% 83.3% 0.2% 3.0% Source: Colliers International Indonesia - Research
19 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International The combination of a hike in the key interest rate, stricter Preferred Payment Method for Apartment Buyer mortgage regulations and wavering consumer confidence has led to widespread speculation that the property market is headed for a plateau and will affect the slowing demand for apartments. KPA In fact, developers have always found ways to accelerate sales, (mortgage) 16% among them providing flexibility in terms of payment. Various payment schemes were offered by developers to maintain sales activity at a good pace. Such payment schemes enable buyers who have limited access to banking and who are buying a home for the second or third time. Some strategies that are used by developers to lure buyers are: Hard Cash »» Flexible down payment scheme. The amount of down 21% payment of 30 to 50% of the total apartment price can be paid Cash by instalment from 12 to 35 times directly to the developers. Installment The remaining payment is paid upon the construction 63% of the project through mortgage (KPA : Kredit Pemilikan Apartemen);
»» Cash instalment. Conventionally, the duration of instalments is the same as the construction progress of the development, i.e. 24 to 36 instalments; Source: Colliers International Indonesia - Research
»» Long instalment. This payment scheme has a longer duration than cash instalment and can be applied after the Asking Price construction is done. Similar to cash instalment, buyers have to pay monthly up to 60 times (5 years) directly to Strata-title apartment prices continue to trend upward along the developer. Consequently, the price for this payment with the escalation of land prices and the construction progress method is higher than the normal price, i.e. 15 to 20% more of the projects. As of 1Q 2014, the average price of strata-title expensive; apartments in Jakarta was IDR24.4 million per sq m an increase of 2.45% compared to the previous quarter. Overall, the average »» Hard cash scheme. Full payment at one time. Typically the asking price in the apartment market in Jakarta has increased developer will give a special discount of around 10 to 15% off by 46% in three years. Particularly in the CBD area, in the same the published rate. period, apartment prices have appreciated by 75%, while in South Jakarta it was 60%. Colliers’ survey of payment methods chosen by apartment buyers was conducted in 40 apartment projects under construction. Average Asking Price (per sq m) of Apartments in This revealed that cash instalment payment was opted for Jakarta by most buyers even in mid-low apartment projects. Only 5 to 20% of buyers of mid-low apartment units use a mortgage IDR 45,000,000 facility. Most of the buyers in this segment pay cash instalments. Similarly, in the middle segment, the majority of buyers chose IDR 40,000,000 cash instalment payments. However, we still see that in several IDR 35,000,000 projects most buyers opted for bank financing instead of cash instalments. In the upper-class segment, again, cash instalments IDR 30,000,000 was preferred by most buyers, but interestingly, the portion of IDR 25,000,000 those paying hard cash was also quite significant. IDR 20,000,000 Banks are more prudent in financing apartment unit ownership, IDR 15,000,000 particularly when the construction progress is slow. In some cases, developers will direct buyers to pay cash instalments, IDR 10,000,000 particularly for the off-plan projects. On the other hand, buyers IDR 5,000,000 for investment will pay cash instalments during construction, primarily if they are not the first buyer of apartment unit because IDR 0 the new LTV regulations require a higher percentage of down payment for a second purchase. Those with cash capability will 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 find paying by cash instalments less of a hassle. CBD South Jakarta Non-Prime Area Average
Source: Colliers International Indonesia - Research
20 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International Overall, the CBD area fetched the highest average asking price of IDR38 million psm as well as the highest increment of 5.8% Apartment for Lease QoQ. Land scarcity in the CBD area was the main driving force for apartment prices in this area to accelerate quickly. The newly launched projects in the CBD area, which mostly provide Supply better building quality, use more imported materials, and offer a private residential concept are offered at a minimum of IDR33 There was eventually one serviced apartment project million per sq m to a maximum of IDR60 million per sqm. The completed in 1Q 2014 after a dormant situation for the last four under-construction projects are quoted from IDR42 to 65 million consecutive quarters. The only apartment for lease this quarter psm. This high offering price occurred because all new projects is Fraser Residence Menteng, featuring 128 serviced apartments located in the CBD area are classified as upper to luxury class comprised of studio to duplex penthouse units. The opening of apartments. In other areas, like South Jakarta, which still have Fraser Residence Menteng brought the total supply of Jakarta’s adequate vacant land to be developed, a moderate growth of apartments for lease to 8,334 units, comprising 57% serviced 3.2% in prices occurred, which brought the average price for the apartments and 43% non-serviced apartments. region to IDR26.7 million per sq m. The key triggers for the price increase were some factors like the commencement of several Fraser Residence Menteng is part of Fraser’s global network of good projects in well-established locations, such as Kemang, serviced residences and is the second development by Fraser Permata Hijau, and Pondok Indah as well as continuing progress after Fraser Residence Sudirman, which opened in June 2011. In of the under-construction projects. Apart from those premium the next two years, the group is on course to manage two more areas in South Jakarta, there are some new apartment projects developments in Jakarta, including Fraser Place Setiabudi (2015) in areas like Mampang, Kebayoran Lama, and Pasar Minggu and Fraser Suites Kuningan (2016). that introduced prices below the average market, ranging from In fact, Frasers Hospitality and Ascott Limited are two worldwide IDR17 to 20 million per sq m and targeting the mid-low to mid- serviced apartment operators that are very active in Jakarta. upper segment. In the interim, non-prime areas including West Frasers Hospitality will have four properties in operation in Jakarta, North Jakarta, East Jakarta and Central Jakarta, recorded the CBD area, while Ascott Limited will have a total of five an increase of 2.8% to IDR18.8 million per sq m. There are some properties scattered around the CBD and South Jakarta in the factors that led to the increase in prices, like the good sales next two years. Ascott Limited operates the four-star equivalent performance showed by ongoing projects and the added value Somerset Serviced Residence and five-star equivalent Ascott The that the apartment projects offer like good building materials Residence brands. Fraser Hospitality operates Fraser Place and and more facilities different from other developments. Residences in the same categories. All four products are found in city or business locations and have fully equipped kitchens (or Average Asking Price in Different Sub-Markets kitchenettes), laundry and reception facilities. (in IDR)
YoY QoQ Area 1Q 2013 4q 2013 1Q 2014 change change CBD 32,619,752 36,174,524 38,282,223 17% 5.8% South Jakarta 22,455,876 25,854,554 26,687,843 19% 3.2% Non-Prime Area 16,350,089 18,298,766 18,819,110 15% 2.8%
Source: Colliers International Indonesia - Research
List of Apartments Operated by Frasers Hospitality and Ascott Limited
Name of development year of operation operator location type The Ascott Residence 1995 Ascott Limited Jl. Kebon Kacang Serviced Apartment Somerset Grand Citra 1996 Ascott Limited Jl. Prof Dr Satrio Serviced Apartment Countrywoods Residence 1996 Ascott Limited Jl. WR Supratman, Ciputat Serviced Apartment Somerset Berlian 2006 Ascott Limited Jl. Permata Berlian 3 Serviced Apartment Fraser Residence Sudirman 2011 Frasers Hospitality Jl. Setiabudi Raya No. 9 Serviced Apartment Citadines Rasuna Jakarta 2013 Ascott Limited Jl. H.R. Rasuna Said Kav.20 Condotel Fraser Residence Menteng 2014 Frasers Hospitality Jl. Menteng Raya Serviced Apartment Ascott Kuningan Jakarta 2014 Ascott Limited Jl. Prof Dr Satrio Serviced Apartment Fraser Place at Setiabudi Sky Garden 2015 Frasers Hospitality Jl. Karbela Selatan Serviced Apartment Somerset Kencana Jakarta 2015 Ascott Limited Jl. KHM Syafi'I Hadzami Condotel Fraser Suites at Ciputra World Jakarta 2 2016 Frasers Hospitality Jl. Prof Dr Satrio Serviced Apartment Source: Colliers International Indonesia - Research
21 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International In addition to those international operators, there are some This project, called TBS Linera Serviced Apartments, has yet to active local serviced apartment operators like Aditya Mansion, decide the number of units to be released to the market. The Sultan Residence, Pondok Indah Golf, and Kemang Oktroi. owner of this project is a local operator who has experience There will be one serviced apartment project in Cilandak in developing townhouses as well as housing complexes for - South Jakarta, which is expected to open in 4Q 2014. expatriates.
List of Apartments Developments in the Future
Name of development year of operation location region no. of units TBS Linera Apartment Service 2014 Jl. Intan No. 25 Cilandak Barat South Jakarta TBA * Ascott Kuningan Jakarta 2014 Jl. Prof Dr Satrio CBD 170 Fraser Place at Setiabudi Sky Garden 2015 Jl. Karbela Selatan CBD 150 One Park Avenue 2015 Jl. KHM Syafi'I Hadzami Sout Jakarta 60 La Maison Barito Serviced Apartment 2015 Jl. Barito Sout Jakarta 80 Oakwood at District 8 Senopati 2016 Senopati Sout Jakarta 180 Fraser Suites at Ciputra World Jakarta 2 2016 Jl. Prof. Dr. Satrio CBD 200 Note: *TBA: to be announced Source: Colliers International Indonesia - Research
Occupancy mining) are considering purchasing a certain amount of strata- title apartment units for their expatriate base (generally the In general, the apartment for lease market in Jakarta saw a minor engineer level). Instead of renting serviced apartments, owning drop in the occupancy rate from 76.6 to 75.8% this quarter. The the strata-title apartment units will be more beneficial for the occupancy level for non-serviced apartments was steady from company as the asset value is expected to grow. the previous quarter at 78.4%, while the serviced apartment projects eased moderately from 72.7% last quarter to 70.5% as Number of Expatriates Working in Indonesia some projects reported that a number of their existing expatriate tenants had completed their employment contracts and had to 2011 2012 2013 leave the country. #Expatriates 77,307 72,427 68,957 Source: Ministry of Manpower & Transmigration Occupancy Level of Non-Serviced Apartments (%) Area 4q 2013 1Q 2014 QoQ change Rental Rates CBD 82.37% 84.07% 1.70% South Jakarta 79.02% 78.05% -0.96% Overall, the asking rental rate of apartments for lease increased Non-Prime Area 75.99% 75.86% -0.13% during the early part of 1Q 2014 in anticipation of the increase in Source: Colliers International Indonesia - Research utility tariffs, especially electricity. The increase in the rental rate was mainly experienced by the preeminent serviced apartments in the CBD, such as Shangri-La, Frasers, Ritz-Carlton, and the Occupancy Level of Serviced Apartments (%) Ascott Group’s apartments, with an average increase between Area 4q 2013 1Q 2014 QoQ change US$100 and 300 per unit per month. As mentioned earlier, CBD 79.00% 78.84% -0.16% several apartments for lease, especially serviced apartments, South Jakarta 77.01% 76.12% -0.89% have anticipated adjusting their asking rental rates upward Non-Prime Area 56.44% 51.88% -4.56% in response to inflation and to the increase in the regional Source: Colliers International Indonesia - Research minimum wage.
Overall, there are some factors affecting the softening of demand Average Asking Rental Rate in Different Areas in the serviced or non-serviced apartment market. One is Rental Rate the decree of the Ministry of Manpower and Transmigration change per sq m per month (Number 4, Year 2012) controlling the number of foreign workers in 19 specific job positions. The number of expatriates Area 4q 2013 1Q 2014 QoQ YoY working in Indonesia has declined in the last three years. CBD including South US$26.56 US$27.58 3.85% 12.99% Jakarta Another factor is the amount of new stock at strata-title apartment projects located in premium areas and suitable to Non-Prime Areas US$15.49 US$15.64 0.76% 6.08% expatriates’ requirements. This is expected to exert pressure on Source: Colliers International Indonesia - Research the occupancy level of apartments for lease. Based on our survey of the marketing teams of some serviced apartments, quite a few multinational companies (e.g. pharmacies, oil and gas, and
22 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International The overall increase in the rental rate was mainly underpinned Concluding Thought by prominent serviced apartments in the CBD (including South Jakarta) that posted an average rent of USD33.20 per sqm The increase in the interest rates, as well as stricter mortgage per month. In the same areas, the non-serviced apartments regulations, has undoubtedly had an impact on the apartment quoted cheaper rates at an average of USD17.70 per sqm per market that had been benefitting from the cheap credit over the month. Serviced apartments located in the non-prime areas last few years. In fact, in the first quarter of 2014, some developers reached USD26.60 per sq m per month, while the non-serviced were confident enough to launch their new projects targeting apartments charged lower at USD12.70 per sq m per month. mostly the middle-upper segment.
Average Rental Rates of Apartment for Lease The demand for strata-title apartments over the past three years has been quite resilient as Jakartans have taken to inner-city $30.00 living. Despite the dismal outlook of Jakarta’s apartment market projected early in 2014, developers formulated ways to get around the obstacles, such as providing flexible terms of payment. $25.00 Such measures effectively maintain the level of apartment absorption because buyers are motivated to buy off-plan $20.00 projects in anticipation of greater capital gains. Notwithstanding the continued apartment transactions, the market needs more $15.00 occupancy to stay healthy. The ideal situation is when the units are bought by occupiers or by investors when the leasing market $10.00 is healthy.
The steep price increases that we have seen over the last three $5.00 years are likely to soften as the market digests the new economic reality but the long-term trend into high-rise living is very $0.00 much here to stay, and with the prices still very low by regional standards, there remains plenty of upside in the years ahead. 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q 2014 Meanwhile, the apartment for lease market is expected to CBD Non CBD maintain a stable occupancy rate. Despite positive inquiries
Source: Colliers International Indonesia - Research from corporate expansion, tighter competition for upper-class strata-title apartments within premium areas would make the occupancy in apartments for lease market remain steady.
23 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International RETAIL SECTOR Supply
Jakarta Jakarta Retail Cumulative Supply Based on Marketing Scheme
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2014YTD for Lease for Sale
Source: Colliers International Indonesia - Research
After the start of operations of Baywalk Mall, which is located within the Green Bay Pluit Complex, Jakarta saw little new retail space provided from the extension projects at Mall Puri Indah (around 3,000 sq m) and Mall Kelapa Gading (around 6,000 sq m). These extended spaces are designed as F&B areas. With the small addition, the Jakarta retail cumulative supply moved upward to 4.32 million sq m as of 1Q 2014. Of this, 2.86 million sq m or 66.3% was marketed for lease.
Historically, after growing by 10% and bringing huge supply to the market in 2009, the annual growth of supply of retail space in Jakarta began weakening. From 2010 to 2013, the average growth was only 3.6% per year. In 2014, the growth of supply for shopping centres in Jakarta will continue declining. Although St Moritz is a huge mall expected to enter the market, overall, the total additional supply is only 138,200 sq m. Comparing year-on- year (YoY), the cumulative supply will only grow by 3.2%.
Based on construction progress, seemingly St Moritz will be ready in late 2014. Two shopping centres belonging to Agung Podomoro Land (APL), Central Park Extension and Shopping Mall at Pancoran are also pursuing progress to reach their completion. Those shopping centres, together with Pantai Indah Kapuk Mall and Pulo Gadung extension, are expected to enter the market in 2015.
24 Research & Forecast Report | 1Q 2014 | Retail | Colliers International Again, a moratorium issue is expected to direct future shopping Jakarta Retail Future Supply - Based on Region centre developments to other areas besides Central and South Jakarta including the Central Business District (CBD). Development of shopping centres within townships continue. West Jakarta AEON Mall Indonesia has become one of the developers trying to take advantage of this opportunity. Last year, AEON East Jakarta confirmed the development of their second mall in Indonesia. This mall, which will be located within Jakarta Garden City in East Jakarta, is scheduled to begin operations in early 2016 North Jakarta and provide approximately 90,000 sq m of leasable area. With additional retail space from AEON Mall Jakarta Garden South Jakarta City, the total supply for future shopping centres in Jakarta is projected to be 462,200 sq m from 2014 to 2016. These projected numbers will also bring the cumulative supply for Central Jakarta shopping centres in Jakarta close to 5 million sq m in 2016. CBD Additionally, in North Jakarta, which is actually known as a trading area, a big developer (Agung Sedayu) will also develop 0 50,000 100,000 150,000 200,000 250,000 300,000 a shopping centre in Pantai Indah Kapuk. Attracting a number of visitors from the surrounding areas is expected to become the 2014F 2015F 2016F way to avoid competition with other existing shopping centres, Source: Colliers International Indonesia - Research especially those located around Pluit.
New Supply Pipeline in Jakarta
shopping centers location region NLA (sq m) Status
2014
St. Moritz Puri Indah West Jakarta 129,200 Under Construction
2015
Central Park Mall Extension Slipi West Jakarta 40,000 Under Construction Pantai Indah Kapuk Mall Pantai Indah Kapuk North Jakarta 30,000 Under Construction Shopping Mall @Pancoran Pancoran South Jakarta 8,000 Under Construction Pulo Gadung Trade Center extension Pulo Gadung East Jakarta 10,000 In Planning
2016
Mal Puri Indah 2 Puri Indah West Jakarta 75,000 In Planning Holland Village Mall Cempaka Putih Central Jakarta 40,000 In Planning Grand Cipulir Cipulir South Jakarta 40,000 In Planning AEON Mall Garden City Cakung East Jakarta 90,000 In Planning Source: Colliers International Indonesia - Research
25 Research & Forecast Report | 1Q 2014 | Retail | Colliers International Greater Jakarta Area (BoDeTaBek - Despite continuing, the growth of supply in BoDeTaBek during 2014 is forecast to be lower than the previous year. After BXc Bogor, Depok, Tangerang, Bekasi) Mall, the market expects to see two shopping centres that will Greater Jakarta Retail Cumulative Supply begin operations during 2014, i.e. AEON Mall BSD City and Cinere Bellevue Suites Mall. Based on Marketing Scheme AEON Mall BSD City, a joint venture project between Sinarmas 4,000,000 Land and AEON Mall, is expected to begin operations by the end of 2014. Seemingly, this mall be completed by its projected date. 3,500,000 As an indication, the mall’s construction that started at the end 3,000,000 of 2013 still shows progress in line with the initial plan.
2,500,000 AEON MALL Indonesia is projected to be the most active mall developer in BoDeTaBek from 2014 to 2017. In addition to BSD 2,000,000 and Deltamas (Bekasi), AEON Mall is also planning to develop 1,500,000 another shopping centre in Cibinong (Bogor).
1,000,000 Greater Jakarta Retail Cumulative Supply 500,000 Based on Regions 0 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F Bekasi 2014YTD
for Lease for Sale
Source: Colliers International Indonesia - Research Tangerang A new shopping centre, Bintaro Jaya Xchange Mall, began operations in Tangerang in 1Q 2014. The mall, which is known as BXc Mall, combines the family and lifestyle mall concept. This Depok mall is part of a mixed-use project that in addition to the lifestyle centre mall, also provides an office tower, apartments and convention hall on 25 ha of land. Located on the side of Bintaro – Pondok Indah toll road, this mall brought 45,000 sq m of new Bogor supply into the market and brought the cumulative supply to 2.24 million sq m in BoDeTaBek. 0 50,000 100,000 150,000 200,000 250,000 300,000 As reported earlier, huge supply entered the Outside Jakarta 2014F 2015F 2016F 2017F market and recorded significant growth of 13.9% YoY in 2013. Source: Colliers International Indonesia - Research
New Supply Pipeline in Greater Jakarta
shopping centers location region NLA (sq m) Status
2014
Cinere Bellevue Suites Mall Cinere Depok 28,000 Under Construction AEON Mall BSD City Serpong Tangerang 75,000 Under Construction
2015
AEON Mall Deltamas Deltamas Bekasi 21,000 In Planning Cimandala City Mall Cimandala Bogor 60,000 In Planning Plaza Indonesia Jababeka Bekasi 20,000 In Planning continued
26 Research & Forecast Report | 1Q 2014 | Retail | Colliers International shopping centers location region NLA (sq m) Status continuation
2016
Bekasi Trade Center 2 Bulak Kapal Bekasi 56,000 Under Planning Living World Jababeka Jababeka Cikarang 18,000 Under Planning Grand Dadap Mall Dadap Tangerang 20,000 Under Construction AEON Mall Bogor Cibinong Bogor 20,000 Under Planning Source: Colliers International Indonesia - Research Comparison of Annual Retail Supply in Jakarta and Annual Supply, Demand and Occupancy BoDeTaBek During 2008 - 2017 in 2008 - 2014 YTD
500,000 100% 600,000
95% 500,000 400,000
400,000 90% 300,000
300,000 85% 200,000 200,000 80%
100,000 100,000 75%
0 0 70% 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2014YTD 2014YTD
Jakarta BoDeTaBek Annual Supply Annual Demand Occupancy
Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research
The occupancy rate for lower-class shopping centres (middle Demand and middle-low) was relatively stable at 86 - 87%. Shopping centres in North Jakarta and the central business district (CBD) recorded the highest growth of 3% QoQ. In the Jakarta CBD, entering its second year of operation, Lotte Shopping Sluggish growth of retail supply began to have a positive effect on Avenue made a significant improvement by having the least demand in Jakarta. The occupancy rate in Jakarta rose by almost number of stores remaining that have not opened. As mentioned 2% QoQ. The growth of occupancy was the highest since 2012 above, this mall became a major generator to lift the average and delivered an average occupancy rate of 89.3% for shopping occupancy rate for shopping centres within the CBD to 92.6% as centres in Jakarta in 1Q 2014. of 1Q 2014. This average occupancy rate rose by 3.5% QoQ.
The occupancy rate of upper-class malls recorded the highest The average occupancy rate for shopping centres in North growth of 1.8% QoQ. Lotte Shopping Avenue, which has been Jakarta was also growing. Although this area achieved the lowest in operation since last year, became the main generator to rate compared to others, performance of shopping centres in maintain the occupancy rate for this group of shopping centres North Jakarta grew by 2.8% QoQ and brought the occupancy to that remained above 90%. Some stores are preparing to open at 84.5 % as of 1Q 2014. the mall, which is continuing to improve access for visitors. Performance of new shopping centres also caused the average The performance of upper-class malls has surpassed 90% for occupancy in East Jakarta to rise. Cipinang Indah Mall, which has the last three years. This trend showed that, besides the ability been in operation since 2013, has helped the average occupancy to maintain tenants, location and type of visitor are factors that rate of shopping centres in East Jakarta rise by 1.9% QoQ to 87.6% make upper-class malls the choice for both premium local as of 1Q 2014. brands and foreign tenants.
27 Research & Forecast Report | 1Q 2014 | Retail | Colliers International Other areas such as South, Central and West Jakarta also grew, Spaces occupied at Mal Ciputra also continued to increase from but modestly. The occupancy growth for these areas was only January to March 2014. Two of those tenants, Samwon and below 1%. West Jakarta, which recorded the second highest Starbucks, come from the food and beverage industry. These occupancy of 92.4% after the CBD, only maintained the same retailers occupied 130 and 200 sq m at the mall, which maintains figure QoQ. Well-known malls like Mal Taman Anggrek, Central occupancy above 90%, continuously. Starbucks is an existing Park Mall and Mal Ciputra are still the main attractions for tenant that relocated within the mall to take a bigger space. potential tenants. The most significant transaction occurred at Mal Taman Anggrek with the opening of JYSK. JYSK Group has Another area that also recorded growth of less than 1% is South its origins in Scandinavia; the first store opened in Denmark in Jakarta, including the CBD and Central Jakarta. 1979. JYSK will open for the first time in Indonesia to meet the needs of households with a classy interior in a European style. The store will be of the same size as a Danish JYSK store, with a sales area of around 1,200 sq m.
Large Retailers Open in 2014
Retailers line of products opened at space taken (sq m) opening in JYSK Home Products Mall Taman Anggrek 1,400 February XXI Entertainment Cipinang Indah Mall 2,000 January Electronic City Home Furnishing Cipinang Indah Mall 1,038 March Time Zone Entertainment Cipinang Indah Mall 1,038 May Source: Colliers International Indonesia - Research
Amount of Space Absorbed in Newly Operating and Occupancy Rates of Shopping Centers for Lease Future Shopping Centers in Jakarta (2013 - 2016) (Mall) and Strata-title Centers (Trade Centers)
100%
2013 90% 80%
70% 2014F 60%
50%
40% 2015F 30%
20%
2016F 10%
0% 0 50,000 100,000 150,000 200,000 250,000 300,000 2008 2009 2010 2011 2012 2013 2014 YTD Absorbed Supply for Lease for Sale
Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research
Tenants in Newly Operated and Future Shopping Centers in Jakarta During 2013 - 2015
shopping center Completion anchor tenant mini anchor Lotte Shopping Avenue 2013 Lotte Department Store Ranch Market, Uniqlo Cipinang Indah 2013 Carrefour XXI, Electronic City, Ace Hardware, Time Zone Baywalk Mall 2013 Ace Hardware, Cinema XXI, Farmers Market, Electronic Solution, Informa, Time Zone, Toys Kingdom, Home Solution, Gold’s Gym ST Moritz 2014 Debenhams, Parkson, Matahari, Electronic City, Cinema XXI, Ranch Market, Sea World Indonesia Hypermart Pantai Indah Kapuk Mall 2015 Blitz Megaplex, Ranch Market, Gold’s Gym
Central Park Mall extension 2015 Central Source: Colliers International Indonesia - Research
28 Research & Forecast Report | 1Q 2014 | Retail | Colliers International BoDeTaBek Further, Bogor and Tangerang achieved 81-82% occupancy rate. Some committed tenants at Cibinong City Mall and Bintaro Annual Supply, Demand and Occupancy XChange were not yet in operation; and this was a reason the in 2008 - 2014 YTD average occupancy rate in both regions declined in 1Q 2014. In Tangerang, after successfully opening three outlets in Jakarta 500,000 100% previously, Uniqlo began to expand outside Jakarta by presenting their fourth outlet at Summarecon Mal Serpong. This outlet occupies nearly 2,500 sq m and is planned to open in April 2014. 400,000 95% Bekasi was flooded by abundant retail supply throughout 2013. However, in line with operation of some committed tenants, the 300,000 90% average occupancy rate for shopping centres in Bekasi gradually rose and recorded 2% growth QoQ as at 1Q 2014 and brought the 200,000 85% average occupancy rate for shopping centres in Bekasi to 78.9%.
100,000 80% Amount of Space Absorbed in Newly Operating and Future Shopping Centers in BoDeTaBek 0 75% (2013 - 2016) 2008 2009 2010 2011 2012 2013 -100,000 70% 2014YTD 2013 Annual Supply Annual Demand Occupancy
Source: Colliers International Indonesia - Research 2014F As retail performance in Jakarta started to grow, the opposite condition was occurring in BoDeTaBek, which showed poorer performance than in the previous quarter. Operation of two shopping centres, Cibinong City Mall and Bintaro XChange Mall, 2015F caused the average occupancy rate to fall by 1.1% to 82.0% as of 1Q 2014.
The average occupancy rate for shopping centres in Depok still 2016F leads by 89.3%. Depok Mall and Margo City became the main contributors to the overall occupancy in this area. Depok Mall, which evolved into a lifestyle and entertainment mall, continues 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 improving by adding new tenants that suit their concept. Absorbed Supply Currently, this mall is in negotiations to present a cinema. Source: Colliers International Indonesia - Research
Large Retailers Open in 2014
Retailers line of products opened at space taken (sq m) opening in Uniqlo Fashion & Accessories Summarecon Mall Serpong 2,400 April Source: Colliers International Indonesia - Research
29 Research & Forecast Report | 1Q 2014 | Retail | Colliers International Tenant List in Newly Operated and Future Shopping Centers in BoDeTaBek During 2012 - 2014
Retailers name Completion anchor tenant mini anchor Shopping Center Completion Anchor Tenant Mini Anchor Bekasi Junction 2013 Lotte Mart 21 Cineplex Grand Metropolitan 2013 Centro Farmers Market, Toys Kingdom, Funworld Summarecon Mall Bekasi 2013 Star Department Store, Cinema XXI The Premiere, The Food Hall, Ace Hardware, Best Denki Cibinong City Mall 2013 Matahari Dept Store, Carrefour Funworld, Hari Hari, Ace Hardware, Cinema XXI, Informa Mal Ciputra Citra Gran 2013 Matahari, Hypermart Gramedia, Farmers Market Cimone City Mall 2013 Lotte Mart Gunung Agung Grand Galaxy 2013 Ace Hardware, Blitz Megaplex, Lotus, Farmers Market Bintaro XChange 2014 Centro Farmer’s Market Best Denki Gold Gym Rockstar Gym, Bx Rink, XXI Cinere Bellevue Suites 2014 Hypermart Paper Clip, Time Zone, Best Denki, Cinema XXI, Celebrity Fit- ness, Rock Star Gym AEON Mall BSD City 2014 Grand Dadap Mall 2016 Giant Home Solution, Electronic Solution, Fun World
Source: Colliers International Indonesia - Research
The election to be held in 2014 is expected to boost consumption Average Asking as well as increase the money flow in society. Therefore, retail sales in Indonesia are projected to grow. Bank Indonesia also noted that the growth of retail sales was supported by financing Rental Rates facilities that helped consumers to purchase goods. Improving weather, which is expected to expedite distribution, is another Average Asking Base Rental Rates in Jakarta factor that can encourage sales. With sales projected to grow, mall owners are confident in IDR 900,000 adjusting their asking rental rates in 2014. This trend began in 1Q IDR 800,000 2014 when the average rent for shopping centres was IDR491,675 per sq m per month. The average rental rate rose by 3.3% QoQ IDR 700,000 and 5.0% YoY. Although this was not as high as from 2012 to 2013, IDR 600,000 the increase can be considered as the onset of an upward trend in rental rates at shopping centers in Jakarta. IDR 500,000 Upper-class shopping centres continue to be a major contributor IDR 400,000 to the overall increase. Growth of 4.9% QoQ has raised the IDR 300,000 average rental rate to IDR792,065 per sq m per month in 1Q 2014.
IDR 200,000 Significant growth was also seen at middle-low class shopping centres. With growth of 3.4% QoQ, this class of shopping centre IDR 100,000 had an average rental rate of IDR253,013 per sq m per month. IDR 0 Despite also growing, middle-class shopping centres rose 1Q 2010 1Q 2011 1Q 2012 1Q 2013 4Q 2013 1Q 2014 relatively steadily by less than 1% quarterly since 2013. This growth brought the average rental rate for middle-class shopping All Class Upper Class centres to IDR360,744 per sq m per month in 1Q 2014. Source: Colliers International Indonesia - Research
30 Research & Forecast Report | 1Q 2014 | Retail | Colliers International Average Asking Base Rental and Occupancy Rates Average Asking Base Rental Rates Based on Area in Jakarta IDR 350,000 IDR 800,000 CBD IDR 300,000 IDR 700,000
South IDR 600,000 IDR 250,000 Jakarta West Jakarta IDR 500,000 IDR 200,000 North IDR 400,000 Jakarta IDR 150,000
IDR 300,000 Central IDR 100,000 East Jakarta IDR 200,000 Jakarta IDR 50,000 IDR 100,000 IDR 0 IDR 0 2008 2009 2010 2011 2012 2013 2014 YTD 84% 86% 88% 90% 92% 94% Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research Average Asking Base Rental Rates in BoDeTaBek Average Asking Base Rental Rates in Jakarta*
IDR 400,000 IDR 800,000
IDR 700,000 IDR 350,000
IDR 600,000 IDR 300,000
IDR 500,000 IDR 250,000
IDR 400,000 IDR 200,000
IDR 300,000 IDR 150,000
IDR 200,000 IDR 100,000
IDR 100,000 IDR 50,000
IDR 0 IDR 0 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 YTD YTD CBD Central Jakarta South Jakarta Bogor Depok Tangerang Bekasi North Jakarta East Jakarta West Jakarta Source: Colliers International Indonesia - Research *CBD includes parts of South and Central Jakarta Source: Colliers International Indonesia - Research
A significant increase was also noted QoQ in the average rental rate in the BoDeTaBek area. The increasing rent has been helped by shopping centres that were able to maintain their occupancy. Among those shopping centres, adjusting the pegged rate was one way to increase rental rates, which climbed by 9.2% to IDR302,618 per sq m per month in 1Q 2014.
31 Research & Forecast Report | 1Q 2014 | Retail | Colliers International the end of 2013. Cibinong City Mall charges a higher maintenance Service Charge cost than existing shopping centers in Bogor. The average service charge for shopping centres in Bogor was IDR60,106 per sq m Average Service Charges in Jakarta and BoDeTaBek per month as of 1Q 2014. In the other two areas, malls belonging to well-known developers IDR 100,000 became the main contributors raising the average service charge. IDR 90,000 Shopping centres developed by Summarecon and Kawan Lama IDR 80,000 have helped to raise the average service charge in Tangerang by 14.7% QoQ, to IDR88,085 per sq m per month. Service charges in IDR 70,000 the Depok area were IDR56,675 per sq m per month and had the IDR 60,000 lowest growth of 2.9%.
IDR 50,000
IDR 40,000 IDR 30,000 Concluding Thought IDR 20,000 Competition among retailers to secure retail space in the CBD IDR 10,000 or other favourite locations is quite tough, highlighted by high IDR 0 occupancy levels experienced by shopping centers located in 2008 2009 2010 2011 2012 2013 2014 those areas. In contrast to that, shopping centers in non-prime YTD Jakarta BoDeTaBek areas or aged shopping centers have been struggling to secure new tenants, particularly when the occupancy is low. In this Source: Colliers International Indonesia - Research situation, tenants became more demanding of the landlords, like Adjustments in service charges continued into 1Q 2014. The asking for longer grace periods, particularly when the physical increase in service charges by 8.0% QoQ was the highest growth occupancy at the mall was low. Low occupancy potentially leads at least since 2012. This growth brought service charges to low turnover. to IDR95,397 per sq m per month as of 1Q 2014. A service charge In some newly launched shopping centers, to boost the physical increase in this quarter was supported by all classes of shopping occupancy, most of the time landlords are try to lure pre- centres, upper to middle-low class. Five shopping centres that are committed tenants to immediately open their stores. Another classified as upper-class have raised their service charges in the way to increase the occupancy level is by lowering the current range of 8-40% as of 1Q 2014. Two shopping centres located in a asking rental rate; this will possibly occur in highly competitive premium area in the CBD were the highest, charging IDR155,000 locations in North Jakarta. psm / month. Two prominent shopping centres in the Outside Among big, anchor-type retailers, the competition to win CBD also had significant increases QoQ. favourite locations will become tougher particularly because Higher growth was shown by middle- to middle-low class large spaces are not widely available. On the positive side, remote shopping centres in almost all Jakarta regions. At some shopping locations but benefiting from direct turnpike access will become centres, there was a very significant increase in service charges. more popular. Emerging areas, like Cikarang or Alam Sutera, Middle-class shopping centres boosted the average service will benefit from this. As good retail locations in Jakarta and charge with an increase of 3.1% QoQ. At middle- to low-class the surrounding areas are becoming scarce, growing second- shopping centers, the increase was largely supported by and third-tier cities in Indonesia will be opted for by expanding shopping centres that have been in operation for some years. retailers, to widen their coverage. The average service charge grew by 8.6%. The increasing service In the dynamic market where shopping centres have to be opened charges will lead to better services, safety and more comfortable with any trend, the retail market is becoming more competitive circulation inside and outside of the building. Such measures for landlords particularly for older malls. In the future, the retail are needed so that the long-operating shopping centres will be market will become more cautious towards operational costs. ready to compete with other, especially newer shopping centres. Not only will the green building concept become more attractive, The service charge in Greater Jakarta as of 1Q 2014 was IDR76,928 complying with some of the green concepts will also become per sq m per month. The Bekasi area became a major contributor more interesting for retailers, like al fresco dining, which reduces by growing 21.4% QoQ. Adjusting the pegged rate is also a way electricity consumptions. for some shopping centres in Bekasi, especially malls belonging to Lippo and Metropolitan group, to raise service charges to IDR76,069 per sq m per month. The average service charge also rose significantly by 23.5% in Bogor. However, this increase was mostly driven by a new mall that has been in operation since
32 Research & Forecast Report | 1Q 2014 | Retail | Colliers International Industrial Estate Sector Supply
The launching of a significant amount of land in the Bekasi area underlined the supply situation for the quarter. Delta Silicon introduced around 162 ha of saleable industrial land as part of Delta Silicon Phase 8. After Phase 7 was designated for commercial use, Phase 8 will provide more options for investors or industrialists that seeks sizeable industrial land in the Bekasi region. Not much available industrial land is immediately ready for purchase in Bekasi. The condition of limited supply has prevailed for some period in Bekasi and other hot industrial locations, which also drives the increase in land prices.
Around 180 ha of land (gross) will potentially come from MM2100 and Bekasi Fajar. These two industrial estates that abut each other are speeding up land construction and have delivered part of the land to the buyer. The Greenland International Industrial Centre (GIIC) and Jababeka are also focusing on expediting land construction.
Not as much land is available in KIIC as reported during 1Q 2014. In Karawang, only Kota Bukit Indah and Suryacipta have considerable land to be developed. With a remainder of less than 10 ha of land available in the first two phases, Suryacipta still has around 280 ha in the third phase, of which around 58% has been developed, leaving around 120 ha of undeveloped land. Likewise, Kota Bukit Indah still has around 30% undeveloped land from the total land planned for the second phase. This industrial estate still has raw land that can potentially be developed in the future.
In Serang, two active industrial estates, including Modern Cikande and KIEC, have a goodly amount of land to expand. Modern Cikande is currently hastening to develop about 100 ha as part of a total of 240 ha planned in Phase 5. Modern Cikande are rushing to develop this land because currently only around 21 ha are ready for sale from Phase 4. Likewise, KIEC that has around 200 ha for expansion, will deliver this in stages. With less than 20 ha available in the first and second phases, speeding up land construction in the subsequent phase is a priority.
In Tangerang, active industrial estates, like Millennium, has limited land of around 10 ha from the total 500 ha they have developed. A potential supply of another 500 ha waits until all matters clear up.
In Bogor, industrial land is really limited with only a few lots available to be developed at two operating industrial estates, i.e. CCIE and Sentul Industrial Estate. Thus far, there is no confirmation of further land expansion at these two estates.
33 Research & Forecast Report | 1Q 2014 | Industrial Estate | Colliers International In the midst of industrial land scarcity, there is still potential land to be developed from future industrial land. Some big property Demand groups, like Lippo, Jababeka, Agung Podomoro, Gajah Tunggal and a few others, are holding large land assets to be developed as industrial land. Lippo had started with KJIE that sold most of Meager sales activity highlighted the industrial market during the land to Toyota. the first quarter of this year. Total sales registered during the quarter were the lowest since 3Q 2009. The dampening sales This year, many industrial estates will focus on delivering trend continued in 1Q 2014. Total sales in this quarter were industrial land that they have sold to industries. At the same 90% lower than total sales in the previous quarter. Not only time, expansion is still needed for developers to maintain sales. quantitatively lower, qualitatively only seven industrial estates Land acquisition is one issue that takes most of the time, even reported transactions during the quarter, which was half of the when the land has been the part of the whole master plan. The total industrial estates recording sales in the previous quarter. current issue occurring in Karawang will be a big challenge for industrial developers. The Head of Regency in Karawang The best sales performer in this period is Jababeka, which has signalled that industrial land expansion will be suspended secured total land sales of 15 ha, the highest over the last two since Karawang will restore its position as the center for rice years. Together with Greenland International Industrial Center production. The Karawang Government also indicated that (GIIC), Delta Silicon, as well as a considerable amount of sales the existence of industrial activity has yet to maximize regional recorded by Bekasi Fajar, these four industrial estates located income for Karawang. in the same region, bolstered the position of Bekasi as highest contributor for this quarter’s industrial land sales. Limited industrial land supply will continue to remain a general issue at least up to next year (2015). Continuing enquiries for Jababeka sold most of the land to existing tenants that industrial land versus the limited stock of land on offer will expanded their operations, primarily from the warehousing and characterize the overall industrial market. Since 2011, land automotive industries. These sizeable transactions helped the scarcity has been a major problem for most industrial estates, overall performance of the industrial estate market this quarter. and the substantial surge in land demand is at the crux of this Also in the Bekasi region, GIIC sales this quarter were very much problem. It has been reported that, in certain industrial estates, underpinned by commercial land sales of around 5.2 ha. The potential buyers seeking industrial land come to the estate quite price of this commercial land is much higher than industrial frequently but there is no transaction because land is limited. In land. a landlord’s market such as this, developers like those located Delta Silicon has concluded pre-committed sales from the in Bekasi or Karawang continue to sell raw land at the price of sales of Phase 8 of around 5 ha. This industrial land was mainly ready-to-use land. Buyers are taking the position of acquiring absorbed by automotive related companies, warehousing and raw land at the current price anticipating a further increase when oil & gas companies. Likewise, Bekasi Fajar only sold two parcels land is offered in a ready-to-use condition. They are now willing of industrial land to warehousing and household companies. to buy raw land (at the ready-to-use price) and wait before the landlord delivers the land with all of the infrastructure. This year, Only negligible sales of around 1.5 ha were recorded in the several industrial developers will concentrate on finalizing and Karawang area from the sales of two pieces of land in KIIC to delivering the product that they have sold. automotive related companies from Japan. No other active industrial estates recorded transactions during the reviewed Distribution of Industrial Land in Six Regions quarter.
Millennium is the only estate in Tangerang that sold around 1 ha land to plastic companies and three warehouse units purchased by food and automotive related companies. Serang Jakarta Bogor 21% 10% 2% This quarter, again, the automotive industry dominated the Bekasi overall land sales. Logistics companies were also quite active in 26% buying land for warehouse expansions.
Karawang Tangerang 36% 5%
Source: Colliers International Indonesia - Research
34 Research & Forecast Report | 1Q 2014 | Industrial Estate | Colliers International Annual Industrial Land Sales Cumulative Supply, Demand and Take-up Rates
1400 10,000 100% 9,000 90% 1200 8,000 80%
1000 7,000 70% 6,000 60% 800 5,000 50% 4,000 40% hectares 600 3,000 30% 2,000 20% 400 1,000 10%
200 0 0% 2008 2009 2010 2011 2012 2013 1Q 0 2014 Cumulative Supply (ha) Cumulative Demand (ha) 2011 YTD 2013 2014 2012 2010 2009 2008 Take-up Rate (%)
Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research Land Sales Recorded During 1Q 2014 at Each Types of Activities Industries During 1Q 2014 Industrial Estate
Jababeka Others Greenland International Logistics/ 26% Industrial Centre Warehousing 27% Delta Silicon
Modern Cikande Oil & Gas Related KIIC 4% Steel-related Plastics Automotive 6% 34% Bekasi Fajar 3%
Millenium
0 2 4 6 8 10 12 14 16
hectares Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research
35 Research & Forecast Report | 1Q 2014 | Industrial Estate | Colliers International Industrial Land Greater Jakarta Industrial Land Prices $240 Prices and $210 $180
Maintenance Cost $150
$120 Land Price US D/ sq m $90 A general situation when limited supply occurs at the same time $60 as continued demand will lead to a climb in land price, albeit moderately and only at a few industrial estates. In the last three $30 quarters, the industrial market has signalled a weakening with limited transactions materializing since the second half of 2013. $0 Thus, this period, price increases are not as massive as in 2010 2008 2009 2010 2011 2012 2013 1Q - 2012. Nevertheless, in some hot market areas, prices have to 2014 Bogor Tangerang be adjusted because land scarcity is a fact while land inquiries continued to soar. Karawang Bekasi
Source: Colliers International Indonesia - Research There were four industrial estates in Tangerang, Bekasi and Serang that introduced new prices during the quarter. Maintenance Cost The Serang region recorded the highest jump by 15.1% QoQ. Bekasi registered only a 1.3% increase QoQ. Likewise, in It is rare to see service charge adjustments at three industrial Tangerang, land prices at Millenium increased moderately estates at the same time. This quarter, both MM2100 and Bekasi by 3.3% QoQ. The determinant factors (supply and demand Fajar in Bekasi introduced new operational costs of US$0.08 per performance) have kept land prices in forward motion at a few sq m per month. Likewise, Modern Cikande also announced an of industrial estates despite the slowing market. adjustment in maintenance cost to IDR400 per sq m per month.
Two industrial estates in Serang introduced new land prices. Mounting operational costs resulting from increasing minimum In this quarter alone, the market has witnessed price increases wages and electricity tariffs were the main reason behind the from an average of USD115.55 to 132.95 per sq m. Continuing adjusted maintenance costs. enquiries combined with the scarcity of industrial land in this In general, maintenance costs stood at the same level as last region has pushed developers to raise land prices while Modern quarter. Cikande, has a specific reason underlining the price climb, i.e. external factors like infrastructure improvement to ease the Greater Jakarta Industrial Maintenance Cost access between the estate and the turnpike. $0.09 Bekasi saw a modest percentage of increase in land prices, at 1.3% QoQ. This relatively small increase was due to the fact $0.08 that land prices in this area are already higher than in other $0.07 regions and most of the estates choose to maintain the current $0.06 high prices. Only Bekasi Fajar had new land prices during the $0.05 reviewed quarter. The Bekasi region continues to command the highest land prices compared to other regions. $0.04 $0.03 Overall, industrial land prices in the past year have been corrected $0.02 mainly due to exchange rate volatility with half of the operating US D/ sq m/ month industrial estates still charging in rupiah; the conversion to $0.01 US dollars (in order to present the price in the same currency) $0.00 makes the overall price somewhat weaker. In fact, industrial 2011 2013 2012 2010 2009 prices generally remain at the same level or increase, and very 2008 rarely go down. For industrial estates charging in US dollars, an 2014YTD adjustment was sometimes made to reduce instability in the Bogor Tangerang Karawang price. Bekasi Serang
Source: Colliers International Indonesia - Research
36 Research & Forecast Report | 1Q 2014 | Industrial Estate | Colliers International There are two things that impacted the sluggish sales, one is the Industrial Land Prices and Maintenance Costs* lack of ready to build industrial lots, which has been the main maintenance costs region Land price (per sq m) issue in the decline in sales and another factor is the market (per sq m per month) activity slowing down. Demand for industrial land has been lowest highest average lowest highest average quite active in only certain locations and therefore certain Bogor USD 120.0 USD 236.3 USD 178.2 USD 0.06 USD 0.06 USD 0.06 industrial locations. in Bekasi for example, are highly demanded Bekasi USD 185.7 USD 253.2 USD 208.8 USD 0.06 USD 0.08 USD 0.07 but with limited land stock. Tangerang USD 126.6 USD 168.8 USD 116.4 USD 0.03 USD 0.08 USD 0.06 Karawang USD 160.0 USD 200.0 USD 182.5 USD 0.05 USD 0.10 USD 0.07 The market is predicted to continue to weaken at least until mid- Serang USD 118.2 USD 147.7 USD 132.9 USD 0.03 USD 0.05 USD 0.04 2014. During this period and ahead, many industrial estates will *1USD = Rp 11,847 concentrate on delivering land parcels that are transacted before Source: Colliers International Indonesia - Research the land is ready. Land construction will characterize the market in 2014 in order to meet the schedule of completion. While committing to deliver ready to use industrial land this year, some developers are also focusing on expanding the subsequent phase of development next year. Thus, a substantial amount of Concluding Thought new industrial land is most likely to be available in 2015. A continued wave of land price increases will not take place at The industrial market situation during the reviewed quarter is no least in the short term. As mentioned earlier, some industrial better than in the previous quarter. The market is slowing down estates have reached their ideal price and will most probably highlighted by slack sales activity with only seven industrial catch up with the ideal operational cost. We also believe that estates reporting small transactions. In terms of the number of should the momentum of economic progress occur after a industrial estates involved in transactions, this was the lowest smooth leadership transition in the country, industrial market since 2008. activity should bounce back.
37 Research & Forecast Report | 1Q 2014 | Industrial Estate | Colliers International 38 Research & Forecast Report | 1Q 2014 | 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
Colliers International Indonesia World Trade Centre 10th & 14th floor Jalan Jenderal Sudirman Kav. 29 - 31 $2.1 Jakarta 12920 Indonesia billion in annual revenue TEL 62 21 521 1400
1.46 billion square feet under management
15,800 professionals and staff
About Colliers International
Colliers International is a global leader in commercial real estate services, with over 13,500 professionals operating out of more than 482 offices in 62 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second- most recognized commercial real estate firm in the world. colliers.com
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