Research And Forecast Jakarta Office 2Q 2014

8/10/2019 Research And Forecast Jakarta Office 2Q 2014

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OFFICE SECTOR

Leased Office

CBD Office Cumulative Supply

Source: Colliers International Indonesia - Research

Supply in the CBD

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2008

2009

2010

2011

2012

2013

2014Y

TD

2014F

2015F

2016F

2017F

2018F

sqm

Existing Supply Annua l Supply

Te cumulative supply of office buildings in Jakarta (CBD and

outside CBD area) will reach around 7.5 million sq m by the

end of 2014, bringing the growth rate of the Jakarta cumulative

supply to 6.5% in 2014, which is higher than in the previous year.Te office supply in Jakarta is projected to increase rapidly from

2015 to 2018 at an average of 10.2% per year.

Annual CBD Future Office DistributionBased on Sub Market


0 150,000 300,000 450,000 600,000 750,000

2014F

2015F

2016F

2017F

2018F

sq m

Sudirman Thamrin Mega Kuningan

Rasuna Said Satrio Gatot Subroto

Research &Forecast Report

2Q 2014Accelerating success.

otal office space in DKI Jakarta increased modestly by only

87,063 sq m during the first half of the year with occupancy

stable at 96%. A major increase in supply, however, is expectedin the next four years with cumulative supply possibly increasing

by 51% from 7.1 million sq m to 10.7 million sq m. Te increase

assumes the completion of 74 buildings which are now under

construction or being planned and would result in a drop in

occupancy below 90%. Average asking base rental rates in IDR

denominated buildings in the CBD rose moderately by around

2% this quarter, reaching IDR252,114 psm / month. Likewise,

the average base rental rate for US dollar denominated buildings

moved slightly upward to USD36.32 psm / month.

- Ferry Salanto, Associate Director | Research
https://twitter.com/colliersintlhttp://www.linkedin.com/company/colliers-international%3Ftrk%3Dhb_tab_compy_id_5227https://www.facebook.com/colliersglobal%3Frf%3D105632526137251


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2

Annual Outside CBD Future Office DistributionBased on Region


0 100,000 200,000 300,000 400,000 500,000

2014F

2015F

2016F

2017F

2018F

sq m

Central Jakarta South Jakarta North Jakarta

East Jakarta West Jakarta

Up to the reviewed quarter, the CBD area continued to contribute

the most space, comprising 67.2% of the cumulative office

supply in Jakarta. Lippo Kuningan, which began operationin

2Q 2014, is the first new office building in the CBD in 2014 and

contributes 30,500 sq m. Tis office building, which is located

in Rasuna Said, brought the cumulative supply in the CBD to its

current 4.79 million sq m. After Lippo Kuningan, 187,805 sq m

of additional supply will enter the market in the CBD by the endof 2014.

Including office buildings that have been in operation, the total

annual supply during 2014 in the CBD will reach 218,305 sq m.

Future office buildings in the CBD are projected to provide a

huge amount of space at 2.27 million sq m from 2015 to 2018.

Next year alone, the CBD will see 619,199 sq m of additional

office space or almost 30% of the total projected additional

supply in 2015 - 2018.

Based on the status of development of 40 new office building

projects (totalling 2.46 million sq m) located in the CBD from

2014 - 2018, 30 office buildings (1.95 million sq m) are underconstruction. With almost 80% under construction as of 2Q

2014, it appears that all of this additional office space in the CBD

from 2014 to 2018 will seemingly be completed.

Te Sudirman area is still the largest contributor of supply in

the CBD, based on location. However, the Satrio and Mega

Kuningan areas are expected to see the most significant growth.

Sequentially, those areas will record growth of 137% and 100%

respectively from 2014 to 2018. In addition to Satrio and Mega

Kuningan, with large land availability, Gatot Subroto will

become the next corridor to grow, by 77% during the same

period. Sudirman will only contribute 47%, more than Rasuna

Said (32%) and Tamrin (11%).

Te total additional supply of office buildings in the outside

CBD in 2014 is projected to reach 245,604 sq m contributed by

10 office buildings. Once again, South Jakarta will become the

main contributor of office supply in 2014 as seven of the office

buildings or 78% of the total additional space in 2014 will be

located in South Jakarta.

As of 2Q 2014, two office buildings officially began operations

and brought the cumulative supply to 2.34 million sq m in

outside CBD. One office building, Green Kosmo Mansion (GKM)

ower, is in South Jakarta, and another, Kirana wo, is in North

Jakarta. Tree office buildings are located outside of South

Jakarta, including Kirana wo, GP Plaza and Wisma 77 ower 2.

South Jakarta will continue leading in future supply in outside

CBD from 2015 to 2018. Additional supply of 0.9 million sq m is

projected to enter the market by 2018. Of this additional space,

59% will be in South Jakarta. Central and West Jakarta will follow

with 16 and 13%, respectively.

South Jakarta will see an additional 150,000 sq m per year from

2014 to 2018. Te total 747,215 sq m provided during 2014 - 2018

in South Jakarta is still more than the total additional supply of

the other regions during that period.

Based on development status, 62.5% of the total projected futuresupply (36 buildings) from 2014 to 2018 in the outside CBD have

begun construction as of 2Q 2014. Tis is at 24 office buildings

under construction. Tis current development status also

signifies that at future office buildings in the outside CBD, almost

all projected supply will meet the completion date.

Supply in the Outside CBD

Outside CBD Office Cumulative Supply


0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2008

2009

2010

2011

2012

2013

2014Y

TD

2014F

2015F

2016F

2017F

2018F

sq

m

Existing Supply Annual Supply

Research & Forecast Report | 2Q 2014 | Office | Colliers International


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4 Research & Forecast Report | 2Q 2014 | Office | Colliers International

PROJECTED

COMPLETIONOFFICE BUILDING PROJECTS NAME LOCATION SGA MARKETING SCHEME STATUS DEVELOPMENT

continuation

2016 Office Tower @ ST Regis Gatot Subroto 90,511 For Lease Under construction

2016 T Tower (BJB Tower) Gatot Subroto 24,000 For Sale Under construction

2016 The Tower Gatot Subroto 56,492 For Sale Under construction

2017 Gayanti City Gatot Subroto 25,000 For Lease In planning

2017 Prosperity Tower @ Distict 8 Sudirman 71,545 For Sale Under construction

2017 Sequis Life Tower 2 Sudirman 80,000 For Lease Under construction

2017 Sudirman 7.8 Sudirman 52,000 For Sale In planning

2017 Sopo Del Tower A Mega Kuningan 80,000 For Lease & Sale In planning

2017 Sopo Del Tower B Mega Kuningan 40,000 For Lease In planning

2017 Treasury Tower @ District 8 Sudirman 139,000 For Sale Under construction

2017 Thamrin Nine Thamrin 45,000 For Lease Under construction

2017 World Capital Tower Mega Kuningan 72,000 For Sale Under construction

2018 Astra Tower Sudirman 100,000 For Lease In planning

2018 Icon Tower Sudirman 72,500 For Lease In planning

2018 Mangkuluhur Tower II Gatot Subroto 50,000 For Lease In planning

2018 PCPD Tower Sudirman 96,000 For Lease Under construction

2017 SSI Tower (Graha Surya Intenusa) Rasuna Said 100,000 For Lease In planning

2018 Tower Two at The City Center Sudirman 39,204 For Lease In planning

2018 Tower 2 @ Ciputra World Jakarta 1 Satrio 70,000 For Lease & Sale In planning

2018 World Trade Center III Sudirman 70,000 For Lease Under construction

OUTSIDE CBD AREA (EXCLUDE TB SIMATUPANG)

2014 GP Plaza Slipi 12,204 For Sale Under construction

2014 Wisma 77 Tower 2 Slipi 24,200 For Lease Under construction

2015 Altira Sunter 40,000 For Sale Under construction

2015 Jakarta Box Tower Kebon Sirih 36,000 For Lease Under construction2015 Maxima Tower Kelapa Gading 8,000 For Lease Under construction

2015 Menara Sentraya Blok M 52,072 For Lease & Sale Under construction

2015 MNC Tower II Kebon Sirih 20,000 For Lease Under construction

2015 Nariba Office Suites Mampang 4,200 For Lease Under construction

2015 One Tower Kemayoran 21,400 For Lease In planning

2015 Puri Indah Financial Tower Puri Indah 38,500 For Sale Under construction

2015 Soho Capital Slipi 36,000 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

2016 BKP Office Tower Sunter 16,000 For Lease In planning

2016 Gallery West Kebun Jeruk 29,000 For Lease & Sale Under construction2016 Lippo Tower Holland Village Cempaka Putih 27,000 For Sale In planning

2016 L'Venue Pasar Minggu 41,597 For Sale In planning

2016 Sky 18 Tower Pasar Minggu 27,500 For Sale In planning

2016 Soho Pancoran Pancoran 30,000 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

2018 Kota Kasablanka Office Tower 2 Casablanca 90,000 For Lease In planning

continued


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Occupancy Rates in the CBD and Outside the CBD


Occupancy

70%

75%

80%

85%

90%

95%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014Y

TD

CBD Outside CBD (excl. TB Simatupang) TB Simatupang

CBD

Annual Office Supply and Demand in the CBD


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2008

2009

2010

2011

2012

2013

2014Y

TD

sqm

Annual Supply Annual Demand

Despite a slight decline QoQ, the occupancy rate for officebuildings in the CBD remained steady as of 2Q 2014, at 96%,

where it has been for the past year.

Nearly 65% of office buildings in the CBD recorded relatively

stable occupancy rates in 2Q 2014. Most office buildings that

recorded growing occupancy were in Mega Kuningan. Despite

the majority remaining relatively stable, office buildings in Gatot

Subroto and Rasuna Said also saw improving performance.

PROJECTED

COMPLETIONOFFICE BUILDING PROJECTS NAME LOCATION SGA MARKETING SCHEME STATUS DEVELOPMENT

continuation

TB SIMATUPANG

2014 Graha MRA 13,000 For Lease Under construction

2014 Plaza Oleos 39,778 For Lease & Sale Under construction2014 Palma Tower 20,484 For Lease Under construction

2014 The Manhattan Square 39,375 For Lease & Sale Under construction

2014 18 Office Park (Cityland Tower) 40,000 For Sale Under construction

2015 AD Premier 18,900 For Lease Under construction

2015 Metropolitan Tower 44,000 For Lease & Sale 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 Beltway Office Park Tower 4 25,600 For Lease In planning

2017 The Sima 60,000 For Lease Under construction

2017 South Quarter Tower 3 40,778 For Lease In planning

2017 The Manhattan Square Tower 2 39,375 For Lease & Sale In planning


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Good location, easy access, good building quality and

management, and integration into commercial areas, such as

shopping centres and apartments, have become the key elements

for office buildings maintaining their occupancy performance.

Based on grade, a decreasing occupancy rate of 1.1% was

recorded at Premium office buildings, while Grade A office

buildings weakened 2.6% QoQ. Grade C office buildings only

saw a slight drop in the occupancy rate QoQ. Only Grade B office

buildings saw growth of 0.5% in the same period.

Annual Office Supply and Demand inthe Outside CBD


Outside CBD

0

50,000

100,000

150,000

200,000

250,000

300,000

2008

2009

2010

2011

2012

2013

2014Y

TD

sqm


New additional supply caused the occupancy rate for office

buildings in the outside CBD to weaken, although less than 1%.

Currently, the average occupancy rate is 93.2%.

Te occupancy rates for office buildings in North Jakarta showed

the most significant drop, slumping 6.5% QoQ.

Annual Office Supply and Demand inTB Simatupang


0

20,000

40,000

60,000

80,000

100,000

2008

2009

2010

2011

2012

2013

2014Y

TD

sqm


Demand for Future Offices

B Simatupang

Despite falling by 2.9%, B Simatupang is still a major driver ofthe occupancy rate in the outside CBD. Te average occupancy

rate in B Simatupang was 93.2% as of 2Q 2014.

Historically, since it was recorded at 70% in early 2000, the

occupancy rate in B Simatupang reached 90% in 2003. Ten

the occupancy rate remained above 90%, with an average of 96%

from 2003 to 2014. oday, there are quite limited large spaces

available at office buildings in B Simatupang. Even newly

operating office buildings have achieved healthy occupancy. A

new office building in B Simatupang has reached above 50% of

committed occupancy in the first year of operation.

Pre-Committed Absorption of Future Officein the CBD


0 150,000 300,000 450,000 600,000 750,000

2014F

2015F

2016F

2017F

2018F

sq m

Annual Supply Space Absorbed


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Pre-Committed Absorption for Future Officein the Outside CBD


Pre-Committed Absorption for Future Officein TB Simatupang


Asking Base Rent

Average Asking Base Rent (Based on AvailableSpace) in the CBD by Grade


0 150,000 300,000 450,000 600,000 750,000

2014F

2015F

2016F

2017F

2018F

sq m


0 150,000 300,000 450,000 600,000 750,000

2014F

2015F

2016F

2017F

2018F

sq m


Abundant supply from 2014 to 2018 will present a challenge for

the office market, particularly in the CBD. As of 2Q 2014, future

office buildings projected to be completed in 2014 have achieved

40% commitment occupancy. Overall, with projected additionalsupply of 2.46 million sq m by 2018 and the commitment

occupancy at 25%, the CBD office market will find it difficult to

maintain occupancy above 90%.

A similar trend seemingly will be seen in the outside CBD.

Excluding B Simatupang, commitment occupancy for

projected future office buildings in 2014 was 10%. On the other

hand, future office buildings in B Simatupang are performing

well at 54.7% as of 2Q 2014. By reaching above 50% commitment

in only two quarters, the big challenge for office buildings in B

Simatupang will be in 2015 due to the large supply projected to

enter the market.

Average Asking Base Rent in the CBD


Low vacancy is still the main reason for landlords to adjust base

rents, and coupled with limited supply, the asking base rent is

currently IDR252,114 psm / month. Te asking base rent grew

by 1.9% QoQ and 17.6% YoY. Some office buildings noted a verysignificant adjustment. However, this increase was followed by

the strong performance of several buildings, which have had an

average occupancy close to 100% since last year.

Te average rental rates of office buildings charging in US dollars

only grew by 1.1% QoQ, as of 2Q 2014. Asking base rent for offices

charging in US dollars was USD36.32 psm /month, growing 5.4%

YoY.

Currently, based on available spaces, nine office buildings

offered a base rent of USD50.00 psm / month and more. In

addition to performance, building quality and location are key

factors in those office buildings becoming the most expensive inthe CBD, and in all of Jakarta.

USD 0.00

USD 5.00

USD 10.00

USD 15.00

USD 20.00

USD 25.00

USD 30.00

USD 35.00

USD 40.00

USD 45.00USD 50.00

USD 55.00

USD 60.00

IDR 0

IDR 59,000

IDR 118,000

IDR 177,000

IDR 236,000

IDR 295,000

IDR 354,000

IDR 413,000

IDR 472,000

IDR 531,000IDR 590,000

IDR 649,000

IDR 708,000

Premium Grade A Grade B Grade C

USD 0.00

USD 5.00

USD 10.00

USD 15.00

USD 20.00

USD 25.00

USD 30.00

USD 35.00

USD 40.00

IDR 0

IDR 59,000

IDR 118,000

IDR 177,000

IDR 236,000

IDR 295,000

IDR 354,000

IDR 413,000

IDR 472,000

2008

2009

2010

2011

2012

2013

2014Y

TD

IDR USD


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USD 0.00

USD 5.00

USD 10.00

USD 15.00

USD 20.00

USD 25.00

USD 30.00

IDR 0

IDR 59,000

IDR 118,000

IDR 177,000

IDR 236,000

IDR 295,000

IDR 354,000

2008

2009

2010

2011

2012

2013

2014Y

TD

IDR USD

Te average base rent in the outside CBD was steady QoQ. Tis

growth has put the average base rent currently at IDR164,727

psm / month. Office buildings charging in USD were at USD22.54

psm / month.

Growth at office buildings in West Jakarta was the highest

at 15.2% QoQ. Office buildings in Slipi were still the main

contributor, bringing the average base rent to IDR180,144 psm

/ month in West Jakarta. South Jakarta achieved the highest

base rent at IDR188,069 psm / month, but only recorded growth

below 1% QoQ.

High base rent in South Jakarta was still influenced by the

performance of office buildings in B Simatupang, including

Pondok Indah. Currently, base rent in B Simatupang was

IDR157,368 psm / month. Office buildings charging in USD

were at USD21.7 psm / month, growing 3.9% QoQ. Tis growth

was similar to office buildings charging in IDR during the same

period.

Average Asking Base Rental in TB Simatupang


Strata-title Office

Asking Price (Combining Office Buildings Chargingin IDR and USD)


Service ChargesIncreasing electricity tariffs effective by mid-2014 for industrial

sectors will bring about a significant correction in service

charges in the remainder of 2014 and early 2015. Currently,

service charges for all classes of office buildings in the CBD were

IDR65,208 psm / month as of 2Q 2014, an increase of nearly 10%

YoY. Office buildings charging in USD recorded a slight increase

of 3.1% in the same period, bringing the average service charges

to USD6.76 psm / month.

Office buildings in the outside CBD charging in rupiah also

showed significant growth of 7.1% YoY. Currently, service

charges were IDR46,155 psm / month as of 2Q 2014. Office

buildings in South Jakarta charged more at IDR48,389 psm /

month. Populated by mostly good quality buildings, the average

service charge in B Simatupang was even higher at IDR74,418

psm / month as of 2Q 2014.

IDR 0

IDR 10,000,000

IDR 20,000,000

IDR 30,000,000

IDR 40,000,000

IDR 50,000,000

IDR 60,000,000

2

008

2

009

2

010

2011

2

012

2013

2014

YTD

CBD TB Simatupang Outside CBD exclude TB Simatupang

Tere was no change in performance at strata-title office

buildings in the CBD with the current total supply at 816,829 sq

m. Te lack of new supply kept take-up rates at 99.4% as of 2Q

2014 and there was no growth QoQ. Tis level of take-up rate

indicates that almost all existing space has been sold out in the

CBD.

Increasing demand for strata-title office buildings had an impacton the performance of future supply. At least from 2014 to 2017,

the committed take-up rate has achieved 46.3% of the 952,931 sq

m of future office space for sale. Strata-title offices for sale, which

will be operational in 2014 alone, have been at 57%.

Te high take-up rate performance at strata-title offices for sale,

especially future supply, has caused the selling price to rise.

Currently, selling prices for strata-title offices in the CBD are

in the range of IDR40 to 80 million psm. Location has allowed

Sudirman to have the highest asking prices ranging from IDR60

to 80 million psm.

ake-up rates for offices for sale in the outside CBD have beenslightly adjusted at Green Kosmo Mansion. Despite still being

high, currently, the take-up rate of offices for sale in the outside

CBD is 94.2%, down 1.3% QoQ. Te asking price currently is

IDR32.5 million psm. Te office buildings for sale in the outside

CBD have asking prices in the range of IDR25 to 45 million psm.

wo office buildings located in Blok M (South Jakarta) and

Slipi (West Jakarta) had higher selling prices than other office

buildings in the outside CBD area.


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Concluding ToughtsA substantial supply projection in the CBD will inevitably have

a big impact on the weakening figure of asking base rental

and occupancy rates. Demand for office space will still be

resilient, however, the growth of office supply will seemingly

reduce the occupancy level over the three next years. Te office

market is predicted to experience contraction in the asking

base rental rates amidst increasingly high competition among

new buildings. Well-performing office buildings with limited

available space mainly underpin the current high asking rental

rates. Rental rates will be adjusted once the market witnesses

sizeable available office space.


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Copyright 2013 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been 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.

About Colliers International

Colliers International is a global leader in commercial real estate services, with over 15,800 professionalsoperating out of more than 485 offices in 63 countries. A subsidiary of FirstService Corporation, ColliersInternational delivers a full range of services to real estate users, owners and investors worldwide,including global corporate solutions, brokerage, property and asset management, hotel investmentsales and consulting, valuation, consulting and appraisal services, mortgage banking and insightfulresearch. Te latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world.

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Primary Authors:

Ferry SalantoAssociate Director | Jakarta62 21 521 1400 ext [email protected]

Colliers International Indonesia

World Trade Centre 10th & 14th floorJalan Jenderal Sudirman Kav. 29 - 31Jakarta 12920Indonesia

TEL 62 21 521 1400

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Research And Forecast Jakarta Office 2Q 2014

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