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indonesian economic indicator
2007 Economic Growth (% YoY) Inflation rate (%) Exchange rate (rp/US$) SBI rate (%) 6.30 6.59 9,124 8.00
highlights
office sector
march 2011
the office supply in the CBD for 2011 will grow slowly, representing 54% of the total of existing supply in 2010 and only 31% of total new supply in 2012. the occupancy rate in the CBD rose by 2.5% q-o-q to 91.6% benefiting from strong absorption of newly built office buildings. office rents showed an increasing trend during the quarter. the average asking gross rental rates in the CBD for buildings quoting rupiah was rp157,248/sq m/month (1% increase q-o-q) while those quoting gross rents in US$ grew by 5% to US$23.73/sq m/month. the price of strata-title office climbed by 11% q-o-q to an average asking price of rp20.1 million/sq m (CBD). outside the CBD, the average asking price was registered at rp15.5 million/sq m/month.
apartment sector
there were 3,720 strata-title apartment units completed during the last quarter which brought total strata-title apartment units in jakarta to 85,734 units. meanwhile, total number of apartments for lease by developers remained at 7,950 units with no new apartments becoming available during the quarter. take-up rates rose by 2.2% q-o-q to 78.9% as a result of vibrant sales during the quarter. on the leasing front, the average occupancy rate for apartments for lease was 72.1%, an increase of 1.7% q-o-q. albeit slightly, the average price of strata-title apartments moved upward as newly built apartment developments introduced price adjustment. the average asking rent was registered at US$13.67/sq m/month a 2.9% increase q-o-q.
retail sector
only small amount of retail space entered the market during 1Q 2011, i.e. mt Haryono Square, a retail facility for the mt Haryono Square commercial compound and Lippo Cikarang Citiwalk in the greater jakarta area. the occupancy rate was 1% higher q-o-q, edging up to 84.3% in jakarta while in the greater jakarta area the occupancy rate was relatively stable at 82.9%. average asking rental rates were relatively stable in jakarta, recorded at rp349,507/sq m/month, while in the greater jakarta area, the average rental rate rose moderately to rp246,052/sq m/month as a result of the influx of new shopping centers and rent adjustments in the karawaci area.
www.colliers.co.id
Office Sector
Jakarta supply
throughout jakarta, less than 10,000 sq m of office space appeared at the beginning of the year, including small new office buildings in the outside CBD area. Cumulative supply for the whole jakarta area therefore climbed slightly, to 6.03 million sq m. For the last five years, office supply in jakarta has grown by 5%, or around 280,000 sq m annually. over the next three years, we expect further growth of 6.8%, or around 440,000 sq m.
Jakarta office cumulative supply (sQ m)
7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2007 2008 2009 2010 annual Supply
Colliers International Indonesia - research
1Q 2011
2011F
Existing Supply
For Lease
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| colliers international
building name allianz tower k-Link tower tempo Scan 18 park aXa tower multivision tower Setiabudi office the City Center (phase 1) World trade Centre 2 Ciputra office Eighty8 office 8 menara prima 2 Chase tower Life tower mangkuluhur tower B keppel New tower menara Selaras office tower at ex Wisma Benhil the City Centre (phase 2) the City Centre (phase 3) rifa 2
marketing scheme For Lease For Lease For Lease For Lease For Lease and For Strata-title Sale For Lease For Strata-title Sale For Lease and For Strata-title Sale For Lease For Lease For Strata-title Sale For Strata-title Sale For Lease For Lease For Lease For Lease For Strata-title Sale For Lease For Strata-title Sale For Strata-title Sale For Lease For Strata-title Sale
progress under construction under construction under construction under construction under construction under construction under construction under construction under construction under construction under construction under construction under planning under planning under planning under planning under planning under planning under planning under planning under planning under planning total = 901,064 sq m
Colliers International Indonesia - research
For Lease
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| colliers international
building name Graha kramat mt Haryono Square menara Citicon Central office park plaza Simatupang menara Satu menara 165 Sovereign plaza Wisma pondok Indah 3 Chitatex tower talavera Suite alamanda tower Naras tower Green tebet Graha Elnusa 2 the manhattan (tower 2)
marketing scheme For Lease For Strata-title Sale For Lease For Lease and For Strata-title Sale For Lease For Lease and For Strata-title Sale For Strata-title Sale For Strata-title Sale For Lease For Lease For Lease For Lease and For Strata-title Sale For Lease For Lease For Lease For Lease operate operate
progress
under construction under construction under construction under construction under construction under construction under construction under construction under planning under planning under planning under planning under planning under planning total = 389,444 sq m
Colliers International Indonesia - research
1Q 2010
1Q 2011
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| colliers international
Finance, banking, insurance and related industries carry on the tradition in the office leasing industry in jakarta as the main demand generator. With growing business, industries like trading, It, mining and manufacturing are also expanding and such industries characterize transactions in the CBD area. Large transactions occurred in a building located in jalan Gatot Subroto, involving a government body overseeing and controlling oil and gas exploration. this government body acquired almost 30,000 sq m of office space. In the finance industry, a giant international insurance company also took around 6,000 sq m of office space in the rasuna Said area. In line with the growing business of the automotive industry, an international tyre manufacturer is also expanding into one of the best office buildings in the thamrin area. this also applies to an Internet-based business that took half a floor in one good quality office building in Senayan. apart from the significant transactions mentioned above, the overall office market also benefited from the growth of other, albeit smaller, types of industry. For example, we also witnessed several mining industries recording space acquisitions, as well as other types of industry like trading, machinery, consumer goods, shipping, etc. Service office businesses
were also expanding quite frequently into newly built office buildings. the arrival of more service offices could indicate growing business in the future. one of the indicators confirming the healthy condition of the office market is the performance of newly operated and future buildings. From the chart above, it is obvious that office buildings operating in 2009 2010 show an average of 90% occupancy, thanks to significant transactions in grade a buildings, involving more than 40,000 sq m from a joint venture of a malaysian and a local bank. Further, four office buildings projected to operate in 2011 have been committed 40%. two years from now, around 30% of office space has been reserved, even with some of the buildings still under construction. of the four buildings targeted to complete this year, only one has not committed agreements with tenants. two buildings are built to partially fulfil internal demand, which makes light of marketing effort; tempo Scan and k-Link are good examples. meanwhile, allianz tower has already been 75% acquired by allianz and the trading industry. In fact, some buildings projected to complete in 2012, like WtC 2, aXa tower and multivision tower, have concluded several significant agreements with tenants while the buildings are still under construction.
In the outside CBD area, occupancy rates moved upward slightly to 90.9% in this quarter. the performance of newly built office buildings during 2009-2010, which reached an average of 95% occupancy, has also helped fuel occupancy to remain steady. meanwhile, all buildings expected to run in 2011 have captured tenants commitments of 35% before operation. Large numbers of active tenants in the outside CBD area are from consumer goods, shipping, freight forwarding, expedition, oil and mining. amongst them were an oil company occupying around 1,000 sq m at menara FIF in jalan tB Simatupang, which resulted in a healthy performance for the buildings. In the North jakarta area, a mining company from China and a forwarding company took space at Graha Indochem, which also lifts the occupancy level of the buildings. meanwhile, shipping and consumer goods companies have entered as new tenants at Graha rekso, located around kelapa Gading, Eastern jakarta. Graha kramat, which recently began operating, started the operation at full speed by taking a leading political party as their single tenant.
2012 2011 2010 2009 0 30,000 60,000 90,000 120,000 150,000 180,000 210,000 240,000 270,000
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absorption performance of outside cbd office building for lease (2009 - 2012)
service charge
Notwithstanding the electricity tariff increase last year, some developers continued to introduce new maintenance cost tariffs during the quarter. Further, additional and/or improved facilities also impacted on cleaning and security costs. these are some of the factors which pushed the average service charge cost slightly upward, to rp53,757/sq m/month in the CBD area. our records show that there were 11 buildings in the CBD with new service charge tariffs ranging from rp5,000 to rp7,500/sq m. None of the buildings with U.S. dollar tariffs changed maintenance costs, so the average service charge for U.S. dollar-denominated buildings hovered at around US$5.97/sq m/ month. there were more office buildings with new maintenance cost tariffs in the outside CBD area. Fifteen buildings with rupiah tariffs asked for higher maintenance costs, from rp2,500 to rp10,000/sq m. Likewise, on the U.S. dollar front, one office building, located in jalan tB Simatupang, increased service charge tariff by US$0.20/sq m. the overall service charge cost for buildings charging rupiah rates was listed at atrp38,602/sq m/month, while those asking for U.S. dollar rates asked for US$4.31/sq m/ month.
2012 2011 2010 2009 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 absorbed Space (sq m) annual Supply for Lease (sq m)
Colliers International Indonesia - research
rental rates
average asking rental rates continued to move upward in the quarter for buildings with both rupiah- and U.S. dollar-denominated rents. the average asking base rental rates for building in rupiahs was recorded at rp103,491/sq m/ month, 4.7% higher than the figure last year. meanwhile, a considerable increase was noted during the quarter for buildings with U.S. dollar rates. Edging up by 5.7% q-o-q, or 11.3% YoY, average asking rental rates were registered at US$17.75/sq m/month. the positive performance in most new buildings with U.S. dollar denominations was mainly translated into increases in the asking rental rate. During the quarter, there were five buildings with increased U.S. dollar rates, ranging from US$2.00 to US$3.00/sq m. In the rupiah building, rental rate increases ranged from rp5,000 to rp25,000/sq m. Leasing activities in the outside CBD area showed quite a good performance during the quarter. this also translated into an increase in average rental rates for the quarter, achieving rp74,770/sq m/month, an increase of 4.7% q-o-q.
CBD (US$)
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| colliers international
2010
1Q 2011
2012 2011 2010 2009 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000
2012 2011 2010 2009 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
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| colliers international
outlook
Indonesia moved closer to attaining an investment grade rating, after Fitch ratings raised Indonesias outlook on sovereign debt to positive from stable. this is expected to have a positive impact on the investment climate and on the property market in Indonesia. the number of new businesses that will come in through acquisition, expansion or relocation will provide a better climate for the office market to further grow. Last years good year for the office market should strongly persist this year, underlined by increasing averages of asking rental rates. We still expect landlords to be more confident in introducing new rates, particularly given continued inquiries for office space, and the fact that total office space projected for 2011 will be less than in 2010. prices of strata-title offices for sale are expected to edge up further, following the increasing steel price, which is in line with the sound performance of strata-title offices. to date, the take-up rate for strata-title offices has reached more than 90%, with large numbers of new buildings reporting less vacancy. We will still witness some future office buildings opening either for sale or for lease. Such schemes introduced several years back are applicable for developers, particularly when they want to control the majority of the space. 2012 should be a strong tenants market for offices located in the CBD, given the significant supply. tenants will have more options for new office buildings during the year. and, despite abundant supply over the next couple of years, the overall performance of office market is predicted to stabilize.
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| colliers international
Apartment Sector
apartment for strata-title sale supply
apartment supply continued to flow, with 26% of the total projected 14,323 units being completed in 1Q 2011. as many as 3,720 units derived from six low-class to middle-upper class apartment projects entered the market. In other words, total supply this quarter contributed as much as 4.5% of the total apartment supply in jakarta. the total 3,720 units completed this quarter are all located outside the CBD, scattered in West jakarta (48%) and North jakarta (46%), with the remaining 6% located in East jakarta. Furthermore, of the total supply coming in this quarter, around 71% are considered low-class development (categorized as rusunami low-class multi-family housing). overall, low-class apartments in jakarta comprise 27% of the citys total 85,734 existing units. For the last two years, the growth of low-class apartments was substantial, and this is likely to
apartment supply as at 1Q 2011 apartment composition by segment
Upper 8.1%
Luxury 3.3%
Low 26.5%
rusunami 71%
continue in 2011. menara Latumenten and Gading Icon, located in West jakarta and North jakarta, each provide more than 1,000 units. In the next two years, the trend of low-class apartment development will continue. Examples include East park apartment, located in jl. krt
radjiman, East jakarta; and puri park View in West jakarta. these apartment units generally come in a size range of 21 to 43 sq m, allowing the unit price to be justifiably affordable.
apartment projects scheduled to be completed in 2011 are comprise low-class to luxury-class apartments. the CBD area contribute six stratatitle apartment projects, ranging from middle-
up class to luxury-class projects like ambassade residence (tower a), Denpasar residence, and keraton residence. meanwhile, East jakarta and West jakarta would be filled by low-class
to middle-low-class apartments, such as East park apartment and Green park View (tower F).
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demand
the take-up rate during the quarter was recorded at 78.9%, increased by 2.2% compared to last quarters figure of 76.7%. With vibrant economic projections for the year and a relatively stable political climate, apartment sales started picking up. other factors triggered apartment sales are payment flexibility with non-interest instalments of up to three years along with the expectation for price increases over the next couple of years. on the infrastructure side, the development of an elevated road connecting antasari and Blok m area would possibly drive price increases since accessibility and travel time become issues. Likewise, several developments along the elevated road connecting tanah abang and kampung melayu, which is currently under construction, has signalled price increases once the infrastructure is in place. meanwhile, the pre-sales rate of apartments under-construction was recorded at 67.3%. During the quarter, pre-sales activities were dominated by the low- to middle-class segment, with sales levels achieving around 79%. By location, the highest pre-sales rate occurred in Central jakarta, specifically in kemayoran, menteng, Salemba and Cik Ditiro areas.
sold and unsold apartment units based on location
60,000 50,000 40,000 30,000 20,000 10,000 0 CBD Southern jakarta Sold unit Unsold
Colliers International Indonesia - research
outside CBD
as of this quarter, there are around 17,935 unsold units composed from existing unsold units and the remaining units for underconstruction projects being marketed.
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100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
after the completion of 3,720 units in the first quarter of this year, there will be more than 10,600 units projected for completion in the remainder of this year, and the take-up rates for
strata-title apartment would be adjusted to around 73.32% in anticipation of that upcoming completion.
price
the gradual sales increase and higher leasing activities continued to be the driving factors for the growth of apartment prices. according to our records, several apartments introduced new prices ranging from rp250,000 to rp500,000 per sq m compared to last quarter. this resulted in a moderate increase of average apartment prices during the quarter to rp12.17 million per sq m. price increase during the quarter occurred in every part of jakarta, but particularly occurred newly built apartments. South jakarta, where newly built apartments registered solid sales performance, witnessed the greatest increase. Developers will adjust offering price soon after they are confident with their sales. overall, price increases was mainly fuelled by good sales performance of new apartment development. other than above mentioned, some apartments have introduced gradual price increases in every quarter (at an average of 3% per quarter). Such measures are likely to boost sales to convince buyers that the apartment is a good investment.
average price per sQuare meter of Jakarta apartments for strata-title sale
rp17,000,000 rp16,000,000 rp15,000,000 rp14,000,000 rp13,000,000 rp12,000,000 rp11,000,000 rp10,000,000 rp9,000,000 rp8,000,000 rp7,000,000 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 CBD Southern jakarta Non CBD average
Colliers International Indonesia - research
p. 11
| colliers international
CBD 42.00%
demand
In general, occupancy level of apartments for lease (serviced and unserviced) stepped ahead in the quarter by 1.7% q-o-q to an average of 72.1%. Some serviced apartments have reported that their short-term occupiers had returned from year-end holidays and committed to stay again in their apartment. apart from individual tenants, corporate clients from the oil industry and finance sector have been continuously demanding generators for apartment for lease. During the reviewed period, the occupancy level of apartment for lease in the CBD reached 76%, leaving around 800 units vacant. meanwhile in South jakarta around 72% of apartment units were occupied, leaving around 820 units. other areas besides the CBD and South jakarta experienced the lowest occupancy of around 68%, allowing 530 units to become available on the market.
Non CBD
rental rates
rental rates benefited from upward leasing performance highlighted by the positive rental trend from quarter to quarter. the average asking rent was registered at US$13.67 per sq m per month, increased by 2.9% q-o-q or 2.2% y-o-y. on the US dollar calculation, rental increases may be higher, but the strengthening of the rupiah against the dollar caused the total average price in US dollars to moderately increase.
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outlook
a strengthening leasing market resulting from expanding multi-national companies will help fuel sales of apartment units in jakarta. the better leasing performance will impact sales performance. another concern which might trigger better sales in the future is the government settling ownership issues for foreigners. the apartment market in Indonesia holds great investment prospects, particularly from the perspective of having similar development qualities for only one-fifth of what it would cost in Singapore. as the market gains confidence with the sales performance and other external factors like infrastructure and increasing construction cost take hold, apartment prices are expected to edge up in the future. price increases in the quarter would continue in the subsequent quarters where South jakarta and the CBD remain favourite locations.
asking rental rates of apartment for lease (in us$/unit/month) serviced apartment
$7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 CBD Southern jakarta Non CBD $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 CBD Southern jakarta Non CBD
unserviced apartment
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| colliers international
Retail Sector
supply Jakarta
after no new supply entered the market in 4Q 2010, a small retail space appeared in the 1Q 2011. In jakarta, mt Haryono Square, a retail centre located in East jakarta, started operating in early march 2011. this retail centre/shopping arcade was built as supporting facilities for the whole compound. as a supporting retail centre, mt Haryono Square only provides 2,663 sq m. With this completion, the retail market has grown a relatively small amount and has brought the cumulative supply as at 1Q 2011 to 3.93 million sq m. retail supply is projected to continue to grow. another shopping arcade integrated within the mixed-use commercial compound, Green tebet, is now under construction. this retail area is designed for food and beverage tenants as its function is as a supporting component for other commercial activities. Further, another small retail area is being developed - the pondok Indah mal 1 extension to the southern area, called area 51. this eye-catching mall is designed to grab the attention of the surrounding urban community and will adopt a lifestyle, entertainment and food centre concept. Both Green tebet and area 51 are expected to operate by the end of this year. jalan Satrio and kasablanka will be occupied with three large-size retail developments. these three malls, i.e. shopping malls at kota kasablanka, kuningan City and Ciputra World, are having completion speeded up. a new superblock development located in jalan mas mansyur, the City Center, would also present a retail centre. these retail centres are part of integrated developments. In jakarta, there will be around 89,000 sq m of retail space by the end of 2011 contributed mainly by kuningan City Lifestyle and Entertainment. We expect another 439,3556 sq m of retail space within the next three years and all of these projected delopments are a component within mixed-use developments.
greater Jakarta
retail supply around Greater jakarta is projected to be far less than in jakarta. Lippo Cikarang Citywalk, known as LCC, became the only centre operating this quarter. Due to its location in the residential and industrial areas, and adopting a lifestyle and entertainment concept, LCC is projected to become a hub for the eastern area. With the operation of this one-floor, 14,030 sq m facility, the cumulative supply for the greater jakarta area was registered at 1.79 million sq m. For greater jakarta, only tangerang shows a significant amount of retail in the future. It is projected that there will be around 155,000 sq m of new retail space by 2012. Summarecon mall Serpong 2 is shopping malls projected to enter the market next year. meanwhile, Living World alam Sutera is expected to be launched this may as well as tangerang City which will be opened soon.
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| colliers international
tenant trend
active retailers were still characterized by the food and beverage industry, representing around 30% of the all tenants in jakarta. In addition to being a place for dining and meeting, retail space is also used as a place for doing business, where people often spend time doing their work in F&B outlets. In addition to the F&B industry, fashion industries like footwear, belt, handbag and fashion itself were also quite active in expanding. Similarly, beauty and health centres as well as clinics are expanding quite actively into retail centres. In addition to beauty salons, wellknown names in the health industry are active retailers, like Erha apothecary, Bali Dental, the Body Shop, International Dental and Natasha Skin Care. Lifestyle changes created by more people needing instant satisfaction and efficiency have led to the integration of several types of businesses and to the need to provide a place for socializing. recently, it has become easy to find a department store integrated with a supermarket or independent entertainment facility such as a movie or live music facility.
North jakarta
2010
1Q 2011
retail supply growth throughout 2010 in jakarta and the greater jakarta area was the lowest since 2009. With only 0.3% growth, YoY growth was 0.2% below last year. Limited supply will continue throughout this year. During 2011, the annual supply will largely be
contributed by greater jakarta area (58%). the number of retail developments in 2011 is projected to be higher by 30% compared to last year. retail for lease still dominates the market and accounts for 76% of new total supply entering.
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greater Jakarta
Bookstores & Services Entertainment Stationaries 7% 2% 5% Beauty & Health 11%
F&B 29%
F&B 34%
like marie Claire in mall kelapa Gading, while mall of Indonesia acquired muji as a new tenant. mall artha Gading captured the most tenants, including olympic Factory Store, matahari Department Store, mr. pancake, pappa kopitiam, plasa Soto Nusantara and radja Seafood. Yamaha music School, which is the largest in Indonesia, also entered as a new tenant. In West jakarta, Citraland mall attracted Best Denki as a new tenant. this mall is similar to mall taman anggrek, which continued to maintain good performance up to the first quarter of 2011 by having muji, hobbies & gifts, childrens wear, fashion accessories, electronics and photo outlets. kalibata mall pursued new tenants to enter around may or june 2011, including Bakti Salsa, triple C, posh Boy, 3 seconds, matahari, Fun World and Gramedia. matahari, Gramedia and Fun World have been preparing fit-out since early march 2011. kalibata mall is now strategizing to upgrade the mall with no clear separation between the expanded space and the existing mall and to change the concept to that of a family mall. Due to tenancy mix works, Calisto Department Store is temporarily closed and it will reopen in may this year. Because of the tenancy mix works, a number of tenants were closed down, including salons, a health clinic, furniture and mobile phones stores and a restaurant. In East jakarta, kramat jati Indah plaza is undergoing renovation and will have its soft launch in the middle of this year. meanwhile, Buaran plaza continued to maintain good performance by having a karaoke centre occupying the top floor of the mall, which used to be the parking area. In return, the management will add parking capacity by having another space vertically. other than mentioned above, roppongi pan (roppan) from japan also opens in Gandaria City. Senayan trade Center is still attractive for bicycle and hobby stores to open in this combined office-retail building.
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| colliers international
rental rates
there was no increase in rental rate this quarter. Strengthening occupancy performance has become more important for shopping malls today. Developers have been enjoying robust occupancy performance. retaining existing tenants by providing rents according to the lease agreement and reasonable rates for new tenants has been common. In 1Q 2011, the average rental rate was recorded at rp349,507/sq m/month. Despite showing no increase q-o-q, the average rental rate was 1.16% higher year-on-year. there is an increasing trend in the greater jakarta area. Up to 1Q 2011, rental rates were registered at rp246,052/sq m/month, increasing 2.16% q-o-q and 2.32% y-o-y. a significantly increasing rental rate of shopping malls around karawaci gave a bounce to the average rental rate.
1Q 2011
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outlook
With a population of more than 200 million, a fast-growing economy and strong domestic consumption, Indonesia offers abundant potential for retail business. positive performance posed during the first quarter has allowed greater hope that the retail market should be better over the remainder of the year. Long listed tenants that plan to open soon (as mentioned previously) indicate that occupancy rates would climb gradually this year. Some developers would prefer to maintain current rental rates and will wait to introduce new rental tariffs, but there is the possibility of rental increase this year. Nevertheless, nowadays, the major challenge of the retail market is that retail centres are not well distributed. We have witnessed that some preferred commercial areas have been continually receiving more retail centres (more than the capacity of each area). It is obvious that many retail centres are mostly concentrated in specific areas where the market is already saturated. Looking ahead, the tenancy mix continues to be a crucial factor for retail premises. a retail centre that does not meet the needs or interest of their customers would experience failure. the key is to invite a variety of retail mix and strategize the best concept in accordance to the target market. this would enable retailers to achieve higher rentals. Such measures are proven by one of the leading shopping centres in the CBD. Its strategy to kick out their anchor retailers and change the concept by offering smaller retail lots and to several branded goods has been successful in generating more revenue. Single buildings or drive-throughs could be alternatives. Generally, food or home equipment centres would be built to pull in early crowds. If the business runs well, a larger retail centre would then appear. this trend is starting to appear, with new retail centre supply categorized as a shopping arcade or citywalk.
2010
1Q 2011
service charge
renovation could boost rental rates and maintenance costs. Some old retail centres are beginning to consider upgrading by improving the quality of facilities such as elevators, escalators, lighting and interiors. retail centres like kalibata plaza, Lokasari plaza and plaza kramat jati Indah are pursuing a better look by undertaking some renovation work, which is expected to be finished in the middle of 2011, in time for the rush back to school and the Lebaran holiday.
average service charges
rp80,000 rp70,000 rp60,000 rp50,000 rp40,000 rp30,000 rp20,000 rp10,000 rp0 2006 2007 jakarta 2008 2009 Greater jakarta
Colliers International Indonesia - research
With no increase, maintenance costs for shopping malls in jakarta this quarter were registered at rp68,526/sq m/month. For the greater jakarta area, due to the operation of one new retail centre that applies maintenance cost above the average market, the service charge was recorded at rp55,969/sq m/month, higher by 1.15% q-o-q.
2010
1Q 2011
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Serang 21%
jakarta 10%
karawang 36%
tangerang 5%
Colliers International Indonesia - research
demand
our projection for 2011 has come close to reality. We were quite convinced that industrial sales in 2011 would surpass those achieved in 2010. So far, total sales in 2010 were the best year ever in industrial history. Now, in the first three months of 2011, the market has witnessed a remarkable sales performance, with total sales in the first quarter accounting for 63% of what was achieved in 2010. In our record, total industrial land sold during 1Q 2011 was around 344 hectares, thanks to several huge transactions this year. For Suryacipta industrial estate, this could be a golden period for them. their achievement for the quarter jumped very significantly as a result of three notable transactions concluded, together with other smaller land parcel deals. another best performer for the quarter is Delta Silicon, which concluded a significant transaction with a tyre producer from korea. other industrial estate with relatively substantial transactions were Bekasi Fajar and kIIC, with total transactions of from 27 to 30 hectares this quarter. the biggest transaction for the quarter was the sale of 81 hectares of land in Suryacipta with the japan automotive industry. this was not the only transaction by the automotive industry; there was another major deal, of 40 hectares, by the japanese auto industry and other smaller transactions by automotive-related industries.
Not only that, but the total transactions accounted for 173 hectares, by a consumer goods producer from Europe. anything related to the automotive industry performed well this quarter, as for example the tyre producer from korea, Hankook, which took around 60 hectares of land in Delta Silicon. this transaction is the second biggest after the transaction in Suryacipta. apart from this sizeable transaction, Delta Silicon also concluded several smaller transactions, particularly for warehouse purposes, chemical, printing, plastic injection, etc. the trend of buyers buying industrial for resale continues in
industrial land sales recorded in 1Q 2011
Suryacipta Delta Silicon Bekasi Fajar kIIC Greenland (kota Delta mas) kota Bukit Indah krakatau Industrial Estate Cilegon mm2100 Industrial town kota Bukit Indah (Indotaisei) modern Cikande 0 30
this estate. In our record, several contractors and developers bought smaller land parcels for building Standard Factory Buildings (SFB). thus, apart from the Hankook transaction, smaller transactions in Delta Silicon accounted for 20.5 hectares. In kIIC and Bekasi Fajar, we found sizeable transactions of over 10 hectares, including a 15-hectare transaction (name of client not officially disclosed), a 12-hectare deal with the chemical industry, 10 hectares of land acquisition by the heavy equipment industry and a deal with the plastic moulding industry.
60
90
120
150
hectares
180
Land sales in 2011 are projected to escalate and strongly outstrip total sales in 2010. a combination of stagnant land supply together with progressive land absorption has led to a
high take-up level. this quarter, take-up rate was registered at 80.1%, against 76.1% in the previous quarter.
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Heavy Equipment 2.88% packaging 1.61% Logistic/ Chemical Warehouse 3.60% 3.57% Steel related 2.02%
automotive 49.68%
printing 0.35%
plastic 0.14%
apart from well-performing industrial estates this quarter, two industrial estates in Serang were quite consistent in concluding deals. kIEC sold around four hectares of land to korean companies that fabricate steel structures, while modern Cikande sold 2.3 hectares of land to a shoelace company from taiwan, together with a local water tank manufacturer of less than one hectare. kota Bukit Indah (Indotaisei), from the limited land available, released around 2.9 hectares to the korean safety shoes industry. they are now expecting another deal from the sports equipment industry, which is likely to materialize in the second quarter of this year.
as seen from the chart above, the automotive industry dominated transactions for the quarter. apart from the significant transaction from Suryacipta, others by the automotive and related industry came from two japanese companies in kota Bukit Indah, five hectares of
land acquired by astra International Daihatsu in Bekasi Fajar, several transactions by spare-part companies, totalling 12.8 hectares in Greenland kota Deltamas, and three hectares of land by astra Honda motors in mm2100.
and
Greenland (kota Delta mas) 4% Bekasi Fajar mm2100 8% Industrial town 1% Delta Silicon 24%
Land prices keep on a speedy track. after substantial increases in the last quarter of 2010, land prices in 1Q 2011 were still moving upwards. the price in tangerang is relatively stable, as not many transaction activities occur in this region. Likewise, after recording a significant increase last quarter, the price was relatively calm during the reviewed quarter in Bogor. In karawang, two industrial estates introduced a new published price. the increased range was between 10% and 26%. meanwhile, one industrial estate in Bekasi also instituted a new price, by increasing the previous quarters price by 25%. a price increase was also monitored in Serang, where one industrial estate introduced an increase of 12.5% for the quarter. In general, the price increases in this quarter were anticipated last year. price growth is the response to escalating sales and anticipation of limited stock
Suryacipta 50%
Colliers International Indonesia - research
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| colliers international
outlook
Despite the massive earthquake and tsunami, japans investment plans in Indonesia will continue as scheduled. From the deals closed this quarter, it was seen that many transactions were by japanese companies, and it is expected that other plans to acquire industrial land by japanese companies will continue. Further, benefiting from the very stable political situation and improved economic fundamentals, Indonesia is expected to attract more investment in 2011. the combination of a growing population, moderate debt and potential productivity would help promote growth. Given that industrial land sales for the first quarter of the year achieved more than 60% of total sales in 2010 (an historic high) and the hope for greater prospects for the economy in 2011, it can confidently be said that 2011 will be better for the industrial market. another indication that suggests improvement this year is that several industrialists from korea and taiwan plan to relocate their factories from China to Indonesia. Currently, the government of China only allows industries operating with high-tech products. Such industries as shoe manufacture or furniture would therefore potentially relocate to Indonesia. Growing sales would generally stimulate prices to edge higher as well. there is room for prices to rise, particularly in some industrial estates where prices are lower than the average. another factor which would lead to higher prices is the adjustment in the Njop or tax office assessment Value.
US$/sq m
Bekasi
None of the industrial estates have reported an increase in service charge cost. overall, service charge costs are fairly flat in all regions, excepting only in Bogor, where we can see a drop, but this is essentially due to the change in currency use. For some time, particularly since the rupiahs value has strengthened against the U.S. dollar, developers would change their asking price or maintenance from U.S. dollars to rupiah because the rupiah value was becoming resilient.
throughout 2011, it is anticipated that maintenance costs will rise. Some industrial estates have indicated introducing new service charge costs in anticipation of rising operational costs. In many cases, the introduction of a new service charge tariff will need some time to socialize to the tenant, because it will affect the operation of all tenants. Not only the maintenance tariff, but other utilities costs, like water, are also anticipated to increase this year.
US$/sq m/month
Land price (sq m) Lowest US$ 50.00 US$ 60.00 US$ 55.00 US$ 86.20 US$ 51.70 Highest US$ 143.60 US$ 145.40 US$ 75.00 US$ 115.00 US$ 97.70 average US$ 115.90 US$ 78.80 US$ 60.9 US$ 95.2 US$ 88.8
maintenance Cost (/sq m/month) Lowest US$ 0.07 US$ 0.04 US$ 0.05 US$ 0.06 US$ 0.03 Highest US$ 0.09 US$ 0.11 US$ 0.06 US$ 0.07 US$ 0.05 average US$ 0.08 US$ 0.06 US$ 0.05 US$ 0.06 US$ 0.04
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| colliers international
$1.9 billion in annual revenue 2.4 billion square feet under management Over 15,000 professionals
colliers international indonesia: World trade Centre 10th 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 floor jalan jenderal Sudirman kav. 29 - 31 jakarta 12920 Indonesia tel 62 21 521 1400 ext 131 faX 62 21 521 1411 Ferry Salanto Division manager, research World trade Centre 10th floor jalan jenderal Sudirman kav. 29 - 31 jakarta 12920 Indonesia tel 62 21 521 1400 ext 134 faX 62 21 521 1411
Copyright 2010 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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