Research & Forecast Report Accelerating success. “After a gloomy 4Q 2013, leasing and sales of office space Similar to the same period last year, no new office supply began to pick up momentum in 1Q 2014. Further, average entered the market in the CBD as of 1Q 2014. With no new office asking base rental rates in the CBD showed a growth of buildings beginning operations, the cumulative supply was still 8.6% that brought the average rent to IDR247,444 / sq 4.77 million sq m as of 1Q 2014. m / month. Similarly, asking base rents in US dollar- Despite no new supply, construction activity for office buildings denominated buildings moved upward slightly by 3.7% in the CBD was seen to continue progressing. Besides the q-o-q to USD35.91 / sq m/ month. The average occupancy buildings that were mentioned in previous reports, construction rate in the CBD stabilized at 96.5%. In terms of strata- for some new office buildings began to appear. At least five title office buildings, average asking prices also increased leading buildings will potentially become new icons in Jakarta, both in US dollars and in rupiah to USD4,750 / sq m and which include Thamrin Nine (in Jalan Thamrin), Astra Tower and World Trade Centre III (in Jalan Sudirman), PCPD Tower IDR45.9 million / sq m respectively.” (in the SCBD) and World Capital Tower (in Mega Kuningan). - Ferry Salanto, Associate Director | Research These five future high-rise buildings will be completed in 2017. A high-rise office building is also in planning and will be built at the Ciputra World 1 Complex. However, construction was not in progress as monitored during this quarter. Ciputra, as the developer, is currently starting construction of Ciputra World Office for Lease Office Tower 2, which is part of the existing Ciputra World Jakarta compound and is planned to be operational in 2015. An office Supply in the CBD building that is also projected to be operational in 2015 and has begun its construction is Satrio Tower. These office buildings will The CBD Office Cumulative Supply be part of the 700,000 sq m of projected total new supply in 2015. The CBD office market is still waiting for construction of several 8,000,000 office buildings that have been announced previously, including 7,000,000 Gran Rubina Tower 2 and Thamrin Twenty. Based on numbers, from 2014 to 2017, there will be 32 new office buildings in the CBD 6,000,000 with a total space of 2.21 million sq m. Sudirman will become the 5,000,000 most active region by contributing 11 projected office buildings (933,141 sq m). On the contrary, future supply in Thamrin will be 4,000,000 the smallest with only two office buildings. sq m 3,000,000 Despite having not been legalized, issues about increasing 2,000,000 building coverage and plot ratio area became the highly anticipated information for developers. This will be related to 1,000,000 strategic areas that are owned by developers, especially in the 0 CBD. This is because those areas can be developed with higher and larger office buildings. For the existing old and mid-rise 2011 buildings, this condition will present the option to demolish the 2013 2012 2010 2009 2008 2017F 2015F 2016F 2014F old buildings and re-build new ones, maximizing the plot ratio. 2014YTD At least two existing office buildings, located in Sudirman, and Existing Supply Annual Supply one office building in Setiabudi are planned for redevelopment. Source: Colliers International Indonesia - Research Future Supply in the CBD Based on Area In line with high demand, additional supply for office buildings will continue to record significant growth in 2015 and 2016. The supply of office buildings in the Outside CBD is projected to 2017F grow by 33% over the previous year with total space of around 385,000 sq m in 2015. Office buildings such as The Suites (in Pantai Indah Kapuk, North Jakarta), Menara Sentraya (in Blok 2016F M, South Jakarta) and St Moritz office tower (in Puri Indah, West Jakarta) are continuing their construction progress and will begin operations in 2015. 2015F Based on area, South Jakarta is still the main contributor of office supply in the Outside CBD. Of the 1.06 million sq m projected office supply from 2014 to 2017, 67.6% will be in South Jakarta 2014F and 75.5% of the 713,390 sq m total future supply in South Jakarta will be in the TB Simatupang area. 0 200,000 400,000 600,000 800,000 1,000,000 Future Supply in the Outside CBD Based on Area sq m Sudirman Thamrin Mega Kuningan 2017F Rasuna Said Satrio Gatot Subroto Source: Colliers International Indonesia - Research 2016F Supply in the Outside CBD Gedung Aneka Tambang 2, which is located in TB Simatupang 2015F (South Jakarta), was the only office building to begin operations in the Outside CBD as of 1Q 2014. This office building for lease brought 16,000 sq m of new additional supply and raised the 2014F cumulative supply to 2.29 million sq m. A total office supply for 2014 is projected to reach over 289,000 sq 0 100,000 200,000 300,000 400,000 500,000 m a historic high after a significant office supply in 2012. Based sq m on the construction progress, after Gedung Aneka Tambang 2, Wisma 77 Tower 2 and Green Kosmo Mansion will soon be ready Central Jakarta South Jakarta North Jakarta to begin operations. Based on marketing scheme, the majority or East Jakarta West Jakarta 63% of the projected annual supply in 2014 will be for strata-title sale. Source: Colliers International Indonesia - Research Outside CBD Office Cumulative Supply 7,000,000 6,000,000 5,000,000 4,000,000 sq m 3,000,000 2,000,000 1,000,000 0 2011 2013 2012 2010 2009 2008 2017F 2015F 2016F 2014F 2014YTD Existing Supply Annual Supply Source: Colliers International Indonesia - Research 2 Research & Forecast Report | 1Q 2014 | Office | Colliers International Supply in TB Simatupang Future Supply in TB Simatupang TB Simatupang Office Cumulative Supply 2017F 1,100,000 1,000,000 900,000 2016F 800,000 700,000 600,000 2015F sq m 500,000 400,000 300,000 2014F 200,000 100,000 0 100,000 200,000 300,000 400,000 500,000 0 sq m 2011 2013 2012 2010 2009 2008 2017F 2015F 2016F 2014F Outside CBD exclude TB Simatupang TB Simatupang 2014YTD Source: Colliers International Indonesia - Research Existing Supply Annual Supply Source: Colliers International Indonesia - Research As of 1Q 2014, the additional supply in Jakarta was only contributed by Gedung Aneka Tambang 2, which is in TB Simatupang. Despite the rapid growth and availability of infrastructure still being debated, this area is constantly evolving. As of 1Q 2014, 513,086 sq m of total space of offices has been in operation in TB Simatupang. By the end of 2014, TB Simatupang will see an additional supply of 219,637 sq m. This total projected supply in 2014 will be the largest since 1990 and even higher than the additional supply of office space in TB Simatupang from 2010 to 2013. However, we noted that no new office buildings have started construction in TB Simatupang in early 2014. All construction activities are carried out by office buildings that started construction last year. 3 Research & Forecast Report | 1Q 2014 | Office | Colliers International New Supply Pipeline PROJECTED OFFICE BUILDING PROJECTS NAME LOCATION SGA MARKETING SCHEME STATUS DEVELOPMENT COMPLETION CBD AREA 2014 Sinarmas MSIG Sudirman 75,000 For Lease Under Construction 2014 Lippo Kuningan Rasuna Said 30,500 For Lease Under Construction 2014 The Noble House Office Tower Mega Kuningan 45,000 For Lease Under Construction 2014 Gran Rubina Tower 1 Rasuna Said 31,438 For Sale Under Construction 2014 Convergence Rasuna Said 36,367 For Lease & For Sale Under Construction 2015 Ciputra World Jakarta 2 Satrio 70,000 For Lease & For Sale Under Construction 2015 International Financial Center 2 Sudirman 50,000 For Lease Under Construction 2015 AIA Center Sudirman 36,596 For Lease Under Construction 2015 Cemindo Tower Rasuna Said 60,995 For Lease Under Construction 2015 Sahid Sudirman Center Sudirman 138,500 For Lease & For Sale Under Construction 2015 Office Tower @ ST Regis Gatot Subroto 90,511 For Lease Under Construction 2015 Telkom Landmark Tower II Gatot Subroto 65,000 For Lease Under Construction 2015 Satrio Square Satrio 24,600 For Lease Under Construction 2015 Bahana Office Tower Mega Kuningan 50,000 For Lease Under Construction 2015 Satrio Tower Satrio 31,604 For Lease Under Construction 2015 Wisma Mulia 2 Gatot Subroto 80,000 For Lease Under Construction 2015 Lippo Thamrin Office Tower Thamrin 16,500 For Sale In Planning 2016 Mangkuluhur Tower Gatot Subroto 53,000 For Lease & For Sale Under Construction 2016 Menara Palma 2 Rasuna Said 50,000 For Lease Under Construction 2016 Gran Rubina Tower 2 Rasuna Said 32,000 For Sale Under Planning 2016 Centennial Tower Gatot Subroto 100,000 For Sale Under Construction 2016 Icon Tower Sudirman 72,500 For Lease Under Construction 2016 The Tower Gatot Subroto 56,492 For Sale Under Construction 2017 SSI Tower Rasuna Said 100,000 For Lease In Planning 2017 Prosperity Tower @ Distict 8 Sudirman 71,545 For Sale Under Construction 2017 World Capital Tower Mega Kuningan 72,000 For Sale Under Construction 2017 World Trade Center 3 Sudirman 70,000 For Lease Under Construction 2017 Sequis Life Tower 2 Sudirman 80,000 For Lease Under Construction 2017 Treasury Tower @ District 8 Sudirman 139,000 For Sale Under Construction 2017 Chitaland Satrio 100,000 For Lease In Planning 2017 Gayanti City Gatot Subroto 25,000 For Lease In Planning 2017 Astra Tower Sudirman 100,000 For Lease Under Construction 2017 Thamrin Nine Thamrin 45,000 For Sale Under