q2 2016-researchand forecastreport-jakarta

Jakarta Property Market Report

Research & Forecast Report

Q2 2016

Accelerating success.

2 Quarterly Report | Q2 2016 | Jakarta | Colliers International

Office SectorOffice demand has dwindled for the last two years, bolstering the negotiating position of tenants in the market. Newly operating office buildings added further downward pressure on rents because of the additional vacant space they have added to the supply.

Apartment SectorDuring the quarter, apartment sales performance continued to languish with a moderate 0.5% growth in price compared to the previous quarter. There were 4,777 new units from the handover of a total of eight apartment towers from five projects. The cumu-lative supply of strata-title apartments in Jakarta grew by 2.9% QoQ or 12.4% YoY to a record 167,697 units. Prices of apartments have been relatively flat as most of the projects hold prices in order to attract buyers. The average asking price of apartments in Jakarta was recorded at IDR31 million/sq m (excluding VAT), increased modestly by 0.5% QoQ.

Expatriate Housing SectorThere were signs of recovery during H1 2016 with number of re-peat corporate clients who signing new one-year lease contracts. Many companies employing expats are currently only willing to commit to a maximum one-year contract; very few of them are willing to accept two years rent in advance.

HighlightRetail SectorBassura City Mall was the only new shopping centre in Ja-karta during H1 2016 contributing around 21,000 sq m of retail space. Thus far, occupancy performance and rental rates are relatively stable. Average asking rent was record-ed at IDR566,087/sq m/month as of Q2 2016.

Industrial Estate SectorThe industrial market has yet to recover from the generally slow sales performance which has led to further downward pressure on industrial land prices. Two industrial estates reportedly intro-duced prices which were lower this quarter by an average of 8%.

Hotel SectorThree new hotel projects began operation in Jakarta during the last quarter. In the 3-star category, Archipelago International (131 rooms) and Liberty hotel (60 rooms) opened. In the 4-star ho-tel category, Accor opened a Mercure brand hotel providing 207 rooms. Total star-rated hotels in Jakarta now total 37,695 rooms from 182 projects. The AOR increased 4.9% to 56.7% QoQ and the Jakarta ADR slightly increased by 0.15% to USD82.65 in Q2 2016Q.

https://www.facebook.com/colliersglobal%3Frf%3D105632526137251

http://www.linkedin.com/company/colliers-international%3Ftrk%3Dhb_tab_compy_id_5227

https://twitter.com/colliersintl

Supply

Office Spaces Offered For Lease

CBD

Source: Colliers International Indonesia - Research

CBD Office Cumulative Supply

Eleven office buildings are expected to be completed, providing a total of around 670,000 sq m of additional office spaces in 2016. As of Q2 2016, after Centennial Tower officially began operation last quarter, three office buildings opened afterwards, which include Sinarmas MSIG, International Financial Centre 2 and Capital Place. These three office buildings contributed 215,511 sq m of spaces, bringing about a total, cumulative office area in the CBD to 5.46 million sq m, as of Q2 2016. With sev-eral office buildings in the pipeline, we expect more new build-ings to be completed in the second semester to provide about 5.81 million sq m by the end 2016, or a growth of 12.2% YoY.

SupplyThree office buildings (Sinarmas MSIG, IFC 2 and Capital Place) began operation this quarter contrib-uting 215,511 sq m bringing the cumulative office supply in the CBD to 5.46 million sq m. A total of 11 office buildings are expected to be completed in 2016 adding 670,000 sq m of office space to supply.

DemandInfrastructure-related companies including those building roads and power plants are becoming more common tenants while insurance, bank and other finance-related companies remain active in search-ing for space.

OccupancyOccupancy continued its two year declining trend and this quarter was recorded at 85.6%, the lowest since 2005. Going forward, given a moderate GDP growth projection and huge projected supply, occu-pancy rates might drop an additional 3% by the end of 2016.

RentAbout 30 buildings considerably lowered asking base rental rates during the first semester this year. Newly operating office buildings are most often pri-oritizing occupancy levels; therefore, we expect to see more discounted rental rates.

Office SectorForecast at a glance

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

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Existing Supply Additional Supply Supply YTD Future Supply




CBD Annual Supply

Quoted from Colliers’ earlier report, 35 office buildings will be completed between 2016 and 2019, creating 2.38 million sq m of new office spaces. However, we revised this projection as of Q2 2016 due to the change in the completion schedule of a few buildings. The current projected number for the same period slightly decreased to 2.28 million sq m, contributed by 34 of-fice buildings. Three office buildings decided to reschedule their completion after 2019.

Looking at how things are progressing, the construction of most of the new office buildings is already underway. Around 70% of the total number of office buildings that are scheduled for com-pletion in 2018 – 2019 have already began construction works.

On the back of a buoyant, long-term growth projection of In-donesia’s economy, some developers (international and local) plan to launch their new office projects in the CBD. Five office buildings (not yet included in the pipeline list) with leasable area around 80,000 sq m will be developed around Rasuna Said and Sudirman.

There is also a very likely option to redevelop existing projects, to allow landlords to maximise plot ratio of the land. With a primary location near future MRT stations in Sudirman, at least four developers plan to redevelop their existing office buildings and replace them with modern and taller buildings. Two office buildings within a commercial compound were already demol-ished in 2015. By this quarter, the developers have started rede-veloping a new tower, Centennial Millennium, after demolishing two office towers – CIMB Plaza and Sequis Plaza. Scheduled for completion in 2019, Centennial Millennium would provide around 100,000 sqm of office spaces.

More office buildings in the CBD are being demolished. Two old and relatively small office buildings – Wisma Sudirman and Nugra Santana – will likely be torn down in the future. Thus far, these buildings are still in operation.

In Rasuna Said, Graha Surya Internusa was demolished last year and will be replaced by SSI Tower. Construction has al-ready commenced. Other office buildings are on schedule to be completed in 2020. Two land plots in Sudirman will potentially become future office buildings developed by two foreign devel-opers. Pertamina also indicated to build a new tower in Rasuna Said.

Four office buildings that will occupy more than 50,000 sq m will make the Gatot Subroto submarket the biggest office space contributor in 2016. Gatot Subroto will contribute 47% of the total additional office spaces in 2016, larger than Sudirman by 19%. However, given a huge projected supply in 2017 – 2018, Sudirman will still be the major contributor of office spaces in the future. Sudirman will see a total of 754,805 sq m of addi-tional office spaces that will be contributed by nine office build-ings.


CBD Cumulative Supply Based on Area

0

150,000

300,000

450,000

600,000

750,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Additional Supply Supply YTD Under Construction In Planning

0

500,

000

1,000

,000

1,500

,000

2,00

0,00

0

2,50

0,00

0

3,00

0,00

0

3,50

0,00

0

Thamrin

Sudirman

Rasuna Said

Mega Kuningan

Gatot Subroto

Satrio

sq m

Cumulative Supply by 2015 Supply in 2016 Projected Supply 2019F

In the CBD, the “office for lease” type is the most common of-fice type. After a dormant 2013 – 2014, the “office for sale” (strata-title office) type started to inflate in number. The annual supply projection of strata-title offices will be 320,000 sq m per annum, from 2016 to 2019. Except in 2019, the annual supply might go down, but the number is not fixed because anything that would be available in 2019 could only be seen in the next quarters. From 2016 to 2018, about 14 future office buildings will produce 842,820 sq m of office spaces for sale, 59% higher than office spaces for lease.






CBD Annual Supply Based on Marketing Scheme

Outside the CBD

As of Q2 2016, five office buildings officially began operation outside the CBD. Some of these buildings are found in South Jakarta – L’Office, Office Tower at Niffaro and Nariba Office Tower. One is in West Jakarta (Soho Capital at Podomoro City) and another in North Jakarta (Altira). The total area of new of-fice spaces this quarter is 150,000 sq m, bringing a cumulative supply to 2.89 million sq m, for a growth of 12% YoY.

At least 10 office buildings have been in operation outside the CBD YoY. The market is anticipating another nine office build-ings to be completed by the end of 2016, and this will bring a cumulative supply to over 3 million sq m. In 2016, new office buildings will still be mainly found in South Jakarta (50% of the total office spaces in 2016). In South Jakarta, Mampang and Pasar Minggu corridors arose as new potential commercial ar-eas for office development, besides the already established TB Simatupang and Pondok Indah areas.

We expect to see additional 381,059 sq m of office spaces out-side the CBD in 2016, 40% of which has already begun opera-tion in the first semester. All future office buildings for 2016 will likely be finished as scheduled this year, based on how the current construction is progressing. Thus far, from the list of future office buildings in 2017 to 2019, almost 50% are already under construction. About three office buildings will probably start construction faster than scheduled, two of which – The Manhattan Tower 2 and Arkadia Tower G – are located in TB Simatupang.

Meanwhile, some developers have a different perspective and see such construction developments over the next few years with alarm, and therefore might reschedule their project launch time.

From 2016 to 2019, the projected cumulative supply in TB Si-matupang will grow moderately, with an additional seven new office buildings. Cibis Tower, South Quarter Tower 3 and Zuria Tower will become available and are expected to begin opera-tion by the end of 2016.


Outside the CBD Cumulative Supply

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2010 2012 2014 2016F 2018F

sq m

For Lease For Sale

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2010 2012 2014 2016F 2018F

sq m

Outside CBD excl. TB Simatupang TB Simatupang


Outside the CBD Cumulative Supply Based on Area

0

200,

000

400,

000

600,

000

800,

000

1,000

,000

1,200

,000

TB Simatupang

Central Jakarta

South Jakarta

North Jakarta

East Jakarta

West Jakarta

sq m

Cumulative Supply by 2015 Supply in 2016 Projected Supply 2019F






Outside the CBD excluding TB Simatupang Annual Supply


TB Simatupang Annual Supply

0

50,000

100,000

150,000

200,000

250,000

300,00020

10

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Annual Supply Additional Supply YTD

Under Construction In Planning

0

50,000

100,000

150,000

200,000

250,000

300,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Annual Supply Additional Supply YTD

Under Construction In Planning

New Supply Pipeline

prOjeCTeD COMpleTiOn OffiCe BuilDing prOjeCTS nAMe lOCATiOn SgA*

(Sq M) MArkeTing SCheMe STATuS DevelOpMenT

CBD

2016 Telkom Landmark Tower II Gatot Subroto 65,000 For Lease Under Construction

2016 Convergence Rasuna Said 36,367 For Lease & Sale Under Construction

2016 Menara Palma 2 Rasuna Said 50,000 For Lease 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 Menara Pertiwi Mega Kuningan 41,456 For Sale Under Construction

2017 PCPD Tower Sudirman 90,500 For Lease Under Construction

2017 T Tower Gatot Subroto 24,000 For Lease & Sale Under Construction

2017 Lippo Thamrin Office Tower Thamrin 16,500 For Sale Under Construction

2017 Prosperity Tower (within District 8 complex) Sudirman 71,545 For Sale Under Construction

2017 Treasury Tower (within District 8 complex) Sudirman 139,000 For Sale Under Construction

2017 Sopo Del Tower B Mega Kuningan 39,200 For Sale Under Construction

2018 Mangkuluhur Tower Gatot Subroto 53,000 For Lease & Sale Under Construction

2018 Sopo Del Tower A Mega Kuningan 64,000 For Lease Under Construction

2018 Sequis Tower Sudirman 78,000 For Lease Under Construction

2018 Sudirman 7.8 (ex Nugra Santana) Sudirman 52,000 For Sale Under Construction

2018 Tower Two at The City Center Sudirman 101,260 For Lease Under Construction

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

2018 World Capital Tower Mega Kuningan 72,000 For Lease & Sale Under Construction

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

2019 Icon Tower Sudirman 72,500 For Lease Under Construction

2019 Thamrin Nine Thamrin 97,500 For Lease Under Construction

continued





prOjeCTeD COMpleTiOn OffiCe BuilDing prOjeCTS nAMe lOCATiOn SgA*

(Sq M) MArkeTing SCheMe STATuS DevelOpMenT

continuation

2019 Indonesia Satu Thamrin 150,000 For Lease Under Construction

2019 The Hundred Mega Kuningan 45,000 For Lease In Planning

2019 Chitaland Satrio 90,000 For Lease Under Construction

2019 Plaza Gani Djemat 2 Thamrin 8,000 For Lease In Planning

2019 Gran Rubina Tower 2 Rasuna Said 32,000 For Sale In Planning

2019 Centennial Millenium Sudirman 100,000 For Lease Under Construction

OuTSiDe CBD exCluDe TB SiMATupAng

2016 ST Moritz Office Tower Puri Indah 19,500 For Sale 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 Harton Tower Kelapa Gading 8,000 For Lease Under Construction

2016 Tamansari Parama Wahid Hasyim 10,800 For Sale Under Construction

2016 One Belpark Office Pondok Labu 17,800 For Lease Under Construction

2017 Soho Pancoran Pancoran 30,000 For Sale Under Construction

2017 BKP Office Tower Sunter 16,000 For Lease Under Construction

2017 Hermina Office Building Kemayoran 20,000 For Sale Under Construction

2017 Ciputra International Puri 1 Phase 1 Puri 15,000 For Lease In Planning



2018 Lippo Tower Holland Village Cempaka Putih 27,000 For Sale In Planning

2018 One Tower Kemayoran 21,400 For Sale Under Construction

2018 Ciputra Twin Tower 1 Kemayoran 40,000 For Sale Under Construction

2018 Ciputra Twin Tower 2 Kemayoran 40,000 For Lease Under Construction

2018 Ciputra International Puri Phase 2 Puri 15,000 For Lease In Planning


2018 Ciputra Internatinal Puri 2 Phase 3 Puri 15,000 For Lease In Planning

2019 MNC Tower II Kebon Sirih 60,000 For Lease Under Construction

2019 Jakarta Box Tower Kebon Sirih 36,000 For Lease In Planning

TB SiMATupAng

2016 South Quarter Tower 3 40,778 For Lease Under Construction

2016 Zuria Tower 6,584 For Lease Under Construction

2016 Cibis Tower 60,800 For Lease & Sale Under Construction

2018 The Sima 60,000 For Lease Under Construction

2018 Beltway Office Park Tower 4 30,839 For Lease In Planning

2019 Arkadia Tower G 30,000 For Lease In Planning

2019 The Manhattan Square Tower 2 39,375 For Lease & Sale In Planning






DemandCBD


Occupancy Changes in the CBDOffiCe BuilDing grADe q4 2015 YTD q2 2016 YoY q2 2015

All Classes 89.4% 85.6% 93.7%

Grade A 85.5% 79.4% 95.8%

Premium Classes 88.5% 87.4% 81.5%

Occupancy rate revealed a declining trend in the last two years. As of Q2 2016, occupancy was recorded at 85.6%, which is a historic low since 2005. A considerable decline in occupancy by 3% QoQ was mainly triggered by the influx of more than 200,000 sq m additional office spaces during the quarter and mainly with high vacancy. Also, occupancy performance of some old office buildings dropped since old tenants have re-located.

Occupancy generally plunged across all office grades. With the absence of new supplies during the quarter, occupancy of pre-mium buildings was also down. Historically, occupancy of pre-mium buildings hovered at above 90% since 2010. More vacant spaces were seen during the quarter in three premium office buildings. Overall occupancy rate of offices at this grade was down 2% to 87.4%.


Average Occupancy rates in the CBD

70%

75%

80%

85%

90%

95%

100%

2010 2011 2012 2013 2014 2015 2016YTD

Premium Grade A All Classes

The pre-committed occupancy of office spaces for lease in 2015 and 2017 also grew slowly. Thus far, pre-committed occupan-cy only reached 43.4% as of Q2 2016. The market has been through the first half of 2016, nevertheless only 35% of the total office space in 2016 has been absorbed. Further, only 54% of the total new office spaces available in 2015 were absorbed. Given a normal annual demand projection in the CBD, which used to range around 250,000 sq m, this year would be a very challenging situation for office market to catch up with the huge number vacant spaces. The good thing so far is that the amount of 2017 annual supply will be marginal, which would help stabi-lise the market, although the number of strata-title will be quite significant.


pre-Committed Occupancy of Office Buildings for lease in the CBD (2015 – 2017)

Outside the CBD


Occupancy Changes in Outside the CBDAreA q4 2015 YoY q2 2016 qoq q2 2015

Outside the CBD excluding TB Simatupang

89.4% 85.6% 93.7%

TB Simatupang 88.5% 87.4% 81.5%

As of Q2 2016, the overall occupancy rate outside the CBD con-tinued on a downward trend and was registered at 84.7%. At least nine office buildings still have more than 10,000 sq m of vacant spaces. All of these office buildings began operation in 2015 and 2016. The openings of new office buildings in West, North and South Jakarta also negatively impacted occupancy rates.

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

2015

2016F

2017F

sq mSpace Absorbed Space Unabsorbed





Without additional new office buildings in the market, the occu-pancy rate was also down in TB Simatupang. Quite a few office buildings located in TB Simatupang, including Pondok Indah, re-ported a drop in occupancy.


Average Occupancy rates in Outside the CBD


pre-Committed Occupancy of Office Buildings for lease in Outside the CBD (2015 – 2017)

Asking RentsCBD


Average Asking rents Based on Building grade


Average Asking rents in the CBD

In general, the average asking rents in the CBD for all class-es of building were down during the first semester of 2016. About 30 buildings were reported to have lowered their rent quite considerably during this period. However, several Grade-A buildings are becoming new supplies, and are now offering more expensive rental rates compared with the average mar-ket. Most of these newly operating buildings started with a high vacancy rate. And because our rental calculation is based on the space available (vacant space), the overall rental rates seems to increase. YTD rental rate changed by 4.2% to record IDR346,222/sq m/month, as of Q2 2016 for all classes of build-ing in the CBD.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016YTD

Outside CBD exclude TB Simatupang TB Simatupang

0 30,000 60,000 90,000 120,000

2015

2016F

2017F

sq mSpace Absorbed Vacant Space

IDR0

IDR75,000

IDR150,000

IDR225,000

IDR300,000

IDR375,000

IDR450,000

IDR525,000

IDR600,000

Premium Grade A Grade B Grade C

Q2 2015 Q2 2016

IDR0

IDR150,000

IDR300,000

IDR450,000

IDR600,000

IDR750,000

2008 2010 2012 2014 2016YTD

Premium Class All Classes





The average base rental for Premium buildings also dropped by 1.3% QoQ. Two buildings of this class lowered their asking rent by 10% during the quarter, thus bringing the average rents to IDR472,293/sq m/month.


Average Asking rents Based on Building Area

Outside the CBD


Average Asking rents in Outside the CBD

IDR0

IDR100,000

IDR200,000

IDR300,000

IDR400,000

IDR500,000

Thamrin Sudirman Rasuna Mega Kuningan

Gatot Subroto

Satrio

Q2 2015 Q2 2016

IDR0

IDR50,000

IDR100,000

IDR150,000

IDR200,000

IDR250,000

IDR300,000

2010 2012 2014 2016YTD

Outside CBD TB Simatupang

As of Q2 2016, the overall rental rate outside the CBD and in TB Simatupang slightly decreased QoQ to a record IDR224,734/sq m/month. Four office buildings located outside TB Simatu-pang lowered their rents by as much as 30%. Further, the rental rates for newly operating office buildings are relatively below the market price.

In TB Simatupang, average asking rents dropped by 10% for the last six months to IDR242,033/sq m/month. Subsequent to the booming office market in 2012, TB Simatupang continued to become a favourite location, and thus pushed rents to move forward. In some cases, rents were offered at IDR250,000 to IDR350,000/sq m/month. Nevertheless after 2014 – 2015, de-mand for office spaces contracted, forcing landlords to adjust rents to be more favourable to the market. Nowadays, landlords are quite cautious about the current slowing down, and thus change the overall rental tariff in this area by as much as 20%.


Average Asking rents Based on Building grade in Outside the CBD

IDR0

IDR50,000

IDR100,000

IDR150,000

IDR200,000

IDR250,000

IDR300,000

IDR350,000

2010 2012 2014 2016YTD

Grade A Grade B Grade C All Classes





Service ChargesCBD


Service Charges in the CBD

As of Q2 2016, average service charge increased 3.9% YTD and was recorded at IDR80,2015/sqm/month. Due to the influx of newly operating office buildings, the average service charge costs for Grade-A buildings registered the highest YTD growth, compared with other grades. As of Q2 2016, service charge was recorded at IDR81,744/sq m/month for Grade-A office buildings.

Lower grade offices may charge higher maintenance tariff. Some Grade-C office buildings in Rasuna Said ask for a more expensive price. However, the overall occupancy costs (base rent and service charge) will be in line with the class and quality of the buildings.

Outside the CBD


Service Charges in Outside the CBD

The average service charge outside the CBD climbed 9.3% YoY to IDR58,037/sq m/month. Since there is only a few Grade-A office buildings outside the CBD, the figure presented may not well represent the market. This is why the service charge for Grade-A buildings is below IDR100,000/sq m/month only. Al-though lower-grade buildings reveal higher service charges, the overall occupancy cost (base rental and service charge) are still more expensive in higher-class buildings.

In TB Simatupang, service charges increased 4.6% QoQ and reached IDR62,900/sq m/month. Several office buildings have introduced a new tariff with increment starting from IDR5,000 to IDR15,000.

IDR0

IDR30,000

IDR60,000

IDR90,000

IDR120,000

IDR150,000

Premium Grade A Grade B Grade C

IDR0

IDR30,000

IDR60,000

IDR90,000

IDR120,000

IDR150,000

Grade A Grade B Grade C





Strata-title Office


pre-Committed Take-up rates of Office Buildings for Sale in the CBD (2015 – 2018)


pre-Committed Take-up rates of Office Buildings for Sale in Outside the CBD (2015 – 2018)


Average Asking prices at new and future Office Buildings

The sales volume of strata-title office spaces in 2016 – 2018 increased around 6% QoQ. The absorption brought the aver-age pre-committed take-up rate to reach around 60% of the total office space for sale (strata-title office) in 2016 – 2018. Meanwhile, for a shorter period, pre-committed take-up rate of offices for sale in 2016 – 2017 achieved around 80% as of Q2 2016. Two future office buildings in Mega Kuningan sold a substantial amount of office spaces, which helped the overall sales performance.

Increasing sales triggered office prices of future office build-ings in the CBD to rise to IDR61.3 million/sq m or grew 16.7% YTD. Currently, the asking prices at future strata-title office buildings are between IDR40 million and IDR70 million/sq m. We also noted that some unoccupied spaces in existing office buildings and buildings under construction are offered at the secondary market between IDR40 million and IDR95 million/sq m.

The total area of projected strata-title offices outside the CBD was recorded below 400,000 sq m by 2018, of which 65% has already been sold. However, we only recorded a small absorp-tion of below 3,000 sq m QoQ. The slowdown in sales held asking prices to stay at IDR29 million/sq m.

Meanwhile, prices were relatively flat in TB Simatupang YoY and registered between IDR28 million and IDR38 million/sq m.

0 70,000 140,000 210,000 280,000 350,000

2015

2016F

2017F

2018F


0 50,000 100,000 150,000 200,000 250,000

2015

2016F

2017F

2018F


IDR0

IDR2

0,00

0,00

0

IDR4

0,00

0,00

0

IDR6

0,00

0,00

0

IDR8

0,00

0,00

0

IDR1

00,0

00,0

00

CBD

Outside the CBD

TB Simatupang





Concluding ThoughtFrom a tenant’s perspective, we have started seeing a sign of recovery highlighted by mounting office enquiries, despite being yet in relatively modest volume. Potential tenants are quite ea-ger to execute transactions, but such transactions will typically be in considerable sizes, between 100 and 400 sqm. There are quite varied enquiries from different sectors, as we have not yet seen any specific business sector dominating office enquiries. As mentioned above, occupancy rates relatively slowed down. Therefore, even though we have begun to observe increasing leasing activities, transactions typically come from relocation activities and a few relocations with space expansion or even space reduction. This “in and out” activity did not really help fuel the overall occupancy level, because of fewer expansion activities from existing tenants or new investors. Having said that, we should be more optimistic towards the market condition over the next semester, provided that econ-omy will continue to grow as projected. We also hope that the government is committed to accelerating economy growth by implementing economic deregulation packages including REITs, materialising all the infrastructure plans and getting the green light from the parliament to execute tax amnesty regulation.

Going forward, oversupply condition remains the main concern. We believe, however, that the new plan to build more office buildings would only happen after 2019, considering that many landlords are already fully aware about the current situation.




Quarterly Report

JAKARTA | OFFICEQ2 2016 Accelerating success.

Apartment SectorForecast at a glance

APARTMENT FOR STRATA-TITLE

SupplyBy the end of the second quarter of 2016, cumulative supply of strata-title apartments in Jakarta had grown at a moderate pace of 2.9% QoQ, equal to 12.4% YoY, to a record 167,697 units. During this quarter, the market received 4,777 new units from the handover of eight apartment towers in five projects, including The Green Pramuka, Royal Springhill, Bassura City, Casablanca East Residence and 19 Avenue. In terms of market segment, middle-lower class apartments dominate the current additional supply at 86.4% of three projects located in non-prime areas.

Green Pramuka City (Orchid and Penelope Towers) and Royal Springhill (Bouvardia and Bulgari Towers) are both located in Central Jakarta; however they are targeting different mar-ket segments, i.e. middle-low and middle-upper, respectively. Meanwhile, East Jakarta continued to see new middle-low class projects from the opening of Bassura City (Edelweiss Tower) and Casablanca East Residence (Dallas & Casablanca Towers). In West Jakarta, 338 additional units came from the completion of a mid-rise apartment project, 19 Avenue (Tower A). 19 Avenue was previously a stalled Rusunami (low-cost apartment) project called Orchard Place Residence, developed by PT Bintang Milenium Indonesia. It was acquired by Marga-hayu Land, who changed the name. Targeting the same low segment, fully furnished 19 Avenue (Tower A) apartments are offered at prices ranging from IDR400 million to IDR600 mil-lion per unit.

As of the middle of 2016, about 40.6% of the 26,583 projected units which will be completed this year have been handed over, leaving about 15,793 units to be handed over in the next se-mester.

SupplyJakarta will see an additional 15,442 units for the remainder of 2016 and a total 25,222 units in 2017.

DemandAlthough the market saw an increase in launching activity, buying sentiment has remained lukewarm; investors and end-users are holding their plans to buy apartments in view of the current economic slowdown. We opine that take-up rates will continue to hover at between 86% and 87%.

RentGiven a drop in the expatriate community, we expect asking rental rates will remain unchanged until the end of 2016.

PriceWe predict an 9% to 11% increase in the average asking price for apartments for sale due to the high-er prices quoted by future apartment projects which will open by the end of the year.



same period in 2015. This suggests that developers are generally quite cautious over the current market condition, with considerable supply going forward and, to some extent, slow absorption. East Jakarta hosts about 87% of the total newly introduced/launched units from two projects: East 8 and Prajawangsa City. East 8, developed by Karya Cipta Group, is targeted at the middle-lower segment, particularly workers in the surrounding areas. East 8 apartment is located in a settled residential area and will benefit from easy accessibility to public transportation, including the future LRT and the existing Jagorawi toll road. With a similar target market, Prajawangsa City, developed by Synthesis Development, together with St. Carolus Vereeniging, claims to be an improvement on their previous project, Bassura City, with bigger units and more green space.

Another new project by Synthesis Development is Samara Suites, which was previously launched as The Residence at Ga-tot Subroto, which offered bigger units and higher prices. Sub-sequently, the developer revised the concept, including the floor plan, unit size and pricing strategy, in order to meet the budget of buyers. As of the end of May, 60 units in Samara Suites have been booked. Another project located in a so-called expatri-ate area, Lavish Residence Kemang, offers a single apartment tower and targets the middle-upper segment. Lavish Kemang Residence is developed by PT Kemang Karya Utama, which has extensive experience in developing houses and townhouses for expatriates.


Strata-title Apartment Annual Supply

List of Completed Apartment Projects as of Q2 2016nAMe Of DevelOpMenT lOCATiOn regiOn DevelOper uniTS

The Green Pramuka (Tower Orchid & Penelope) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 2,000

The Royal Springhill (Tower Bouvardia & Bulgari) Jl. Spring Hill Residence Kemayoran Central Jakarta Springhill Golf Group 312

Bassura City (Tower Edelweiss) Jl. Basuki Rahmat East Jakarta Synthesis Development 1,000

Casablanca East Residence (Tower Dallas & Casablanca)

Jl. Pahlawan Revolusi East Jakarta Binakarya Propertindo 1,127

19 Avenue Apartment (Tower A) Daan Mogot West Jakarta Margahayu Land 338

Total 4,777


Newly Launched ProjectsDuring this quarter, Jakarta’s apartment market saw a moderate addition of newly launched/introduced projects. Four brand-new projects with 5,946 units initiated pre-sale activities in Q2 2016 and are expected to be completed in the next four years. The number of units being introduced/launched is 20% lower than the

List of New Introduced/Launched Projects in Q2 2016

nAMe Of DevelOpMenT lOCATiOn regiOn expeCTeD COMpleTiOn TiMe

eSTiMATeD priCe (iDr/Sq M)* TOTAl uniTS

Prajawangsa City (8 towers) Jl. Raya Bogor, Cijantung East Jakarta 2020 IDR 11,350,000 4,000

East 8 (2 towers) Jl. Raya Lap. Tembak, Cibubur East Jakarta 2020 IDR 13,500,000 1,172

Samara Suites Jl. Gatot Subroto South Jakarta 2019 IDR 26,350,000 300

Lavish Kemang Residence Jl. Kemang Raya No.78A South Jakarta 2019 IDR 35,000,000 474

*) Price based on hard cash excludes VAT 10%Source: Colliers International Indonesia - Research

0

5,000

10,000

15,000

20,000

25,000

30,000

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

2020

F





The total number of apartment units launched during 2Q 2016 was 5,946.

The mood in the apartment market has been subdued, as re-flected in the limited number of newly introduced/launched projects in recent quarters. In general, some developers have opted to postpone the launch date of their projects due to a lack of confidence in the current market situation. Moreover, the overall Indonesian economy faces a number of downside risks, such as slow economic growth and lowered consumer confi-dence, which impacts project decisions by developers.


number of Apartment units and projects being introduced/launched every quarter

New PipelineApArTMenT nAMe lOCATiOn regiOn DevelOper #uniTS STATuS

2016

The Green Pramuka (Tower Orchid) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Built

The Green Pramuka (Tower Penelope) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Built

The Royal Springhill (Bouvardia Tower) Jl. Spring Hill Residence Ke-mayoran

Central Jakarta Springhill Golf Group 120 Built

The Royal Springhill (Bulgari Tower) Jl. Spring Hill Residence Ke-mayoran

Central Jakarta Springhill Golf Group 192 Built

Casablanca East Residence (Tower Dallas) Jl. Pahlawan Revolusi East Jakarta Binakarya Proper-tindo Group

408 Built

Casablanca East Residence (Tower Casa-blanca)

Jl. Pahlawan Revolusi East Jakarta Binakarya Proper-tindo Group

719 Built

Bassura City (Tower Edelweiss) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment

1,000 Built

Bassura City (Tower Dahlia) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment

1,000 Built

Green Bay Pluit (Sea View) Jl. Pluit Karang Ayu North Jakarta Agung Podomoro Group

2,072 Built

Kemang Village (The Bloomington) Jl. P Antasari South Jakarta Lippo Karawaci 150 Built

Four Winds Jl. Permata Hijau Raya No.1 South Jakarta PT. Tri Tirta Permata 140 Built

Metro Park Residence Kebon Jeruk West Jakarta Agung Podomoro Group

1,451 Built

Madison Park Tanjung Duren West Jakarta Agung Podomoro Group

1,200 Built

19 Avenue Apartment 9 (Tower A) Daan Mogot West Jakarta Margahayu Land 338 Built

continued

0

3

6

9

12

15

0

1,500

3,000

4,500

6,000

7,500

Q1 2

014

Q2

2014

Q3

2014

Q4

2014

Q1 2

015

Q2

2015

Q3

2015

Q4

2015

Q1 2

016

Q2

2016

#Units #Projects





ApArTMenT nAMe lOCATiOn regiOn DevelOper #uniTS STATuS

continuation

The Grove (Empyreal + Masterpiece) Jl. HR Rasuna Said CBD Bakriland Develop-ment

438 Under-construction

The Residence (CWJ 2) Jl. Prov Dr Satrio Kav 6, Kun-ingan

CBD Ciputra 119 Under-construction

The Orchad Satrio (CWJ 2) Jl. Prov Dr Satrio Kav 6, Kun-ingan

CBD Ciputra 349 Under-construction

T - Plaza Residence (Tower A) Jl. Penjernihan I Kav.1 Pejom-pongan

Central Jakarta PT. Prima Kencana 321 Under-construction

Elpis Residence Gunung Sahari Central Jakarta Sioeng Group 790 Under-construction

The Green Pramuka (Tower Scarlet) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Under-construction

The H Residence Kemayoran (Amethyst) Jl. Rajawali Selatan Central Jakarta Hutama Karya Realtindo


Bassura City (Tower Cattleya) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Bassura City (Tower Alamanda) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Sentra Timur Residence (Tower Tosca) Pulo Gebang East Jakarta Bakriland Develop-ment


East Park Apartment (Tower C) Jl. KRT Radjiman East Jakarta PT. Cakra Sarana Persada


Teluk Intan (Tower Saphire) Jl. Teluk Gong North Jakarta PT Trika Bumi Pertiwi

1,100 Under-construction

Pluit Seaview (Tower Belize) Pluit North Jakarta Binakarya Proper-tindo Group


Senopati Suites 2 Jl. Senopati South Jakarta Mahkota Asia Graha 81 Under-construction

LA City Apartment (Tower A) Jl. Raya Lenteng Agung, Jaga-karsa

South Jakarta Pancanaka Samaktha 980 Under-construction

Nine Residence Warung Buncit South Jakarta Lippo Karawaci 246 Under-construction

La Venue - North Tower Jl. Pasar Minggu South Jakarta PT Bintang Rajawali (Sinar Mas Group)


Senopati Suites 3 Jl. Senopati South Jakarta Mahkota Asia Graha 54 Under-construction

1 Park Avenue (3 Towers) Jl. KHM Syafi'I Hadzami (terusan gandaria)

South Jakarta Intiland 279 Under-construction

Izzara Apartment (South and North Tower) TB. Simatupang South Jakarta Grage Group 542 Under-construction

Apartment Pejaten Park Residence Jl. Warung Buncit Raya No.21 South Jakarta Bahama Group 560 Under-construction

Kebayoran Icon Jl. Ciledug Raya South Jakarta Tamara Land 256 Under-construction

One Casablanca Residence Jl. Pal Batu South Jakarta Forza Land 215 Under-construction

Woodland Park (Mahogany Tower) Jl. Pahlawan Kalibata South Jakarta PT. Pardika Wisthi Sarana


St Moritz (The New Ambassador Suite Tower)

Jl. Puri Indah Kembangan West Jakarta Lippo Karawaci 200 Under-construction

St. Moritz (New Presidential Tower) Jl. Puri Indah West Jakarta Lippo Karawaci 159 Under-construction

The Nest Apartment Jl. Raden Saleh Raya, Meruya Utara

West Jakarta PT. Karya Cipta Sukses Selaras


Green Park View (Tower Gardenia) Jl. Daan Mogot West Jakarta PT. Inten Cipta Sejati, Cempaka Group


Belmont Residence (TowerAthena) Jl. Meruya Ilir West Jakarta Gapura Prima 193 Under-construction

Puri Mansion Apartment (Tower Amethyst) Jl. Lingkar Luar Barat, Puri Kembangan

West Jakarta Agung Sedayu Group 900 Under-construction

Paradise Mansion (2 tower) Jl. Paradise Boulevard Selatan West Jakarta Palm Group 1,000 Under-construction

continued






continuation

2017

Sudirman Suites Jl. Sudirman CBD Pikko Group 380 Under-construction

Domaine Jl. Jend. Sudirman Kav 1 CBD Lyman Group 186 Under-construction

Verde Two (Tower East) Jl. Rasuna Said CBD Farpoint Realty 182 Under-construction

Anandamaya Residences (3 towers) Jl. Jend Sudirman CBD Hongkong Land 500 Under-construction

Menteng Park Jl. Cikini Raya No.79 Central Jakarta Agung Sedayu Group 756 Under-construction

Holland Village Cempaka Putih Central Jakarta Lippo Karawaci 400 Under-construction

Royal Suites Kemayoran Central Jakarta Springhill Golf Group 450 Under-construction

The Green Pramuka (Tower Nerine) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Under-construction

Green Signature Apartment Jl. MT. Haryono East Jakarta KSO Fortuna Indone-sia (Pikko)


Podomoro Park Jl. I Gusti Ngurah Rai, Klender East Jakarta Agung Podomoro Group


Sentra Timur Residence (Tower Brown) Pulo Gebang East Jakarta Bakriland Develop-ment


Bassura City (Tower Jasmine) 2 tower Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Bassura City (Tower Heliconia) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Pluit Seaview (Tower Ibiza) Pluit North Jakarta Binakarya Proper-tindo Group


Pluit Seaview (Tower Bahama) Pluit North Jakarta Binakarya Proper-tindo Group


Regatta London Tower Jl. Pantai Mutiara North Jakarta Intiland 186 Under-construction

Pakubuwono Terrace Grand Tower Kebayoran Lama South Jakarta PT. Selaras Mitra Sejati


District 8 (Tower Eternity) Jl. Senopati South Jakarta Agung Sedayu 400 Under-construction

District 8 (Tower Infinity) Jl. Senopati South Jakarta Agung Sedayu 280 Under-construction

Lexington Rersidence Pondok Pinang South Jakarta Cowwel Develop-ment


The Aspen Peak at Admiralty (Tower C) Jl. Fatmawati South Jakarta PT. Harmas Jalas-veva


Sapphire Residence Lebak Bulus South Jakarta PT. Bangun Lintas Shafira


La Terrasse Jl. Deplu Raya No.12 South Jakarta Cowell Development 111 Under-construction

The Foresque Pasar Minggu, Ragunan South Jakarta PT Griya Karunia Sejahtera (Binakarya Propertindo Group)


The Langham Residences Senopati South Jakarta Agung Sedayu Group 57 Under-construction

Antasari Heights (One Otium Residence) Jl. Pangeran Antasari No.8 South Jakarta PT Radinka Quatro Land


The Batik @ Pejaten Jl. Siaga Raya South Jakarta Alam Kencana 137 Under-construction

La Foret Vivante Jl. Limo, Permata Hijau South Jakarta PT. Mahkota Properti Indo Permata


Selatan 8 (Tower Sultan) Kebayoran Lama South Jakarta Karya Cipta Group 336 Under-construction

The Hamilton Jl. KHM Syafi'I Hadzami South Jakarta Intiland 112 Under-construction

Puri Mansion Apartment (Tower Amethyst) Jl. Lingkar Luar Barat, Puri Kembangan


Puri Orchad (3 Tower) Jl Raya Adicipta West Jakarta PT Adicipta Graha Kencana (Serenity Group)


Maqna Residence Jl. Meruya Ilir No. 88 West Jakarta PT. Graha Meruya 312 Under-construction

Veranda Jl. Pesanggrahan Raya, Kem-bangan

West Jakarta PT. Mutirara Puri Indah


continued






continuation

Vittoria Residence (3 tower) Jl. Daan Mogot West Jakarta PT. Duta Indah Kencana


Wang Residence Jl. Panjang No 18 West Jakarta PT. Citicon Proper-tindo


Taman Anggrek Residence (6 towers) Tanjung Duren West Jakarta Agung Sedayu 3,000 Under-construction

19 Avenue Apartment (Tower B) Daan Mogot West Jakarta Margahayu Land 416 Under-construction

Sycamore Suite Puri Botanical, Joglo West Jakarta Jakarta Setiabudi International

125 Under-planning

2018

Gayanti City (2 Towers) Jl. Gatot Subroto CBD PT Buana Pasifik International


Verde Two (Tower West) Jl. Rasuna Said CBD Farpoint Realty 152 Under-construction

Lavie Jl. Denpasar Raya CBD Wilsor Group 302 Under-construction

South Hill Jl. Denpasar Raya CBD Tan Kian 611 Under-construction

Le' Parc Jl. Thamrin CBD PT. Putragaya Wahana


Regent Residences (tower 1) Semanggi CBD PT. Kencana Graha Global


The Hundred Residence Mega Kuningan CBD PT. Farpoint Realty Indoneasia


The Elements Epicentrum (2 Towers) Rasuna Said CBD Sinar Mas Land 372 Under-construction

Capitol Suites Jl. Prapatan Raya Central Jakarta The Capitol Group 327 Under-construction

Holland Village (Phase II) Cempaka Putih Central Jakarta Lippo Karawaci 230 Under-construction

Signature Park Grande Jl. MT. Haryono East Jakarta KSO Fortuna Indone-sia (Pikko)


Sahid Garden Residence Ciracas East Jakarta Sahid Group 476 Under-planning

Gold Coast Apartment (Atlantic Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 568 Under-construction

Regatta Apartment (Tower New York) Pantai Mutiara North Jakarta Intiland 186 Under-construction

Sedayu City (Tower Melbourne) Jl. Pegangsaan Dua Raya North Jakarta Agung Sedayu 912 Under-planning

Sedayu City (Tower Darwin) Jl. Pegangsaan Dua Raya North Jakarta Agung Sedayu 936 Under-planning

The Kensington Royal Suites (4 Tower) Kelapa Gading North Jakarta Summarecon 790 Under-construction

Gold Coast Apartment (Bahama Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under-construction

Gold Coast Apartment (Carribean Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under-construction

Gold Coast Apartment (Honolulu Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under-construction

Grand Marina Ancol Ancol North Jakarta PT. Bangun Setia Cipta (Jaya Ancol)

672 Under-planning

Bellevue Place MT Haryono, Tebet South Jakarta Gapura Prima 240 Under-construction

The Aspen Peak at Admiralty (Tower D) Jl. Fatmawati South Jakarta PT. Harmas Jalas-veva


Casa Grande Residence 2 (Tower Angelo) Jl. Casablanca South Jakarta Pakuwon Group 350 Under-construction

Casa Grande Residence 2 (Tower Bella) Jl. Casablanca South Jakarta Pakuwon Group 350 Under-construction

Casa Grande Residence 2 (Tower Chianti) Jl. Casablanca South Jakarta Pakuwon Group 350 Under-construction

Pondok Indah Residences (3 Towers) Pondok Indah South Jakarta Metro Pondok Indah 880 Under-construction

Selatan 8 (Tower Prabu) Jl. Raya Ulujami South Jakarta Karya Cipta Group 344 Under-construction

45 Antasari (2 Tower) Antasari South Jakarta Cowell Development 1,924 Under-construction

Arzuria Apartment Jl. Tendean South Jakarta Tolaram Group 210 Under-construction

Pakubuwono Spring (2 towers) Jl. Teuku Nyak Arief No.9 South Jakarta PT. Simprug Mah-kota Indah (Agung Podomoro Group)


Branz Simatupang (2 tower) TB. Simatupang South Jakarta Tokyuland 381 Under-construction

continued






continuation

Synthesis Residence Kemang (3 towers) Jl. Ampera Raya No.17 South Jakarta PT. Synthesis Devel-opment


The Ease Brawijaya Jl. Taman Brawijaya III Kebay-oran Baru

South Jakarta PT. Bhakti Usaha Dinamika

54 Under-planning

Gianetti Apartment Jl. Kebon Jeruk Raya, Kemang-gisan

West Jakarta Bangun Investa Graha


Gallery West Jl. Panjang No 5 West Jakarta AKR 280 Under-construction

Ciputra International Puri Indah (Tower Amsterdam)

Jl. Lingkar Luar Barat West Jakarta Ciputra 412 Under-construction

Grand Madison Park Tanjung Duren West Jakarta Agung Podomoro Group


Citra Lake Suites (Tower Rosewood) Jl. Raya Kresek West Jakarta Ciputra Group 104 Under-construction

Citra Lake Suites (Tower Greenwood) Jl. Raya Kresek West Jakarta Ciputra Group 126 Under-construction

Citra Lake Suites (Tower Oakwood) Jl. Raya Kresek West Jakarta Ciputra Group 117 Under-construction

Citra Lake Suites (Tower Sherwood) Jl. Raya Kresek West Jakarta Ciputra Group 122 Under-construction

Aerium Taman Permata Buana (2 towers) Taman Permata Buana West Jakarta Sinar Mas Land and Itochu

491 Under-planning

Ciputra International Puri Indah (Tower Barcelona)

Jl. Lingkar Luar Barat West Jakarta Ciputra 335 Under-construction

Puri Mansion Apartment (Tower Crystal) Jl. Lingkar Luar Barat, Puri Kembangan


West Vista (2 towers) Jl. Lingkar Luar Barat No.8, Duri Kosambi

West Jakarta PT. Harapan Global Niaga


Citra Living Apartment (Somerset Tower) Jl. Citra 7, Kalideres West Jakarta Citra Mitra Graha KSO


Citra Living Apartment (Orchad Tower) Jl. Citra 7, Kalideres West Jakarta Citra Mitra Graha KSO


Citra Living Apartment (Newton Tower) Jl. Citra 7, Kalideres West Jakarta Citra Mitra Graha KSO


2019

The Suite (W Hotel Tower) Jl. Prof. Dr. Satrio CBD Ciputra 200 Under-planning

The Residences at The St. Regis Jakarta Jl. H.R Rasuna Said CBD Rajawali Property Group


Arandra Residence (was Sentosa Resi-dence)

Jl. Cempaka Putih Raya No.1 Central Jakarta Gamaland 687 Under-construction

Menara Jakarta (Tower Equinox) Kemayoran Central Jakarta Agung Sedayu 396 Under-construction

Menara Jakarta (Tower Azure) Kemayoran Central Jakarta Agung Sedayu 860 Under-construction

The Linq Kemayoran (2 towers) Kemayoran Central Jakarta KG Global 1,020 Under-planning

Menteng 37 Jl. Menteng 37 Central Jakarta Pikko Group & Wijaya Wisesa (JV)

99 Under-planning

The H Residence Kemayoran (Lotus) Jl. Rajawali Selatan Central Jakarta PT Hutama Karya Realtindo

252 Under-planning

Jaya Ancol Seafront - Oceana Tower Pademangan, Ancol North Jakarta Jaya Ancol 524 Under-construction

Orient Residence Jl. Yos Sudarso, No 76 North Jakarta PT Tri Raton Mega 225 Under-planning

Fatmawati City Center - Corona Park Suite Tower

Fatmawati South Jakarta Agung Sedayu 620 Under-planning

Royal Park at Kebayoran (Arlington Tower) Jl. Cileduk Raya 18, Cipulir South Jakarta PT. Trixindo Selaras 630 Under-planning

Ratu Prabu 3 Residences TB. Simatupang South Jakarta PT Ratu Prabu Tiga 61 Under-construction

Samara Suites (was The Residence Gatot Subroto)

Jl. Gatot Subroto South Jakarta Synthesis Develop-ment

300 Under-planning

Lavish Kemang Residence Jl. Kemang Raya No.3, Bangka South Jakarta PT Kemang Karya Utama

474 Under-planning

Green Sedayu Apartment (Tower Pasadena)

Jl. Kamal Raya, Cengkareng West Jakarta Agung Sedayu 644 Under-planning

continued






continuation

2020

Regatta Tokyo Tower Jl. Pantai Mutiara North Jakarta Intiland 276 Under-planning

Prajawangsa City (8 towers) Jl. Raya Bogor, Cijantung East Jakarta Synthesis Develop-ment

4,000 Under-planning

East 8 (2 towers) Cibubur East Jakarta Karya Cipta Group 1,172 Under-planning

Fatmawati City Center(5 towers) Fatmawati South Jakarta Agung Sedayu 2,080 Under-planning

Green Sedayu Apartment (Tower New York)

Jl. Kamal Raya, Cengkareng West Jakarta Agung Sedayu 920 Under-planning


DemandNo significant changes in the apartment market were noted in 2Q 2016. Although the market saw some improvement in launching activity, buying sentiment remained lukewarm. Sales remained quiet as investors and end-users have put their plans to buy apartments on hold in view of economic conditions. Pro-spective buyers continued to tread with caution and be mindful with their purchases in light of recent market conditions, partic-ularly delays in construction progress and project cancellations, which were further worsened by the lack of regulations protect-ing buyer and developer rights. Overall, the average take-up rate only rose by less than 1% QoQ and YoY. A combination of creative marketing strategies (with gimmicks, etc.) and a limited number of newly introduced/newly launched projects have helped lift, or at least maintain, the overall take-up rate performance of the apartment market in Jakarta. The un-revealed fact behind the vigorous sales performance in certain projects is insider trading with buyers who could be sharehold-ers or top executives of the company. Though small in number, such transactions helped lift overall sales performance. Another way to boost sales is to offer buy-back and cash-back guaran-tees, i.e. refunding the money to the buyer when the handover schedule does not meet the agreed timeline.

Developers have collaborated with insurance companies to provide protection for their apartment units with the benefit of 100% cash-back after 15 claim-free years. As long as buyers don’t make a claim on their apartment insurance (also called Building Insurance) policy for 15 years, they will receive a full refund of all of the Building Insurance premiums that they have paid.

In terms of area, under-construction projects in the CBD re-corded the highest increase in overall take-up rate, at 2.5%, compared to 1.1% and 1% in South Jakarta and non-prime areas, respectively.


Take-up Comparison between Existing and Under- Construction Projects

Q2 2015 Q1 2016 Q2 2016 QoQ YoY

Existing 95.80% 96.20% 96.20% 0.00% 0.40%

Under-construction 69.00% 67.00% 68.10% 1.10% -0.90%

Average (all) 85.90% 86.20% 86.70% 0.50% 0.90%


Take-up Rate Changes in Different Locations in JakartaQ2 2015 Q1 2016 Q2 2016 QoQ YoY

CBD 96.00% 94.00% 94.50% 0.50% -1.50%

South Jakarta 88.00% 85.30% 85.90% 0.60% -2.10%

Non-prime area 83.40% 85.40% 85.90% 0.50% 2.50%

Thus far, foreign ownership regulations have not changed dras-tically because they still have to comply with the Agrarian Law, which limits the scope of ownership. Foreigners can only buy property under a Hak Pakai (Right to Use) title, and in order to do that they have to hold a legal stay permit in Indonesia. Recently, after the issuance of revised Government Regulation number 103/2015, the government (Head of the National Land Agency) introduced the implementation of the regulation No. 13 of 2016 on Procedures for Granting, Relinquishing and Trans-ferring Ownership of Residential Property for Foreign Citizens Domiciled in Indonesia. This new regulation makes it clearer that foreign citizens are only allowed to own high-end residen-tial properties (either apartment or landed house) with various minimum thresholds based on the property type and location. Previously, Indonesian authorities announced in 2Q 2015 that foreigners would be allowed to purchase apartments or houses which cost at least IDR10 billion/unit (roughly US$740,000) under a right-to-use title. Nonetheless, even with these govern-ment efforts to ease regulations on foreign ownership, the main challenge facing apartment sales remains: they have to be built on Right to Use land that is unconventional in the local market.





The Price Threshold for Foreign-Owned Houses and Apartments in Indonesia

lOCATiOnSelling priCe (in iDr)

hOuSe (>) APARTMENT (>)

Jakarta 10 billion 5 billion

Banten 5 billion 1 billion

West Java 5 billion 1 billion

Central Java 3 billion 1 billion

Yogyakarta 3 billion 1 billion

East Java 5 billion 1.5 billion

Bali 3 billion 2 billion

NTB 2 billion 1 billion

North Sumatera 2 billion 1 billion

East Kalimantan 2 billion 1 billion

South Sumatera 2 billion 1 billion

Other location 1 billion 750 million

Source: Ministerial Regulation No.13 of 2016

Another appealing effort to bolster the current sluggish market has come through relaxation of LTV regulations. The Central Bank (Bank Indonesia) has stepped in to support the domestic economy and property market and, in particular, is likely to boost apartment sales going forward. Bank Indonesia is planning to review loan-to-value (LTV) regulations to boost the property market in 3Q 2016. Under the easing policy, the Central Bank will reduce the amount of down payments in a bid to spur credit growth and boost economic growth. Another possible measure would let homeowners take out loans to purchase a second home “off the plan”, or one that is under pre-construction. This relaxation would provide a tailwind to the property sector, par-ticularly the apartment market, if it is fully materialised. Never-theless, Bank Indonesia has repeatedly emphasised that it will continue to closely monitor the market and enforce policies to prevent the property market from overheating, which could lead to a bubble. It will also maintain a prudent policy to keep non-performing loans below 5% of total loans.

Asking PriceOverall, the prices of apartments in Jakarta have been relatively flat, as most projects have maintained prices in order to attract buyers in this softening market situation. Newly launched or introduced projects are offered at a lower price compared to the average market price, which may hamper further price growth. To a greater extent, developers are quite concerned over the weakened purchasing power of general consumers, which is reflected in the latest data from the Statistics Bureau Indonesia, where GDP only grew 4.92% in the first quarter of 2016, slower than the estimate of slightly above 5%. Therefore, in order to cope with such a situation, developers have mainly played the role of a bank by providing installment schemes as their default payment method. Moreover, in some cases, developers have of-fered additional discounts, ranging from 3% to 5%, depending on the installment period, meaning that longer installments re-ceive a smaller discount.


Quarterly Asking Prices of Apartments in Three Regions

As of Q2 2016, the average asking price of apartments in Ja-karta was recorded at IDR31 million/sq m (excluding VAT), a modest increase of 0.5% QoQ and 9% YoY. In South Jakarta, apartment prices rose by 1.1% QoQ and 11.3% YoY, the highest rate compared to the CBD and other non-prime areas. South Jakarta remains a desirable location to live in, as indicated by the sales improvement during the reviewed quarter. In addition, some developers raised selling prices because their projects are approaching handover. The CBD still has the highest apartment prices, at IDR48.3 million/sq m, an increase of 0.9% compared to the previous quarter, while non-prime areas posted the low-est QoQ growth, 0.7%, to IDR23.3 million/sq m, mainly because the newly introduced projects in East Jakarta are offered at a lower price than the market average.


Apartment Price Changes in Jakarta Based on Area (in IDR/sq m)

Q2 2015 Q1 2016 Q2 2016 QoQ YoY

CBD 44,135,684 47,816,125 48,246,435 0.90% 9.30%

South Jakarta 32,713,013 36,028,156 36,421,523 1.10% 11.30%

Non-prime Area 21,285,155 23,147,612 23,300,386 0.70% 9.50%

Average 28,442,570 30,840,637 31,008,439 0.50% 9.00%

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

Q1 2

012

Q3

2012

Q1 2

013

Q3

2013

Q1 2

014

Q3

2014

Q1 2

015

Q3

2015

Q1 2

016

IDR

/sq

m

CBD South Jakarta Non-Prime Area





APARTMENT FOR LEASE

SupplyNo new supply was launched in Q2 2016, and the total stock of Jakarta’s apartments for lease remained at 8,780 units. Nonetheless, the market is expecting to receive at least 890 new serviced apartment units in the next four years. The new projects will be largely operated by global serviced apartment operators such as Oakwood Worldwide, Frasers Hospitality and The Ascott Limited. The only local apartment operator is Lavish Kemang Residence Serviced Apartment.

List of Future Supply Serviced Apartment in Jakarta

nAMe Of DevelOpMenT Beginning YeAr Of OperATiOn lOCATiOn AreA #uniT

Fraser Suites at Ciputra World 2 2017 Jl. Prof. Dr. Satrio CBD 200

Oakwood Premiere Jakarta at District 8 Senopati 2017 Senopati South Jakarta 378

Ascott Menteng Jakarta 2019 Menteng Central Jakarta 150

Fraser Residence Serenia Hills 2019 Cilandak, Lebak Bulus South Jakarta TBA

Fraser Suites Kebon Melati 2019 Kebon Melati, Tanah Abang South Jakarta TBA

Serviced Apartment at Lavish Kemang Residence 2020 Jl. Kemang Raya No.78 A South Jakarta 162


As there was no change in the number of existing apartments for lease, the distribution composition remains the same as well, with the majority of projects concentrated in the CBD and South Jakarta, representing around 44% and 35%, respectively. By grade, most apartments for lease in Jakarta are classified as middle-upper grade projects, followed by middle-lower grade, with 73% and 14%, respectively. The middle-upper class seg-ment, which is mostly dominated by serviced apartments, typi-cally features projects with better building maintenance and high rental rates, while middle-lower class buildings mostly consist of old non-serviced apartment projects located in non-prime areas


Distribution of existing Apartments for lease (by number of units)

OccupancyThe falling number of mid- to junior-level expatriates relocating to Jakarta has created a challenge for apartments on the lease market. On the other hand, in order to keep demand steady, some serviced apartments have collaborated with Online Travel Agents (OTA) such as Agoda and Booking.com to offset the number of expats leaving the city. During the reviewed period, the occupancy of serviced apartments increased modestly by 0.2%, while that of non-serviced apartments declined by 0.8%, to 62.8% and 76.2%, respectively.

CBD44%

Central Jakarta

10%

South Jakarta

35%

North Jakarta

5%

West Jakarta

6%





The traditionally slow month of Ramadan (this June – July) saw a weakened number of inquiries on apartments for lease, mainly because expatriates are the main market and their num-bers have fallen. The underlying issues behind this are longer visa processing times and tightened housing allowances for multinational companies. A number of multinational compa-nies have decided to rationalise their expenses by streamlin-ing costs for housing allowances. In addition, the expiration of existing work contracts for a number of expatriates continued to bring the average occupancy rate down by 0.45% compared to the previous quarter, settling at 71.5%. This quarter, some newly completed serviced apartments in the CBD have report-edly achieved relatively good occupancy performance as a re-sult of various promotional efforts to attract tenants. Moreover, some non-serviced apartments have had new inquiries from e- commerce businesses coming to Jakarta. Meanwhile, since most of the apartments for lease in South Jakarta and non-prime areas are old projects, tenants have been presented with alternative options, like renting in newly operating strata-title apartments belonging to the individual owner. In this gloomy rental market, most individual unit owners have come up with more flexible payment terms at more competitive rental rates compared to both serviced and non-serviced apartments.


Average Occupancy rate of Apartment for lease in jakarta

Average Rental RateThe majority of apartment for lease projects maintained rent tariffs at the same level this quarter. In general, new rental rates introduced early in the year are valid until the end of the year. Rental rates quoted in rupiah remained flat, while changes only took place in apartments which still quote rent in US dollars due to the strengthening Indonesian rupiah against the US dollar during the period. As a result, the average rental rate of apart-ments for lease in the CBD stayed at IDR374,061/sq m/month, while rental tariffs for apartments for lease in South Jakarta, including non-prime areas, decreased by 1.4% from the previ-ous period to IDR224,178/sq m/month.

All in all, the average asking rental rate will be relatively stable throughout the year, although the rental rate may fluctuate due to rupiah depreciation/appreciation, since some operators still use the floating rate conversion.


Average Rental Rate (in IDR/sq m) of Apartment for Lease Based on Region

Q1 2016 Q2 2016 QoQ

CBD 374,061 374,061 0.00%

South Jakarta (including non-prime areas)

227,296 224,178 -1.40%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 2

014

Q2

2014

3Q 2

014

4Q 2

014

Q1 2

015

Q2

2015

Q3

2015

Q4

2015

Q1 2

016

Q2

2016

Serviced Apartment Non-Serviced Apartment


Occupancy Rates of Apartment for LeaseQ2 2015 Q1 2016 Q2 2016 QoQ YoY

CBD 79.40% 69.10% 76.10% 6.90% -3.40%

South Jakarta 76.40% 72.00% 70.40% -1.60% -6.10%

Non-Prime area 70.00% 69.60% 68.00% -1.50% -2.00%

Concluding ThoughtThe outlook for Indonesia’s economy is expected to remain lack-lustre in 2016, with growth forecast to range from 5% to 5.2%, down from previous estimates of 5.2% to 5.6%. On the other hand, Standard & Poor’s (S&P) rating agency affirmed Indo-nesia’s sovereign credit rating of BB+ with a positive outlook, leaving the economy one notch below investment grade. This means that an upgrade is still likely in the near future.

In our opinion, the apartment market will see gradual improve-ment in the upcoming quarters since the economic fundamen-tals show signs of stabilisation, inflation remains low and we are anticipating the tax amnesty law coming into effect. In addition, Bank Indonesia has launched easing moves, including cutting the BI rate by 25 bps to 6.5%, as well as macro prudential poli-cies that will relax the loan-to-value ratio for landed houses and apartments and are expected to boost credit demand and spur economic activity. Nevertheless, the expectation of huge supply going forward is the other main challenge for the apartment market in general. At the very least, the positive outlooks dis-cussed above will not materialise in the short-term. The apart-ment market will need some time to stabilise and find equilib-rium before taking off in the next one-two years.





Expatriate Housing Sector

Forecast at a glance

Market OverviewThe expatriate housing market started to show signs of recov-ery during the first semester of 2016. A number of inquiries came mostly from repeat corporate clients who sign one-year contract extension (as opposed to the traditional two-year con-tracts). Many expat employing companies are currently only willing to commit to a maximum one-year contract and very few of them are willing to accept two years rent in advance even if the working permit of the employee has been issued for a two year period. Furthermore, many landlords are willing to negotiate less than one year lease extension due to the real-ization of the current market condition and the drastic drop in inquiries for expat housing. In some cases occupiers are taking advantage of the situation and may relocate to other residential projects that offer either lower rents or at least equal rents but with better amenities. Typically multinational companies prefer their expat employees to reside in housing compounds rather than in stand alone houses for security reason. Residing within a compound or in a serviced or regular apartment building al-lows these companies to take advantage of security measures that are already in place. This is often the easier security solu-tion for both the employee and employer.

Well-developed housing compounds such as Executive Para-dise, Atmaya Residence and Astoria Residence continue to at-tract a sound number of tenants and continue to maintain their high occupancy despite the current market condition.

Executive Paradise is one of the largest housing complexes which is developed on 20 hectares of land in Cilandak, South Jakarta. This complex provides a relaxing and peaceful sanc-tuary seemingly set away from traffic noise and air pollution making it one of the most popular choices within the expat community. , Situated right next to Executive Paradise, Astoria Residence complex offers luxury houses featuring 4-5-bed-rooms and each unit is equipped with a swimming pool and ample living space. Developed specifically to service the expat community, Astoria Residence tenants can also take advan-tage of the club house and mini market located in the adjacent Executive Paradise compound.

DemandBesides power related industries, we anticipate one of the driving factors creating demand for residential property will be the infrastructure sector.

RentLandlords are being forced to be more realistic about rental rates, increasing their marketing efforts and being open to alternative rental models. In certain cases landlords are willing to negotiate and adjust the rental rate down by as much as 35% in order to lease their property rather than lose income by leav-ing the units vacant.



The rising supply of newly completed upscale individually-owned apartments together with the reduction in the number of expatriates entering the country have been a major factor in pushing landlords to offer more favorable rental rates and more attractive contractual terms for tenants. Consequently, landlords are being forced to be realistic about the rental rates, increasing their marketing efforts and being open to alterna-tive rental models. In certain cases the landlords are willing to negotiate and adjust the rental rate down by as much as 35% in order to let their property rather than losing income by leaving the units vacant.

The number of expatriates arriving (those being issued working permits) has yet to recover. According to data from Ministry of Manpower, the number of expatriates with a working permit during January-February 2016 was still 41% lower compared to the same period in 2015 (8,980 people).

Source: Ministry of Manpower of the Republic of Indonesia

Annual Number of Expatriates with Working Permit in Indonesia

2011 2012 2013 2014 2015Jan – Feb

2016

#expatriates 77,307 72,427 68,957 68,762 69,025 5,339

The second quarter of each year (April – June) is typically the peak season for obtaining new inquiries from expatriates who are assigned to work in Indonesia. During this period orienta-tion activities intensify prior to their relocation process in order to understand and appraise the geographical situation while at the same time familiarizing them with the local culture. Dur-ing their familiarization trips, normally they will view houses or apartments, medical facilities, supermarkets, shopping malls, to get an idea of where they might want to live in Jakarta. For ex-patriates relocating with children, the proximity to the preferred international school will typically take first priority in deciding home location. Normally the relocation details need to be de-cided prior to the start of the school academic year in August or September.

The plummeting global oil prices have pushed corporations in this sector to restructure their operational cost, including bud-gets for their expatriates’ accommodation. This sector has ex-perienced a downward trend over the last few years and thus businesses have been forced to streamline their expenses. Budgets have been reduced therefore pressuring multination-als to reduce the number of expatriate workers overseas or be more provident with the individuals that are currently in coun-try. One of the ways this is being implemented is by searching for a more affordable accommodation. Currently finding vacant houses and apartments for lease is not as challenging as in previous years. Based on our data, during 2012 – 2013, the vacancy rate of typical expatriate homes was below 10 percent, while on the contrary, since 2014 onward the vacancy rate is expected to hit a double digits as we have witnessed in the first quarter of 2016.

Amid the slowing global oil and gas business, other sectors seem to bring exuberance to the expatriate housing market go-ing forward. In line with the government’s massive plan to pro-vide adequate energy supply, some major multinational compa-nies have already started to play a part in this sector. Besides power related industries, that are anticipated to become one of the driving factors for residential needs, the infrastructure sec-tor seems to also become a trigger to create demand.

During the current sluggish market where the amount of hous-ing inquiries has noticeably diminished, landlords are generally accommodative to the clients’ needs particularly amid the glut of residential supply. This situation has forced landlords to be more flexible in deciding the rental tariff, or alternatively have an empty cash-burning dwelling. During the first semester of 2016 we have experienced discounts ranging between USD50 to USD1,000/unit/month for standard expat housing compared to the previous semester. Based on our experience, the biggest discount was granted for relatively small stand alone houses with the size of 400 – 500 sq m which previously commanded a USD5,000/unit/month price tag. This is unquestionably due to the number of vacant units of this type of housing currently available on the market. More luxurious homes are not as sub-ject to this range of discount because of the reduced number of units available.

Housing Rental Rates in Several Expatriate Areas

expATriATe hOuSing BY AreA Size (Sq M)Offering renTAl rATe per uniT

(uSD/uniT/MOnTh)MiniMuM MAxiMuM

Menteng 4 - 5 Bedrooms House 500 - 1,200 4,000 12,000

Kuningan 4 - 5 Bedrooms House 500 - 900 4,000 8,000

Pondok Indah 4 - 5 Bedrooms House 450 - 1,000 3,500 10,000

continued





expATriATe hOuSing BY AreA Size (Sq M)renTAl rAnge (uSD/uniT/MOnTh)MiniMuM MAxiMuM

continuationKebayoran Baru 4 - 5 Bedrooms House 600 - 1,500 3,500 10,500 3 - 4 Bedrooms Townhouse/complex 250 - 700 3,000 4,000

Permata Hijau 4 - 5 Bedrooms House 400 - 1,500 4,050 10,800 3 - 4 Bedrooms Townhouse/complex 220 3,150

Kemang 4 Bedrooms Townhouse/complex 400 - 700 3,000 4,500 3 Bedrooms House 400 – 750 2,500 4,000 4 - 5 Bedrooms House 550 - 1,000 4,000 5,500

Cilandak 4 Bedrooms Townhouse/complex 300 - 700 3,000 6,000 3 Bedrooms Apartment + Study 300 - 600 2,500 3,500 4 - 5 Bedrooms House 450 - 750 3,500 5,500

Cipete 3 Bedrooms Townhouse/complex 200 - 300 2,500 3,500 4 Bedrooms Townhouse/complex 400 - 700 3,000 4,500 3 Bedrooms House 300 - 500 2,500 3,000 4 - 5 Bedrooms House 400 - 800 3,000 4,500

Pejaten 3 Bedrooms Townhouse/complex 400 - 600 3,500 4,500 4 Bedrooms House 500 - 900 3,500 5,500

Source: Colliers International Indonesia - Research and Residential Tenant Representation

Apartment for ExpatriateDespite not having as many units available, the management of some selected expatriate apartment projects introduced an increase in the rental rate by 5% over the reviewed period. The apartment market which aims at shorter termed expat tenants benefits from the downsizing in the contract tenure from typi-cally two to three years employment contract to a shorter-term of less than one year. Serviced apartment accommodation is more flexible in the tenure terms compared to landed houses and therefore is becoming increasingly popular among expatri-ates.

A typical two-bedroom non-serviced apartment (including stra-ta-title apartment which was rented to the expatriate) is offered from a minimum of IDR18 million to a maximum of IDR56 mil-lion/unit per month, while a three-bedroom is offered ranging from IDR29 million to IDR78 million/unit per month. The most expensive non-serviced apartment is located in Kebayoran Baru area, e.g. Dharmawangsa, and is offered from IDR72 million to IDR130 million/unit per month for 4 to 5-bedroom apartments (penthouse). A two-bedroom serviced apartment is offered from a minimum IDR45.5 million to a maximum IDR67.5 mil-lion/unit per month, while the three-bedroom is offered ranging from IDR42 million to IDR94.5 million/unit per month. Further, serviced apartment units of more than 3-bedroom are offered ranging from IDR73.5 million to IDR176 million/unit per month.





Apartment Rental Rates in Several Expatriate Areas

ApArTMenT BY AreA Size (Sq M)renTAl rATe (in uSD/uniT/MOnTh)

nOn-ServiCeD ApArTMenT ServiCeD ApArTMenT

Sudirman 2 Bedrooms Apartment 106 - 145 32 – 52 46 – 67 3 Bedrooms Apartment 158 - 320 45.5 - 78 68 – 94.5

Menteng 2 Bedrooms Apartment 90 - 142 35 – 51 54 – 56 3 Bedrooms Apartment 124 - 213 39 – 65 70 4 Bedrooms Apartment 319 176

Kuningan 2 Bedrooms Apartment 120 - 145 20 – 32.5 45.5 – 67.5 3 Bedrooms Apartment 157 - 166 32.5 – 39 49 – 52 4 Bedrooms Apartment 440 45.5

Pondok Indah 2 + 1 Bedrooms Apartment 117 - 190 42 – 48 45.5 - 55 3 Bedrooms Apartment 190 - 455 45.5 – 68 52 – 70 4 - 5 Bedrooms Apartment 285 - 455 66 – 71 73.5 – 83

Kebayoran Baru 2 Bedrooms Apartment 140 - 203 42 – 56 3 Bedrooms Apartment 243 - 302 58.5 – 78 4 - 5 Bedrooms Apartment 330 - 500 72 - 130

Permata Hijau, Simpruk 2 Bedrooms Apartment 105 - 115 40 – 41

3 - 4 Bedrooms Apartment 165 - 300 35 – 52 42 - 46

Kemang 3 Bedrooms Apartment 165 - 303 32.5 – 58.5

Cilandak 3 - 4 Bedrooms Apartment 164 29 3 Bedrooms Apartment + Study 300 58

Cipete 3 - 4 Bedrooms Apartment 220 - 295 52 – 78

Pejaten 2 - 3 Bedrooms Apartment 102 - 191 18 – 29

* exclude breakfastSource: Colliers International Indonesia - Research and Residential Tenant Representation





OccupancyIn general, middle-upper to upper-class apartments experi-enced a 3% drop in occupancy compared to the last semester of 2015, hitting 79%. Though small, this decrease in occupancy is inevitable, particularly due to the slowdown in the number of expanding companies that generate demand for this segment. The preferred areas remain the CBD (Rasuna Said, Satrio and Sudirman) and South Jakarta, including Oakwood, The Ascott, Golf Pondok Indah Residence and Shangri-La Residence.


Average Occupancy rate of Selected Apartments preferred By expatriates

Notes:

A: Dharmawangsa, The Capital Residence, SCBD Suites, Pakubuwono Residence, Oakwood

B: The Residence at Ritz Carlton, Plaza Senayan, The Plaza Residence, Airlangga Apartment, Senayan City

C: Setiabudi Residence, Golf Pondok Indah, Somerset Grand Citra, The Ascott, Menteng Executive

D: Aston Rasuna, Somerset Berlian, Puri casablanca, Casablanca

E: Taman Rasuna, Palm Court, Puri Imperium

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

A B C D E Average




Retail SectorForecast at a glance

Supply

Jakarta


Cumulative Supply

The beginning of Bassura City Mall’s operation during the quar-ter marked it as the only new supply of shopping centre during the first semester of 2016 in Jakarta. The mall is located within a mixed-use development called Bassura City in East Jakarta. By contributing circa 21,000 sq m of additional retail space, the retail cumulative supply in Jakarta was recorded at 4.47 million sq m as of Q2 2016, showing a growth below 1% YoY. The cumulative supply is expected to grow gradually in Jakarta. Around 63% of the future supply in 2016–2019 are still in the planning stage as of 2Q 2016. Thus far, retail moratorium in certain commercial areas in Jakarta still exists but is likely sub-ject to be ceased in line with the improvement in transportation infrastructure. There might be some plans of new shopping centre developments in the CBD area, but this has not yet been officially announced in the market.

SupplyThe cumulative retail supply in Jakarta was recorded at 4.47 million sq m while in the BoDeTaBek area, the cumulative supply was 2.39 million sq m. Three shopping centres totaling 78,000 sq m will be added to the supply in Jakarta by the end of 2016.

DemandFashion and F&B retailers remained active in searching for retail space. We anticipate big retailers like department stores, supermarkets and cinemas will continue to expand.

OccupancyOccupancy in DKI Jakarta has been hovering for quite sometime at around 86%. With a limited amount of new supply, occupancy is expected to remain rela-tively unchanged by the end of 2016.

RentThe overall rental tariff is likely to increase next year particularly because of continued demand for space in upper class malls.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Existing Supply Annual Supply Supply YTD Future Supply




Annual retail Supply

Fifteen shopping centres have gradually begun operations with-in the last five years in Jakarta. Nine of these shopping centres are located in integrated residential developments (apartments) to benefit from the local population. Lippo Mall Puri (opened in 2014), One Belpark Mall (2015) and Bassura City Mall (2016) are the three latest operating shopping centres taking advantage of the surrounding massive residential developments.


Cumulative Supply Based on Marketing Scheme


Distribution of retail Spaces for Sale Based on Area

The supply growth of retail spaces for sale (strata-title) has been relatively flat. Jakarta has seen no addition of retail spaces for sale since 2012. Retail spaces for sale were recorded at 1.5 million sq m, representing 32.2% of the total retail supply as of Q2 2016. Going forward, New Harco Glodok seems to be the only future supply of strata-title shopping centres in Jakarta. The 60,000 sq m of retail space from this retail centre is pro-jected to add additional 4.2% strata-title supply by 2019.


retail Supply Based on Area

0

50,000

100,000

150,000

200,000

250,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Annual Supply Supply YTD Under Construction In Planning

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

For Lease For Sale

CBD1%

Central Jakarta

43%

South Jakarta8%

North Jakarta

28%

East Jakarta

9%

West Jakarta

11%

0 200,000 400,000 600,000 800,000 1,000,000

CBD

Central Jakarta

South Jakarta

North Jakarta

East Jakarta

West Jakarta

sq m

Existing Supply in 2016YTD Future Supply in 2016F - 2019F





Previously, we recorded at least 11 existing trade centres having a net lettable area (NLA) of 50,000 sq m and more in Jakarta. Most of these trade centres are located in Central and North Jakarta, which have a long history as trading areas. Therefore, these areas provide the largest strata-title retail space of around 70% of the total retail space for sale in Jakarta as of Q2 2016.

From the chart above, except for East Jakarta, the other re-gions contributed more than 700,000 sq m of retail space as of Q2 2016. Going forward, East Jakarta is expected to be-come the most active region in contributing more retail space in the future, together with West Jakarta. Thus far, based on construction progress, only AEON Mall Jakarta Garden City is in the construction stage.

Greater Jakarta


Cumulative Supply

After developing Mal Metropolitan, Grand Metropolitan and Pla-za Tambun (all of these are located in Bekasi), PT Metropolitan Land, Tbk, the owner company, confirmed the beginning of the operation of Metropolitan Mall Cileungsi. This became the ad-ditional supply in BoDeTaBek (greater Jakarta) area. This shop-ping centre, which is geographically located in Bogor Regency, contributed 26,500 sq m of new retail space and brought the cumulative supply to 2.39 million sq m as of Q2 2016.

BoDeTaBek will see more future supply than Jakarta. Sixteen future shopping centres will contribute around 740,000 sq m from now up to 2019. Projected annual supply will be around 185,000 sq m in BoDeTaBek. Based on construction prog-ress, most of these future shopping centres are in the planning stage, particularly shopping centres scheduled for completion in 2018–2019.


Cumulative Supply Based on Marketing Scheme


Annual retail Supply

Total retail space for sale was recorded at 763,228 sq m, rep-resenting 32% of the total supply in BoDeTaBek area. This com-position is similar to that Jakarta. BoDeTaBek will still expect two other future strata-title centres for sale up to 2019, namely, Bekasi Trade Centre 2 (located in Bekasi) and Vivo Trade Mall (in Bogor).

In greater Jakarta area, Tangerang and Bekasi continue to pro-vide the most number of retail spaces compared to other re-gions. The projected cumulative supply in each of these areas will exceed one million sq m by 2019. Up to 10 of the 16 future shopping centres in greater Jakarta will be located in Tangerang and Bekasi.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Existing Supply Annual Supply Supply YTD Future Supply

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

Annual Supply Supply YTD Under Construction In Planning

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2010

2011

2012

2013

2014

2015

2016

F

2017

F

2018

F

2019

F

sq m

For Lease For Sale






retail Supply Based on Area

New Supply Pipeline

ShOpping CenTre DevelOper lOCATiOn regiOn nlA (Sq M) DevelOpMenT STATuS

jAkArTA

2016

Pantai Indah Kapuk Mall Agung Sedayu Pantai Indah Kapuk

North Jakarta 30,000 Under Construction

Shopping Mall @ Pancoran Agung Podomoro Pancoran South Jakarta 8,000 Under Construction

Neo SOHO Mall (Podomoro City) Agung Podomoro Slipi West Jakarta 40,000 Under Construction

2017

New Harco Plaza Agung Podomoro Glodok West Jakarta 60,000 Under Construction

2018

AEON Mall Garden City Aeon Cakung East Jakarta 71,000 Under Construction

Mall @ Green Pramuka City Duta Paramindo Sejahtera Pramuka North Jakarta 30,000 In Planning

Mal Puri Indah 2 Antilope Madju Puri Indah Puri Indah West Jakarta 50,000 In Planning

Shopping Mall at Podomoro Park Agung Podomoro Buaran East Jakarta 40,000 In Planning

2019

Holland Village Mall Lippo Karawaci Cempaka Putih Central Jakarta 40,000 In Planning

Mall at The City Center Greenwood Mas Mansyur CBD 65,000 In Planning

Grand Metro Cipulir Priamanaya Cipulir South Jakarta 30,000 In Planning

Pondok Indah Mall 3 Metropolitan Kentjana Pondok Indah South Jakarta 60,000 In Planning

continued

0 300,000 600,000 900,000 1,200,000

Bogor

Depok

Tangerang

Bekasi

sq mExisting Supply in 2016YTD Future Supply in 2016 - 2019F





ShOpping CenTre DevelOper lOCATiOn regiOn nlA (Sq M) DevelOpMenT STATuS

continuation

BoDeTaBek

2016

Bekasi Trade Center 2 Gapura Prima Bulak Kapal Bekasi 56,000 Under Construction

Q Big Sinarmas Land BSD City Tangerang 69,000 Under Construction

2017

Grand Dhika City Mall Adhi Persada Realty Bekasi City Bekasi 24,000 Under Construction

2018

Plaza Indonesia Jababeka Plaza Indonesia & Graha Buana Cikarang

Jababeka Bekasi 55,685 Under Construction

AEON Mall Deltamas Aeon Deltamas Bekasi 90,000 In Planning

AEON Mall Sentul Aeon Sentul Bogor 15,000 In planning

Living World Jababeka Kawan Lama Jababeka Bekasi 18,000 In Planning

Vivo Shopping Mall Megapolitan Cibinong Bogor 20,000 Under Construction

Vivo Trademall Megapolitan Cibinong Bogor 13,000 In Planning

2019

AEON Mall Bogor Aeon In Planning

Embarcadero Lippo Karawaci Bintaro Tangerang 30,000 In Planning

Hollywood Central Graha Buana Cikarang Cikarang Bekasi 25,000 In Planning

Kota Harapan Indah Hasana Damai Putera Medan Satria Bekasi 51,000 In planning

Lippo Grand Mall Lippo Karawaci Karawaci Tangerang 120,000 In Planning

Mall at Pesona Square Menara Depok Asri Juanda Depok 30,000 In Planning

Mall at Green Lake Cempaka Group Cimanggis Depok 20,000 In Planning


OccupancyJakarta

Global Retail Development Index 2016

2016 rAnk COunTrY MArkeT Size

(25%)COunTrY

riSk (25%)

MArkeT SATurATiOn

(25%)

TiMe preSSure

(25%)grDi SCOre pOpulATiOn gDp per

CApiTA, ppp

nATiOnAl reTAil SAleS

($ BilliOn)

1 China 100.0 61.2 36.2 92.5 72.5 1,372 14,190 3,046

2 India 53.7 54.3 75.8 100.0 71.0 1,314 6,209 1,009

3 Malaysia 81.2 83.4 23.5 50.4 59.6 31 26,141 93

4 Kazakhstan 56.4 37.3 61.9 70.2 56.5 18 24,346 48

5 Indonesia 64.3 38.9 50.2 68.9 55.6 256 11,112 324

6 Turkey 85.9 46.4 31.9 53.1 54.3 78 20,277 241

7 United Arab Emirates 95.2 100.0 1.3 18.0 53.6 10 66,997 69

8 Saudi Arabia 91.2 64.9 21.3 31.5 52.2 32 53,565 109

9 Peru 47.3 52.8 50.4 57.2 51.9 31 12,077 70

10 Azerbaijan 33.9 30.8 80.9 59.3 51.2 10 18,512 17

Source: AT Kearney






Occupancy rates

Despite being recorded among the top five rankings in the Global Retail Development Index (GRDI) report 2016, the retail market in Jakarta has yet to show brisk performance. Occupancy has been hovering for quite some time and was recorded at 86% as of Q2 2016. Two newly operating shopping centres with under-performing occupancy for the previous year also caused overall occupancy to slightly decrease YTD. Nonetheless, Indonesia’s huge population is still appealing to foreign retailers, as reflected in the burgeoning foreign retail investments in Indonesia, par-ticularly in Jakarta. Dubai-based Lulu opened its first hyper-market in Cakung, East Jakarta. Meanwhile, Courts (Singapore), Lotte (South Korea), Jysk (Denmark), Uniqlo (Japan), IKEA and H&M (Sweden) have big plans to expand business in Indonesia, particularly in Jakarta.

The CBD remains an attractive location for branded local and foreign businesses for expansion. This has caused a wide gap in the occupancy rates of the CBD and areas outside the CBD since 2014. Nevertheless, amid limited retail space in the CBD, the occupancy only grew moderately during the first semester of 2016 and was registered at 92%.

Meanwhile, average occupancy outside the CBD has been re-corded at below 85% since 2014. After hovering at 84% for the last two quarters, the average occupancy declined mildly to 83.8% as of Q2 2016. However, we still noted a number of leasing activities at some shopping centres QoQ, particularly in North Jakarta, as can be seen in the following table.

*excluding areas considered as the CBDSource: Colliers International Indonesia - Research

Occupancy Outside the CBD Based on AreaAreA Q2 2015 Q4 2016 Q2 2016

South Jakarta* 91.10% 88.50% 88.60%

Central Jakarta* 73.10% 72.60% 72.60%

North Jakarta 84.50% 83.90% 84.90%

East Jakarta 87.40% 88.10% 82.20%

West Jakarta 81.50% 81.10% 80.70%

South and East Jakarta maintained the occupancy rates at 88%. However, the overall occupancy rates in East Jakarta plunged quite significantly to 82.2% following the beginning of Bas-sura City Mall’s operation. Areas outside the CBD will see the completion of three future shopping centres in the remainder of 2016. The start of the operation of the future Pantai Indah Kapuk Mall and Neo Soho Mall at Podomoro City in the first year may impact the projected overall occupancy.


YoY Comparison: number of vacant Spaces Based on Area

Occupancy Based on Mall GradeMAll grADe Q2 2015 Q4 2016 Q2 2016

Upper Class 91.6% 90.8% 90.9%

Middle Class 88.5% 86.3% 85.7%

Middle Lower Class 77.5% 77.7% 77.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010

2011

2012

2013

2014

2015

2016

YTD

CBD Outside the CBD Jakarta

0

20,000

40,000

60,000

80,000

100,000

120,000

CBD Central Jakarta

South Jakarta

North Jakarta

East Jakarta

West Jakarta

sq m

Q2 2015 Q2 2016






Based on mall grade, the occupancy for upper-class shopping centres was recorded at 90.9% and has been relatively stable QoQ. In the middle lower class, occupancy slightly fluctuated within the last year. At least four shopping centres of this class (located in Slipi, Blok M, Koja and Cengkareng) hold a large va-cant space, which brought the average occupancy to relatively decline YoY. One of these four shopping centres is undergo-ing renovation and upgrading of the tenancy mix. The QoQ oc-cupancy rate at middle-class shopping centres was somewhat corrected mainly because of the increasing vacant spaces at several shopping centres located in Cilandak, Blok M, Rasuna Said, Kelapa Gading and Mas Mansyur. More vacant spaces dur-ing this period were contributed by newly operating shopping centres in 2015–2016. Apart from that, some retailers are now doing fit-outs for their stores, which are seemingly ready to be occupied around the end of 2016.


YoY Comparison: number of vacant Spaces Based on Mall grade

New Tenants at Some Shopping Centres in JakartaShOpping CenTre AreA new TenAnT

Mall Taman Anggrek West Jakarta WB Jewelry

Mall Puri Indah West Jakarta Celebrity Fitness

Central Park Mall West Jakarta Fossil, Tag Heuer, Sephora, Dharma Kitchen, POLO, Kitchen Art, Chung Gi Wa Korean BBQ, Puma, Planet Sports, Jade Wong

Pluit Junction North Jakarta Hero Supermarket

Citywalk Sudirman Central Jakarta Takigawa, Shabu Tei, Gandy Steak


Committed Tenants at New and Future Shopping Centres in JakartaShOpping CenTre AreA TenAnT nAMe

Shopping Mall Pancoran South Jakarta Excelso, Nanny’s Pavilion, Starbucks, Coffee Bean, Baskin Robins, Chatime, Wendys, Solaria

Neo Soho Mall West Jakarta Central Dept Store, Kid Station, Electronic Solution, Pedro, The Body Shop, Clarks, Staccato, Polo Ralph Lauren, Samsonite, Wrangler, Wood, Cotton On, Mango, Nine West, Charles & Keith, Armani Jeans, Furla, Ta Wan, Pizza Hut, Pepper Lunch

Pantai Indah Kapuk Mall North Jakarta Uniqlo, The Food Hall, XXI, Ace Hardware, Gold’s Gym, Informa, H&M, Optik Melawai, Sports Station, Gior-dano, Levi’s Store, Timberland, Pizza Hut, Starbucks, Excelso

Bassura City Mall East Jakarta XXI, Lion Superindo, Optik Melawai, Sports Station, The Body Shop, Starbucks, Imperial Kitchen

0

30,000

60,000

90,000

120,000

150,000

180,000

Upper Classes Middle Classes Middle-Lower Classes

sq m

Q2 2015 Q2 2016





Greater Jakarta

Except for Bogor, other areas in greater Jakarta recorded relatively better occupancy rates albeit very moderately. Eight shopping centres including Detos (Depok), Ekalokasari (Bogor), Summarecon Mall Bekasi, Grand Metropolitan (Bekasi), Grand Galaxy (Bekasi), Bintaro Xchange, Cinere Bellevue and AEON Mall reported that they have secured additional tenants occu-pying above 1,000 sq m YoY. Nevertheless, overall occupancy only slightly increased to 83.2% as of Q2 2016. In spite of the fact that newly operating shopping centres have secured pre-committed tenants, the physical occupancy is yet to be recorded because the tenants are mainly in the preparation stage to open stores. BoDeTaBek area is anticipating a large new retail space over the next four years. Given this, we expect an increase in vacant space as the amount of supply will be larger than the historical number of annual demand.


Occupancy rate Based on Area


YoY Comparison: number of vacant Spaces in Several regions

The limited number of vacant spaces in Jakarta, particularly in certain shopping destinations, has shifted the expansion target of both local and foreign retailers in certain areas in BoDeTaBek. Demand for retail space from branded retailers is commonly large and entail high-specification premises.

Occupancy Based on AreaAreA Q2 2015 Q4 2016 Q2 2016

Bogor 82.0% 82.0% 77.6%

Depok 85.6% 86.2% 86.9%

Tangerang 78.3% 81.8% 82.0%

Bekasi 83.6% 85.7% 85.8%



Committed Tenants at New and Future Shopping Centres in Greater JakartaShOpping CenTre nAMe AreA new TenAnT

Metropolitan Mall Cileungsi Bogor Matahari Department Store, Gramedia, Cinema XXI, Superindo, Eat and Eat, Electronic City, JYSK

Vivo Lifestyle Bogor Centro, Fun World

Vivo Trade Mall Bogor Lotte Mart, CGV

Q Big Tangerang Mitra 10, Lulu Hypermarket, Informa, Ace Hardware, Toys Kingdom

Bekasi Trade Centre 2 Bekasi Hypermart

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016YTD

Bogor Depok Tangerang Bekasi All Area

0

25,000

50,000

75,000

100,000

125,000

150,000

Bogor Depok Tangerang Bekasi

sq m

Q2 2015 Q2 2016





Rental RatesJakarta


Average Asking rents in jakarta

Average asking rents for the whole area of Jakarta was re-corded at IDR566,087/sq m/month as of Q2 2016. Around 20% of the total shopping centres contributed to the increase in the average asking rent that grew 6% YoY. The most significant in-crease occurred in North Jakarta, with at least seven shopping centres increasing the asking rents between IDR50,000 and IDR200,000/sq m/month. In some cases, limited vacant space pushed large well-known shopping centres to adjust the asking rent tariff, particularly for main areas like the ground floor. Such adjustment has brought the average asking rent to climb sig-nificantly by around 25% in North Jakarta. In East Jakarta, the rental tariff adjustment was mainly due to the newly operating shopping centre that changed the overall figure for the region.

As of Q2 2016, the average asking rent for retail occupation in the CBD was recorded at IDR855,965/sq m/month, while in areas outside the CBD, it was IDR476,009/sq m/month.

Based on mall grade, middle- and middle to lower-class shop-ping centres showed higher growth in rental rates than upper-class shopping centres YoY. However, in terms of occupation cost, the rate for most middle-class shopping centres is basi-cally 45% less expensive than what is quoted by most upper-class shopping centres. Currently, the range of the average asking rents for upper-class shopping centres is recorded at IDR550,000 to IDR1,200,000/sq m/month, while the middle classes were recorded at IDR300,000 to IDR600,000/sq m/month (middle) and IDR200,000 to IDR400,000/sq m/month for middle lower.


YoY: Average Asking rents Outside the CBD Based on Area


YoY: Asking rents Based on Mall grade

IDR0

IDR150,000

IDR300,000

IDR450,000

IDR600,000

IDR750,000

IDR900,000

2010

2011

2012

2013

2014

2015

2016

YTD

CBD Outside CBD Jakarta

IDR0

IDR100,000

IDR200,000

IDR300,000

IDR400,000

IDR500,000

IDR600,000

Central Jakarta

South Jakarta

North Jakarta

East Jakarta West Jakarta

Q2 2015 Q2 2016

IDR0

IDR100,000

IDR200,000

IDR300,000

IDR400,000

IDR500,000

IDR600,000

IDR700,000

IDR800,000

IDR900,000

Upper Classes Middle Classes Middle-Lower Classes

Q2 2015 Q2 2016





Greater Jakarta


Average Asking rents in BoDeTaBek


Average Asking Asking rents YoY

In the greater Jakarta area, average rental rates in Bekasi and Bogor showed a relatively significant increase compared to those of other regions. With the same reason, the main trigger for the increase was the inclusion of newly operating shopping centres with higher asking rent to the overall rental calculation. The asking rents increased 8.4% in Bogor YoY while in Bekasi, the increase was 18.3% YoY. Overall, with other minor changes experienced by the other regions, the average asking rent in BoDeTaBek was recorded at IDR352,119/sq m/month as of Q2 2016, growing 9.4%, YoY.

The segmentation of shopping centres in BoDeTaBek is mainly categorised as middle to middle lower class. As of Q2 2016, the asking rents were recorded in the range of IDR225,000 to IDR450,000/sq m/month (middle class) and IDR200,000 to IDR360,000/sq m/month (lower class). Only a few shopping centres are segmented as middle to upper class, with rental rates ranging from IDR300,000 to IDR550,000/sq m/month.

Service ChargesJakarta


Average Service Charges in jakarta


Average Service Charges YoY Changes

IDR0

IDR50,000

IDR100,000

IDR150,000

IDR200,000

IDR250,000

IDR300,000

IDR350,000

IDR400,00020

10

2011

2012

2013

2014

2015

2016

YTD

Bogor Depok Tangerang Bekasi Average

IDR0

IDR50,000

IDR100,000

IDR150,000

IDR200,000

IDR250,000

IDR300,000

IDR350,000

IDR400,000


Q2 2015 Q2 2016

IDR0

IDR30,000

IDR60,000

IDR90,000

IDR120,000

IDR150,000

IDR180,000

2010

2011

2012

2013

2014

2015

2016

YTD

CBD Outside the CBD Jakarta

IDR0

IDR20,000

IDR40,000

IDR60,000

IDR80,000

IDR100,000

IDR120,000

IDR140,000

Central Jakarta

South Jakarta

North Jakarta

East Jakarta West Jakarta

Q4 2015 Q2 2016





During Q2 2016, the average service charge in Jakarta moved upwards modestly by 4.5% QoQ to record IDR123,482/sq m/month. At least 30 shopping centres made adjustments to this maintenance tariff by as much as 20% during the first semes-ter. The CBD and South Jakarta, which are mostly populated by upper-class malls, recorded the highest increase in service charges at IDR153,902 and IDR125,794/sq m/month, respec-tively. However, the highest YTD growth in service charges was registered by North Jakarta, with at least seven shopping cen-tres making adjustment for the tariff.

The overall upper-class malls charged the operating cost to the tenants at an average of IDR152,278/ sq m/month. This is an in-crease of 7% YTD, the highest growth compared to other lower-class malls. Some shopping centres introduced 15.3% increase on the average in one year’s time.


YTD: Service Charge based on Mall grade

Greater Jakarta

Only six shopping centres made adjustments in the average ser-vice charge, with moderate increase of 3.3% YTD to IDR88,158/sq m/month as of Q2 2016. We recorded about three shop-ping centres in Depok making adjustments in the service charge tariff, thus bringing the highest increase (compared to other regions) of 9.7%. Moreover, one of these malls introduced an almost double tariff since the mall began operations in 2014.


Average Service Charges


YoY: Service Charge based on Area

IDR0

IDR20,000

IDR40,000

IDR60,000

IDR80,000

IDR100,000

IDR120,000

IDR140,000

IDR160,000

Upper Middle Middle-Lower

Q4 2015 Q2 2016

IDR 0

IDR 20,000

IDR 40,000

IDR 60,000

IDR 80,000

IDR 100,000

2010

2011

2012

2013

2014

2015

2016

YTD

Bogor Depok Tangerang Bekasi Average

IDR0

IDR20,000

IDR40,000

IDR60,000

IDR80,000

IDR100,000


Q4 2015 Q2 2016




Industrial Land SupplyIn the midst of sluggish industrial land sales, the commitment to deliver ready-to-build land still prevails, highlighted by con-tinuing construction activity. Many landlords still believe in the long-term investment climate; however they tend to flow with the current market trends and remain quite cautious during this slowdown period.

As discussed in earlier reports, Karawang will potentially be-come the area with the most land for expansion. The biggest land expansion will come from a consortium of companies, Trans Hexa Karawang (THK). The consortium members in-clude group of companies such as Gajah Tunggal, Salim, Artha Graha, Agung Podomoro, etc. Currently, the total area of THK’s land is roughly 2,300 hectares. THK’s location can be accessed by exiting the Jakarta-Cikampek toll road at KM 46, followed by Karawang Barat Toll Gate 2. The main road, with a 45-metre ROW (Right of Way), connects several industrial estates in the area. Thus far, Gajah Tunggal has developed an industrial estate called GT Techpark @ Karawang. We have not seen any other companies within the consortium start construction, mainly because they are still waiting for a market response. Unlike the typical buyers of other property sectors, industrial tenants generally prefer ready-to-use land plots instead of buying “pa-per”, even when it is backed up by big property developers. In fact, on the demand side, there is strong indication that estab-lished companies would prefer take an established industrial estate, rather than pioneering a new, undeveloped estate. The proper sales strategy to cope with such a situation is to offer an anchor buyer with serious intentions and a strong brand in the market. This means transactions only occur for substantial amounts of land covering more than 30 hectares. If a smaller buyer approaches, the landlord will only deliver ready-to-build land within the next two years.

We have also heard of a plan regarding a sizeable land acquisi-tion for expansion in Karawang. Considering the limited amount of land they currently hold, the expansion plan seems to be feasible given the need to increase production capacity from the internal tenants. Nevertheless, the downturn in the land absorption rate over the last couple of years has forced land-lords to consider taking an enormous amount of land.

Land availability remains a classic issue for the Bekasi region. Two industrial estates revealed potential enquiries for land, but in a substantial amount which they cannot fulfill because of land availability. Meanwhile, one industrial estate in this region foresees this as an opportunity, as they still have abundant land stock to be developed. GIIC is now accelerating the prepara-

Industrial Estate Sector

Forecast at a glance

SupplyIn Karawang the Gajah Tunggal Group and Agung Podomoro Group have already launched their indus-trial estates. They are members of a consortium of industrial developers referred to as Trans Hexa Kar-awang who share a common road.

DemandThis quarter, the total sales of industrial land in the greater Jakarta area added to 29.03 hectares. Total sales in H1 2016 only represented 13.9% of the total of last year’s transaction of 347.51 hectares. We an-ticipate a higher sale volume in H2 2016 particularly coming from the logistics sector.

PriceThe price of industrial land will likely remain un-changed by the end of 2016.

SupplyIn Karawang the Gajah Tunggal Group and Agung Podomoro Group have already launched their indus-trial estates. They are members of a consortium of industrial developers referred to as Trans Hexa Kar-awang who share a common road.

DemandThis quarter, the total sales of industrial land in the greater Jakarta area added to 29.03 hectares. Total sales in H1 2016 only represented 13.9% of the total of last year’s transaction of 347.51 hectares. We an-ticipate a higher sale volume in H2 2016 particularly coming from the logistics sector.

PriceThe price of industrial land will likely remain un-changed by the end of 2016.



tion of a 450-hectare expansion in stages in anticipation of large-scale land enquiries. Meanwhile, BFIE has set plans for a 50-hectare expansion, and even now there is only limited land available for sale.

Bogor is the only region with minimal expansion capacity, and thus far the number of enquiries is small, and they rarely occur.KIEC, in Serang, continues to take part in the acquisition of sev-eral small lots as part of their big plan to develop 100 hectares for future supply. Their target is to comprehensively develop the area by 2017.


industrial land Stock Status in Some Active and future industrial estates

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Bogor Tangerang Karawang Bekasi Serang

Hec

tare

s

Existing Stock Remaining Unsold Land

Potential Land To Be Developed

Industrial Land Sales


land Absorption in q2 2016

This quarter, Bekasi Fajar (BFIE) stood at a record high in terms of sales volume. Albeit moderate in number, i.e. 11.5 hectares, this represents the most sales made by BFIE in the last six consecutive quarters. The sales made by BFIE also underline the fact that the logistics sector has bolstered its position as the most active type of industry in securing industrial land. Com-posed of several transactions, the sales by BFIE are all from logistics-related companies, including warehouses. Amidst weakening automotive sales volumes over the last couple of years, the need to store related material has escalated, trigger-ing growth in the logistics sector. Furthermore, requirements for logistics facilities have mounted in volume following the brisk prospects of on-line retail.

One prominent industrial estate in Bekasi has again reported no sales for this quarter. The major issue was not sluggish de-mand, but limited capacity to entertain sizeable land enquiries. This has been a dilemma amidst the slowing market, but at the same time it cannot execute transactions because of a lack of supply. For some tenants or industrial investors, proximity to the capital city and well-built infrastructure will always be the main reasons for choosing an industrial location.

Delta Silicon also felt that the recent market conditions have been very slow. This quarter they only performed a land trans-action for roughly one hectare with a Taiwanese packaging com-pany and a local auto parts company. Nevertheless, they expect a brisker outlook next quarter, with several transactions in the pipeline. Such conditions were also experienced by Greenland International Industrial Centre (GIIC), where they expect to see market improvement in the third quarter, with several sizeable transactions on the horizon. In total, Bekasi registered a total of 17.5 hectares in transactions, the most compared to other regions and a 50% increase QoQ.

Other relatively sizeable transactions during the quarter came from Jababeka Industrial Estate, which sold a total of 5 hectares of land, mainly to logistics companies and smaller companies from the electronics and consumer sectors.

In Karawang, two industrial estates reported sales which ac-counted for a total of 4.1 hectares. Though small, this figure is higher than last quarter’s 3.5 hectares. After registering 2 hectares in land sales last quarter, KIIC reported around 3 hect-ares’ worth of sales from the expansion of a Japanese auto parts company. Meanwhile, a steel company based in Korea also expanded at Suryacipta, taking up 1.1 hectares. Two other indus-trial estates in Kota Bukit Indah did not record any transactions of industrial land for sale or lease. Since the beginning of 2014, Karawang has registered a total transaction volume of under 10 hectares every quarter.

Millennium sold roughly the same amount of land QoQ, totalling 1.9 hectares, made up of a 1.4-hectare land plot sale to the plas-tics industry and various standard warehouse buildings ranging from 600 sq m to 1,000 sq m, totalling about 5,000 sq m of land. There are several other industrial estates in Tangerang, 0 2 4 6 8 10 12

Krakatau Industrial Estate Cilegon

Delta Silicon

Suryacipta

Millennium

KIIC

Jababeka

Modern Cikande

Bekasi Fajar

hectares





but most are not actively selling. The latest one is Griya Idola In-dustrial Park, an industrial park selling industrial lots and build-ings with a total area of 80 hectares. More than 70% of the total sellable land in the first stage (20 hectares) has been absorbed. Though relatively small, Modern Cikande has consistently regis-tered land sales totalling around 5 hectares through two trans-actions. Thus far, these sales make up the second-largest area, after those at BFIE. Two local companies in the pharmaceutical and chemical industries are new to this estate. Modern Cikande has recorded remarkable sales volume for the last two years, and although 2016 has seen this volume fall quite a bit, the sales performance of this estate has been above the market average. Meanwhile, KIEC only recorded sales from the expansion of a French company in the industrial gas sector. Thus far this is the only transaction it has registered this year. Going forward, KIEC is confident in the market situation and is anticipating sizeable transactions in July or August.


Annual industrial land Absorption

Total sales of industrial land in several regions in the great-er Jakarta area accounted for 29.03 hectares, slightly higher than last quarter’s 19.39 hectares. Last year’s total transactions reached 347.51 hectares, which means that total sales during the first semester of this year were only 13.9% of last year. It will be very difficult to reach last year’s transaction total in the remaining six months of this year.

Throughout the first half of the year, the logistics sector be-came the most active sector, similar to the trends of the last two years.


Types of Activities industries During q2 2016

0

200

400

600

800

1,000

1,200

1,400

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD

Hec

tare

s

Jakarta Bogor Tangerang Karawang Bekasi Serang

Automotive19%

Plastics4%

Pharma-ceutical

6%

Steel-related

2%

Chemicals4%

Oil & Gas Related

1%

Manufacturing1%

Logistics/Warehousing

48%

Packaging1% Molding

4%Developer

2%

Others7%

Land Price


greater jakarta industrial land prices

USD0.00

USD25.00

USD50.00

USD75.00

USD100.00

USD125.00

USD150.00

USD175.00

USD200.00

USD225.00

USD250.0020

06

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD

USD/

sq m

Bogor Bekasi Tangerang Karawang Serang





The current general sales performance has lead to further downward pressure on prices. Two industrial estates reported the introduction of new lower prices, at an average of 8%, this quarter, in light of increasingly tough sales. Other industrial estates with mediocre sales may maintain the current asking prices, but would probably be willing to negotiate.

Buyers with a sizeable purchasing plan may be in a better posi-tion to negotiate. This has been the case when potential buyers come with a requirement of more than 10 hectares; moreover, if the potential buyers are from an anchor industry, this may entice other supporting industries to buy as well.

Bekasi, the home of many established industrial estates, main-tains the highest prices in comparison to other regions. Asking prices are already set in rupiah and range from IDR2.4 million to IDR3.5 million, depending on the estate specifications (qual-ity, facility, etc.) and the tenants. In Karawang, prices are mainly offered in US dollar, starting from USD170 to USD200. As of Q2 2016, land prices across greater Jakarta are primarily quoted in ID rupiah, and thus far prices in US dollar are only found in Karawang.

Currently, a 10% discount on the asking price is quite common, and still within the target of the transacted price. Larger dis-counts may occur for large-scale land transactions.

Source: Colliers International Indonesia - Research*1USD = Rp 13,320

Industrial Land Prices and Maintenance Costs (in USD equivalent)

regiOnlAnD priCe (in uSD/Sq M) MAinTenAnCe COSTS

(in uSD/Sq M/MOnTh)

lOweST higheST AverAge lOweST higheST AverAge

Bogor 120.00 210.21 165.11 0.06 0.06 0.06

Bekasi 180.18 240.24 218.17 0.06 0.08 0.07

Tangerang 142.64 150.15 146.40 0.03 0.08 0.06

Karawang 170.00 200.00 185.00 0.05 0.10 0.06

Serang 150.15 165.17 157.66 0.03 0.05 0.04

Maintenance Cost


greater jakarta industrial Maintenance Costs

Maintenance costs remained flat during the quarter. None of the operating industrial estates changed their costs, as neces-sary adjustments were made beforehand. Besides, during hard times, landlords tend to create a conducive atmosphere by not introducing new tariffs. The maintenance tariffs in industrial es-tates are generally maintained for a longer period. Unlike land prices, maintenance costs in all industrial estates in Bekasi are charged in US dollars. In Karawang, a few estates are already offering rupiah tariffs, while all of the industrial estates in Se-rang have applied the rupiah tariff for several years.

USD0.00

USD0.01

USD0.02

USD0.03

USD0.04

USD0.05

USD0.06

USD0.07

USD0.08

USD0.09

USD0.10

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD

USD/

sq m

/mon

th

Bogor Bekasi Tangerang Karawang Serang

Concluding ThoughtSome industrial estates felt that they did not see signs of mar-ket recovery during this review period, and they do not expect a miracle to boost sales performance. On the other hand, we also saw a contradictory situation, whereby industrial estate landlords started to feel that the market is likely to bounce back in the near-term. All in all, without any good expectations of the market over the next semester, we believe that the market will need to breathe heavily to catch up to last year’s sales perfor-mance, since the total transactions from last year mainly con-sisted of a single enormous transaction which lifted the overall performance. This year will definitely need such a transac-tion to keep up with last year’s performance. That would be a miracle.




Hotel Supply

Starred Hotel In Q2 2016, there were three new hotel projects that began operation in Jakarta. In the 3-star hotel category, Archipelago International added 131 rooms under Harper brand, located in Jalan MT Haryono, East Jakarta. Harper MT Haryono is the first Harper hotel in Jakarta. Additionally, another new 3-star category was from the operation of Liberty hotel, which is lo-cated in the CBD. This hotel provides 60 rooms for the public. As of Q2 2016, there were a total of 10,683 3-star hotel rooms in Jakarta.

In the 4-star hotel category, Accor expanded using the Mercure brand in Jakarta. This recently opened hotel is located in Cikini, Central Jakarta. Mercure Cikini provides 207 rooms, leading the total hotel rooms in the 4-star category to reach 14,921.

None of the under-construction 5-star hotels is ready for op-eration during the reviewed quarter. Thus, the total number of 5-star hotel rooms in Jakarta remains at 12,193.

By the end of 2016, Jakarta expects to see a total of 11,835 3-star hotel rooms, 17,867 4-star hotel rooms and 12,851 5-star hotel rooms, respectively.

Hotel SectorForecast at a glance

SupplyBy end of 2016, Jakarta will see an additional 4,756 rooms comprising 1,302 rooms in 3-star hotels; 2,796 rooms in 4-star hotels; and 658 rooms in 5-star hotels.

DemandThe number of foreign visitors coming to Indonesia through Soekarno Hatta airport will have inflated from 2.4 million in 2015 to 2.7 million in 2016.

PerformanceWith a substantial amount of additional rooms by the end of 2016, we predict AOR may drop and thus hoteliers will be pushed to adjust room tariffs down-ward.


Top 5 Most Active hotel Chain Operators in jakarta (including Budget hotel), 2015 - present

Santika Hotel & Resorts

13%

MaxOne19%

Accor25%

Archipelago International

13%

Swiss-belhotel International

19%

InterContinental Hotel Group

13%




Cumulative Supply of Starred hotel projects in jakarta

0

10

20

30

40

50

60

70

80

90

100

2010

2011

2012

2013

2014

2015

Q1 2

016

Q2

2016

2016

F

2017

F

2018

F

2019

F

3-star 4-star 5-star


Cumulative Supply of Starred hotel rooms in jakarta

0

2,100

4,200

6,300

8,400

10,500

12,600

14,700

16,800

18,900

21,000

2010

2011

2012

2013

2014

2015

Q1 2

016

Q2

2016

2016

F

2017

F

2018

F

2019

F

3-star 4-star 5-star

New Pipeline

hOTel nAMe STArreD rATing

STr ChAin SCAle rATe lOCATiOn regiOn rOOMS prOjeCT STATuS

prOjeCTeD COMpleTiOn

TiMe

Yello Hotel Hayam Wuruk 3-star Not define yet Hayam Wuruk Central Jakarta 372 Under construction Q3 2016

Harper TB Simatupang 3-star Not define yet TB Simatupang South Jakarta 180 Opening preparation

Q3 2016

Whiz Prime Hayam Wuruk 3-star Not define yet Hayam Wuruk Central Jakarta 100 Under construction 2016

Ibis Styles Jakarta PIK 3-star Midscale Class Pantai Indah Kapuk North Jakarta 200 Under construction 2016

Ibis Styles Kemang 3-star Midscale Class Kemang South Jakarta 200 Deferred 2016

Ibis Styles Tanah Abang 3-star Midscale Class Tanah Abang Central Jakarta 225 Post Tender 2017

Grand Zuri Mangga Dua 3-star Not define yet Mangga Dua Central Jakarta 130 Design Stage 2017

Hotel Pasar Senen 3-star Not define yet Pasar Senen Central Jakarta 200 Under construction 2017

Santika TB Simatupang 3-star Upper Upscale Class

TB Simatupang South Jakarta 160 Permit Process Q1 2018

Total 3-star hotel rooms 1,767

Swiss-Belhotel - Kelapa Gading 4-star Upscale Class Kelapa Gading North Jakarta 316 Under construction Q3 2016

Swiss-Belhotel Rasuna Epicentrum

4-star Upscale Class Rasuna Epicentrum South Jakarta 323 Under construction Q3 2016

Harris Hayam Wuruk 4-star Upscale Class Hayam Wuruk Central Jakarta 238 Under construction Q3 2016

Four Points by Sheraton Jakarta 4-star Upscale Class Thamrin CBD 162 Opening preparation

Q3 2016

Holiday Inn Hotel & Resorts Jakarta Gajah Mada

4-star Upper Midscale Class

Gajah Mada Central Jakarta 420 Opening preparation

Q4 2016

Prima Hotel 4-star Not define yet KH Wahid Hasyim Central Jakarta 150 Under construction 2016

Aston Titanium Cijantung 4-star Upscale Class Cijantung East Jakarta 225 Opening preparation

2016

Suite Novotel Jakarta PIK 4-star Upscale Class Pantai Indah Kapuk North Jakarta 220 Opening preparation

2016

Grand Whiz Poin Square 4-star Not define yet Lebak Bulus South Jakarta 132 Opening preparation

2016

continued





hOTel nAMe STArreD rATing

STr ChAin SCAle rATe lOCATiOn regiOn rOOMS prOjeCT STATuS

prOjeCTeD COMpleTiOn

TiMe

continuation

Aston Sunter Hotel 4-star Upscale Class Sunter North Jakarta 150 Under construction 2016

Ancol Courtyard Marriott Hotel 4-star Upscale Class Ancol North Jakarta 310 Opening preparation

2016

aloft Kebon Jeruk 4-star Upscale Class Kebon Jeruk West Jakarta 140 Under construction Q3 2017

Novotel Cikini 4-star Upscale Class Cikini Central Jakarta 286 Under construction Q2 2017

aloft Wahid Hasyim 4-star Upscale Class Wahid Hasyim Central Jakarta 170 Under construction Q4 2017

Prama Gatot Soebroto - Kemang 4-star Not define yet Kemang Raya South Jakarta 200 Concept Stage 2017

Morrissey Hotel 4-star Not define yet Wahid Hasyim Central Jakarta 343 Under construction 2017

Grand Clarion Jakarta 4-star Not define yet Otto Iskandar Dinata East Jakarta 272 Under construction 2017

Mercure Hotel Matraman 4-star Upscale Class Matraman Raya South Jakarta 150 Deferred 2017

Hotel Santika Premier Yos Sudarso

4-star Upper Upscale Class

Yos Sudarso South Jakarta 150 Deferred 2017

Mercure Kemang 4-star Upscale Class Kemang South Jakarta 80 Permit Process Q1 2018

Oyama Centre 4-star Not define yet Yos Sudarso North Jakarta 160 Under construction 2018

aloft Jakarta Simatupang 4-star Upscale Class TB Simatupang South Jakarta 180 Permit Process 2019

Radisson RED Jakarta 4-star Upscale Class Satrio CBD 36 Planning stage 2019


Four Seasons 5-star Luxury Class Gatot Subroto CBD 125 Opening preparation

Q3 2016

The Westin Jakarta@Gama Tower

5-star Luxury Class Rasuna Said CBD 283 Opening preparation

Q3 2016

Alila - SCBD lot 11 5-star Luxury Class SCBD CBD 250 Under construction 2016

InterContinental Jakarta Pondok Indah Hotel & Residences

5-star Luxury Class Pondok Indah South Jakarta 470 Under construction 2017

The Langham District 8@Lot 28 SCBD

5-star Luxury Class SCBD CBD 200 Under construction 2017

JW Marriott @St Moritz 5-star Luxury Class Puri Indah West Jakarta 208 Under construction 2017

JW Marriott @Kemang Village 5-star Luxury Class Kemang South Jakarta 275 Deferred 2017

Park Hyatt Hotel 5-star Luxury Class Kebon Sirih Central Jakarta 150 Under construction 2017

W Hotel @Ciputra World Jakarta 2

5-star Luxury Class Mega Kuningan CBD 126 Deferred 2018

Aryaduta - Holland Village 5-star Upscale Class Cempaka Putih Central Jakarta 180 Under construction 2018

Sofitel 5-star Luxury Class Mega Kuningan CBD 212 Under construction 2018

Regent 5-star Luxury Class Gatot Subroto CBD 127 Under construction 2018

Rosewood Jakarta 5-star Luxury Class Satrio CBD 200 Design Stage 2018

St Regis 5-star Luxury Class Gatot Subroto CBD 280 Design Stage Q1 2019

Waldorf Astoria 5-star Luxury Class Thamrin CBD 181 Abandoned 2019


Total star hotel rooms 9,847

Source: Colliers International Indonesia - Research, STR Global





Budget HotelIn Q2 2016, there was one new budget hotel called MaxOne lo-cated in Kramat, Central Jakarta. This hotel provides 120 rooms. The room contribution from this hotel brought the overall supply of budget hotels to 5,087 rooms in Jakarta.

Cumulative Supply of Budget hotel (economy Class) in jakarta


Future Budget Hotel Development in Pipeline

hOTel nAMe STr ChAin SCAle rATe lOCATiOn regiOn nO. Of

rOOMS prOjeCT STATuSprOjeCTeD COMpleTiOn

TiMe

Fame Hotel Not define yet Grand Cakung Mall East Jakarta 97 Deferred Q3 2016

Cordela Hotel Not define yet Kramat Raya Central Jakarta 70 Under construction Q3 2016

Amaris Tanah Abang Economy Jl Fachrudin Central Jakarta 79 Deferred Q3 2016

Oak Tree Not define yet Wahid Hasyim Central Jakarta 120 Under construction 2016

Amaris Pluit Economy Pluit Raya North Jakarta 112 Under construction 2016

Whiz - Cipete Not define yet Cipete South Jakarta 180 Under construction 2016

NEO Kebayoran Midscale Class Kebayoran Lama South Jakarta 102 Under construction 2016

POP! Hotel Pasar Baru Economy Class Pasar Baru Central Jakarta 112 Under construction 2016

Luminor Not define yet Pecenongan Central Jakarta 199 Under construction 2016

Amaris Slipi Economy Letjen S Parman West Jakarta 146 Under construction Q2 2017

MaxOne Hayam Wuruk Not define yet Hayam Wuruk Central Jakarta 120 Under construction 2017

Whiz Hayam Wuruk Not define yet Hayam Wuruk Central Jakarta 200 Deferred Q1 2018

Ibis Budget Jaksa Economy Jl Jaksa Central Jakarta 99 Permit Process 2018

POP! Hotel Wahid Hasyim Economy Wahid Hasyim Central Jakarta 150 Design Stage Q1 2019

Total budget hotel rooms 1,786

Source: Colliers International Indonesia - Research, STR Global

0

10

20

30

40

50

60

2010

2011

2012

2013

2014

2015

Q1 2

016

Q2

2016

2016

F

2017

F

2018

F

2019

F





Hotel DemandBased on the Statistics Bureau Indonesia data, by the end of April 2016, there were a total of 664,892 foreign visitors who landed in Soekarno-Hatta International Airport, a 4.9% drop compared to last year.

The month of Ramadhan has also benefited the hotel business, not from room income but from meeting room and food reve-nue. During the season, there is an increase in gathering activi-ties particularly from corporations holding break fasting gather-ings or “buka puasa bersama” either internally or for clients. In general, hotels intensively promote special packages, taking advantage of the season of Ramadhan.

number of passengers Through Soekarno – hatta, ngurah rai and juanda Airports

Source: Statistics Bureau Indonesia

PerformanceThe tight competition has exerted a big impact on the hotel sec-tor. To achieve the revenue target, they pushed to optimise ev-ery sector in the hotel.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD

Soekarno - Hatta Ngurah Rai Juanda

Average Occupancy Rate (AOR)

During Q2 2016, hotel performance in Jakarta started to pick up. Business is running as usual. The end of Q2 2016 is festive season. A lesser number of people will go on business trips, so many people will fast forward their schedules. This causes an increase in MICE performance in the hotel sector. The corporate and government market pushed most of its meeting activities before the festival, so the occupancy in Q2 2016 increased.

In Jakarta, the AOR increased quite significantly by 4.9% to 56.7% QoQ. In the CBD area, the AOR increased by 4.2% to 55.3% QoQ. Meanwhile, for hotels outside the CBD area, the AOR increased by 5.4% to 57.6% QoQ.

In the CBD area, the highest increase in occupancy happened in luxury-class hotels. With good market conditions, the AOR for luxury hotels increased by 4.78% in Q2 2016, bringing the AOR to 53.17%. The second biggest increase in the CBD area was experienced by upscale-class hotels with 4.36% increase, bringing the AOR to 55.26%. Upper upscale-class hotels ex-perienced 4.04% increase, bringing the AOR to 60.01% in Q2 2016. Upper midscale- and midscale-class+ hotels experienced 3.45% increase, bringing the AOR to 56.83%.

The good occupancy rating by hotels in the CBD area was fol-lowed by hotels outside CBD. In upper upscale-class hotels, the AOR increased significantly by 5.73% QoQ, bringing the AOR to 54.59%. Meanwhile, in upscale-class hotels, the AOR increased by 3.95% to 60.34%.

Monthly Average Occupancy rate (AOr)

Source: STR Global

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan Feb Mar Apr May

Jakarta CBD Outside CBD





Average Occupancy rate (AOr) in CBD

Source: STR Global

Average Occupancy rate (AOr) in jakarta

Source: STR Global

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 Q1 2016 Q2 2016


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 Q1 2016 Q2 2016

Luxury Class Upper Upscale ClassUpscale Class Upper Midscale & Midscale Classes+

Average Occupancy rate (AOr) in Outside the CBD

Source: STR Global

Average Daily Rate (ADR)

Jakarta’s ADR slightly increased by 0.15% to USD82.65 in Q2 2016. There was a 0.71% increase of ADR for hotels in Jakarta CBD to USD122.25. Meanwhile, areas outside the CBD experi-enced 0.35% increase.

In the CBD area, the ADR for all classes generally slightly in-creased. The highest increase happened in luxury-class hotels, exhibiting 0.87% increase. It brought the ADR to USD178.73. Upper midscale- and midscale-class+ experienced 0.85% in-crease to USD60.87. Upscale-class hotels also experienced a spike. The AOR increased by 0.59% to USD76.58. In upper up-scale-class hotels, the increase was only 0.24% to USD120.11.

For areas outside the CBD, the ADR were varied. In upper up-scale class, there was a 0.70% increase, which brought the ADR to USD87.68. Meanwhile, for the upscale class outside the CBD, there was a 0.48% decrease, bringing the ADR to USD63.05.

The increase in ADR of Jakarta hotels in Q2 2016 was affected by the numerous MICE activities held before the festival. Al-though the increase was not significant, it signalled that the per-formance of Jakarta hotels is getting better.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 Q1 2016 Q2 2016

Upper Upscale Class Upscale Class





Average Daily rate (ADr) in jakarta

Source: STR Global

Monthly Average Daily rate (ADr)

Source: STR Global

Average Daily rate (ADr) in Outside the CBD

Source: STR Global

Average Daily rate (ADr) in CBD

Source: STR Global

USD0.00

USD30.00

USD60.00

USD90.00

USD120.00

USD150.00

Jan Feb Mar Apr May


USD0.00

USD30.00

USD60.00

USD90.00

USD120.00

USD150.00

2013 2014 2015 Q1 2016 Q2 2016


USD0.00

USD40.00

USD80.00

USD120.00

USD160.00

USD200.00

2013 2014 2015 Q1 2016 Q2 2016

Luxury Class Upper Upscale ClassUpscale Class Upper Midscale & Midscale Classes+

USD0.00

USD15.00

USD30.00

USD45.00

USD60.00

USD75.00

USD90.00

2013 2014 2015 Q1 2016 Q2 2016

Upper Upscale Class Upscale Class




Copyright © 2016 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.


For more information:Ferry SalantoSenior Asociate Director | Research+62 21 3043 [email protected]

Contributors:Eko ArfiantoManager | Research

Hern Rizal GobiAssistant Manager | Research

Nurul SorayaSenior Research Executive | Research

Although the performance of Jakarta hotels is getting better, competition in the hotel sector in Jakarta is getting tighter. Based on Colliers’ database, Jakarta is expected to have addi-tional 4,756 new rooms by the end of 2016. It consists of 1,302 3-star hotel rooms, 2,796 4-star hotel rooms and 658 5-star hotel rooms. Hoteliers are challenged to be able to maintain the AOR and ADR of their hotels, but looking at the current conditions, hote-liers are faced with two options. The first is to maintain the AOR but lose their ADR or maintain their ARR but lose the AOR. In several areas, hoteliers may maintain both AOR and ADR with positive trend. This could happen because the supply grows in line with the demand. Thus, when there is new supply, the changes in AOR and ADR are not very significant because the market does exist. The problem happens when supply exceeds demand. The market will be divided, which will cause the AOR or ADR or both to drop.

Unfortunately, this recently happened in Jakarta. Most hoteliers were urged to maintain either their AOR or ARR. The condition worsened because of the loss of some corporate markets.

Other than that, the government announced that there will be an amendment for the Government Expenditure budget due to changes in some indicators. One is the operational expenditure, which includes business trips and meeting packages. This con-dition will impact the hotel sector, especially the MICE sector and those related to the government market.

The same situation happened in the end of 2014 when the gov-ernment issued a regulation to ban government meetings in ho-tels. It brought down hotel performance significantly and the government market was lost. Hoteliers should prepare for the worst situation if the government amends the budget.

q2 2016-researchand forecastreport-jakarta

Real Estate