Research & Forecast Report 4Q 2013 Jakarta 1st Quarter | Office 2015
Jakarta Property Market Report
Accelerating success.
Highlights Office Sector A substantial amount of new office space of around 600,000 sq m is projected to come on the market this year in the CBD. This will be the historic high annual supply. Given the immense supply, the occupancy rate in the CBD should drop by the end of the year which will most likely put downward pressure on rents. The annual growth of average rents for grade A and premium buildings has already been reduced from 33.6% in 2013 to only 3.9% in 2014 for rupiah denominated buildings. In the same period, the growth of average rental rate for buildings quoting US dollars was 23.7% in 2013 and rents even dropped by -0.6% in 2014 and even further decreased by -1.1% in 1Q 2015.
Apartment Sector The “wait and see” attitude caused by national elections in 2014 and a slowing economy as a result of the strengthening US dollar against local currencies in the Asia Pacific region reduced the growth rate of apartment supply last year. With only half of the total projected supply in 2014 being materialized (around 10,000 units), 2015 will become a tougher market as 29,451 units are projected to be completed. As a result of the softening apartment market, prices of apartments only climbed modestly by 2.7% QoQ slightly lower than in the previous quarter of 3.1%. Meanwhile, the absorption rate of future apartment projects was down by 3.7% to 68.4% QoQ.
Retail Sector The occupancy rate of the retail sector in Jakarta has been stabilizing and grew to 86.8% in 1Q 2015, thanks to the retail moratorium in DKI Jakarta which limits the issuance of permits for new shopping centers. Going forward, the retail market is anticipating the entrance of new foreign retailers and an
2
increasing number of new stores by retailers already doing business here. Upper-class shopping centers are generally enjoying high occupancy while on the contrary, middle-low class shopping centers experienced a moderate decline in occupancy. Similarly, only upper class shopping malls registered a QoQ growth in rents of 3.4% to IDR921,237/sq m/month.
Hotel Sector Jakarta is anticipating additional rooms from the operation of 39 new hotels providing 6,963 rooms during 2015 – 2018. The new supply during that period represents 21.3% of the cumulative hotel rooms as at the end of 2014. The YoY occupancy performance of hotels in Jakarta was down from 64.3% to 53.7% mainly because of the high hotel room usage for political activities during election campaigning during the early months in 2014. However, the increased demand was offset by a new regulation that banned government’s civil servants for holding meetings in hotels. This new government policy was subsequently reversed in early April 2015. Likewise, the overall ADR (Average Daily Rate) was also down YoY, from USD98.15 to USD94.09.
Industrial Estate Sector There were no significant change in the industrial market, but 82.18 hectares of land which were transacted this quarter has already equaled 26% of last year’s total sales. This suggests that the industrial market has been on track to follow sales trends of 2013 and 2014. As it was seen in the last period of 2014, the overall sales during the quarter were dominated by transactions with consumer goods and logistics companies. Several industrial estates with limited land still continue to introduce new higher prices, but prices in general are flat.
Research & Forecast Report | 1Q 2015 | Highlight | Colliers International
OFFICE SECTOR Office Space Offered for Lease
After very limited additional office space last year, two office buildings in the CBD are officially opened, namely Sahid Sudirman and Gran Rubina which together contributed 169,938 sq m of new office space. The CBD further anticipates around 400,000 sq m of office space projected to be in operation before the end of 2015. The projected additional office supply will be contributed by eight office buildings that as of 1Q 2015 are in the finishing stages of construction. Apart from the continued influx of new office space, there will a reduction in the total office space. Two office buildings in Sudirman are being demolished as of 1Q 2015. Jalan Sudirman, as the main thoroughfare in the CBD, is undergoing a mega-MRT project to alleviate worsening traffic problems, particularly in the commercial area. With the MRT project, DKI Jakarta Government allow land owners along the MRT route for higher plot ratio, With very expensive land prices in the area and given the higher plot ratio, several old buildings are being considered for demolition and replaced with taller office buildings. By eliminating these two office buildings, the cumulative office supply only grew 2.9% YoY to 4.78 million sq m as of 1Q 2015.
Supply CBD Office Cumulative Supply 8,000,000 7,000,000
sq m
6,000,000 5,000,000
In the CBD, except Jalan Thamrin, all sub-markets will contribute new office buildings in 2015. Jalan Sudirman will lead in terms of both number of office buildings (with three office buildings) and area of office space (43% of annual supply in 2015). Gatot Subroto is one active sub-market with additional space of 130,000 sq m from two office buildings in 2015.
4,000,000 3,000,000 2,000,000 1,000,000
Existing Supply
2019F
2018F
2017F
2016F
2015F
2015YTD
2014
2013
2012
2011
2010
0
Annual Supply
Source: Colliers International Indonesia - Research
CBD Office Cumulative Supply Based on Area 8,000,000
Of all of the projected office buildings in 2015 - 2019, about 75% of the 2.9 million sq m have started construction work. This means that only 12 office buildings representing 816,500 sq m are still in the planning stage as of 1Q 2015. Including newly operating office buildings in 2015, the CBD will see around 500,000 sq m of projected additional space per year up to 2019.
7,000,000 6,000,000 sq m
With a total projected 260,500 sq m of office space in 2015, a new office building in Jalan Sudirman will have an area of around 86,000 sq m. This indicates that the higher plot ratio in this main corridor of the CBD has been implemented. Sahid Sudirman tower (258 m in height), is the second tallest office building in Jakarta after Wisma 46 (261.5 m in height). Sinarmas MSIG, a future office building in Sudirman, will also be included in the five tallest office buildings in Jakarta. Later, Jakarta will see an office building with 70 levels situated around Jalan Thamrin that is expected to be in operation in 2018.
5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
Existing Supply
2019F
2018F
2017F
2016F
2015F
2015YTD
2014
2013
2012
2011
2010
0
Annual Supply
Source: Colliers International Indonesia - Research
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Research & Forecast Report | 1Q 2015 | Office | Colliers International
Annual Future Office Space in the CBD
In spite of the fact that the outside CBD regularly provides less office space than the CBD, since 2010, additional office supply in the outside CBD has been consistently above 100,000 sq m per year. In 2015, it is expected that 334,206 sq m of additional office space will enter the market. As of 1Q 2015, almost 43% of the above supply has been in operation. South Jakarta will be the most active area, contributing nine of the 12 projected office buildings in 2015.
1,000,000 900,000 800,000 700,000 sq m
600,000
The outside CBD area will continue to provide office space at least up to 2017. We expect to see additional supply in the outside CBD of around 780,000 sq m in 2016 - 2017. Central and West Jakarta will contribute about the same amount as South Jakarta in terms of number of office buildings.
500,000 400,000 300,000 200,000
Annual Future Office Space in the Outside CBD
100,000
300,000
0 2015F
2016F
For Lease
2017F
For Sale
2018F
2019F 250,000
In Planning
Source: Colliers International Indonesia - Research
200,000 sq m
Based on marketing scheme, offices for lease constitute 78.2% of the cumulative supply as of 1Q 2015. It is projected that additional supply of offices for lease will still dominate both under-construction and in-planning projects. Excluding inplanning projects, the total future additional space of offices for lease in 2015 - 2019 is 1.23 million sq m with about 0.87 million sq m of offices for sale.
150,000 100,000 50,000
Outside CBD Office Cumulative Supply 0 2015F
3,000,000
For Lease
2,500,000
sq m
2017F
For Sale
2018F
2019F
In Planning
Source: Colliers International Indonesia - Research
2,000,000
Almost 47% of future office buildings in the outside CBD (excluding TB Simatupang) are projects in the planning stage (no construction activity in the field). The projects under construction are dominated by strata-title offices for sale.
1,500,000 1,000,000 500,000
Existing Supply
2019F
2018F
2017F
2016F
2015F
2015YTD
2014
2013
2012
2011
2010
0
Annual Supply
Source: Colliers International Indonesia - Research
4
2016F
Research & Forecast Report | 1Q 2015 | Office | Colliers International
Cumulative Office Space in TB Simatupang
Overall, the construction work of future office buildings in TB Simatupang is still on schedule. TB Simatupang will see around 260,000 sq m of total projected additional supply in 2016 - 2017, almost equal to the total supply in 2015 alone.
1,200,000 1,000,000
Cumulative Supply in the Outside CBD and TB Simatupang
sq m
800,000
4,000,000
600,000
3,500,000
400,000
3,000,000 sq m
200,000
2018F
2017F
2016F
2015F
2015YTD
1,500,000 1,000,000
Annual Supply
500,000
Source: Colliers International Indonesia - Research
Annual Future Office Space in TB Simatupang 250,000
Outside CBD excluding TB Simatupang
2018F
2017F
2016F
2015F
2015YTD
2014
2013
2010
0
TB Simatupang
Source: Colliers International Indonesia - Research
Annual Supply in the Outside CBD and TB Simatupang 300,000 250,000 200,000 sq m
TB Simatupang continues to bolster its position as a secondary commercial area after the CBD, particularly when the area is currently contributing more office space. As of this quarter, four newly operating office buildings in South Jakarta are located in TB Simatupang and this is equal to the office supply in 2014. The four office buildings located in the southern part of TB Simatupang, are 18 Office Park, Plaza Oleos, AD Premier and Metropolitan Tower. Together, these buildings contributed 142,678 sq m to bring the cumulative supply in TB Simatupang to 739,343 sq m as of 1Q 2015. Another three office buildings in TB Simatupang are projected to open in 2015, namely South Quarter 1 and 2, and Graha MRA. These office buildings have reached final stages of construction and are expected to bring additional new office space of 237,234 sq m by the end of 2015, almost three times the additional supply in 2014.
2012
2014
2,000,000
2011
Existing Supply
2013
2012
2011
2010
0
2,500,000
150,000 100,000 50,000
200,000
Source: Colliers International Indonesia - Research
50,000
0 2015F For Lease
2016F For Sale
2017F In Planning
Source: Colliers International Indonesia - Research
Research & Forecast Report | 1Q 2015 | Office | Colliers International
TB Simatupang
2019F
2018F
2017F
2016F
2015F
2015YTD
2014
2013
2012
2010
sq m
Outside CBD excluding TB Simatupang
100,000
5
2011
0 150,000
New Supply Pipeline projected completion
Office building projects name
location
SGA
Marketing scheme
status development
CBD 2015
Sinarmas MSIG
Sudirman
75,000 For Lease
Under Construction
2015
The Noble House Office Tower
Mega Kuningan
45,000
For Lease
Under Construction
2015
AIA Center (Menara Selaras)
Sudirman
47,000 For Lease
Under Construction
2015
Cemindo Tower
Rasuna Said
60,995
For Lease
Under Construction
2015
Telkom Landmark Tower II
Gatot Subroto
65,000
For Lease
Under Construction
2015
Bank Muamalat Tower (Satrio Square)
Satrio
24,600
For Lease
Under Construction
2015
BTPN Tower (Bahana Office Tower)
Mega Kuningan
50,000
For Lease
Under Construction
2015
Wisma Mulia 2
Gatot Subroto
65,000
For Lease
Under Construction
2016
Convergence
Rasuna Said
36,367
For Lease & Sale
Under Construction
2016
International Financial Center 2
Sudirman
50,000
2016
Menara Pertiwi
Mega Kuningan
2016
Capital Palace (Office Tower @ ST Regis)
Gatot Subroto
2016
Menara Palma 2
Rasuna Said
2016
Centennial Tower
Gatot Subroto
For Lease
Under Construction
41,456
For Sale
Under Construction
90,511
For Lease
Under Construction
50,000 For Lease
Under Construction
100,000 For Sale
Under Construction
2016
Ciputra World Jakarta 2
Satrio
70,000 For Lease & Sale
Under Construction
2016
Satrio Tower
Satrio
31,604
For Lease
Under Construction
2016
The Tower
Gatot Subroto
56,492
For Sale
Under Construction
2016
Lippo Thamrin Office Tower
Thamrin
16,500
For Sale
Under Construction
2016
T Tower (BJB Tower)
Gatot Subroto
24,000 For Sale
Under Construction
2017
Mangkuluhur Tower
Gatot Subroto
53,000 For Lease & Sale
Under Construction
2017
Sequis Life Tower 2
Sudirman
80,000 For Lease
Under Construction
2017
Gayanti City
Gatot Subroto
25,000 For Lease
In Planning
2017
Prosperity Tower @ Distict 8
Sudirman
2017
Treasury Tower @ District 8
Sudirman
2017
Sopo Del Tower A
2017
Sopo Del Tower B
2018
Sudirman 7.8 (ex Nugra Santana)
Sudirman
2018
SSI Tower (Graha Surya Intenusa)
Rasuna Said
2018
Mangkuluhur Tower II
Gatot Subroto
2018
Tower Two at The City Center
Sudirman
39,204 For Sale
Under Construction
2018
World Trade Center III
Sudirman
70,000 For Lease
Under Construction
2018
Icon Tower
Sudirman
72,500
In Planning
2018
Tower 2 @ Ciputra World Jakarta 1
Satrio
70,000 For Lease & Sale
Under Construction
2018
Astra Tower
Sudirman
80,000
For Lease
Under Construction
2018
Thamrin Nine
Thamrin
97,500
For Lease
Under Construction
2018
Chitaland
Gatot Subroto
100,000 For Lease
Under Construction
2019
Gran Rubina Tower 2
Rasuna Said
2019
The Hundred
2019
SCBD Lot.10 (PCPD Tower)
2019
World Capital Tower
Mega Kuningan
72,000 For Sale
Under Construction
2019
Tower Three at The City Center
Sudirman
34,000
For Lease
In Planning
2019
Tower 1 at Sampoerna Strategic Square
Sudirman
43,000
For Sale
In Planning
71,545
For Sale
Under Construction
139,000 For Sale
Under Construction
Mega Kuningan
80,000 For Lease & Sale
Under Construction
Mega Kuningan
40,000 For Lease
Under Construction
52,000 For Sale
In Planning
100,000 For Lease
In Planning
50,000 For Lease
In Planning
For Lease
32,000 For Sale
In Planning
Mega Kuningan
35,000
For Lease
Under Construction
Sudirman
96,000
For Lease
Under Construction
2019
Tower 2 at Sampoerna Strategic Square
Sudirman
118,000
For Lease
In Planning
2019
Redevelopment at Sequis Center
Sudirman
100,000 For Lease
In Planning
2019
Redevelopment eX
Thamrin
150,000 For Lease
In Planning continued
6
Research & Forecast Report | 1Q 2015 | Office | Colliers International
New Supply Pipeline projected completion
Office building projects name
location
SGA
Marketing scheme
status development
continuation oUTSIDE CBD EXCLUDING TB SIMATUPANG 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
The Suites
Pantai Indah Kapuk
13,200
For Sale
Under Construction
2015
Maxima Tower
Kelapa Gading
8,000 For Lease
Under Construction
2015
Nariba Office Suites
Mampang
4,200 For Lease
Under Construction
2016
Puri Indah Financial Tower
Puri Indah
38,500
For Sale
Under Construction
2016
Gallery West
Kebun Jeruk
29,000 For Sale
Under Construction
2016
L'Office
Pasar Minggu
2016
MNC Tower II
Kebon Sirih
20,000 For Lease
Under Construction
2016
Sky 18 Tower
Pasar Minggu
27,500 For Sale
Under Construction
2016
Soho Capital
Slipi
36,000
For Sale
Under Construction
2016
Altira
Sunter
40,000 For Sale
Under Construction
2016
BKP Office Tower
Sunter
16,000
For Lease
Under Construction
2016
Tamansari Parama
Wahid Hasyim
10,800
For Sale
Under Construction
2017
Soho Pancoran
Pancoran
30,000 For Sale
Under Construction
2017
Jakarta Box Tower
Kebon Sirih
36,000 For Lease
Under Construction
2017
Lippo Tower Holland Village
Cempaka Putih
27,000 For Sale
In Planning
2017
One Tower
Kemayoran
21,400
In Planning
41,597
For Sale
For Sale
Under Construction
2017
Ciputra Business District Kemayoran Tower 1
Kemayoran
40,000 For Sale
In Planning
2017
Ciputra Business District Kemayoran Tower 2
Kemayoran
40,000 For Lease
In Planning In Planning
2017
Ciputra International Puri 1 Phase 1
Puri
15,000
2017
Ciputra International Puri 2 Phase 1
Puri
20,000 For Lease
For Lease
In Planning
2017
Ciputra International Puri 3 Phase 1
Puri
30,000 For Lease
In Planning
2018
Kota Kasablanka Office Tower 2
Casablanca
90,000 For Lease
In Planning
2018
Ciputra International Puri Phase 2
Puri
15,000
In Planning
For Lease
2018
Ciputra International Puri 1 Phase 3
Puri
15,000
For Lease
In Planning
2018
Ciputra Internatinal Puri 2 Phase 3
Puri
15,000
For Lease
In Planning
2018
Summarecon Tower
Slipi
70,000 For Lease
In Planning
TB SIMATUPANG
2015
Graha MRA
13,000
For Lease
Under Construction
2015
South Quarter Tower 1
40,778
For Sale
Under Construction
2015
South Quarter Tower 2
40,778
For Lease
Under Construction
2016
South Quarter Tower 3
40,778
For Lease
Under Construction
2016
Zuria
6,584
For Lease
Under Construction
2016
Cibis Tower
60,800
For Lease
Under Construction
2017
Beltway Office Park Tower 4
30,839
For Lease
Under Construction
2017
The Sima
60,000 For Lease
Under Construction
2017
Arkadia Tower G
30,000 For Lease
In Planning
2017
The Manhattan Square Tower 2
39,375
In Planning
Source: Colliers International Indonesia - Research
7
Research & Forecast Report | 1Q 2015 | Office | Colliers International
For Lease & Sale
Occupancy Rate in All Categories of Office Building in the CBD
Demand and Occupancy CBD 1Q 2014
YoY
1Q 2015
96.5%
QoQ
4Q 2014
93.6%
95.7%
100% 96% 92%
Source: Colliers International Indonesia - Research
Number of Space Absorbed and Occupancy in the CBD
88% 84%
sq m
80% 5,000,000
100%
4,500,000
90%
4,000,000
80%
3,500,000
70%
3,000,000
60%
2,500,000
50%
2,000,000
40%
1,500,000
30%
1,000,000
20%
500,000
10%
0
Space Absorbed
Vacant Space
2015YTD
2014
2013
2012
2011
2010
0%
Occupancy
Source: Colliers International Indonesia - Research
Although the office supply was very limited in 2014, the occupancy rate in the CBD dropped from 96.5% in early 2014 to 95.7% at the end of 2014. With new office buildings beginning operations this quarter, the occupancy in the CBD fell to 93.6%. The decreasing trend in the occupancy rates would indicate that more tenants are now considering relocation to the outside CBD.
76% 72% 68% 64% 60% 1Q 2014 Premium
Grade A
Grade B
2015YTD Grade C
Source: Colliers International Indonesia - Research
All in all, the office market still expects demand from the finance-related industries including insurance and banking, which still require large spaces. The growing information and technology industries, such as telecommunications will also help create office demand in the CBD. Moreover, the policy of the new government to accelerate the country’s infrastructure and energy sectors, will hopefully provide opportunities for the office space business from tenants like consultants or suppliers who support those industry sectors. The huge supply projected for the next couple of years will create a challenge for the office business. As of 1Q 2015, the total projected supply for 2016 has yet to report pre-committed absorption. Given this situation, we believe that the projected occupancy will continuously decline in the CBD.
A general situation whereby substantial demand is largely driven by the mining, oil and gas sectors is now becoming less. Tapering business conditions and high asking rents are factors which likely cause tenants to consider cutting their operational expenses. About 62% of the total remaining space in the CBD as of 1Q 2015 was contributed by vacant spaces at Premium and Grade A office buildings. Increasingly high asking base rent at Premium and Grade A office buildings, again, has left more vacant space, and caused the occupancy of that building category to decrease by 3.7% QoQ to 92.1%.
8
2014
Research & Forecast Report | 1Q 2015 | Office | Colliers International
Pre-Commitment Demand for Future Office Buildings for Lease in the CBD
Number of Space Absorbed and Occupancy in the Outside CBD 3,000,000
100% 90%
2,500,000
2016F
80% 70%
2,000,000 sq m
60% 1,500,000
50% 40%
1,000,000
2015F
30% 20%
500,000
10% 0
100,000
200,000
300,000
400,000
0
500,000
2010
sq m Space Absorbed
Vacant Space
Space Absorbed
2014
Vacant Space
Occupancy
Commitment Demand for Future Office Buildings for Lease in the Outside CBD
Outside CBD 94.6%
2012
Source: Colliers International Indonesia - Research
Source: Colliers International Indonesia - Research
1Q 2014
0%
YoY
1Q 2015 90.9%
QoQ
4Q 2014 93.2%
Source: Colliers International Indonesia - Research
The occupancy rates in the outside CBD showed a similar trend to the CBD, declining 2.3% QoQ to 90.9% as of 1Q 2015. Large vacant spaces were largely contributed by office buildings in South Jakarta. As of 1Q 2015, 62.1% of the 233,921 sq m of remaining space in the outside CBD was in South Jakarta. Of that, 72.9% was found at newly operating office buildings in 2014 - 2015. The occupancy rates of office buildings in South Jakarta, which was recorded at 88.9%, experienced a decreasing trend by 5.2% QoQ. In other areas, the growth of occupancy was relatively flat QoQ and only West Jakarta recorded an average occupancy of 90.7% as of 1Q 2015. The overall West Jakarta office market registered a vacant space reduction of around 20% QoQ. Officially operating committed tenants at new office buildings have helped the occupancy in West Jakarta climb 2% over the previous quarter.
9
2016F
2015F
0
30,000
60,000
90,000
120,000
150,000 sq m
Space Absorbed Source: Colliers International Indonesia - Research
Research & Forecast Report | 1Q 2015 | Office | Colliers International
Vacant Space
Asking Base Rent
TB Simatupang 1Q 2014
YoY
96.2%
1Q 2015
QoQ
84.3%
4Q 2014 92.8%
Source: Colliers International Indonesia - Research
Due to four new office buildings officially operating, the occupancy rate in TB Simatupang dropped significantly by 8.6% QoQ to 84.3% as of 1Q 2015. This is the first time since 2002 that the occupancy in TB Simatupang was below 90%. However, high pre-committed demand for office buildings in 2015 is expected to return the occupancy rate to its higher level. Although newly operating office buildings in 2015 caused occupancy to decline, those new office buildings have secured a 50% occupancy rate on average when beginning operations. Overall, pre-committed occupancy for all office buildings in 2015 has reached 44.1% as of 1Q 2015.
Number of Space Absorbed and Occupancy in TB Simatupang 700,000
100% 90%
600,000
80%
sq m
500,000
70% 60%
400,000
50% 300,000
40% 30%
200,000
20%
100,000
10%
0
0% 2010
Space Absorbed
2012 Vacant Space
Source: Colliers International Indonesia - Research
2014 Occupancy
CBD All rental numbers presented in this report are asking rental rates as published by developers. Tenants are becoming more sensitive to the increase in the rental rates recently particularly given the fact that vacant office space is quite abundant and the economy is slowing down. Amidst tenants’ concern over the high occupancy costs, the average rental rate in rupiah was IDR257,543/sq m/month as of 1Q 2015 for all classes of office buildings, posting an upward adjustment of 1.8% QoQ. Some office buildings charging in rupiah lowered their rents from the previous quarter. However, increasing rents at office buildings with large vacant spaces have caused the overall asking base rents to climb. As of 1Q 2015, at least two office buildings holding vacant spaces of more than 15,000 sq m raised the rent by IDR50,000 to 80,000/sq m/month. The asking rents in US dollars showed almost similar growth of 2.0% QoQ, to USD37.58/sq m/month as of 1Q 2015. Office buildings charging in US dollars and with higher rents above the market average generally having large vacant spaces. As of 1Q 2015, 58.8% of the total remaining vacant space was found at office buildings charging USD40.00/sq m/month and above. Nevertheless, some significant adjustment was made by office buildings charging in US dollars by lowering their rents between USD2.00 and 10.00 as of 1Q 2015. These adjustments caused office rents to climb only modestly QoQ. Similar to buildings charging in US dollars, of the total vacant space supplied by office buildings charging rent in rupiah, 46.9% is available at office buildings charging rent above the market average rent. This resulted in a higher average rent in rupiah. In the high specifications class of buildings charging in US dollars, the asking base rent of Premium and Grade A office buildings in the CBD continued to decrease. As of 1Q 2015, the average asking rent was USD42.24/sq m/month, down modestly by 1.1% QoQ. It has been three consecutive quarters since 2H 2014 that the average asking base rent of Premium and Grade A office buildings has decreased QoQ. The average asking rental rate for Premium office buildings only was USD46.72/sq m/month as of 1Q 2015, down significantly QoQ, 4.9%.
10 Research & Forecast Report | 1Q 2015 | Office | Colliers International
Average Asking Rental Rates
Average Asking Rental Rates Based on Grade
in Rupiah
in Rupiah IDR 600,000
IDR 300,000
IDR 550,000 IDR 500,000
IDR 250,000
IDR 450,000 IDR 400,000
IDR 200,000
IDR 350,000 IDR 300,000
IDR 150,000
IDR 250,000 IDR 200,000
IDR 100,000
IDR 150,000 IDR 100,000
IDR 50,000
IDR 50,000 IDR 0
IDR 0 2010
2011
2012
2013
2014
Grade A
2015YTD
Source: Colliers International Indonesia - Research
Grade B
Grade C
Source: Colliers International Indonesia - Research
in US Dollar
in US Dollar
USD 60.00
USD 60.00
USD 50.00
USD 50.00
USD 40.00
USD 40.00
USD 30.00
USD 30.00
USD 20.00
USD 20.00
USD 10.00 USD 10.00 USD 0.00 2010
2011
2012
All Classes Source: Colliers International Indonesia - Research
11
2013
2014
2015YTD
USD 0.00
Premium
Premium
Grade A
Source: Colliers International Indonesia - Research
Research & Forecast Report | 1Q 2015 | Office | Colliers International
Grade B
Grade C
Outside CBD The average asking rental rate in the outside CBD showed modest growth QoQ at office buildings charging in both rupiah and US dollars. As of 1Q 2015, the asking base rent registered an average of IDR191,603/sq m/month, while in US dollars it was USD21.47/sq m/month. The most expensive office locations in the outside CBD area remain in Central and South Jakarta. The asking base rent in Central and South Jakarta was between IDR205,974 and 215,172/ sq m/month. In fact, West Jakarta showed significant growth in the rental rates, at 6.2% QoQ, more than in other areas. Several office buildings that have been operating since 2013 - 2014 have had a significant impact on the overall asking base rent in West Jakarta, raising it to IDR197,611/sq m/month. The least favourite office locations, i.e. North and East Jakarta recorded the lowest asking base rents at between IDR106,736 and 108,729/sq m/month as of 1Q 2015. Being the secondary business area after the CBD, TB Simatupang (which is part of South Jakarta) helps maintain an asking base rent in South Jakarta to register at the highest level. Although the QoQ growth of asking base rents was low, four office buildings newly operating in early 2015 have raised the asking rent to IDR228,822/sq m/month and USD21.71/sq m/month.
Average Asking Rental Rates in the Outside CBD in Rupiah IDR 250,000
IDR 200,000
IDR 150,000
IDR 100,000
IDR 50,000
IDR 0 2010
2011
2012
2013
Outside CBD excluding TB Simatupang
2014
2015YTD
TB Simatupang
Source: Colliers International Indonesia - Research
in US Dollar USD 25.00
USD 20.00
USD 15.00
USD 10.00
USD 5.00
USD 0.00 2010
2011
2012
2013
Outside CBD excluding TB Simatupang Source: Colliers International Indonesia - Research
12
Research & Forecast Report | 1Q 2015 | Office | Colliers International
2014
2015YTD
TB Simatupang
Service Charge The gap between service charges in the CBD and outside CBD tapered. Last year, the service charge in the outside CBD was around 20% less than in the CBD. As of 1Q 2015, the service charge (both IDR and US dollars) in the outside CBD was IDR65,498/ sq m/month, up 20.1% QoQ. Office buildings newly operating during 2013 - 2014 had maintenance costs between IDR45,000 and 85,000/sq m/month. Currently, most of the new buildings in the outside CBD continue to improve building service quality and facilities. Moreover, some office buildings, primarily in TB Simatupang, are classified as green buildings. In TB Simatupang alone, the average service charge was IDR59,340/sq m/month, and USD5.93/sq m/month. Service charges in the CBD were IDR92,173/sq m/month as of 1Q 2015. Compared to the outside CBD, currently it is 28.9% higher than in the outside CBD. Based on building grade, service charges at Premium and Grade A office buildings in the CBD were IDR103,802/sq m/month. Seven Premium and Grade A office buildings in the CBD had service charges of IDR90,000/sq m/month and above during the reviewed quarter.
The Range of Service Charge Cost in the Two Main Areas in Jakarta IDR 100,000
IDR 80,000
IDR 60,000
IDR 40,000
IDR 20,000
IDR 0 CBD Source: Colliers International Indonesia - Research
Service Charges of Office Buildings in Jakarta IDR 80,000 IDR 70,000 IDR 60,000 IDR 50,000 IDR 40,000 IDR 30,000 IDR 20,000 IDR 10,000 IDR 0 2010
2011 CBD
2012
2013
2014
2015YTD
Outside CBD
Source: Colliers International Indonesia - Research
Although service charges continued to increase, around 35% of office buildings, both in the CBD and the outside CBD still had service charges below IDR50,000/sq m/month.
13
Research & Forecast Report | 1Q 2015 | Office | Colliers International
Outside CBD
Strata-title Office
Annual Supply and Take-up Rates of Strata-title Office Buildings in the CBD
Average Asking Price of Strata-title Office Space per Sq m in Jakarta
200,000 180,000 160,000
IDR 60,000,000
140,000 sq m
IDR 50,000,000
120,000 100,000 80,000
IDR 40,000,000
60,000 40,000
IDR 30,000,000
20,000 IDR 20,000,000
2015YTD
2014
2013
2012
2011
Annual Supply
IDR 0
Annual Take-up
Source: Colliers International Indonesia - Research
2010 CBD
2010
IDR 10,000,000
2009
2008
0
2011
2012
2013
Outside CBD exclude TB Simatupang
2014
2015YTD
TB Simatupang
Source: Colliers International Indonesia - Research
The CBD will see a large amount of additional office space for sale in 2015 - 2018, starting with the operation of Gran Rubina and Sahid Sudirman, which brought the cumulative supply of stratatitle offices in the CBD to 986,767 sq m as of 1Q 2015. At least another 14 strata-title office buildings will provide 849,564 sq m in the CBD up to 2018. The majority of office buildings are under construction and are expected be completed as scheduled. The high commitment of office transactions has kept the average take-up rate at 97.6% as of 1Q 2015. Despite dropping QoQ, the take-up rate will bounce back due to the fact that there will be no new additional supply of strata-title office space for sale in the remainder of 2015. During this quarter, some future strata-title office buildings projected to be in operation in 2016 and 2017 have been fully absorbed, which helped bring the pre-commitment sales to 38 and 61%, respectively. These precommitment levels are expected to keep the projected take-up rate at a high level in the future.
Pre-Committed Demand of Future Strata-title Office for Sale in the CBD
2018F
2017F
2016F
2015F
0
100,000
200,000
300,000
400,000 sq m
Space Absorbed
Space Unabsorbed
Source: Colliers International Indonesia - Research
In this quarter, the average asking price of vacant space in strata-title office buildings in the CBD was IDR46.9 million/sq m. This suggests a lower price QoQ because some newly underconstruction strata-title office buildings, due to their location, offer a launch price lower than the market average. With less vacant space and no newly launched strata-title buildings offered in US dollars during this quarter, the office space price has grown by 5.4% QoQ to USD4,492/sq m.
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Research & Forecast Report | 1Q 2015 | Office | Colliers International
With no additional strata-title office space, the take-up rate in the outside CBD (excluding TB Simatupang) stayed at 94.1% as of 1Q 2015. The projected take-up rate in 2015 - 2016 is expected to be quite high in the outside CBD where the pre-committed absorption of office buildings in those years has reached 60% as of now. The high take-up rates of both existing and future supply has raised the asking prices in the outside CBD to an average of IDR30.3 million/sq m, up 10.3% QoQ.
Annual Supply and Take-up Rates of Strata-title Office in the Outside CBD
Concluding Thoughts
250,000
A more conducive political situation is expected to help accelerate an increase in occupancy to catch up the projected demand in the years ahead. More implemented government programmes are expected to invite more investors to come and bolster the absorption of office space.
200,000
sq m
All newly operating strata-title offices are located in TB Simatupang, bringing 134,840 sq m of additional space for sale. This relatively large amount of space somewhat decreased the take-up rate in TB Simatupang by 3.5% QoQ to 89.2% as of 1Q 2015. Asking prices of strata-title space in this area rose by 13.8% QoQ to IDR32.2 million/sq m for buildings charging in rupiah. The influx of newly operating strata-title offices is one of the causes for the price increase during the quarter. For buildings charging in US dollars, the average asking price was USD3,500/ sq m.
150,000
Less absorption than projected QoQ will put pressure on asking rents. This will likely cause a weakening of the average asking rent, at least it will be relatively flat during 2015.
100,000
50,000
Cumulative Supply
2015YTD
2014
2013
2012
2011
2010
2009
2008
0
Cumulative Take-up
Source: Colliers International Indonesia - Research
Pre-Committed Demand of Future Office for Sale in the Outside CBD
2017F
2016F
2015F
0
50,000
100,000
150,000
Space Absorbed
200,000
Space Unabsorbed
250,000 sq m
Source: Colliers International Indonesia - Research
15
Research & Forecast Report | 1Q 2015 | Office | Colliers International
Apartment Sector
remaining stock is distributed in South Jakarta, CBD area and Central Jakarta at 21.1%, 15.7% and 13.2%, respectively, while East Jakarta had a mere 6.2% of the total inventory.
Apartment for Strata-title Supply Commencing in 2015, the cumulative supply of apartment units in Jakarta grew at a moderate pace. The apartment market received 3,255 new units, up by 2.3% QoQ, from seven projects comprising four brand new projects and three extension towers. These 3,255 units, or 11% of the total projected 29,451 new units that will be completed this year, are scattered in all areas of Jakarta, except the CBD. Of the total supply in this quarter, 38% is located in South Jakarta, while the remaining portions are located in North Jakarta (25%), East Jakarta (22%), West Jakarta (11%) and Central Jakarta (6%). Overall, with the addition from newly-completed projects, the total existing stock of strata-title apartments in Jakarta rose to 146,300 units. By location, the non-prime areas (North Jakarta and West Jakarta) dominate the market with 22.2% and 21.6% of the total stock, respectively. The
The first quarter of the year began with optimism among developers as they launched several new apartment projects. Compared to the same quarter last year, there were 7,276 newly-introduced and launched units, 115% higher than in the same period last year. Demand for apartments in Jakarta has been notably strong during the last three years, evidenced by almost all new completed apartment projects achieving more than a 90% sales rate. Apartment units are still perceived as an investment tool as they provide capital gains of around 10 - 25% (if bought at the initial offering) and rental yield expectations of around 6 to 8% per year. The reform of Indonesia’s fuel subsidy policy will have a positive impact on the property sector as the government aims to allocate the budget to more productive uses, such as improvements in infrastructure. The acceleration of infrastructure projects will expand the economy, in line with the government’s target of a 5.5% GDP growth this year, an increase 0.5% from the growth in 2014.
List of Completed Projects During 1Q 2015 Name of development
location
region
developer
no. of units
Belmont Residence (Tower Montblanc)
Jl. Meruya Ilir
West Jakarta
Gapura Prima
350
The Royal Springhill (Lotus Tower)
Jl. Spring Hill Residence Kemayoran
Central Jakarta
Springhill Golf Group
192
Titanium Square
Jl. Raya Bogor, Pasar Rebo
East Jakarta
PT Titanium Property
725
Northern Ancol Residence
Ancol
North Jakarta
Jaya Ancol
800
La Venue - South Tower
Jl. Pasar Minggu
South Jakarta
PT Bintang Rajawali (Sinar Mas Group)
341
Botanica Apartment
Simprug, Kebayoran Baru
South Jakarta
Pikko Group
626
Woodland Park (Trambesi tower)
Jl. Kalibata Raya
South Jakarta
PT. Pardika Wisthi Sarana
221
Source: Colliers International Indonesia - Research
Newly-Introduced Apartment During 1Q 2015 Name of development
location
region
Expected completion time
estimated price/ sq m*
No. of Units
remarks
South Hill
Jl. Denpasar Raya
CBD
2018
IDR37 - 39 million
611
Pre-sales
Green Pramuka (Nerine Tower)
Jl. Pramuka
Central Jakarta
2017
IDR16.7 million
1,000
Launched
Podomoro Park
Jl. I Gusti Ngurah Rai
East Jakarta
2018
IDR18.5 million
3,000
Introduced (NUP system **)
The Hamilton
Jl. Teuku Nyak Arief
South Jakarta
2017
IDR49.5 million
112
Introduced (NUP system**)
Pakubuwono Spring
Jl. Teuku Nyak Arief
South Jakarta
2018
IDR51 million
545
Launched
La Terrasse
Jl. Deplu Raya No.12
South Jakarta
2018
IDR37 million
111
Launched
Branz Simatupang (2 tower)
Jl. TB Simatupang
South Jakarta
2018
IDR28 million
381
Introduced
Synthesis Residence Kemang
Jl. Ampera Raya
South Jakarta
2018
IDR29.5 million
1,100
Introduced (NUP system**)
19 Avenue (Tower B)
Jl. Daan Mogot
West Jakarta
2017
IDR10.5 million
416
Launched
Notes: *Price excludes 10% VAT **NUP (Indonesian term for Nomor Urut Pemesanan) or also known as priority pass is a new marketing strategy commonly applied by reputable developers to gauge the interest of potential buyer in the initial offering Source: Colliers International Indonesia - Research
16
Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
As of 1Q 2015, there are 7,276 units at either newly-introduced or newly-launched projects, which are mainly located in South Jakarta, representing 53% of the total units. Among the districts in South Jakarta, TB Simatupang remains in the spotlight as can be seen by the growing number of office developments that drive the growth of apartment development in the surrounding area.
The Distribution of Future Apartment Developments in Several Regions of Jakarta 35,000 30,000
The supply of new apartment units during 2015 is projected to be substantial, i.e. 29,451, should all projects be completed. All in all, the total projected units that will come into the market from 2015 to 2018 will be 80,881 new units, mainly supplied in West Jakarta with 23% of the total supply, followed by East Jakarta and South Jakarta with 22 and 20%, respectively. Typically, apartment development in West Jakarta is characterised by massive unit projects targeting the middle-low income segment, offering small units in order to make prices affordable. The units of these apartment projects typically come with areas from 22 sq m for studio units to 70 - 80 sq m for 3-bedroom units. On the other hand, East Jakarta will see abundant new projects in the next two to three years, mainly coming from two projects, i.e. Green Signature and Bassura City, which are located in Cawang and Cipinang, respectively.
25,000
Units
20,000 15,000 10,000 5,000 0 2015F
2016F
2017F
2018F
CBD
Central Jakarta
South Jakarta
North Jakarta
East Jakarta
West Jakarta
Source: Colliers International Indonesia - Research
New Supply Pipeline (2015 - 2019) Apartment name
location
region
no. of units
2015 The Grove (Empyreal + Masterpiece)
Jl. HR Rasuna Said
CBD
438
Ciputra World - Luxurious Raffles Residences
Jl. Prof Dr Satrio
CBD
64
Setiabudi Sky Garden (tower 1)
Jl. Karbela Selatan
CBD
426
Setiabudi Sky Garden (tower 2)
Jl. Karbela Selatan
CBD
160
Elpis Residence
Gunung Sahari
Central Jakarta
790
Capitol Park Apartment (Tower T)
Jl. Salemba Raya, Menteng
Central Jakarta
727
Capitol Park Apartment (Tower U)
Jl. Salemba Raya, Menteng
Central Jakarta
976
The Mansion at Dukuh Golf Residence (Aurora Tower)
Jl. Benyamin Sueb Kemayoran
Central Jakarta
522
The Mansion at Dukuh Golf Residence (BellaVista Tower)
Jl. Benyamin Sueb Kemayoran
Central Jakarta
612
The H Residence Kemayoran (Amethyst)
Jl. Rajawali Selatan
Central Jakarta
800
The Royal Springhill (Lotus Tower)
Jl. Spring Hill Residence Kemayoran
Central Jakarta
192
The Royal Springhill (Bouvardia Tower)
Jl. Spring Hill Residence Kemayoran
Central Jakarta
120
Casablanca East Residence (2 Twr) + Tower Dallas
Jl. Pahlawan Revolusi
East Jakarta
1,904
Titanium Square
Jalan Raya Bogor Kav. 27 Pasar Rebo
East Jakarta
725
The H Residence
MT Haryono
East Jakarta
383
Bassura City (Tower Flamboyan)
Jl. Basuki Rahmat
East Jakarta
1,000
Bassura City (Tower Edelweiss)
Jl. Basuki Rahmat
East Jakarta
1,000
Bassura City (Tower Dahlia)
Jl. Basuki Rahmat
East Jakarta
1,000
Bassura City (Tower Alamanda)
Jl. Basuki Rahmat
East Jakarta
600
Bassura City (Tower Geranium)
Jl. Basuki Rahmat
East Jakarta
900
Teluk Intan (Tower Saphire)
Jl. Teluk Gong
North Jakarta
1,100
Pluit Seaview (Tower Maldives)
Pluit
North Jakarta
940
Pluit Seaview (Tower Belize)
Pluit
North Jakarta
300
Callia Apartment
Jl. Perintis Kemerdekaan
North Jakarta
560
The Oak Tower (2 Towers)
Jl. Perintis Kemerdekaan
North Jakarta
821 continued
17
Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
Apartment name
location
region
no. of units continued
Northern Ancol Residence (1Q)
Ancol
North Jakarta
800
Green Bay Pluit (Sea View)
Jl. Pluit Karang Ayu
North Jakarta
2,072
La Venue - South Tower (1Q)
Jl. Pasar Minggu
South Jakarta
341
The Royal Olive Residence Tower I
Jl. Buncit Raya
South Jakarta
225
Senopati Penthouse
Jl. Senopati Kav 45
South Jakarta
63
Senopati Suites 2
Jl. Senopati
South Jakarta
81
LA City Apartment (Tower A)
Jl. Raya Lenteng Agung, Jagakarsa
South Jakarta
980
La Maison Barito
Barito
South Jakarta
80
Botanica Apartment (3 Towers)
Simprug, Kebayoran Baru
South Jakarta
626
Woodland Park (Trambesi tower)
Jl. Kemukus No. 6, Fatahillah
South Jakarta
221
1 Park Avenue (3 Towers)
Jl. KHM Syafi'I Hadzami
South Jakarta
279
Nine Residence
Warung Buncit
South Jakarta
246
Providence Park
Jl. Kalimaya - Iskandar Muda
South Jakarta
114
Kencana Residence
Jl. Sultan Iskandar Muda
South Jakarta
173
Izzara Apartment (South and North Tower)
TB. Simatupang
South Jakarta
542
The Aspen Peak at Admiralty
Jl. Fatmawati
South Jakarta
644
Niffaro Apartment (Ebony Tower)
Jl. Kalibata Raya
South Jakarta
288
Grand Dhika Mansion Pejaten (Sector 1)
Jl. Siaga Raya
South Jakarta
Metro Park Residence
Kebon Jeruk
West Jakarta
1,451 159
44
St. Moritz (New Presidential Tower)
Jl. Puri Indah
West Jakarta
Satu8 Residence
Jl. Pilar Komp. Delta, Kedoya
West Jakarta
174
Belmont Residence (Tower Montblanc)
Jl. Meruya Ilir
West Jakarta
350
The Nest Apartment
Jl. Raden Saleh Raya, Meruya Utara
West Jakarta
1,100
Green Palm Residence @ Puri
Jl. Kosambi
West Jakarta
1,000
19 Avenue Apartment 9 (Tower A)
Daan Mogot
West Jakarta
338
The Residence (CWJ 2)
Jl. Prov Dr Satrio Kav 6, Kuningan
CBD
The Orchad Satrio (CWJ 2)
Jl. Prov Dr Satrio Kav 6, Kuningan
CBD
349
Sudirman Suites
Jl. Sudirman
CBD
380
2016 119
Gayanti City (2 Towers)
Jl. Gatot Subroto
CBD
318
T - Plaza Residence (Tower A)
Jl. Penjernihan I Kav.1 Pejompongan
Central Jakarta
307
Sentosa Residence
Cempaka Putih
Central Jakarta
687
Sudirman Hill Residence
Jl. Karet Pasar Baru
Central Jakarta
255
The Green Pramuka (Tower Orchid)
Jl. Jenderal Ahmad Yani
Central Jakarta
1,000
The Green Pramuka (Tower Penelope)
Jl. Jenderal Ahmad Yani
Central Jakarta
1,000
The Green Pramuka (Tower Scarlet)
Jl. Jenderal Ahmad Yani
Central Jakarta
1,000
Capitol Suites
Jl. Prapatan Raya
Central Jakarta
327
The Royal Springhill (Bulgari Tower)
Jl. Spring Hill Residence Kemayoran
Central Jakarta
192
Holland Village (Phase II)
Cempaka Putih
Central Jakarta
230
Signature Park Grande
Jl. MT. Haryono
East Jakarta
1,100
Bassura City (Tower Cattleya)
Jl. Basuki Rahmat
East Jakarta
600
East Park Apartment (Tower C)
Jl. KRT Radjiman
East Jakarta
550
Sentra Timur Residence (Tower Tosca)
Pulo Gebang
East Jakarta
133
Pluit Seaview (Tower Ibiza)
Pluit
North Jakarta
500
Pluit Seaview (Tower Bahama)
Pluit
North Jakarta
650
La Venue - North Tower
Jl. Pasar Minggu
South Jakarta
253
Kemang Village (The Bloomington)
Jl. P Antasari
South Jakarta
150 continued
18
Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
Apartment name
location
region
no. of units continuation
Senopati Suites 3
Jl. Senopati
South Jakarta
54
Pakubuwono Terrace Grand Tower
Kebayoran Lama
South Jakarta
435
District 8 (Tower Eternity)
Jl. Senopati
South Jakarta
400
District 8 (Tower Infinity)
Jl. Senopati
South Jakarta
280
Lexington Rersidence
Pondok Pinang
South Jakarta
275
Apartment Pejaten Park Residence
Jl. Warung Buncit Raya No.21
South Jakarta
560
Four Winds
Jl. Permata Hijau Raya No.1
South Jakarta
122
Bellevue Place
MT Haryono, Tebet
South Jakarta
240
Kebayoran Icon
Jl. Ciledug Raya
South Jakarta
256
Sapphire Residence
Lebak Bulus
South Jakarta
St Moritz (The New Ambassador Suite Tower)
Jl. Puri Indah Kembangan
West Jakarta
The Windsor (Tower II)
Jl. Puri Indah
West Jakarta
164
Gianetti Apartment
Jl. Kebon Jeruk Raya, Kemanggisan
West Jakarta
500
Gallery West
Jl. Panjang No 5
West Jakarta
280
37 200
Belmont Residence (TowerAthena)
Jl. Meruya Ilir
West Jakarta
193
Puri Mansion Apartment (Tower A)
Puri Mansion
West Jakarta
900
Madison Park
Tanjung Duren
West Jakarta
1,200
Veranda
Jl. Pesanggrahan Raya, Kembangan
West Jakarta
174
Domaine
Jl. Jend. Sudirman Kav 1
CBD
186
Verde Two (Tower East)
Jl. Rasuna Said
CBD
182
Anandamaya Residences (3 towers)
Jl. Jend Sudirman
CBD
500
2017
Central 88 (2 Towers)
Jl. Trembesi, Kemayoran
Central Jakarta
612
Menteng Park
Jl. Cikini Raya No.79
Central Jakarta
756
Holland Village
Cempaka Putih
Central Jakarta
400
Royal Suites
Kemayoran
Central Jakarta
450
The Green Pramuka (Tower Nerine)
Jl. Jenderal Ahmad Yani
Central Jakarta
1,000
Green Signature Apartment
Jl. MT. Haryono
East Jakarta
800
Podomoro Park
Jl. I Gusti Ngurah Rai, Klender
East Jakarta
3,000
Bassura City (Tower Jasmine) 2 tower
Jl. Basuki Rahmat
East Jakarta
2,000
Bassura City (Tower Heliconia)
Jl. Basuki Rahmat
East Jakarta
700
La Terrasse
Jl. Deplu Raya No.12
South Jakarta
111 660
The Foresque
Pasar Minggu, Ragunan
South Jakarta
The Langham Residences
Senopati
South Jakarta
57
The Batik @ Pejaten
Jl. Siaga Raya
South Jakarta
200
La Foret Vivante
Jl. Limo, Permata Hijau
South Jakarta
253
Selatan 8 (Tower Sultan)
Kebayoran Lama
South Jakarta
336
The Hamilton
Jl. KHM Syafi'I Hadzami
South Jakarta
Puri Orchad (3 Tower)
Jl Raya Adicipta
West Jakarta
3,000
112
Maqna Residence
Jl. Meruya Ilir No. 88
West Jakarta
312
Vittoria Residence (3 tower)
Jl. Daan Mogot
West Jakarta
1,100
Wang Residence
Jl. Panjang No 18
West Jakarta
250
Taman Anggrek Residence (6 towers)
Tanjung Duren
West Jakarta
3,000
19 Avenue Apartment (Tower B)
Daan Mogot
West Jakarta
416
Regatta London Tower
Jl. Pantai Mutiara
North Jakarta
186 continued
19
Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
Apartment name
location
region
no. of units continuation
2018 Verde Two (Tower West)
Jl. Rasuna Said
CBD
152
Lavie
Jl. Denpasar Raya
CBD
320
South Hill
Jl. Denpasar Raya
CBD
611
Le' Parc
Jl. Thamrin
CBD
100
Regent Residences (tower 1)
Semanggi
CBD
100
Core Sky Residence
Pulo Gebang
East Jakarta
282
Sahid Garden Residence
Ciracas
East Jakarta
476
Gold Coast Apartment (Atlantic Tower)
Pantai Indah Kapuk
North Jakarta
568
Regatta Apartment (Tower New York)
Pantai Mutiara
North Jakarta
186
Sedayu City (Tower Berlin)
Jl. Pegangsaan Dua Raya
North Jakarta
912
The Kensington Royal Suites (4 Tower)
Kelapa Gading
North Jakarta
790
Jaya Ancol Seafront - Oceana Tower
Pademangan, Ancol
North Jakarta
524
Casa Grande Residence 2 (Tower Angelo)
Jl. Casablanca
South Jakarta
350
Casa Grande Residence 2 (Tower Bella)
Jl. Casablanca
South Jakarta
350
Casa Grande Residence 2 (Tower Milano)
Jl. Casablanca
South Jakarta
350
Pondok Indah Residences (3 Towers)
Pondok Indah
South Jakarta
880
Selatan 8 (Tower Prabu)
Jl. Raya Ulujami
South Jakarta
344
One Otium Residence
Jl. Pangeran Antasari No.8
South Jakarta
160
45 Antasari (2 Tower)
Antasari
South Jakarta
1,924
Arzuria Apartment
Jl. Tendean
South Jakarta
210
Pakubuwono Spring (2 towers)
Jl. Teuku Nyak Arief No.9
South Jakarta
545
Branz Simatupang (2 tower)
TB. Simatupang
South Jakarta
381
Synthesis Residence Kemang
Jl. Ampera Raya
South Jakarta
1,100
Ciputra International Puri Indah (Tower Amsterdam)
Puri Indah
West Jakarta
412
Grand Madison
Tanjung Duren
West Jakarta
300
Citra Lake Suites (Tower Rosewood)
Jl. Raya Kresek
West Jakarta
104
Citra Lake Suites (Tower Greenwood)
Jl. Raya Kresek
West Jakarta
126
Citra Lake Suites (Tower Oakwood)
Jl. Raya Kresek
West Jakarta
117
Citra Lake Suites (Tower Sherwood)
Jl. Raya Kresek
West Jakarta
122
Apartemen Taman Permata Buana
Taman Permata Buana
West Jakarta
550
Source: Colliers International Indonesia - Research
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Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
Demand Following a downturn trend in the previous quarter, the sales of strata-title apartments, particularly in the primary market, continued to record slow absorption. This slow market situation was highlighted by low GDP growth and a rupiah depreciation against the US dollar, which affected the overall economy of Indonesia, particularly by lowering the purchasing power of the middle class. The weakening local currency against the US dollar has made construction costs more expensive, particularly for upper- to luxury-class apartments, as 30 to 40% of the material components are imported goods. Furthermore, the abundance of supply puts the overall market in a tough situation since there are about 80,000 units (during 2015 - 2018) being marketed. In view of this, we expect to see a further softening in the strata-title apartment market throughout 2015.
Take-up Rates Performance of Existing and Under Construction Projects average take-up rates
4Q 2014
1q 2015
QoQ
Existing Projects
95.6%
95.7%
0.10%
Pre-Sales rate of Under Construction Projects
72.1%
68.4%
-3.70%
87.00%
85.50%
-1.50%
Average Source: Colliers International Indonesia - Research
Take-up Rates Performance of Existing Projects in Three Major Areas take-up existing projects CBD
4Q 2014 99.3%
1q 2015
QoQ
99.3%
0.0%
South Jakarta
97.9%
97.6%
-0.3%
Non-Prime area
93.7%
94.0%
0.3%
Source: Colliers International Indonesia - Research
As of 1Q 2015, the overall average take-up rate for strata-title apartments (both existing and under-construction projects) in Jakarta was 85.5%, down slightly from the previous quarter’s 87%. The table above shows that existing apartment projects in South Jakarta experienced a decrease in the take-up rates from the previous quarter, while the non-prime area posted an increase of 0.3% from the previous quarter but experienced a drop for the under-construction projects. On the other hand, the take-up rates for existing projects in the CBD apartment market remain the same as the previous quarter, at 99.3%.
Take-up Rates Performance of Future Projects in Three Major Areas take-up existing projects
4Q 2014
1q 2015
QoQ
CBD
88.3%
83.9%
-4.4%
South Jakarta
78.0%
68.6%
-9.4%
Non-Prime area
69.4%
67.1%
-2.3%
The pre-sales activity of under-construction projects underwent a declining trend in all regions of Jakarta. The take-up rate in South Jakarta experienced the lowest drop, mostly due to the abundant supply of newly-introduced or launched projects in the last three years. Similar to South Jakarta, the pre-sales rate in the CBD area also experienced a declining sales rate because most of the projects saw slower absorption than in 2014. The sales performance of under-construction projects is very much affected by the influx of new projects. For example, one new middle-upper class project entering the pre-sales stage put downward pressure on the overall take-up rate during January - March 2015. Similarly, the continued influx of new projects in the non-prime area (including Central, North, West and East Jakarta) has resulted in a downswing of the take-up rate by 2.3% compared to the previous quarter.
Asking Price Despite the lowering sales performance during the quarter, average asking prices for strata-title apartments continued to demonstrate an upward trend. As of 1Q 2015, the average asking price of apartments in Jakarta rose by 2.7% QoQ to IDR28.4 million/sq m. Based on location, the new apartments in nonprime locations posted the highest price increase, followed by South Jakarta and the CBD area. Benefiting from a relatively lower price compared to South Jakarta and the CBD area, some projects in non-prime areas are enjoying a good take-up rate and that has helped the average price to improve. On the other hand, the market perceives that the current prices of apartments in the CBD have reached a peak.
Average Asking Price of Apartment per Sq m 4Q 2014
1q 2015
CBD
Asking price/sq m
43,472,842
44,135,684
1.5%
South Jakarta
32,033,471
32,713,013
2.1%
Non-Prime area
20,764,022
21,285,155
2.2%
Source: Colliers International Indonesia - Research
The pace of apartment prices in 2014 slowed compared to the aggressive price growth in 2011 - 2013. The slowdown is in line with the government’s expectations, as they are very concerned with the persistently soaring prices. This trend is expected to continue throughout 2015 as the government is planning to further tighten the real estate market by imposing taxes on a broader range of the property segment. Bank Indonesia’s target to curb the growth of property prices by tightening the LTV (Loan to Value) regulation has shown results. As on the chart below, the average QoQ changes of apartment prices in 2014 has been relatively slower than the strong growth since 2012 - 2013. During 2011 - 2013, the average QoQ changes in apartment prices increased by 3.34%.
Source: Colliers International Indonesia - Research
21
QoQ
Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
QoQ Changes of Average Asking Prices of Apartment in Jakarta 10%
Apartment For Lease Supply After Ascott Kuningan became available in the last quarter, there was no new supply of apartments for lease during 1Q 2015. As such, the total supply of both serviced and non-serviced apartments in Jakarta remained at 8,519 units. The majority of apartments for lease in Jakarta are designed to meet expatriate standards with spacious sizes, and therefore these projects are mainly found in the CBD and South Jakarta for two main reasons, i.e. the locations are in close proximity to the commercial area and are still in the catchment area of reputable international schools.
9% 8% 7% 6% 5% 4% 3%
The Distribution of Apartment for Lease by Area
2% 1% 0% 2011
2012
2013
2014
2015YTD
Non-prime 21% CBD 44%
Source: Colliers International Indonesia - Research
The trend of slowing demand is likely to persist in the upcoming quarters. To anticipate this, developers continue to offer financing incentives like cash instalment payments and in some cases, buyers are not required to make a down payment. This payment scheme has become a preferable method of paying since it does not require bank approval and offers flexibility to manage the cash flow. Furthermore, developers, especially those having strong working capital, are confident in offering longer cash instalments for up to 60 months.
Payment Method Apartment
Composition
Hard Cash 16%
in
Purchasing
Mortgage 26%
South Jakarta 35% Source: Colliers International Indonesia - Research
The apartment for lease market in Jakarta was mainly dominated by two global brands of serviced apartment operator, i.e. The Ascott Limited and Frasers Hospitality. The Ascott Limited has three brands in operation, Ascott Residence, Somerset and Citadines. Frasers Hospitality has only Fraser Residence but in the upcoming years, Fraser Hospitality will have Fraser Suites (Ciputra World II), Fraser Place (Setiabudi Sky Garden) and Capri by Fraser. A strong operator brand for serviced apartments is a crucial factor for differentiation from other products and to guarantee a global service level. Several major serviced apartment operators have multiple brands to serve different market segments.
Cash Installment 58% Source: Colliers International Indonesia - Research
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Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
List of Serviced Apartments Managed by Ascott and Frasers Name of development
year of operation
operator
location
type
The Ascott Residence
1995
Ascott Limited
Kebon Kacang
Serviced Apartment
Somerset Grand Citra
1996
Ascott Limited
Satrio
Serviced Apartment
Countrywoods Residence
1996
Ascott Limited
WR Supratman, Ciputat
Serviced Apartment
Somerset Berlian
2006
Ascott Limited
Permata Hijau
Serviced Apartment
Fraser Residence Sudirman
2011
Frasers Hospitality
Setiabudi
Serviced Apartment
Citadines Rasuna Jakarta
2013
Ascott Limited
Rasuna Said
Condotel
Fraser Residence Menteng
2014
Frasers Hospitality
Menteng
Serviced Apartment
Ascott Kuningan Jakarta
2014
Ascott Limited
Satrio
Serviced Apartment
Fraser Place at Setiabudi Sky Garden
2015
Frasers Hospitality
Karbela Selatan
Serviced Apartment
Somerset Kencana Jakarta
2015
Ascott Limited
KHM Syafi'I Hadzami
Condotel
Fraser Suites at Ciputra World Jakarta 2
2016
Frasers Hospitality
Satrio
Serviced Apartment
Fraser Suites Kebon Melati
2018
Frasers Hospitality
Kebon Melati
Serviced Apartment
Capri by Fraser
2018
Frasers Hospitality
TB Simatupang
Condotel
Source: Colliers International Indonesia - Research and Fraser Cachet (Issue 18)
Occupancy The apartment for lease market experienced a minor occupancy decrease of 0.4% QoQ to 75.3%. Leasing activity during the initial period of 2015 was relatively stagnant highlighted with “come and go” tenants and the absence of new enquiries from expatriates. This figure also marked a 0.9% decrease compared to the same quarter in 2014. Moreover, it should be noted that a large number of new middle-upper to upper class strata-title apartments is likely to put downward pressure on occupancy levels of apartments for lease. Generally, individually owned apartment units are offered furnished, which meets expatriate standards and taste.
The QoQ Occupancy Performance for Non-Serviced Apartment Area CBD
4Q 2015 84.5%
South Jakarta Non-Prime area
1Q 2015
0.1%
77.1%
76.7%
-0.4%
74.9%
74.8%
-0.1%
The QoQ Occupancy Performance for Serviced Apartment 4Q 2014
1Q 2015
QoQ change
CBD
78.7%
76.1%
-2.6%
South Jakarta
74.6%
75.5%
0.9%
Non-Prime area
51.8%
53.4%
1.6%
Source: Colliers International Indonesia - Research
To cope with this situation, some apartments for lease (both serviced and non-serviced) offered more flexible leasing terms and payment to entice tenants, allowing for short-term leasing. Previously, the apartments for lease require a minimum lease term of six months paid in advance. Recently, landlords are offering monthly accommodation that can be paid monthly.
QoQ change
84.6%
Source: Colliers International Indonesia - Research
Area
New enquiries were reportedly limited, with only a few apartments in South Jakarta enjoying an increase in occupancy during the reviewed quarter. Softening demand during this quarter was mostly limited to inquiries from western expatriates. The recent plunge in oil prices has impacted the overall sluggish performance of apartments for lease in Jakarta as some companies related to the oil business reduced the number of their expatriates working in Jakarta. For some years, the oil and gas industry has consistently driven the leasing market, mainly for western expatriates.
Rental Rates The average monthly rent of apartments for lease in Jakarta persisted in its decline, falling 2% QoQ to USD21.8/sq m/ month. The overall downward trend in the rental rate was triggered by sluggish demand in the previous year, which caused management adjust rents to maintain the occupancy level. Several apartments for lease are offered in local currency, however with the weakening rupiah against the US dollar and that the overall rental rates presented here are in US dollars, the overall figure dropped somewhat. During the “tenants’ market” in the coming period, rents are expected to soften during 2015 and this will characterise the whole leasing market.
23 Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
Average Rental Rates of Apartment for Lease
Concluding Thought
USD 30.00
The government plans to introduce a new scheme of luxury goods tax on residential property would adversely impact property sales, particularly in the middle segment. Previously, a 5% luxury tax was expected to be imposed on property valued at IDR10 billion but a revision is pending to reduce this to IDR2 billion. The planned revisions would encompass a much wider range of property sales, as a IDR2 billion apartment in Jakarta is currently considered as middle to middle-upper segment, which comprises about 23% of the total existing apartments. On the other hand, it is unlikely to have a dramatic impact on the upper to luxury class apartments, since this kind of buyer will pay for a high-quality product and is not relatively price sensitive.
USD 27.00
Rental Rates/ sq m/ month
USD 24.00 USD 21.00 USD 18.00 USD 15.00 USD 12.00 USD 9.00 USD 6.00 USD 3.00
CBD
2015YTD
2014
2013
2012
2011
2010
2009
USD 0.00
South Jakarta (inc. Non-Prime Area)
Source: Colliers International Indonesia - Research
As mentioned above, some serviced apartments in the CBD raised their rental rates by 3 to 5%. One serviced apartment building adjusted the rental rate quite significantly and thus impacted the drop of overall rental rates in the CBD. On the other hand, apartments for lease in South Jakarta (including nonprime area), which mostly consist of non-serviced apartments, kept the rental rate the same as in the previous quarter. In addition, since many non-serviced apartments quote the rental rate in rupiah, the strengthening US dollar impacted the overall rental rates in US dollars.
The apartments for lease market is expected to remain quiet in the upcoming quarters due to the current issues regarding an additional regulation that will require foreigners to master the Indonesian language before they are able to obtain a work permit. This regulation may hamper the inflow of a number of expatriates coming to Indonesia. In contrast, the establishment of the ASEAN Economic Community should create a business momentum that will gradually improve the Jakarta apartments for lease market.
Average Rental Rates of Apartment for Lease Area
4Q 2014
1Q 2015
QoQ change
CBD
USD28.58
USD27.81
-2.7%
South Jakarta (including non-prime area)
USD15.94
USD15.83
-0.7%
Source: Colliers International Indonesia - Research
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Research & Forecast Report | 1Q 2015 | Apartment | Colliers International
RETAIL SECTOR
Existing and Future Retail Space in Jakarta West Jakarta
Supply
East Jakarta
Jakarta
North Jakarta
Jakarta Shopping Center Cumulative Supply
South Jakarta
5,500,000 Central Jakarta
5,000,000 4,500,000
CBD
4,000,000
0
3,000,000
200,000 400,000 600,000 800,000 1,000,000 sq m
2,500,000 2,000,000
Existing Supply up to 2014
1,500,000
Source: Colliers International Indonesia - Research
5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000
For Sale
For Lease
Source: Colliers International Indonesia - Research
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Research & Forecast Report | 1Q 2015 | Retail | Colliers International
2018F
2017F
0 2016F
Experienced developers are still the main contributors of additional supply of shopping centres in Jakarta. Agung Podomoro Land (APL) and Pondok Indah Group will become active contributors of new shopping centres in Jakarta. They will provide around 48% of the total additional supply during 2015 2018.
5,500,000
2015F
Despite the limited number, Jakarta is expected to see more shopping centres in operation after 2016. It is projected that there will be around 500,000 sq m of new retail space by 2018. Other than shopping centres that are currently under construction, at least five future shopping centres, i.e. Mal Puri Indah 2, Pondok Indah Mal 3, AEON Cakung, Shopping Mall at Podomoro Park and Holland Village Mall are preparing to start construction in 2015. Some of those have confirmed that they will break ground within the first half of 2015.
Jakarta Cumulative Supply Based on Marketing Scheme
2015YTD
For the last five years, the growth of retail space in Jakarta has been slack and this will likely continue in 2015 - 2016 when there will be less than 100,000 sq m of additional supply contributed by three shopping centres. With no new shopping centres operating as of 1Q 2015, the cumulative supply of retail space in shopping centres in Jakarta remained as it was in 2014 at 4.43 million sq m.
2014
Source: Colliers International Indonesia - Research
Pondok Indah Group plans to build two new shopping centres, i.e. Puri Indah Mal 2 in West Jakarta and Pondok Indah Mal 3 South Jakarta. Both malls are expansions of existing projects. Being announced several years ago, these projects will start to be developed in 2015.
2013
2018F
2017F
2016F
2015F
2015YTD
2014
Annual Supply
2012
Existing Supply
2013
2012
2011
2010
0
Future Supply in 2015 - 2018
While proceeding with the construction of New Harco Plaza, Agung Podomoro is preparing to launch Podomoro Park in Buaran, East Jakarta. Similar to their previous project (Podomoro City in West Jakarta), the shopping mall in Podomoro Park will be part of an integrated development together with apartments.
2011
500,000
2010
1,000,000
sq m
sq m
3,500,000
Greater Jakarta Area (BoDeTaBek Bogor, Depok, Tangerang, Bekasi)
Existing and Future Retail Space in BoDeTaBek
BoDeTaBek Shopping Center Cumulative Supply
Bekasi
3,000,000 Tangerang
2,500,000
sq m
2,000,000
Depok
1,500,000 Bogor
1,000,000 500,000
0
2018F
2017F
2016F
2015F
2015YTD
2014
Annual Supply
Source: Colliers International Indonesia - Research
AEON Mall BSD seemingly will be the sole shopping centre in greater Jakarta in 2015. Construction progress on it has been quite significant and it is ready to open as the first AEON Mall in Indonesia around mid-2015. A joint venture of AEON with a local developer will build 20 shopping malls in Indonesia over the next eight years. Besides BSD City, AEON will develop more malls in the greater Jakarta area like Kota Deltamas in Bekasi Regency, Bogor and Sentul. It is expected that those developments will be completed and opened in 2018. Without any new shopping centres being introduced this quarter, the cumulative supply was identical to the previous quarter at 2.91 million sq m. It is expected that the greater Jakarta retail market will see more new space than Jakarta with a projected 600,000 sq m of additional supply coming into the market by 2018. However, as of 1Q 2015, construction progress is only seen at retail centres that are expected to begin operations in 2015 2016. This only represents 25% of the total additional supply in 2015 - 2018. Larger additional supply in 2017 - 2018 will be contributed mostly by shopping centres located adjacent to or integrated into residences, both vertical and landed houses.
600,000
Existing Supply up to 2014
900,000
1,200,000 sq m
Future Supply in 2015 - 2018
Source: Colliers International Indonesia - Research
Overall, Jakarta and the greater area is anticipating additional 27 new shopping centres that will bring 1.1 million sq m of retail space by 2018. Bekasi and Tangerang will be the two largest contributors with around 500,000 sq m of projected additional retail space at 10 shopping centres by 2018. These 10 projected shopping centres will bring the cumulative supply in each of those areas to more than a million sq m by 2018. In addition to Bekasi, which will have seven future shopping centres, Bogor will also see more additional retail space of around 100,000 sq m by 2018, as they are only neighbourhood category shopping centres.
BoDeTaBek Cumulative Supply Based on Marketing Scheme 3,000,000 2,500,000 2,000,000 sq m
Existing Supply
2013
2012
2011
2010
0
300,000
1,500,000 1,000,000 500,000
For Sale
For Lease
Source: Colliers International Indonesia - Research
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Research & Forecast Report | 1Q 2015 | Retail | Colliers International
2018F
2017F
2016F
2015F
2015YTD
2014
2013
2012
2011
2010
0
Despite the lower numbers, Tangerang will see larger additional supply than Bogor, mostly due to the fact that future shopping centres in Tangerang are regional shopping centres larger than 30,000 sq m.
In Jakarta, three regions including Central, South and West Jakarta are areas actively contributing new shopping centres. West Jakarta will be the largest contributor by providing 150,000 sq m of additional supply by 2018.
New Supply Pipeline shopping centers
developer
location
region
NLA (sq m)
Status
Jakarta 2015 Pantai Indah Kapuk Mall
Agung Sedayu
Pantai Indah Kapuk
North Jakarta
30,000 Under Construction
Shopping Mall @ Pancoran
Agung Podomoro
Pancoran
South Jakarta
Agung Podomoro
Slipi
West Jakarta
40,000 Under Construction
Pondok Indah Group
Puri Indah
West Jakarta
50,000 In Planning
8,000
Under Construction
2016 Neo SOHO Mall (Podomoro City) 2017 Mal Puri Indah 2 Grand Cipulir
Priamanaya
Cipulir
South Jakarta
30,000 In Planning
Holland Vilage Mall
Lippo Group
Cempaka Putih
Central Jakarta
40,000 In Planning
New Harco Plaza
Agung Podomoro
Glodok
West Jakarta
60,000 Under Construction
Mall @ Green Pramuka City
Duta Paramindo Sejahtera
Pramuka
North Jakarta
30,000 In Planning
Pondok Indah Mall 3
Pondok Indah Group
Pondok Indah
South Jakarta
60,000 In Planning
2018 Mall at The City Centre
Kencana Graha Global
Mas Mansyur
Central Jakarta
65,000
Shopping Mall at Podomoro Park
Agung Podomoro
Buaran
East Jakarta
40,000 In Planning
In Planning
AEON Mall Garden City
AEON & Sinarmas
Cakung
East Jakarta
90,000 In Planning
AEON
Serpong
Tangerang
75,000 Under Construction
BoDeTaBek 2015 AEON Mall BSD 2016 Bekasi Trade Centre 2
Gapura Prima
Bulak Kapal
Bekasi
56,000
Metropolitan Mall Cileungsi
Metropolitan Land
Cileungsi
Bogor
25,000 Under Construction
Under Construction
30,000 In Planning
2017 Vivo Sentul Lifestyle
Megapolitan
Cibinong
Bogor
Vivo Sentul Trademall
Megapolitan
Cibinong
Bogor
13,000
In Planning
Living World Jababeka
Kawan Lama
Jababeka
Bekasi
18,000
In Planning
Plaza Indonesia Jababeka
Plaza Indonesia
Jababeka
Bekasi
20,000 In Planning
Hollywood Central
Graha Buana Cikarang
Cikarang
Bekasi
25,000 In Planning
Embarcadero
Lippo Group
Bintaro
Tangerang
40,000 In Planning
Grand Dhika City Mall
Adhi Persada Property
Bekasi
Bekasi
24,000 Under Construction continued
27 Research & Forecast Report | 1Q 2015 | Retail | Colliers International
shopping centers
developer
location
region
NLA (sq m)
Status
2018 AEON Mall Deltamas
AEON
Deltamas
Bekasi
90,000 In Planning
AEON Mall Bogor
AEON
Cibinong
Bogor
20,000 In Planning
AEON Mall Sentul
AEON
Sentul
Bogor
15,000
Pesona Square
Menara Depok
Depok
Depok
20,000 In Planning
In Planning
Kota Harapan Indah
Hasana Dharma Permai
Bekasi
Bekasi
51,000
Lippo Grand Mall
Lippo Group
Karawaci
Tangerang
In Planning
120,000 In Planning
Source: Colliers International Indonesia - Research
Demand and Occupancy Since the second half of 2014, the occupancy rate of shopping centres in Jakarta continues to increase QoQ. As of 1Q 2015, several home furnishing and fashion retailers contributed to increase the occupancy to 86.8%. Jysk and H&M are foreign retailers that have entered the Jakarta market around 2013 2014. Jysk, a Danish retail chain selling household goods such as mattresses, furniture and interiors, will be very expansive in opening new outlets in 2015. This retailer opened three stores, two of which are in Jakarta. H&M, will also open more stores in Jakarta. Later, the Sweden-based retailer will open a store at a mall in Pluit, North Jakarta. The projected occupancy of shopping centres in Jakarta is expected to increase at least until the next quarter. Some tenants like home furnishings, fashion, department store and supermarket seemingly are in the pipeline to open new stores. When these pre-committed tenants open, retail space in Jakarta will become limited.
Cumulative Supply, Demand and Occupancy in Jakarta 3,500,000
100% 90%
3,000,000
80%
2,500,000
70% 60%
sq m
2,000,000
50% 1,500,000
40% 30%
1,000,000
20%
500,000
10%
Space Absorbed
Vacant Space
2015YTD
2014
2013
2012
2011
0% 2010
0
Occupancy
In 2014, quite a few shopping centres had large vacant spaces due to their transformation by upgrading tenancy layouts and façades. Apart from that, Jakarta also witnessed some dying malls. With poor performance at these malls, some tenants anticipate pulling out due to lower numbers of visitor and low transaction volume. The decreasing performance of those shopping centres will lead to a weakening occupancy of the overall Jakarta area. Landlords should anticipate this and look for a way to attract crowds to their malls. Poorer performance was also recorded at middle to middle low class shopping centres that are categorised as trade malls. Occupancy levels at this class of shopping centres during 2014 continued to weaken. However, as of 1Q 2015, the occupancy at middle class shopping centres started climbing while at middlelow shopping centres it continued to decline. Conversely, upper class, including premium, malls maintained a high level of average occupancy. Most shopping centres recorded new space absorption from 500 to 2,000 sq m that were taken by tenants, raising the occupancy of upper class shopping centres to 91.2% as of 1Q 2015. Based on area (CBD and Outside CBD), the occupancy of shopping centres in the CBD was flat at 92% since the previous year. With no additional supply for at least three years ahead, tenant re-layout is the mostly activity found at shopping centres in the CBD. A renewal tenancy list is one way for landlords to attract a lot of visitors and maintain high occupancy rates. Currently, a luxury mall around Thamrin made small changes to their layout by relocating tenants from eX Plaza (a mall that stopped operating in the middle of 2014). To maintain the prestige, this mall had to select potential tenants to occupy the space mostly on the top floor. Another mall in Thamrin also did a re-layout due to the opening of a new department store, while a mall in South Jakarta is also discussing refreshing their tenancy mix. After the declining trend in 2014, the average occupancy in the outside CBD climbed moderately QoQ to 84.6% as of 1Q 2015. On the contrary, South Jakarta saw a decreasing occupancy QoQ due to a large vacant space available at a shopping centre in the Cilandak area. This mall is in negotiations with some food and beverage stores to occupy the vacant space.
Source: Colliers International Indonesia - Research
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Research & Forecast Report | 1Q 2015 | Retail | Colliers International
The performance of newly operating shopping centres in 2013 2014 also helped move occupancy upwards in North, East and West Jakarta. As of 1Q 2015, the occupancy in North and East Jakarta were 83.7 and 87.4%, respectively. West Jakarta recorded
lower occupancy than those two areas. The opening of stores at both newly operating and existing shopping centres maintained the occupancy in West Jakarta at 80.9%.
List of New Tenants (of more than 1,000 sq m) during 2015 in Jakarta Name of tenant
type of retailer
open at
opening time
Jysk
Home Furnishing
Kuningan City
March
Jysk
Home Furnishing
Pejaten Village
March
XXI
Entertainment
Lippo Mall Puri
March
H&M
Fashion
Emporium
April
Matahari
Dept. Store
Pasaraya
June
H&M
Fashion
Lippo Mall Puri
June
Uniqlo
Fashion
PIK Mall
July
Lotte Mart
Supermarket
PIK Mall
July
Informa
Home Furnishing
PIK Mall
July
Ranch Market
Supermarket
PIK Mall
July
Gold’s Gym
Entertainment
Dharmawangsa Square
July
Debenhams
Dept. Store
Lippo Mall Puri
July
Ace Hardware
Home Furnishing
PIK Mall
October
Ace Hardware
Home Furnishing
Mall of Indonesia
November
Source: Colliers International Indonesia - Research
Annual Supply and Demand in Jakarta
Cumulative Supply, Demand and Occupancy in BoDeTaBek
200,000 100%
2,000,000
90%
160,000
80% 70%
120,000 1,200,000 sq m
sq m
1,600,000
80,000
60% 50%
800,000
40% 30%
40,000 400,000
Annual Demand
Source: Colliers International Indonesia - Research
The performance of some shopping centres that operated in 2013 - 2014 also had a positive good impact on the occupancy in greater Jakarta area, which climbed by 1.6% QoQ to 83.4% as of 1Q 2015. Some committed tenants opened their stores after those malls had been operating for two years. Similar to Jakarta, home furnishing retailers were a major contributor which helped maintain the occupancy in greater Jakarta high since the second half of 2014. Jysk, Pong’s, Informa and Ace Hardware have opened progressively as of 1Q 2015 at shopping centres in Depok and Tangerang.
Space Absorbed
Vacant Space
2014
2013
2012
2011
0% 2010
2015YTD
2014
2013
0 2015YTD
Annual Supply
2012
2011
2010
0
29
20% 10%
Occupancy
Source: Colliers International Indonesia - Research
AEON Mall will be the sole shopping centre operating in 2015. AEON Mall is expected to lure visitors due to its Japanese mall concepts that are different from other operating malls It is confirmed that and AEON own brand supermarket and department store will occupy this mall, which is projected to officially open in 2Q 2015.
Research & Forecast Report | 1Q 2015 | Retail | Colliers International
Annual Supply and Demand in BoDeTaBek
Occupancy Based on Region in BoDeTaBek 100%
200,000
90% 160,000
80% 70% sq m
60% 50%
120,000
80,000
40% 30%
40,000
20% 10%
Depok
2015YTD
Tangerang
Bekasi
Annual Supply
2014
2014
2013
2013
2015YTD
Bogor
2012
2012
2011
2010
2010
2011
0
0%
Annual Demand
Source: Colliers International Indonesia - Research
Source: Colliers International Indonesia - Research
Committed Tenant in Future Shopping Centres Name of shopping centers
projected completion
location
retailers
Jysk
Home Furnishing
Margo City
February
Ace Hardware
Home Furnishing
Bintaro XChange
May
XXI
Entertainment
Aeon Mall
June
H&M
Fashion
Aeon Mall
June
Uniqlo
Fashion
Aeon Mall
June
Informa
Home Furnishing
Bintaro XChange
May
Ace Hardware
Home Furnishing
BTC City (BTC 2)
2016
Informa
Home Furnishing
BTC City (BTC 2)
2016
Source: Colliers International Indonesia - Research
List of New Tenant of More Than 1,000 sq m During 2015 and 2016 in Jakarta and BoDeTaBek projected completion
location
PIK Mall
2015
Kapuk, North Jakarta
Blitz Megaplex, Muji, Gold Gym, Lotte Mart, Ace Hardware, Fun World, Ranch Market
Neo Soho Mall
2016
Slipi, West Jakarta
Central Department Store
Aeon Mall
2015
BSD City, Tangerang
Jysk, Aeon Supermarket, Aeon Department Store, H&M, Uniqlo
Bekasi Trade Center 2
2016
Bulak Kapal, Bekasi
Hypermart, Ace Hardware
Metropolitan Mall Cileungsi
2016
Cileungsi, Bekasi
Matahari, Gramedia, XXI
shopping centers
Retailers
Jakarta
BoDeTaBek
Source: Colliers International Indonesia - Research
30
Research & Forecast Report | 1Q 2015 | Retail | Colliers International
Space Absorption in the Future Shopping Centers in BoDeTaBek
in Jakarta 2018F
2018F
2017F
2017F
2016F
2016F
2015F
2015F
2014
2014
0
60,000
120,000
Absorbed
180,000
240,000
0
sq m
Vacant Space
Source: Colliers International Indonesia - Research
80,000
160,000
Absorbed
240,000 Vacant Space
320,000 sq m
Source: Colliers International Indonesia - Research
Based on committed demand, future shopping centres in 2015 2016 both in Jakarta and the greater Jakarta area have been 50% absorbed as of 1Q 2015. Some committed tenants are ready to open at shopping centres that are projected to begin operating in 2015 - 2016.
Average Asking Rents and Service Charges Jakarta Asking Base Rent (Sq m/month) Based on Class IDR 1,000,000
Most shopping centres in Jakarta saw a similar range of asking base rents YoY. As of 1Q 2015, the average base rent of shopping centres in Jakarta was IDR521,783/sq m/month, up by 6.1% YoY. The asking base rent of a typical floor was IDR359,706/ sq m/month while the highest rent achieved is typically found on the ground floor where the average rent was, on average, IDR674,741/sq m/month. Although the asking base rent was relatively flat, landlords will charge 15 - 25% more when renewing the contracts, which commonly have a three-year lease period. Based on grade, since 2011, upper class malls experienced 10% average growth of rents, while middle – middle low class only recorded 3% per year. The average asking base rent of upper class, which was IDR921,237/sq m/month as of 1Q 2015, is expected to increase. Limited vacant space and the plan to introduce new rental rates will likely lift the average base rents in 2015.
IDR 900,000 IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000
Middle – middle low class malls have begun to see high growth of rents. In the previous year, the growth of the average rent of this mall grade was 2.2%. In 2015, by climbing 2.9% YoY, the average base rent was IDR343,991/sq m/month as of 1Q 2015. However, the projected growth of rents will be modest as increasing rents still have a strong impact on middle class retailers.
IDR 400,000 IDR 300,000 IDR 200,000 IDR 100,000 IDR 0 2010 Upper Class
2011
2012 Middle Low
2013
2014
2015YTD
Average
Source: Colliers International Indonesia - Research
31 Research & Forecast Report | 1Q 2015 | Retail | Colliers International
Average Asking Base Rent in Jakarta
There is a big gap in service charges between upper class and lower class malls with a range of 35 to 55%. The average service charge at middle – middle low class shopping centres was between IDR95,874 and 65,751/sq m/month as of 1Q 2015. It is expected that the growth of service charges in 2015 will be higher than in 2014. As an early indicator, the QoQ growth of service charge as of 1Q 2015 was higher than QoQ changes in 2014.
IDR 1,000,000 IDR 900,000 IDR 800,000 IDR 700,000
Average Service Charge in Jakarta Based on Location
IDR 600,000 IDR 500,000 IDR 400,000
IDR 200,000
IDR 300,000 IDR 200,000
IDR 160,000
IDR 100,000 IDR 0 2010
2011
2012
2013
CBD
2014
2015YTD
Outside CBD
IDR 120,000
IDR 80,000
Source: Colliers International Indonesia - Research
Since electricity tariffs and minimum wages increased in 2014, the average service charge surpassed IDR100,000/sq m/month. As of 1Q 2015, service charges at shopping centre in Jakarta were IDR105,723/sq m/month, growing 10.1% YoY. Upper class shopping centres had a rapid increase in service charges, to IDR148,803/sq m/month as of 1Q 2015. Six upper class malls in Jakarta have adjusted their service charges upward in the range of IDR150,000 - 230,000/sq m/month as of 1Q 2015.
Average Service Charge in Jakarta Based on Class IDR 200,000
IDR 40,000
IDR 0 2010
2011
2012
2013
CBD
2014
2015YTD
Outside CBD
Source: Colliers International Indonesia - Research
BoDeTaBek Average Base Rent in BoDeTaBek IDR 400,000
IDR 160,000
IDR 360,000 IDR 320,000
IDR 120,000
IDR 280,000 IDR 240,000
IDR 80,000
IDR 200,000 IDR 160,000
IDR 40,000
IDR 120,000 IDR 80,000
IDR 0 2010 Upper Class
2011
2012
2013
Middle Low
2014
2015YTD
Average
IDR 40,000 IDR 0 2010
Source: Colliers International Indonesia - Research
Bogor
2011
2012
Depok
Source: Colliers International Indonesia - Research
32
Research & Forecast Report | 1Q 2015 | Retail | Colliers International
2013 Tangerang
2014
2015YTD Bekasi
In greater Jakarta, with a range of IDR200,000 to 300,000/sq m/ month, the average asking base rent was IDR315,898/sq m/ month as of 1Q 2015. It grew 4.4% YoY. The average base rent of shopping centres in Tangerang was the highest at IDR372,185/ sq m/month, while in Depok it was the lowest at IDR249,113/sq m/month.
Concluding Thoughts
The projected asking base rent in greater Jakarta is expected to increase in 2015. Some shopping centres that achieved high occupancy rates still maintain base rents similar to the previous year. With limited vacant space, the possibility of adjusting asking base rents will be high in 2015.
Jakarta is still projected as a potential market for foreign retailers. However, there is inadequate vacant space in the middle to upper class mall particularly in the CBD. Several shopping centers mitigate such situation by rearranging the tenancy mix and selecting tenants with the capacity to attract crowd and lift mall’s performance.
Average Service Charge in BoDeTaBek Based on Region
Jakarta has to avoid a saturated situation of shopping centres in terms of tenancy mix and mall atmosphere. Re-layout and bringing in new tenants brings a fresh concept that is expected to attract more visitors to shop.
IDR 120,000 IDR 100,000 IDR 80,000 IDR 60,000 IDR 40,000 IDR 20,000 IDR 0 2010 Bogor
2011 Depok
2012
2013 Tangerang
2014
2015YTD Bekasi
Source: Colliers International Indonesia - Research
The average service charge at shopping centres in greater Jakarta was in the range of IDR70,000 - 80,000/sq m/month. The average service charge in greater Jakarta was IDR79,947/sq m/month, lower by 25% compared to that in Jakarta. Based on region, Bekasi and Tangerang had the highest service charges at IDR85,052 and 82,449/sq m/month, respectively. Five shopping centres, two in Tangerang, have adjusted their service charge to between IDR100,000 and 125,000/sq m/month. The highest service charge was recorded by two shopping centres located in Bogor and Tangerang.
33 Research & Forecast Report | 1Q 2015 | Retail | Colliers International
Hotel Sector
Cumulative Supply of Star-Rated Hotel Rooms in Jakarta 14,000
Star-Rated Hotel
12,000
8,000 6,000 4,000 2,000
60 50 40 30 20 10
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
0
5-star
Source: Colliers International Indonesia - Research
34
Research & Forecast Report | 1Q 2015 | Hotel | Colliers International
5-star
2015
2014
2013
2012
2011
2010
2009
4-star
Source: Colliers International Indonesia - Research
70
4-star
2008
3-star
Cumulative Supply of Star-Rated Hotel Projects in Jakarta
3-star
2007
0 2006
In 2015, there will be another luxurious hotel with 250 rooms in the CBD area from The Westin - Starwood Hotels & Resorts Group. By 2015, Colliers Indonesia expects an addition of 6,310 rooms in the starred-rated hotels, that will be mostly at 3-star hotels.
10,000
2005
Most hotels in Jakarta are business hotels which rely mostly on business activities of meetings, conferences and exhibitions. In early 2015, two prominent names in the hotel industry officially opened luxury class hotels in Jakarta area: Raffles Hotels & Resorts with 173 rooms, and Fairmont Hotels & Resorts with 380 rooms. In contrast, the Jakarta hotel market saw a reduction in the number of hotel rooms with the temporary closure of the Four Season Hotel Jakarta. This was the Regent Hotel that opened in 1995 and was operated by Four Seasons years later. As of the end of 2014, the hotel called a halt to operations and will re-open after three years of major renovations.
Future Hotel Development Pipeline Name of development
star rated
str global equivalent rate
location
No. of rooms
region
projected completion time
Harris Hotel Hayam Wuruk
3
Midscale Class
Hayam Wuruk
Central Jakarta
265
2015
Harris Hotel Gunung Sahari
3
Midscale Class
Gunung Sahari
Central Jakarta
200 2015
Harris Hotel Cilandak
3
Midscale Class
Cilandak
South Jakarta
130
2015
Aston Neo
3
Midscale Class
TB Simatupang
South Jakarta
170
Q3 2015
Ibis Style
3
Midscale Class
Pantai Indah Kapuk
North Jakarta
200 Q4 2015
Prima Hotel
3
Midscale Class
Wahid Hasyim
Central Jakarta
150
Q4 2015
Santika
3
Midscale Class
TB Simatupang
South Jakarta
151
Q2 2016
Santika
3
Midscale Class
Yos Sudarso
North Jakarta
150
Q2 2016
Ibis Style
3
Midscale Class
Bangka Raya
South Jakarta
200 Q3 2016
The Acacia
3
Midscale Class
Kramat Raya
Central Jakarta
150
Q3 2016
Hotel @Fachrudin
3
Midscale Class
Tanah Abang
Central Jakarta
225
Q4 2016
Citizen M Hotel
3
Midscale Class
Mega Kuningan
South Jakarta
200 Q4 2018
Grand Mercure Kemayoran
4
Upscale Class
Benyamin Sueb, Kemayoran
Central Jakarta
200 2015
Novotel
4
Upscale Class
Pantai Indah Kapuk
North Jakarta
220 Q4 2015
SwissBelhotel - Kirana Commercial Avenue
4
Upscale Class
Boulevard Kelapa Gading
North Jakarta
300 Q3 2016
Aloft
4
Upscale Class
Wahid Hasyim
Central Jakarta
170
Q4 2017
Hotel @Perintis - South Tower
4
Upscale Class
Mega Kuningan
South Jakarta
112
2018
Sheraton
5
Luxury
Gandaria
South Jakarta
300 Q3 2015
InterContinental
5
Luxury
Pondok Indah
South Jakarta
300 Q4 2015
St Regis
5
Luxury
Gatot Subroto
South Jakarta
124
The Langham
5
Luxury
SCBD
South Jakarta
200 2017
Regent
5
Luxury
Gatot Subroto
South Jakarta
126
2018
Sofitel
5
Luxury
Mega Kuningan
South Jakarta
212
2018
2016
Source: Colliers International Indonesia - Research and STR Global
Budget Hotel For the last couple of years, the budget hotel market has shown exponential supply growth. As of 2015, there will be 1,164 additional hotel rooms. Since 2006, the Amaris brand (Santika Group) has been the major budget hotel operators with ten hotels under its management. Other active budget hotel operators include Aston Group with Fave and NEO, Accor Group with Ibis budget brand, and Tauzia Management with POP! and the new brand called Yello. By the end of 2015, Tauzia Management will dominate hotel development especially for budget hotels around Indonesia.
Cumulative Supply of Budget Hotel (Economy Class) in Jakarta 45 40 35 30 25 20 15 10 5
Source: Colliers International Indonesia - Research
35 Research & Forecast Report | 1Q 2015 | Hotel | Colliers International
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
0
Future Hotel Development Pipeline str global equivalent rate
Name of development
location
region
No. of rooms 112
projected completion time
POP! Hotel Pasar Baru
Economy
Pasar Baru
Central Jakarta
2015
POP! Hotel Wahid Hasyim
Economy
Wahid Hasyim
Central Jakarta
90
2015
Whiz - Cipete
Economy
Cipete
South Jakarta
180
2015
@HOM - Cawang
Economy
Cawang
East Jakarta
80
2015
POP! Hotel Gajah Mada
Economy
Gajah Mada
Central Jakarta
90
2015
Whiz - Hayam Wuruk
Economy
Hayam Wuruk
Central Jakarta
200 2015
Yello Hotel Hayam Wuruk
Economy
Hayam Wuruk
Central Jakarta
372
2015
Amaris TB Simatupang
Economy
TB Simatupang
South Jakarta
151
2015
Source: Colliers International Indonesia - Research and STR Global
There are three major groups of hotel management that are actively expanding their business coverage, i.e. Tauzia Management, Santika and Intiland. Santika, with the Amaris brand has dominated the budget hotel market in Jakarta but recently, Tauzia and Intiland are slowly trying to increase their market share. By 2016, Tauzia Management will add four hotels with at least 700 rooms in Jakarta, followed by Intiland, which will expand with another two hotels providing at least 490 rooms.
Most Active Budget Hotel Operators Based on Number of Rooms
Most Active Budget Hotel Operators Based on Number of Hotels 16 14 12 10 8
1,600
6
1,400
4
1,200
2
1,000
0 Santika
800
Year to Date
600
Tauzia
Projected Supply During 2015
Source: Colliers International Indonesia - Research
400 200 0 Santika Year to Date
Tauzia
Intiland
Projected Supply During 2015
Source: Colliers International Indonesia - Research
36 Research & Forecast Report | 1Q 2015 | Hotel | Colliers International
Intiland
Number of Passenger Through Soekarno - Hatta Airport
The Composition of Foreign and Domestic Guests 100%
2,000,000
1,500,000
1,000,000
500,000
2014
2013
2012
2011
2010
2009
Source: Jakarta Statistics
Performance
80%
60%
40%
20%
0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Domestic
Foreign
The YoY hotel performance is not great, particularly from an occupancy rate standpoint. According to the STR Global data point that Colliers refers to, the AOR (Average Occupancy Rate) in March 2015 decreased quite significantly from 66.2 to 56%. This occurred not only in the CBD area but also outside the CBD area. There were some factors that probably affect this. First is Election Day when quite a few political parties held congresses and other political activities in hotel raising the occupancy rate prior to the legislative election. This explains why the AOR in early 2014 was higher than in early 2015. Second is the issuance of a new regulation, after the new cabinet was inaugurated by the Ministry of Administrative and Bureaucratic Reform that prohibits civil servants from holding meetings in hotels. Apart from this, the relatively low occupancy rate will be further challenged by the continuing new hotel development in the future.
Source: Jakarta Statistics
Since 2010, the number of passengers that arrived in Jakarta showed an upward trend. By the end of 2014, the number of passengers that arrived in Indonesia via Soekarno – Hatta International Airport had reached 2,246,437, a slight increase from the previous year. The highest number arrivals was during June to September.
37
2008
0 2007
For some time, hotel guests have been largely domestic. Most foreign guests choose to stay in 5-star hotels, with some staying in 4-star hotels mainly for business trips. The majority of domestic guests prefer to stay in 3-star hotels. In the last four years, the average length of stay of foreign guests in 5-star hotels has been slightly higher than that of domestic guests.
2,500,000
2006
At the end of 2014, the Indonesian Hotel and Restaurant Association (PHRI) urged the government to postpone the policy of banning all government institutions from holding meetings and conferences in hotels and convention centres. In response to this, it was indicated that government would relax the ban to help boost hotel occupancy rates, which had decreased since the implementation of this strict measure. The hotel association expects that the ban relaxation will likely increase occupancy rates in hotels located in remote areas by 10 to 20% where from 40 to 50% of revenues are sourced from government-related events.
2005
Demand Driver
Research & Forecast Report | 1Q 2015 | Hotel | Colliers International
Average Occupancy Rate of Hotels in Jakarta 100%
Average Occupancy Rate of Hotels in the Outside CBD Jakarta 100%
80% 80% 60% 60% 40% 40% 20% 20% 0% Mar 2014 Jakarta
Mar 2014 CBD
0% Mar 2014
Mar 2014
Upper Upscale Class
Upscale Class
Outside CBD
Source: STR Global
Average Occupancy Rate of Hotels in CBD Jakarta
Source: STR Global
The decreasing performance of AOR at hotels in Jakarta was followed by the decreasing performance of the ADR (Average Daily Rate). YoY comparison shows year-to-date ADR reached USD94.14, down from USD98.87 in the same period last year.
100%
80%
Average Daily Rate of Hotels in Jakarta
60%
USD 140.00 40%
USD 120.00
20%
USD 100.00 USD 80.00
0% Mar 2014
Mar 2014
Luxury Class
Upper Upscale Class
Upscale Class
Upper Midscale & Midscale Classes+
Source: STR Global
USD 60.00 USD 40.00 USD 20.00 USD 0.00 Mar 2014 Jakarta Source: STR Global
38 Research & Forecast Report | 1Q 2015 | Hotel | Colliers International
Mar 2014 CBD
Outside CBD
Average Daily Rate of Hotels in CBD Jakarta USD 200.00 USD 180.00 USD 160.00 USD 140.00 USD 120.00 USD 100.00 USD 80.00 USD 60.00 USD 40.00 USD 20.00 USD 0.00 Mar 2014
Mar 2014
Luxury Class
Upper Upscale Class
Upscale Class
Upper Midscale & Midscale Classes+
Source: STR Global
Average Daily Rate of Hotels in the Outside CBD Jakarta USD 100.00
USD 80.00
USD 60.00
USD 40.00
USD 20.00
USD 0.00 Mar 2014
Mar 2014
Upper Upscale Class
Upscale Class
Source: STR Global
39
Research & Forecast Report | 1Q 2015 | Hotel | Colliers International
Industrial Estate Sector Supply Commencing in 2015, around 50 ha of new industrial land were introduced by Bekasi Fajar Industrial Estate. This new industrial land stock is ready for sale. Sizeable industrial land remains limited and thus far, many plans for expansion have yet to be concluded. In 2015, the industrial market will receive quite sizeable new industrial land from the expansion of several industrial estates. Apart from the 50 ha available above, around 5.4 ha is also available from Suryacipta. Another expansion of 25 ha of commercial area will also be contributed by Bekasi Fajar, This parcel will be offered at a different price from the industrial lots. Thus far, only around 80 ha were recognised as this quarter’s supply. One industrial estate located in Bekasi is accelerating the conclusion of land acquisition and permitting as part of the expansion plans for around 600 ha. This industrial estate has yet to confirm that the 600 ha extension plan on which they are now working will be ready at a specified time. Likewise, two industrial estates in Serang are also working on expanding the industrial land with a total area of more than 400 ha. Apart from operating industrial estates that are actively expanding their zone are several upcoming industrial estates located mainly in Karawang that are part of a big consortium called Trans Hexa Karawang. Several industrial estates will focus on delivering industrial land that they have sold to industrial tenants. At the same time, expansion is still needed for developers to maintain sales. Land acquisition is one issue that takes most of the time even when the land has been part of the whole master plan. While some expansion projects are still underway, the transaction activity continues. However, we only recognise new supply when land is ready for occupation with ready infrastructure.
40
The general issue in the industrial market remains the same, i.e. the limited ready-to-build industrial land. Continued inquiries for industrial land versus the limited stock of land on offer will still characterise the overall industrial market although the expectation of future industrial land is high. Since 2011, land scarcity has been a major problem for most industrial estates, and the substantial surge in land demand is at the crux of this problem. In certain industrial estate locations like in Bekasi, quite a few potential buyers seeking industrial land come to the estate frequently there was less transaction recorded because the land is limited. When the landlords have more bargaining power, some of them that are located in highly demanded areas like Bekasi or Karawang continue to sell raw land at the price of ready-to-use land. Buyers are taking the position of acquiring raw land at the current price to anticipate a further increase when land is offered in a ready-to-use condition. Buying raw land (at the ready-to-use price) is something common.
Demand Total sales during 1Q 2015 was much underpinned by the sales in the Serang area. In general, sales activity during the quarter was quiet compared to the previous quarter. In Tangerang, Millennium was the only active industrial estate. Overall, sales of industrial land were sluggish in this early period of the year. Sales activity within operating industrial estates was relatively low. The good thing is that the total sales during 1Q 2015 was much underpinned by the sales at two industrial estates in Serang involving around 42 ha of land. Land absorption is definitely weakening compared to the same quarter last year. However, we still see that the industrial market is strong with potential buyers continuing to ask for industrial land, although the inquiries are still sporadic. Total sales in Serang during 1Q 2015 jumped quite substantially compared to last quarter due to sales at two major industrial estates in this area, from 17.15 ha to 42.05 ha this quarter. KIEC reported about 9 ha of land sales (from the total planned transaction of 18 ha). This piece of land was sold to coal storage company, which is related to the cement industry. Modern Cikande, on the other hand, consistently records sales transactions and has been always be the main driver of the overall transactions in the greater Jakarta area. Thus far, 33 ha of land transactions in Modern Cikande were concluded by five companies from the chemical, probiotic, lubrication, baby diapers and F&B industries. All of these transactions were by new companies.
Research & Forecast Report | 1Q 2015 | Industrial Estate | Colliers International
The Bekasi region concluded 30.78 ha of transactions mainly contributed by Delta Silicon and GIIC. Other than that, two industrial estates having smaller transactions were MM2100 and Jababeka. Delta Silicon reported a total of 17.28 ha mainly from warehouse companies and a small amount from workshops. A total of 9 ha of land transactions were concluded by heavy equipment and diaper companies this quarter in GIIC. The auto-related industry acquired 3 ha of land in MM2100 while smaller land parcels totalling 1.5 ha in Jababeka were sold to various companies like auto-related industries, warehouses, logistics and general commercial buildings. With limited land to offer, total land transactions in Karawang are still about the same as last quarter. Contributed only by Suryacipta and KIIC, this quarter’s sales are only 6.4 ha, not very different from last quarter’s 8.5 ha. A new chemical industry took 5.4 ha in Suryacipta, which helped Suryacipta’s performance after recording no transactions last quarter. This is the biggest land transaction in Karawang for this quarter because KIIC only recorded land sales of around 1.1 ha to a new auto-parts company from Taiwan. In Karawang, two industrial estates under the brand of Kota Bukit Indah did not record sales or leasing transactions. Again, Millennium industrial estate consistently recorded sales, albeit a small one of 1.82 ha and this was the only transaction during 1Q 2015 in Tangerang. Similar to Tangerang, the Bogor region only concluded leasing transactions at CCIE with a total of 1.1 ha from two workshoprelated companies.
Annual Industrial Land Sales
Land Sales Recorded During 1Q 2015 in Each Industrial Estate Modern Cikande Delta Silicon Krakatau Industrial Estate Cilegon Greenland International Industrial … Suryacipta MM2100 Industrial Town Jababeka Millenium CCIE KIIC 0
1,200 1,000 800 600 400
Tangerang
Karawang
2015YTD
2014
2013
2012
2011
2010
2009
2007
2006
2008
Bekasi
Serang
Source: Colliers International Indonesia - Research
41
15
20
25
30
35
hectares
0
Bogor
10
Source: Colliers International Indonesia - Research
200
Jakarta
5
For the last year, automotive and related industries have not been the main driver for industrial land absorption. Last year, the automotive industry only ranked number three after the F&B and logistics / warehouse industries. This quarter, the automotive industry plunged to seventh position after consumer goods, warehouse, F&B, building materials, chemicals, and heavy equipment industries. However, this condition cannot be used to predict the overall picture of new tenant composition for the full year of 2015, as the market will be very dynamic. One thing that we can opine is that the warehouse and logistics companies together with consumer goods will be the most active tenants for this year.
1,400
Hectares
Total land sales transactions during 1Q 2015 were 82.18 ha, lower than last quarter (representing around 80% of total sales in 4Q 2014). Despite being lower than last quarter, the total land transactions recorded during 1Q 2015 has already equalled 26% of last year’s total sales. This suggests that the industrial market has been on the right track to follow the sales trend of 2013 and 2014.
Research & Forecast Report | 1Q 2015 | Industrial Estate | Colliers International
Types of Activities Industries During 1Q 2015
Greater Jakarta Industrial Land Price USD 250
Logistics/ Warehousing 21.64%
Heavy Equipment Machinery 7.30% 1.34%
Chemicals 7.95%
Building Material 10.95%
USD 200
Medical 1.25%
USD 150
Others 1.28%
USD 100
Plastics 1.22%
Bogor Source: Colliers International Indonesia - Research
Land Price One industrial estate in Bekasi introduced a new land price of USD230/sq m, following the last quarter’s adjustment made by the industrial estate adjacent to it. One industrial estate in this location with the biggest land bank kept adjusting the land price and monitored the price dynamics, particularly in Bekasi and Karawang. To date, they adjusted the price from USD185 to 195/ sq m this quarter. Other than these two industrial estates, prices have been stable. The average land price for available industrial plots in Bekasi was registered at USD222.47, about the same as the price last year. Another industrial estate in Serang was also quite confident with the new price of IDR1.9 million/sq m, representing a 8.5% increase over last quarter. This brought the average industrial land price in Serang to USD132.77/sq m (after converting from local currency to US dollars). Other than these two regions, industrial land prices are stable in Bogor, Tangerang and Karawang. There might be a slight price adjustment during 2015, depending on the economy and sales performance for the full year of 2015.
42
Bekasi
Tangerang
Karawang
2015YTD
2014
2013
2012
2011
2010
2009
2008
USD 0 2007
Food & Beverage 13.60%
USD 50
2006
Consumer Goods 27.99%
Automotive 5.48%
Serang
Source: Colliers International Indonesia - Research
Industrial Land Prices and Maintenance Costs* region
Land price (per sq m) lowest
highest
maintenance costs (per sq m per month)
average
lowest
highest
average USD 0.06
Bogor
USD 120.0
USD 218.7
USD 169.3
USD 0.06
USD 0.06
Bekasi
USD 195.0
USD 250.0
USD 222.5
USD 0.06
USD 0.08
USD 0.07
Tangerang
USD 148.4
USD 156.2
USD 152.3
USD 0.03
USD 0.08
USD 0.06
Karawang
USD 170.0
USD 200.0
USD 185.0
USD 0.05
USD 0.10
USD 0.06
Serang
USD 117.2
USD 148.4
USD 132.8
USD 0.03
USD 0.05
USD 0.04
*1USD = Rp 12,804 Source: Colliers International Indonesia - Research
Maintenance Cost In general, maintenance costs stood at the same level as last quarter. Only in Serang did two operating industrial estates announce adjustments in service charges during the quarter under review. The average service charge in Serang was IDR449/ sq m/month last quarter and in 1Q 2015 it rose to IDR592/sq m/ month.
Research & Forecast Report | 1Q 2015 | Industrial Estate | Colliers International
Greater Jakarta Industrial Maintenance Cost $0.10
US $/ sq m/ month
$0.08
$0.06
$0.04
$0.02
Bogor
Bekasi
Tangerang
Karawang
2015YTD
2014
2013
2012
2011
2010
2009
2008
2007
2006
$0.00
Serang
Source: Colliers International Indonesia - Research
Concluding Thought The industrial market initiated the year with relatively good performance with total sales for 1Q 2015 about a quarter of sales in the full year of 2014. Albeit lower than last quarter, at least the industrial market has signalled for further recovery as buyers have been actively looking for industrial land during the quarter. Land availability should not become a crucial issue, although some prominent estates have find it difficulties in providing big parcel land in prime location. Nevertheless several underconstruction industrial estates largely located in Karawang and some other estates in Serang, Tangerang and Bekasi are working on construction of industrial which would become significant land bank in the future. The cancellation of mega project Cilamaya port would broaden the opportunity for industrial location to move further east to Subang and Purwakarta. The government has indicated that Cilamaya project would be shifted to other areas that would not interfere with the very important Pertamina facilities for distributing gas when the Cilamaya project is executed.
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Research & Forecast Report | 1Q 2015 | Industrial Estate | Colliers International
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