3Q 2013 I THE KNOWLEDGE

APARTMENT SECTOR

RESEARCH & FORECAST REPORT

The apartment market still witnessed a price adjustment rising by 5% q-o-q to an average of IDR23 million/sq m in DKI Jakarta. Further, apartment prices in the CBD rose by 17% y-o-y to IDR35 million/sq m. Construction activity progressed on the back of continued demand to purchase apartment units. During the third quarter of 2013, an abundant number of new projects were launched and were well absorbed. The average take-up rate of strata-title apartments (completed, under construction and planned) in Jakarta achieved 86.4% - up by 3.5% from the previous quarter.

Supply
In 3Q 2013, the cumulative supply of strata-title apartments increased by 3% Q-o-q and reached a total of 128,353 units. The 3% increase accounts for an additional 3,644 units that came from the completion of five towers from two apartment projects Kebagusan City (Tower B) and Green Bay Pluit (Bayview). Kebagusan City (Tower B) was the final tower to be handed over from the Kebagusan City project (with a of total three towers) and is situated in the surrounding business centre, TB Simatupang. The other four towers, which comprised 3,096 units, came from a massive development called Green Bay Pluit. This project started operating when the first four towers (Coast View) came onstream in the last quarter of 2012. Both Kebagusan City and Green Bay Pluit targeted the middle-to-low-class segment of the market. In addition, around 2,500 units from seven projects were launched during the reviewed quarter. The largest share of these units, 37%, was located in North Jakarta and came from two developments Pluit Sea View (Bahama Tower) and Regatta (London Tower). The second-largest percentage, 29%, of the new units was released in South Jakarta and came from three projects The Aspen Peak Residence, One Casablanca Residence and Lexington Residence. With the launch of Tower Alamanda at Bassura City and Sudirman Hill Residence, 24% and 10% of the new units were located in East and Central Jakarta, respectively. The Bahama Tower was the fourth tower of the Pluit Sea View apartment project to target the middle-to-low-class segment of the market. In the Pantai Mutiara area, Regatta launched its new tower. Both Pluit Sea View and Regatta offer panoramic views of the Java Sea. One Casablanca Residence and Lexington Residence are brand new projects located in Casablanca and the Pondok Pinang area, respectively. The Aspen Peak Residence is the subsequent tower of The Aspen Residence@Admiralty project. The abovementioned three projects are located in South Jakarta and target the middle-to-upper-class segment. With a fair amount of vacant land that could potentially be developed, South and North Jakarta continue to provide a steady supply of apartments. Central Jakarta saw the launch of a middle-to-upper-class-segment project called Sudirman Hill, while Tower Alamanda at the Bassura City project was introduced in East Jakarta and targeted the middle-to-low-class segment.

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JAKARTA | 3Q 2013 | APARTMENT

LIST OF NEW LAUNCHED PROJECTS in 3Q 2013

APARTMEnT nAME Pluit Sea View (Bahama Tower) Regatta (London Tower) Sudirman Hill Residence Bassura City (Tower Alamanda) The Aspen Peak Residence One Casablanca Residence Lexington Residence Pluit

lOCATiOn

REGiOn North Jakarta North Jakarta Central Jakarta East Jakarta South Jakarta South Jakarta South Jakarta

uniTS TYPE Studio - 3BR 2BR - 3BR Studio - 3BR Studio - 3BR Studio - 3BR 1BR - 3BR 1BR - 3BR SiZE (Sq M) 24 - 68 115 - 163 35 - 129 20 - 48 39 - 136 48 - 108 56 - 129 # 650 276 255 600 220 199 300

Pantai Mutiara Karet Basuki Rahmat Fatmawati Kasablanka Pondok Pinang

Colliers International Indonesia - Research

Looking forward, a massive supply of apartments is anticipated to flood the strata-title apartment market in Jakarta over the next three years. The large influx of units will be generated mostly by mixed-use developments that integrate residential and commercial functions. Some mixed-use projects, such as Bassura City in East Jakarta, Green Bay Pluit in North

Jakarta, The Green Pramuka and Holland Village in Central Jakarta, and St. Moritz in West Jakarta, adopted a one-stop living concept. This idea allows tenants/occupiers to shop, do business, exercise in a gym and live in one place. With expensive fuel prices, traffic congestion and air pollution, the one-stop living concept is becoming more favoured.

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In addition to offering land efficiency and integrated uses, mixed-use developments can take advantage of off-peak hours for one use, such as office space that may be peak hours for other uses, such as restaurants and

entertainment venues. This allows for more robust building activity with fewer requirements for parking and infrastructure, which promotes a greater capacity for leasable area and higher property values.

NEW SUPPLY PIPELINE (2013 - 2015)

APARTMEnT nAME

lOCATiOn

REGiOn

#uniT

DEVElOPMEnT STATuS

2013
Pancoran Riverside (Tanjung Kalibata) GP Plaza Pasar Baru Mansion (2 Towers) The East at Essence Complex Dharmawangsa MyHome Apartment Sentra Timur Residence (stage 2) 3 Towers Green Lake Sunter (Tower North) Green Central Tower Cerberra The Windsor (Tower I) Titanium Square Pakubuwono Terrace (Tower I) Tamansari Semanggi (Tower B) St. Moritz (New Royal Suite Tower) Verde Apartment (Tower East) Pengadegan Timur Gatot Subroto Pasar Baru Dharmawangsa Satrio Pulogebang Sunter Gajah Mada Puri Indah Pasar Rebo Kebayoran Lama Gatot Subroto Puri Indah HR Rasuna Said South Jakarta CBD Central Jakarta South Jakarta CBD East Jakarta North Jakarta West Jakarta West Jakarta East Jakarta South Jakarta CBD West Jakarta CBD 1,900 Under Construction 320 Under Construction 520 Under Construction 244 Under Construction 136 Under Construction 885 Under Construction 876 Under Construction 420 Under Construction 176 Under Construction 725 Under Construction 750 Under Construction 620 Finishing 150 Under Construction 114 Under Construction

2014
Ambassade Residence Tower A Luxurious Raffles Residences The Grove St Moritz (The New Ambassador Suite Tower) La Venue - South Tower Casablanca East Residence (2 Towers) + Tower Dallas The Grove Suite Kemang Village (The Intercontinental & The Infinity) The Aspen at Admiralty The Windsor (Tower II) Pakubuwono Terrace (Tower 2) The Pakubuwono Signature Sherwood Apartment (3 Towers) The H Residence Pluit Seaview (Tower Maldives) Sudirman Suites Senopati Penthouse Sky Terrace Lagoon LA City Apartment (Tower A) Setiabudi Sky Garden (Tower 1) La Maison Barito (Tower 1) Botanica Apartment (3 Towers) Puri Denpasar Satrio HR Rasuna Said Puri Indah Pasar Minggu Pahlawan Revolusi HR Rasuna Said Pangeran Antasari Fatmawati Puri Indah Kebayoran Lama Pakubuwono Kelapa Gading MT Haryono Pluit Sudirman Senopati Kalideres Lenteng Agung Setiabudi Barito Simprug CBD CBD CBD West Jakarta South Jakarta East Jakarta CBD South Jakarta South Jakarta West Jakarta South Jakarta South Jakarta North Jakarta East Jakarta North Jakarta CBD South Jakarta West Jakarta South Jakarta CBD South Jakarta South Jakarta 234 Under Construction 64 Under Construction 438 Under Construction 200 Under Construction 341 Under Construction 1,904 Under Construction 151 Under Construction 575 Under Construction 860 Under Construction 164 Under Construction 720 Under Construction 188 Under Construction 325 Under Construction 383 Under Construction 940 Under Construction 380 Under Construction 63 Under Construction 525 Under Construction 980 Under Construction 426 Under Construction 80 Under Construction 626 Under Construction continued

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APARTMEnT nAME The Hive Signature Park Grande The Bellevue Metro Park Residence Gading Greenhill Elpis Residence Capitol Park Apartment (2 Towers) Northern Ancol Residence The Mansion at Dukuh Golf Residence (2 Towers) Green Palm Residence The Green Pramuka (2 Towers)

lOCATiOn DI Panjaitan MT Haryono Pondok Indah Kebon Jeruk Pegangsaan Dua Gunung Sahari Salemba Ancol Kemayoran Kosambi Pramuka

REGiOn East Jakarta South Jakarta South Jakarta West Jakarta North Jakarta Central Jakarta Central Jakarta North Jakarta Central Jakarta West Jakarta Central Jakarta

#uniT

DEVElOPMEnT STATuS continuation

422 Under Construction 1,100 Under Construction 60 Under Construction 1,200 Under Construction 700 Under Construction 791 Under Construction 1,706 Under Construction 800 Under Construction 1,134 Under Construction 1,000 Under Construction 2,000 Under Construction

2015
East Park Apartment (Tower C) Belmont Residence (Tower Montblanc) Teluk Intan (Tower Saphire) Kemang Village The Bloomington The Royal Olive Residence Woodland Park (Cendana Tower) The Residence The Orchard Satrio Senopati Suites 2 Setiabudi Sky Garden (Tower 2) Woodland Park (Matoa Tower) Tifolia Apartment Green Signature Apartment Pluit Seaview (Tower Belize) Gianetti Apartment 1 Park Avenue Nine Residence Callia Apartment St Moritz (New Presidential Tower) Pakubuwono Terrace Grand Tower The Oak Tower Sky Garden Pluit Seaview (2 Towers) Satu8 Residence Providence Park Kencana Residence Bassura City (5 Towers) District 8 (2 Towers) The Nest Apartment Menteng Park Point 8 (Air Crew Tower) Gallery West KRT Radjiman Meruya Ilir Teluk Gong Pangeran Antasari Buncit Raya Kalibata Satrio Satrio Senopati Setiabudi Kalibata Perintis Kemerdekaan MT Haryono Pluit Kemanggisan Gandaria Warung Buncit Perintis Kemerdekaan Puri Indah Kebayoran Lama Perintis Kemerdekaan Pluit Kedoya Permata Hijau Pondok Indah Basuki Rahmat Senopati Meruya Utara Cikini Daan Mogot Kebon Jeruk East Jakarta West Jakarta North Jakarta South Jakarta South Jakarta South Jakarta CBD CBD South Jakarta CBD South Jakarta North Jakarta South Jakarta North Jakarta West Jakarta South Jakarta South Jakarta North Jakarta West Jakarta South Jakarta North Jakarta North Jakarta West Jakarta South Jakarta South Jakarta East Jakarta South Jakarta West Jakarta Central Jakarta West Jakarta West Jakarta 550 Under Construction 350 Under Construction 1,100 Under Construction 150 Under Construction 225 Under Construction 218 Under Construction 119 Under Construction 349 Under Construction 81 Under Construction 160 Under Construction 221 Under Construction 500 Under Construction 800 Under Construction 300 Under Construction 500 Under Construction 279 Under Construction 246 Under Construction 560 Under Construction 150 Under Construction 435 Under Construction 700 Under Construction 1,150 Under Construction 174 Under Construction 114 Under Construction 173 Under Construction 4,200 Under Construction 680 Under Construction 1,100 Under Construction 756 Under Construction 546 Under Construction 280 Under Construction continued

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APARTMEnT nAME Green Bay Pluit (Sea View) Izzara Apartment Lexington Residences The Suite (W Hotel Tower) The Green Pramuka (3 Towers) The Aspen Peak at Admiralty Pluit

lOCATiOn

REGiOn North Jakarta South Jakarta South Jakarta CBD Central Jakarta South Jakarta

#uniT

DEVElOPMEnT STATuS continuation

2,072 Under Construction 450 Under Construction 300 Under Construction 200 Under Construction 3,000 Under Construction 644 Under Construction
Colliers International Indonesia - Research

TB Simatupang Pondok Pinang Satrio Pramuka Fatmawati

Demand
At the end of 3Q 2013, the apartment market was very active. Many new projects were launched and well absorbed. As described in the above section on supply, in response to the resilient market, developers are generally still confident about launching various types of projects. Some projects have been reported to sell around 25 - 30 units per month and be sold out within a year. This is mainly due to the advantages of having a good location and concept. As of September 2013, the average take-up rate of strata-title apartments (both existing and future apartments under offer) in Jakarta reached 86.4%, increasing by 3.5% compared to the previous quarter and 7.6% compared to 3Q 2012. The performance of the pre-sales of apartment projects (future apartments under offer) was recorded at 74.6%, a rise of 7.7% compared to the previous quarter. Meanwhile, though falling moderately compared to the previous quarter, the unsold units of existing apartment projects came in considerably high at 92.9%.

AVERAGE TAKE-uP RATES OF EXiSTinG And FuTuRE PROjECTS REGION Existing Pre-Sales Rate 2Q 2013 87.8% 80.3% 3Q 2013 83.3% 81.1%
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q-o-q

AVERAGE TAKE-uP RATES OF EXiSTinG PROjECTS BASEd On REGiOn REGION CBD South Jakarta Outside CBD 2Q 2013 92.2% 97.2% 94.4% 3Q 2013 97.9% 97.6% 90.1%
Colliers International Indonesia - Research

q-o-q

AVERAGE TAKE-uP RATES OF FuTuRE PROjECTS BASEd On REGiOn REGION CBD South Jakarta Outside CBD 2Q 2013 89.0% 68.1% 63.8% 3Q 2013 89.5% 72.5% 73.4%
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q-o-q

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The pre-sales rate of apartments located outside the CBD area posted higher increases in their take-up rates compared to those located in the CBD. The pre-sales rate outside the CBD registered an increase of 9.6% compared to
TAKE-UP RATES DURING 3q 2009 UP TO 3q 2013
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 3Q2009 3Q2010

that of the previous quarter. Sales during the Idul Fitri holiday did not immediately reduced the sales activity. In fact, the apartment market saw buyers coming from other cities, such as Surabaya, Yogyakarta and Balikpapan.

3Q2011

3Q2012

3Q2013

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The Central Bank (Bank Indonesia or BI) raised the benchmark interest rate (BI rate) to 7.25% in September. As such, the BI rate has been raised a cumulative 150 bp since May 2013. The measure was taken to shield the Indonesian Rupiah from the threat of more capital outflows. Nevertheless, the weakening value of the Indonesian Rupiah against the US Dollar has so far had a limited impact on the performance of apartment sales. Apart from other marketing gimmicks, such as providing flexible payment schemes, promotions and prizes, the progress of construction activity remains a key factor for buyers considering a purchase decision. During the quarter, the Indonesia Property Expo 2013 reportedly captured significant sales, particularly from the low-to-middle-class segment. Besides introducing measures, such as lifting interest rates, Bank Indonesia also introduced a

new mortgage regulation to help curb excessive loan growth and ease property speculation. The regulation stipulates an increase in the minimum down payment for additional property purchases. In our view, such a policy will have a greater impact on middle-to-low-class properties, particularly in the landed residential sector where buyers generally use mortgages for housing loans. In the high-rise residential sector, mortgages are typically not the main source of funding to purchase a unit. Instead, cash instalments (during construction) or even hard cash are the general payment methods for purchasing such apartment units. Additionally, in anticipation of the recent economic crisis, some developers came up with strategies that included providing longer terms of payment for down payments and other promotional campaigns to entice buyers.

Asking Price
With the fear that the economy could worsen in response to the weakening value of the Indonesian Rupiah, apartment prices continued to be adjusted upwards and rose by 5% during a quarter period to an average of IDR23 million per sq m. Progressive construction activity was not a significant motive to purchase apartments. As such, developers confidence to introduce new prices was lifted. Another reason that upward pressure was placed on apartment prices was the continued land price escalation that was particularly evident in areas of South Jakarta, such as Simprug, Permata Hijau, Puri Indah, Pantai Indah Kapuk and Menteng.

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AVERAGE ASKinG PRiCES OF APARTMEnT in jAKARTA

40,000,000 35,000,000 30,000,000

IDR /sq m

25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 2010 CBD 2011 South Jakarta 2012 Outside CBD 2013YTD Average
Colliers International Indonesia - Research

Apartment prices have shown exceptional growth over the last two years, particularly in the CBD and South Jakarta. Within two years, the average price of apartments in the CBD climbed by 61%. Over the same period, in South Jakarta, prices jumped by 46%. In certain commercial areas, such as Jalan HR Rasuna Said, the average price of apartments in 2011

registered at IDR18 million per sq m. However, currently, this price has more than doubled to IDR37 million per sq m. Likewise, going further south, in areas, such as Gandaria (close to the upper-class residential area, Pondok Indah), the average price was IDR13 million per sq m in 2011 and has now reached an average of IDR24 million per sq m.

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Apartment For Lease (Serviced and Non-serviced)

Supply
The interest in developing apartments that are purely for lease has dropped because developers still see such projects as long-term investments. During the quarter, once again, no new apartments for lease (serviced and nonserviced) were launched between July and September. Frasers Residence Menteng, which was initially scheduled to start operations in 3Q 2013, was delayed from entering the market. With 170 units, Ascott Kuningan Jakarta is another serviced apartment project that is scheduled to complete in the next three months.

LIST OF FUTURE PROJECTS OF APARTMENT FOR LEASE DEVELOPMENT Frasers Residence Menteng Ascott Kuningan LOCATION Menteng Satrio REGION CBD CBD CATEGORY Serviced Serviced #Units 128 170

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With no new projects coming onstream during the quarter, the cumulative supply of apartments for lease (serviced and non-serviced) stood at 8,206 units. Of these units, 56.6% were

categorised as serviced apartments. Location wise, of these apartments, 44% were positioned in the CBD, and 36% were located in South Jakarta.

APARTMEnTS FOR lEASE in jAKARTA BASEd On REGiOn

East Jakarta West Jakarta 0.06% North Jakarta 6.02% 5.36%

CBD 43.60%

South Jakarta 36.02%

Central Jakarta 8.93%

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Occupancy Level
The average occupancy rate of apartments for lease in 3Q 2013 was recorded at 76.1%, which OCCUPANCY OF APARTMEnT FOR lEASE
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 2009 2010 2011 2012 2013YTD

is relatively the same figure of the previous quarter.

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The Islamic holiday season surrounding Idul Fitri had the least impact on the occupancy of serviced apartments in the CBD. Occupancy rose mildly by 16% q-o-q to 80%. Generally, most occupiers of serviced apartments are long-stay tenants. Several apartments still benefited from the continuing arrivals of new expatriates. Some inquiries came from nongovernmental organisations, such as World Bank, and others came from construction, service, bank and insurance companies.

The immediate competition for serviced apartments will come from newly built stratatitle apartments located in the CBD or South Jakarta. In South Jakarta, apartments, such as Senopati Suites, Residence8 at Senopati, 1Park Residence and Gandaria Heights, will entice long-term occupiers because they are relatively new and offer competitive rental rates compared to older service apartment.

OCCuPAnCY PERFORMAnCE in diFFEREnT AREAS REGION CBD South Jakarta Outside CBD 2Q 2013 78.4% 79.6% 72.0% 3Q 2013 80.0% 79.0% 71.8%
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q-o-q

Rental Rates
Fundamentally, following the weakening value of the Indonesian Rupiah against that of the US Dollar, we think that there will be hardly any immediate impact to rental rates, at least in the short term. The majority of landlords that operate apartments for lease are quoting rents in US Dollars because the majority of their tenants are expatriates. Around 13% of the apartments for lease in Jakarta are charging rents denominated in Indonesian Rupiah. These apartments are locally operated or older. Despite offering unchanged rental tariffs q-o-q,
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our calculation for the overall rental rates uses US Dollars. Therefore, the chart subside moderately. In the CBD, the average rental rate of apartments for lease was recorded at US$26.80 per sq m per month, which represents a drop of less than 1% compared to that of the previous quarter. In the non-CBD area, the average rental rate registered at US$15.70 per sq m per month and fell somewhat compared to the previous quarter

JAKARTA | 3Q 2013 | APARTMENT

AVERAGE ASKinG REnTAl RATES (USD/Sq M/MOnTH) OF APARTMEnT FOR lEASE

AREA CBD South Jakarta SERViCEd USD 32.25 USD 22.26 nOn-SERViCEd USD 17.16 USD 12.75

482 offices in 62 countries on 6 continents

United States: Canada: Latin America: Asia Pacific: EMEA:
$2.0

Colliers International Indonesia - Research

140 40 20 195 85

Concluding Thoughts
Until the end of September 2013, the weakening of Rupiah against US Dollar had not shown a negative impact on the absorption of apartments in Jakarta. Almost every segment, including the middle-to-upper-class segment, recorded an increasing trend compared to the previous quarter. Moreover, the increasing land prices in Jakartas prime areas provides the foundation for apartment prices to appreciate. The increasing number of office developments, especially in the CBD and TB Simatupang area, could spark more leasing demand and will likely become the trigger that motivates investors to purchase property. In the leasing market, the inquiries about serviced apartments are expected to grow with the increased corporate and investment activities, which include infrastructure works and industrial expansions. These projects will require experts from overseas, and spur growth, albeit at a slower pace than that of 2011. On the other hand, the interest rate, which has risen to 7.25%, and the newly implemented LTV policy will likely affect the performance of apartment sales, especially those of the middleto-low-class segment and low-class segment. In contrast, the projects categorised under the middle-to-upper-class segment or luxury-class segment will not be affected because most of them do not use mortgage payments and are not price sensitive. Though the expectations of good returns and good gains remain, investment is not the only motivation for apartment buyers. The buying power of the middle-to-upper-class segment for local and international properties is still good. In general, wealthier individuals buy international property to have accommodations for their children or as a method for staying in the country where their property is located.

billion in annual revenue 2012 13,500 professionals

1.1

billion square feet under management

Over

COLLIERS INTERNATIONAL INDONESIA: World Trade Centre 10th & 14th floor Jalan Jenderal Sudirman Kav. 29 - 31 Jakarta 12920 Indonesia
TEl 62 21 521 1400 FAX 62 21 521 1411

Michael Broomell Managing Director World Trade Centre 10th & 14th floor Jalan Jenderal Sudirman Kav. 29 - 31 Jakarta 12920 Indonesia TEl 62 21 521 1400 ext 131 FAX 62 21 521 1411 Ferry Salanto Associate Director, Research World Trade Centre 10th & 14th floor Jalan Jenderal Sudirman Kav. 29 - 31 Jakarta 12920 Indonesia
TEl 62 21 521 1400 ext 134 FAX 62 21 521 1411

Email: Ferry.Salanto@colliers.com

Copyright 2013 Colliers International The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has bee made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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