Market Trends of Indonesia Commercial Real Estate Industry
This section covers the major market trends shaping the Indonesia Commercial Real Estate Market according to our research experts:
The demand for office remains strong in the country
Some large leasing transactions were recorded during the fourth quarter of 2021, such as in MSIG Tower of about 15,000 sqm by an online education institution, in Medialand Tower by a logistics company of 5,500 sqm, and in Capital Place of 4,000 sqm by Nokia.
Overall, improving trends in inquiries and transactions from those in 2021 were observed throughout the year, with demand coming mostly from tenants looking for office relocations and consolidations for 2022 and beyond.
After six consecutive quarters of market contraction trend, the Jakarta CBD office market recorded its first positive quarterly net-take-up of 17,900 sqm in the fourth quarter of 2021, indicating a very positive sign for market recovery in the near term.
The average occupancy rate of the CBD (Central Business District) office market decreased by 0.2%-70.4% by the end of December 2021, due mostly to the large additional supply. The base rental rate in Rupiah decreased further by 3.0% Q-o-Q in the fourth quarter of 2021, in line with weak demand and decreasing average occupancy of the market.
By the end of December 2021, the average base rental in Rupiah term stood at IDR 175,100 per sqm per month (a decrease of 9.1% YoY), while in USD equivalent, it stood at USD 12.3 per sqm per month (a decrease of 9.6% Y-o-Y). Meanwhile, service charges remained relatively unchanged over the fourth quarter of 2021.
Retail Space likely to Witness Growth in Jakarta
Closing out the year in 2022, the Jakarta retail market recorded an addition of one new retail center in South Jakarta, namely AEON Mall Tanjung Barat. The opening of AEON Mall Tanjung Barat added approximately 40,000 sqm of retail space to the market.
This fourth AEON Mall in Indonesia, together with the Southgate Residence project, is expected to create a new one-stop urban lifestyle complex in South Jakarta. With the total addition of two new projects in 2021, the total full-year new supply of Jakarta retail centers in 2021 reached 70,000 sqm. Another two retail centers with approximately 73,000 sqm of retail space are expected to enter the Jakarta retail market by 2022.
The total refurbishment and transformation of Sarinah, the oldest retail center in Jakarta, was completed and was open to the public in March 2022. The total Jakarta retail supply will reach 4,716,400 sqm by the end of 2022. The overall Jakarta retail market was relatively stable during the last quarter of 2021. The occupancy rate stood at 76.7%, which increased slightly by 0.2% since the last quarter of 2021.
