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.