Research & Forecast Report Jakarta | Apartment Q1 2016

Accelerating success.

Apartment Sector “After having experienced dismal sales last year which were partially salvaged due to a lower than expected supply, the first quarter of 2016 witnessed 6,013 new apartment units coming from the completion of six projects. End-user buyers continued to absorb unsold units of existing projects reflecting a moderate increase in the take-up rate to 96.2% for such projects. However, sales of under construction projects dropped 1.7% QoQ to 67% this quarter. The average apartment price in Jakarta increased by 1.1% QoQ which was the lowest increment since Q3 2012. The average asking price in Jakarta was up slightly from IDR30.5 million last quarter to IDR30.8 million this quarter.”

completed projects this quarter, including Metro Park Residence, Kemang Village (Bloomington Tower) and Green Bay Pluit (Sea View) were previously expected to be completed in 2015. Including the newly completed projects, the total of existing apartments in Jakarta has reached 162,920 units, increasing by 3.8% compared to the previous quarter and 21.96% YoY. The majority of unit supply this quarter were in West Jakarta that contributed 44.1% from the completions of Metro Park Residence and Madison Park, followed by Green Bay Pluit (Sea View) in North Jakarta with 34.5%. All in all, North Jakarta dominates the total existing supply with 22.6%, followed by West Jakarta and South Jakarta, with 21.8 and 19.9%, respectively.

Apartment for Strata-title

We revised our supply projections for 2016 - 2019 in the light of slow construction progress, delayed ground-breaking schedules and even development permit issues. We expect that the total supply during 2016 - 2018 will reach 75,083 units, down mildly by 3.2% compared to the previous projection of 77,549 units. Of the total 75,083 units, 26,583 units will be completed in 2016; 24,447 in 2017; and 24,053 in 2018.

Supply After a dismal period last year with supply projections off the mark, the first quarter of 2016 witnessed 6,013 units of additional supply coming from the completion of six projects. This figure is almost double the supply in the same quarter last year and represents 22.6% of the total projected supply of 2016. Three of six newly

Newly Completed Apartment Projects During Q1 2016 Name of development

location

region

developer

units

Metro Park Residence

Kebon Jeruk

West Jakarta

Agung Podomoro Group

1,451

Madison Park

Tanjung Duren

West Jakarta

Agung Podomoro Group

1,200

Kemang Village (The Bloomington)

Jl. Pangeran Antasari

South Jakarta

Lippo Karawaci

Four Winds

Jl. Permata Hijau Raya No.1

South Jakarta

PT. Tri Tirta Permata

Green Bay Pluit (Sea View)

Jl. Pluit Karang Ayu

North Jakarta

Agung Podomoro Group

Bassura City (Tower Dahlia)

Jl. Basuki Rahmat

East Jakarta

Synthesis Development

150 140 2,072 1,000 Total

6,013

estimated price (idr/sq m)*

total Units

Source: Colliers International Indonesia - Research

Newly Introduced/Launched Projects During Q1 2016 Name of development

LOCATION

region

Expected completion time

The Residences at The St. Regis Jakarta

Jl. H.R Rasuna Said

CBD

2019

NA

164

Arandra Residence (phase 1)

Jl. Cempaka Putih Raya No.1

Central Jakarta

2020

23 million

368

Fatmawati City Center (Victoria Tower)

Fatmawati

South Jakarta

2020

36 million

622

Total

1,154

*Exclude VAT Source: Colliers International Indonesia - Research

Location Distribution (Q1 2016)

of

Existing

West Jakarta 22.4%

Apartments

CBD 14.4%

Central Jakarta 13.5%

East Jakarta 7.5%

South Jakarta 19.8%

North Jakarta 22.4% Source: Colliers International Indonesia - Research

January - March 2016 remained a quiet quarter with only three projects being introduced or launched. This represents only one-third of the amount in the same period of 2015. The recent declining sales performance has changed developers’ standpoint to focus on the selling out of unsold units rather than launching new products. Currently, the total number at new projects is 1,154 units expected to be completed in 2019 - 2020, ranging from the middle to luxury segments.

One of the newly launched projects is The Residences at The St. Regis Jakarta situated at the former location of the Four Seasons Hotel Jakarta for which Rajawali Group, as the landlord, has reached a management agreement with Starwood Hotels & Resorts Worldwide. As typical luxury apartments, The Residences apartments will be flanked by The St. Regis Hotel tower featuring a minimum of three-bedroom units ranging from 355 to 373 sq m (3 BR), 750 sq m (4 BR) and 1,250 sq m (Sky Palace). Another future apartment project is Arandra Residence, (previously the Sentosa Residence project and acquired by Gama Land from Bahama Group). This project, which will be located in the Cempaka Putih area, Central Jakarta, consists of five towers, with the first two towers (first phase) totalling 384 one-bedroom to three-bedroom units. As of February 2016, they still offer a Purchase Order Number or Nomor Urut Pembelian (NUP) with an average asking price of IDR23 million / sq m. In South Jakarta, Fatmawati City Center launched another tower, called Victoria Tower, which is expected to be completed in the next four years. More developers are becoming pragmatic over the current condition in which the market has reached a plateau. This is reflected in the limited number of projects being introduced or launched during the quarter. In general, apartment consumers still have a wait-and-see attitude. Despite generally declining apartment sales last year, however, the low to middle market segment saw better sales YoY last year, suggesting the idea that this market is widely acceptable even during strenuous times. The DKI Jakarta, on the other hand, focuses on sprucing up slum areas and converting them into low-cost apartments affordable by workers as well as widening the public, green, open space area.

New Pipeline Apartment name

location

region

developer

#units

Status

2016 The Grove (Empyreal + Masterpiece)

Jl. HR Rasuna Said

CBD

Bakrieland Development

438

Under Construction

The Residence (CWJ 2)

Jl. Prof Dr Satrio Kav 6, Kuningan

CBD

Ciputra Development

119

Under Construction

The Orchad Satrio (CWJ 2)

Jl. Prof Dr Satrio Kav 6, Kuningan

T - Plaza Residence (Tower A)

Jl. Penjernihan I Kav.1 Pejompongan

CBD

Ciputra Development

349

Under Construction

Central Jakarta

PT. Prima Kencana

307 Under Construction

Elpis Residence

Gunung Sahari

Central Jakarta

Sioeng Group

790 Under Construction

The Green Pramuka (Tower Orchid)

Jl. Jenderal Ahmad Yani

Central Jakarta

PT Duta Paramindo

1,000 Under Construction

The Green Pramuka (Tower Penelope)

Jl. Jenderal Ahmad Yani

Central Jakarta

PT Duta Paramindo

1,000 Under Construction

The Green Pramuka (Tower Scarlet)

Jl. Jenderal Ahmad Yani

Central Jakarta

PT Duta Paramindo

1,000 Under Construction

The H Residence Kemayoran (Amethyst)

Jl. Rajawali Selatan

Central Jakarta

Hutama Karya Realtindo

800 Under Construction

The Royal Springhill (Bouvardia Tower)

Jl. Spring Hill Residence Kemayoran

Central Jakarta

Springhill Golf Group

120 Under Construction

The Royal Springhill (Bulgari Tower)

Jl. Spring Hill Residence Kemayoran

Central Jakarta

Springhill Golf Group

192

Under Construction

Casablanca East Residence (2 Towers)

Jl. Pahlawan Revolusi

East Jakarta

Binakarya Propertindo Group

1,904

Under Construction

Bassura City (Tower Edelweiss)

Jl. Basuki Rahmat

East Jakarta

Synthesis Development

1,000 Under Construction

Bassura City (Tower Dahlia)

Jl. Basuki Rahmat

East Jakarta

Synthesis Development

1,000 Built continued

2

Research & Forecast Report | Q1 2016 | Apartment | Colliers International

Apartment name

location

region

developer

#units

Status continuation

Bassura City (Tower Cattleya)

Jl. Basuki Rahmat

East Jakarta

Synthesis Development

600 Under Construction

Bassura City (Tower Alamanda)

Jl. Basuki Rahmat

East Jakarta

Synthesis Development

600 Under Construction

Sentra Timur Residence (Tower Tosca)

Pulo Gebang

East Jakarta

Bakrieland Development

133

Teluk Intan (Tower Saphire)

Jl. Teluk Gong

North Jakarta

PT Trika Bumi Pertiwi

Pluit Seaview (Tower Belize)

Pluit

North Jakarta

Binakarya Propertindo Group

Green Bay Pluit (Sea View)

Jl. Pluit Karang Ayu

North Jakarta

Agung Podomoro Group

Senopati Suites 2

Jl. Senopati

South Jakarta

Mahkota Asia Graha

81

Under Construction

LA City Apartment (Tower A)

Jl. Raya Lenteng Agung, Jagakarsa

South Jakarta

Pancanaka Samaktha

980

Under Construction

Nine Residence

Warung Buncit

South Jakarta

Lippo Karawaci

246

Under Construction

La Venue - North Tower

Jl. Pasar Minggu

South Jakarta

PT Bintang Rajawali (Sinar Mas Group)

253

Under Construction

Kemang Village (The Bloomington)

Jl. P Antasari

South Jakarta

Lippo Karawaci

150

Built

Senopati Suites 3

Jl. Senopati

South Jakarta

Mahkota Asia Graha

1 Park Avenue (3 Towers)

Jl. KHM Syafi'I Hadzami (terusan gandaria)

South Jakarta

Intiland

Izzara Apartment (South and North Tower)

TB. Simatupang

South Jakarta

Grage Group

542

Under Construction

Apartment Pejaten Park Residence

Jl. Warung Buncit Raya No.21

South Jakarta

Bahama Group

560

Under Construction

Four Winds

Jl. Permata Hijau Raya No.1

South Jakarta

PT. Tri Tirta Permata

140

Built

Kebayoran Icon

Jl. Ciledug Raya

South Jakarta

Tamara Land

256

Under Construction

One Casablanca Residence

Jl. Pal Batu

South Jakarta

Forza Land

215

Under Construction

Grand Dhika Mansion Pejaten (Sector 1)

Jl. Siaga Raya

South Jakarta

Adhi Persada Property

44

Under Construction

Woodland Park (Mahogany Tower)

Jl. Pahlawan Kalibata

South Jakarta

PT. Pardika Wisthi Sarana

218

Under Construction

St Moritz (The New Ambassador Suite Tower)

Jl. Puri Indah Kembangan

West Jakarta

Lippo Karawaci

200 Under Construction

Metro Park Residence

Kebon Jeruk

West Jakarta

Agung Podomoro Group

1,451

St. Moritz (New Presidential Tower)

Jl. Puri Indah

West Jakarta

Lippo Karawaci

The Nest Apartment

Jl. Raden Saleh Raya, Meruya Utara

West Jakarta

PT. Karya Cipta Sukses Selaras

1,100 Under Construction

Green Park View (Tower Gardenia)

Jl. Daan Mogot

West Jakarta

PT. Inten Cipta Sejati, Cempaka Group

1,200 Under Construction

Belmont Residence (TowerAthena)

Jl. Meruya Ilir

West Jakarta

Gapura Prima

193

Puri Mansion Apartment (Tower Amethyst)

Jl. Lingkar Luar Barat, Puri Kembangan

West Jakarta

Agung Sedayu Group

900 Under Construction

Madison Park

Tanjung Duren

West Jakarta

Agung Podomoro Group

19 Avenue Apartment (Tower A)

Daan Mogot

West Jakarta

Margahayu Land

Paradise Mansion (2 Towers)

Jl. Paradise Boulevard Selatan

West Jakarta

Palm Group

Sudirman Suites

Jl. Sudirman

CBD

Pikko Group

380

Under Construction

Casa Domaine

Jl. Jend. Sudirman Kav 1

CBD

Lyman Group

186

Under Construction

Verde Two (Tower East)

Jl. Rasuna Said

CBD

Farpoint Realty

182

Under Construction

Anandamaya Residences (3 towers)

Jl. Jend Sudirman

CBD

Hongkong Land

500 Under Construction

Menteng Park

Jl. Cikini Raya No.79

Central Jakarta

Agung Sedayu Group

756

Under Construction

1,100 Under Construction 300 Under Construction 2,072 Built

54

Under Construction

279 Under Construction

159

Built Under Construction

Under Construction

1,200 Built 338

Under Construction

1,000 Under Construction

2017

Under Construction continued

3

Research & Forecast Report | Q1 2016 | Apartment | Colliers International

Apartment name

location

region

developer

#units

Status continuation

Holland Village

Cempaka Putih

Central Jakarta

Lippo Karawaci

400 Under Construction

Royal Suites

Kemayoran

Central Jakarta

Springhill Golf Group

The Green Pramuka (Tower Nerine)

Jl. Jenderal Ahmad Yani

Central Jakarta

PT Duta Paramindo

Green Signature Apartment

Jl. MT. Haryono

East Jakarta

KSO Fortuna Indonesia (Pikko)

Podomoro Park

Jl. I Gusti Ngurah Rai, Klender

East Jakarta

Agung Podomoro Group

Sentra Timur Residence (Tower Brown)

Pulo Gebang

East Jakarta

Bakrieland Development

Bassura City (Tower Jasmine)

Jl. Basuki Rahmat

East Jakarta

Synthesis Development

2,000 Under Construction

Bassura City (Tower Heliconia)

Jl. Basuki Rahmat

East Jakarta

Synthesis Development

700 Under Construction

Pluit Seaview (Tower Ibiza)

Pluit

North Jakarta

Binakarya Propertindo Group

500 Under Construction

Pluit Seaview (Tower Bahama)

Pluit

North Jakarta

Binakarya Propertindo Group

650

Under Construction

Regatta London Tower

Jl. Pantai Mutiara

North Jakarta

Intiland

186

Under Construction

Pakubuwono Terrace Grand Tower

Kebayoran Lama

South Jakarta

PT. Selaras Mitra Sejati

435

Under Construction

District 8 (Tower Eternity)

Jl. Senopati

South Jakarta

Agung Sedayu Group

400 Under Construction

District 8 (Tower Infinity)

Jl. Senopati

South Jakarta

Agung Sedayu Group

280 Under Construction

Lexington Rersidence

Pondok Pinang

South Jakarta

Cowell Development

275 Under Construction

The Aspen Peak at Admiralty (Tower C)

Jl. Fatmawati

South Jakarta

PT. Harmas Jalasveva

322 Under Construction

Sapphire Residence

Lebak Bulus

South Jakarta

PT. Bangun Lintas Shafira

La Terrasse

Jl. Deplu Raya No.12

South Jakarta

Cowell Development

111

Under Construction

The Foresque

Pasar Minggu, Ragunan

South Jakarta

PT Griya Karunia Sejahtera (Binakarya Propertindo Group)

660

Under Construction

The Langham Residences

Senopati

South Jakarta

Agung Sedayu Group

57

Under Construction

Antasari Heights (One Otium Residence)

Jl. Pangeran Antasari No.8

South Jakarta

PT Radinka Quatro Land

360

Under Construction

The Batik @ Pejaten

Jl. Siaga Raya

South Jakarta

Alam Kencana

137

In Planning

La Foret Vivante

Jl. Limo, Permata Hijau

South Jakarta

PT. Mahkota Properti Indo Permata

253

Under Construction

Selatan 8 (Tower Sultan)

Kebayoran Lama

South Jakarta

Karya Cipta Group

336

Under Construction

The Hamilton

Jl. KHM Syafi'I Hadzami

South Jakarta

Intiland

112

Under Construction

Puri Orchad (3 Towers)

Jl Raya Adicipta

West Jakarta

PT Adicipta Graha Kencana (Serenity Group)

Maqna Residence

Jl. Meruya Ilir No. 88

West Jakarta

PT. Graha Meruya

312

Under Construction

Veranda

Jl. Pesanggrahan Raya, Kembangan

West Jakarta

PT. Mutirara Puri Indah

174

Under Construction

Vittoria Residence (3 towers)

Jl. Daan Mogot

West Jakarta

PT. Duta Indah Kencana

Wang Residence

Jl. Panjang No 18

West Jakarta

PT. Citicon Propertindo

Taman Anggrek Residence (6 towers)

Tanjung Duren

West Jakarta

Agung Sedayu

19 Avenue Apartment (Tower B)

Daan Mogot

West Jakarta

Margahayu Land

416

Under Construction

Sycamore Suite

Puri Botanical, Joglo

West Jakarta

Jakarta Setiabudi International

125

In Planning

450

Under Construction

1,000 Under Construction 800 Under Construction 3,000 In Planning 605

Under Construction

37 In Planning

3,000 Under Construction

1,100 Under Construction 250 Under Construction 3,000 Under Construction

continued

4

Research & Forecast Report | Q1 2016 | Apartment | Colliers International

Apartment name

location

region

developer

#units

Status continuation

2018 Gayanti City (2 Towers)

Jl. Gatot Subroto

CBD

PT Buana Pasifik International

318

Under Construction

Verde Two (Tower West)

Jl. Rasuna Said

CBD

Lavie

Jl. Denpasar Raya

CBD

Farpoint Realty

152

Under Construction

Wilsor Group

302 Under Construction

South Hill

Jl. Denpasar Raya

CBD

KSO Duta Regency Karunia Metropolitan Kuningan Properti

611

Le' Parc

Jl. Thamrin

CBD

PT. Putragaya Wahana

100 Under Construction

Regent Residences (tower 1)

Semanggi

CBD

PT. Kencana Graha Global

100 Under Construction

The Hundred Residence

Mega Kuningan

CBD

PT. Farpoint Realty Indoneasia

100 Under Construction

The Elements Epicentrum (2 Towers)

Rasuna Said

CBD

Sinar Mas Land

372 Under Construction

Capitol Suites

Jl. Prapatan Raya

Central Jakarta

The Capitol Group

327 Under Construction

Holland Village (Phase II)

Cempaka Putih

Central Jakarta

Lippo Karawaci

230 Under Construction

Signature Park Grande

Jl. MT. Haryono

East Jakarta

KSO Fortuna Indonesia (Pikko)

Sahid Garden Residence

Ciracas

East Jakarta

Sahid Group

476

In Planning

Gold Coast Apartment (Atlantic Tower)

Pantai Indah Kapuk

North Jakarta

Agung Sedayu

568

Under Construction

Regatta Apartment (Tower New York)

Pantai Mutiara

North Jakarta

Intiland

186

Under Construction

Sedayu City (Tower Melbourne)

Jl. Pegangsaan Dua Raya

North Jakarta

Agung Sedayu

912

In Planning

Sedayu City (Tower Darwin)

Jl. Pegangsaan Dua Raya

North Jakarta

Agung Sedayu

936

In Planning

The Kensington Royal Suites (4 Towers)

Kelapa Gading

North Jakarta

Summarecon

790 Under Construction

Gold Coast Apartment (Bahama Tower)

Pantai Indah Kapuk

North Jakarta

Agung Sedayu

600 Under Construction

Gold Coast Apartment (Carribean Tower)

Pantai Indah Kapuk

North Jakarta

Agung Sedayu

600 Under Construction

Gold Coast Apartment (Honolulu Tower)

Pantai Indah Kapuk

North Jakarta

Agung Sedayu

600 Under Construction

Grand Marina Ancol

Ancol

North Jakarta

PT. Bangun Setia Cipta (Jaya Ancol)

672 In Planning

Bellevue Place

MT Haryono, Tebet

South Jakarta

Gapura Prima

240 Under Construction

The Aspen Peak at Admiralty (Tower D)

Jl. Fatmawati

South Jakarta

PT. Harmas Jalasveva

322 In Planning

Casa Grande Residence 2 (Tower Angelo)

Jl. Casablanca

South Jakarta

Pakuwon Group

350

Under Construction

Casa Grande Residence 2 (Tower Bella)

Jl. Casablanca

South Jakarta

Pakuwon Group

350

Under Construction

Casa Grande Residence 2 (Tower Chianti)

Jl. Casablanca

South Jakarta

Pakuwon Group

350

Under Construction

Pondok Indah Residences (3 Towers)

Pondok Indah

South Jakarta

Metro Pondok Indah

880

Under Construction

Selatan 8 (Tower Prabu)

Jl. Raya Ulujami

South Jakarta

Karya Cipta Group

344

Under Construction

45 Antasari (2 Tower)

Antasari

South Jakarta

Cowell Development

1,924

Under Construction

Arzuria Apartment

Jl. Tendean

South Jakarta

Tolaram Group

210 Under Construction

Pakubuwono Spring (2 towers)

Jl. Teuku Nyak Arief No.9

South Jakarta

PT. Simprug Mahkota Indah (Agung Podomoro Group)

545

Under Construction

Branz Simatupang (2 towers)

TB. Simatupang

South Jakarta

Tokyuland

381

Under Construction

Synthesis Residence Kemang (3 towers)

Jl. Ampera Raya No.17

South Jakarta

PT. Synthesis Development

Gianetti Apartment

Jl. Kebon Jeruk Raya, Kemanggisan

West Jakarta

Bangun Investa Graha

500 Under Construction

Gallery West

Jl. Panjang No 5

West Jakarta

AKR

280 Under Construction

Ciputra International Puri Indah (Tower Amsterdam)

Jl. Lingkar Luar Barat

West Jakarta

Ciputra

412

Under Construction

1,100 Under Construction

1,100 Under Construction

Under Construction continued

5

Research & Forecast Report | Q1 2016 | Apartment | Colliers International

Apartment name

location

region

developer

#units

Status continuation

Grand Madison Park

Tanjung Duren

West Jakarta

Agung Podomoro Group

Under Construction

Citra Lake Suites (Tower Rosewood)

Jl. Raya Kresek

West Jakarta

Ciputra Group

104

Under Construction

Citra Lake Suites (Tower Greenwood)

Jl. Raya Kresek

West Jakarta

Ciputra Group

126

Under Construction

Citra Lake Suites (Tower Oakwood)

Jl. Raya Kresek

West Jakarta

Ciputra Group

117

In Planning

Citra Lake Suites (Tower Sherwood)

Jl. Raya Kresek

West Jakarta

Ciputra Group

122 In Planning

Aerium Taman Permata Buana (2 towers)

Taman Permata Buana

West Jakarta

Sinar Mas Land and Itochu

491

In Planning

Ciputra International Puri Indah (Tower Barcelona)

Jl. Lingkar Luar Barat

West Jakarta

Ciputra

335

Under Construction

Puri Mansion Apartment (Tower Crystal)

Jl. Lingkar Luar Barat, Puri Kembangan

West Jakarta

Agung Sedayu Group

700 Under Construction

West Vista (2 towers)

Jl. Lingkar Luar Barat No.8, Duri Kosambi

West Jakarta

PT. Harapan Global Niaga

Citra Living Apartment (Somerset Tower)

Jl. Citra 7, Kalideres

West Jakarta

Citra Living Apartment (Orchad Tower)

Jl. Citra 7, Kalideres

West Jakarta

2,840

Under Construction

Citra Mitra Graha KSO

312

Under Construction

Citra Mitra Graha KSO

312

In Planning

Source: Colliers International Indonesia - Research

Demand The Jakarta apartment market has yet to change from the last quarter of 2015 and is still characterised by a slow take-up rate as a result of softening demand, particularly from investment buyers. In spite of the fact that the developers have offered attractive marketing gimmicks and flexible payment methods, demand has yet to grow noticeably. On the other hand, the existing apartment market performed fairly well QoQ as it seemed to be dominated by end-users for their own occupation. Overall, the average take-up rate for both existing and underconstruction apartments experienced a modest increase (less than 1%) compared to the previous quarter, from 85.4 to 86.2%.

Quarterly Take-up Rate Performance of Existing and Under-construction Apartments 100% 90% 80% 70% 60% 50% 40%

Take-up Rate Changes of Existing and Underconstruction Projects Q1 2015

Q4 2015

Q1 2016

Existing Projects

95.7%

94.9%

96.2%

1.3%

0.6%

Under-construction Projects

68.5%

68.7%

67.0%

-1.7%

-1.5%

Average

85.5%

85.4%

86.2%

0.8%

0.7%

20% 10%

The QoQ take-up rate figures for the CBD and other non-prime areas experienced somewhat positive performance, while South Jakarta continued to see a downward trend due to massive additional supply, as this area has been the main location for apartment development. Since there is a limited number of newly launched apartments in the CBD, the market continues to absorb the unsold units from the existing under-construction projects, while the non-prime areas provide more apartment projects with affordable prices, thus capturing a wider market segment. The South Jakarta area recorded a declining take-up rate along with a continued increase in new apartment projects with higher prices, particularly projects having good building specifications located in areas with sound infrastructure.

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014

Q4 2013

Q3 2013

Q2 2013

Q1 2013

Existing Projects

in

Different

Locations

Q4 2015

Q1 2016

QoQ

YoY

95.6%

93.8%

94.0%

0.2%

-1.6%

South Jakarta

88.9%

86.6%

85.3%

-1.2%

-3.5%

Non-prime area

82.6%

83.7%

85.4%

1.7%

2.8%

Source: Colliers International Indonesia - Research

Under Construction Projects

Source: Colliers International Indonesia - Research

6

Changes Q1 2015

CBD

0%

YoY

Source: Colliers International Indonesia - Research

Take-up Rate in Jakarta

30%

QoQ

Research & Forecast Report | Q1 2016 | Apartment | Colliers International

In an attempt to rescue the property sector, the government has undertaken several measures, such as easing individual foreign ownership, giving tax incentives to Indonesian REITs, increasing Loan to Value ratio and increasing the threshold for the tax on luxury property. Since early this year, Bank Indonesia has gradually cut the benchmark rate by 75 basis points (bps) to 6.75%, which will help spur growth in the property industry. Along with the announcement, the Financial Services Authority (OJK) and Bank Indonesia also targeted the lending rate at below 10%. Those measures are a positive catalyst for the property sector, in the long run, particularly for the apartment market. Nevertheless, buyers may further delay their planned apartment purchases in the hope of lower lending rates in the future.

Average Prices in Three Different Areas Q1 2015

Q1 2016

QoQ

YoY

CBD

IDR44,135,684

IDR47,250,375

IDR47,816,125

1.2%

8.3%

South Jakarta

IDR32,713,013

IDR35,430,002

IDR36,028,156

1.7%

10.1%

Non-prime Area

IDR21,285,155

IDR22,947,092

IDR23,147,612

0.9%

8.8%

Average

IDR28,442,570

IDR30,507,768

IDR30,840,637

1.1%

8.4%

Source: Colliers International Indonesia - Research

Another potential catalyst from the government to boost the property sector is the Tax Amnesty, despite the fact that, thus far, the House of Representative (DPR) has postponed discussion of the draft bill because they need more time to study it comprehensively. The Tax Amnesty scheme is likely to have a positive impact on the property market as it could increase capital inflow from repatriated funds that will be utilised to boost economic growth through higher capital expenditure and infrastructure spending. All in all, the property sector shows more confidence as the government continues to support the sector with regulations and policies. Nevertheless, it may take some time for the property market to benefit from the policies. Until all issues are cleared, we might not see any significant recovery in apartment demand.

Asking Price Overall, the asking prices of apartments in Jakarta have been flat. In the current soft market, developers tend to set the price carefully in order to maintain sales activity and to attract potential buyers. Landlords are generally still implementing traditional marketing methods, like offering incentives such as big discounts and flexible payments for serious buyers. Moreover, most developers offer 36 monthly instalments as their default plan, then come up with a raft of discounts, reducing the price as much as 20% through other promotions, without having to overtly slash the price. This kind of strategy is becoming popular as weak demand coincides with a surge in supply at new projects that were introduced or launched in 2015. As of Q1 2016, the average apartment price in Jakarta increased by 1.1% QoQ, the lowest increment since Q3 2012 at 0.7%. South Jakarta recorded the highest QoQ increase of 1.7%, followed by the CBD and Non-prime area (including West Jakarta, East Jakarta, North Jakarta and Central Jakarta) with 1.2 and 0.9%, respectively. The reason that the apartment prices in Jakarta never drop is that the market is mainly driven by investors rather than end-users. Thus, if the apartment prices remain flat for a long period, investors will start losing interest, as they are in the market looking for a good return on their investment.

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Q4 2015

Research & Forecast Report | Q1 2016 | Apartment | Colliers International

Apartment For Lease

expand their presence in Jakarta in the next four years with the development of Fraser Suites Jakarta at Ciputra World 2 (end of 2016), Fraser Residence Serenia Hills (2018), Capri by Fraser Simatupang (2018) and Fraser Suites Kebon Melati (2019).

Supply In the first quarter of 2016, there was only one serviced apartment project being completed, namely Fraser Place Setiabudi Jakarta. This new serviced apartment building features 151 one-bedroom to three-bedroom units. With the opening of this project, the total supply of apartments for lease increased by 1.7% to 8,780 units. This newly operating apartment building continues to demonstrate that South Jakarta remains a favourite location (35%) for serviced apartments after the CBD (44.6%) Fraser Place Setiabudi is the third serviced apartment project managed by Frasers Hospitality after Fraser Residence Jakarta and Fraser Residence Menteng, which have been operating since 2011 and 2014, respectively. Frasers Hospitality will further

We have identified a total of six new serviced apartment developments in the next three years that will be located in the CBD area, South Jakarta and Central Jakarta. All of these will be operated by renowned global brands, such as Frasers Hospitality, Ascott Limited and Oakwood. In fact, although the competition among serviced apartments has become tougher over the past two years, Jakarta still presents an opportunity for hospitalityand tourism-related businesses to grow, in particular due to the ASEAN Economic Community (AEC), which may open more opportunities for foreign investment, foreign capital and skilled labour coming to Jakarta.

Serviced Apartment Supply Pipeline in Jakarta Apartment name

location

region

developer

#units

Status

2016 Fraser Suites at Ciputra World Jakarta 2

Jl. Prof. Dr. Satrio

CBD

Ciputra

200 Under Construction

Oakwood at District 8 Senopati

Jl. Senopati

South Jakarta

Agung Sedayu Group

180

Fraser Residence Serenia Hills

Jl. Lebak Bulus

South Jakarta

TBA*

TBA*

In Planning

Capri by Fraser Simatupang

Jl. TB Simatupang

South Jakarta

TBA*

TBA*

In Planning

Fraser Suites Kebon Melati

Jl. Kebon Melati

Central Jakarta

TBA*

TBA*

In Planning

Ascott Menteng Jakarta

Jl. Menteng

Central Jakarta

TBA*

150

In Planning

Under Construction

2018

2019

*TBA: to be announced Source: Colliers International Indonesia - Research

Occupancy Rate In general, activity of apartments for lease in Jakarta remains weak in the first quarter of 2016. Dealing with increased competition from individually-owned apartments and the shrinkage in the number of expatriate arrivals is a double whammy, making it harder for vacant units to be absorbed. The problem is also compounded by a less than optimistic outlook for particular industries, such as electronics, as well as the oil and gas sector, as some of them have announced layoffs or even closed business operations in Indonesia. The average occupancy rate fell from 73.6% in Q4 2015 to around 71.9%. In terms of type, serviced apartments experienced an occupancy decrease of 4% compared to the previous quarter and 6.7% YoY, while non-serviced apartments had a relatively more stable performance of about 77%. The occupancy level in the CBD area experienced a significant drop by 3.7% due to the absence of new tenants together with low occupancy at the newly operating serviced apartments, Fraser Palace Setiabudi.

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Occupancy Rates Changes of Apartment for Lease (by Type) Q1 2015

Q4 2015

Q1 2016

QoQ

YoY

Non-serviced

77.6%

77.3%

77.0%

-0.3%

-0.7%

Serviced

69.3%

66.6%

59.6%

-7.0%

-9.7%

Source: Colliers International Indonesia - Research

Occupancy Rates in Different Locations in Jakarta Q1 2015

Q4 2015

Q1 2016

CBD

80.0%

78.2%

71.5%

South Jakarta

76.5%

73.2%

72.0%

-1.2%

-4.5%

Non-prime area

69.8%

69.9%

69.6%

-0.3%

-0.2%

Source: Colliers International Indonesia - Research

Research & Forecast Report | Q1 2016 | Apartment | Colliers International

QoQ

YoY

-6.7%

-8.5%

Demand continued to be suppressed due to concerns about the economy, business uncertainties and tightened corporate housing budgets. Upscale serviced apartments, which are typically dominated by larger family type apartments and 3-bedroom units or above, experienced weak demand. On the other hand, shifting demand to more popular smaller apartment units continues to grow. An extended rout in oil prices is likely to force energy companies to minimise their expenditures, particularly for expatriate accommodation in Indonesia. In some cases, at serviced apartments that heavily rely on corporate tenants from oil and gas companies, the occupancy has dropped by 5 - 10% since 2014 when the oil prices started to fall. Some upscale serviced apartments have reported that some tenants with families from oil and gas companies have decided not to extend their stays and have to return their families to their home countries because the company has to limit expatriate remuneration packages, including housing allowances and company-paid school fees. Therefore, the only alternative is moving to a more affordable, smaller apartment located near their workplace.

Rental Rates Almost serviced and non-serviced apartments managed to maintain their rental rates, while only a few serviced apartments operated by international chains were confident enough to increase their rates by between 5 and 15%. In contrast to the occupancy rate, the average rental rate has shown an upward trend with increases of 3.5 and 2.7% QoQ in the CBD and South Jakarta (including Non-prime) areas, respectively. Although most serviced apartments have managed to keep rental rates unchanged, it is still tough to get tenants in the current softening rental market. In the current tenant market situation, landlords and operators are typically open to negotiations and reducing the rental rate. In order to keep the units occupied, landlords are willing to offset a reduction in rental rates with a long-term lease. Based on our findings at several serviced and non-serviced apartments, the real transaction rates could be reduced by between 10 and 20% from the published rental rates.

Concluding Thought The Jakarta apartment market remained subdued in Q1 2016, particularly at the under-construction projects. Rather than aggressively promoting new projects in the market, developers are more focused on selling the unsold units at existing projects. As a result, with many unsold units together with steady sales activity in the market, price increases are hampered. Over the years, we have seen many apartment projects proliferate in Jakarta with relatively good take-up rates from pre-sales activity (at least 80% sold). The main factors stimulating the demand for apartments are a growing middle class who buy apartments as a primary home, occasional living and investment. We are also of the view that the current sluggish performance in apartment sales is likely to be a short-term shock rather than a long-term trend since Jakarta, as Indonesia’s economic centre, has a huge population and expanding middle class, both of which are strong demand drivers. As such, we expect that sentiment in the apartment market, particularly in the pre-sales (under-construction apartment market) will recover meaningfully starting in 2H 2016 as the currency starts to stabilise and economic growth starts to make progress on the back of a lower interest rate environment. Public investment and government spending on infrastructure should be a catalyst for economic growth. The implementation of economic reforms will be crucial in improving apartment market performance. In the leasing market, we have seen that, in some particular cases, compensation packages for expatriates are being reduced, impacting the size of housing allowances, which in some cases are being terminated altogether. With lower budgets for housing, expatriates need to seek cheaper rental alternatives, i.e., moving from international branded serviced apartments to local privately owned strata-title apartments or negotiating for lower monthly rents. In the light of that, we expect the apartment for lease market will not recover in the next couple of quarters.

Rental Rates of Apartment for Lease in Different Locations in Jakarta Q4 2015

Q1 2016

QoQ

CBD

361,290

374,061

3.5%

South Jakarta (including Non-Prime areas)

221,310

227,296

2.7%

Source: Colliers International Indonesia - Research

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Research & Forecast Report | Q1 2016 | Apartment | Colliers International

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