COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2019 | 8 JANUARY 2020

Eko Arfianto
GAINING TRACTION TO ACCELERATE
Senior Manager | Research | Jakarta
+6221 3043 6726
Eko.Arfianto@colliers.com

2018–23
Summary & Q4 2019 Full Year 2019 Annual Average
Recommendations
Net space absorption in 2019 was > Annual office space absorption is expected
lower than in 2018. Businesses to see a decreasing trend until 2023.
Demand 61,889 sq m 411,484 sq m 355,303 sq m
continued to relocate, and in some
cases, reduced space. Rent is still
depressed due to the prolonged > Total office supply is expected to increase by
tenant market situation. The 3% per annum until 2023, 80% of which will
Indonesian economy will face be contributed by the incoming 2020-2021 154,410 sq m 483,334 sq m 316,913 sq m
challenges as the volume of Supply supply.
exports remains sluggish, the
Annual Average
policies surrounding the US-China QOQ / YOY / Growth 2018–23 /
trade war remain uncertain, and End Q4 End 2019 End 2023
global growth still weak. This
would reduce business activities 1.9% 1.4% 1.6%
and indirectly impact the property > In anticipation of the economic downturn,
sector, specifically making it rent is projected to drop in 2020.
difficult for office demand to Rent IDR247,733 IDR247,733 IDR263,545
recover quickly.
> Vacancy rate will drop by 0.7% per year up to 0.4% 0.3% 0.8%
Public transportation, including the
2023, following fewer supplies from 2022 to
MRT and future LRT, is expected to
2023.
be a game changer, but its Vacancy 16.9% 16.9% 13.7%
presence is only “good to have” or
a push factor for tenants in 0.3% 5.4% 1.3%
> Sales volume is expected to grow albeit
choosing which buildings to
slowly, allowing prices to increase
occupy. Some landlords have Price moderately until 2023.
anticipated this by providing IDR43.6 mio IDR43.6 mio IDR46.2 mio
shuttle busses to take their tenants Source: Colliers International
to the nearest station. Note: USD1 to 14,070 at the end of Q4 2019. 1 sq m = 10.76 sq ft
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2019 | 8 JANUARY 2020

MORE OFFICE BUILDINGS Outside the CBD, a total of seven new office buildings officially started
operating, adding nearly 250,000 sq m and reaching a cumulative supply of
COMPLETED IN Q4 2019 3.49 million sq m by the end of 2019. Majority of the buildings were
completed in Q4 2019. The supply situation in 2020 will be quite similar to
In 2019, a total of 11 new office buildings opened in Jakarta, five of which that in 2019, with eight buildings still in the pipeline and supply expected to
were completed in Q4, bringing the total number of office spaces in Jakarta grow by 7% YOY.
to 10.14 million sq m currently, up by 5% YOY. Supply is expected to rise by
2.8% as several office establishments will be completed in 2020. In Q1 2020,
around 230,000 sq m of new spaces will be added to the Jakarta office
OCCUPANCY IS GENERALLY STEADY
inventory, about half of which will come from the CBD and outside the CBD Average rents and occupancy rates
areas.
In the past three months, however, the CBD did not produce any new office
building in lieu of supply reduction. The International Financial Tower
building temporarily stopped operations due to refurbishment work. The
total supply in the CBD dropped to 6.66 million sq m as of this quarter. In
2019, four new office buildings entered the market, less than our forecast at
the end of 2018. Cumulative supply only grew by 3.7% YOY, or 4% lower
compared to that in 2018. We anticipate a total of around 270,000 sq m in
the CBD in 2020, which will be contributed by seven office buildings.
. Cumulative office supply

Source: Colliers International

Occupancy in the CBD moved upward modestly in 2019 YOY, whilst the QOQ
figure in Q4 2019 had been relatively stable at 83.4%. Thanks to the
performance of some office buildings that started operating in 2018 and
2019, occupancy reached around 60% by the end of 2019. A moderate
supply projection will help maintain occupancy in 2020, amidst the global
economic uncertainty. We anticipate that net absorption will be
commensurate with the increase in the number of new office buildings. Thus
far, establishments that are expected to meet completion in 2020 have
registered just less than 30% of committed occupancy, yet we expect this
number to grow in 2020, albeit moderately.
Source: Colliers International

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COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2019 | 8 JANUARY 2020

In a market that favours tenants, occupancy of Grade A office buildings
(including premium class) stayed at 81.8%, experiencing a slightly upward
trend of 3% YOY in 2019. Meanwhile, occupancy of Grade B and C buildings
were at 87.7% and 83.0%, respectively.
Outside the CBD, occupancy climbed in Q2-Q3 2019, however after a
substantial supply influx in Q4 2019, it dropped by 2.4% QOQ to 82.5%. The
challenge from flowing supply will continue in 2020, particularly given the
fact that pre-committed occupancy of future buildings scheduled for
operation in 2020 is less than 20% by the end of 2019. Having said that,
occupancy rate is forecasted to dwindle by 1.5-2.0% in 2020.
rent stayed flat QOQ at IDR216,000, but is expected to drop in 2020, despite
less than 0.5% YOY.
STRATA-TITLE OFFICE
Strata-title office spaces were offered at IDR53.4 million in 2019. A relatively
good absorption in 2019 (around 47,000 sq m) was partly triggered by the
landlords’ decision to offer good rates, at least over the last three quarters
of 2019. The pre-committed take-up rate for office buildings completed in
2019-2020 has currently reached 77%.

In TB Simatupang, the second-best business area, occupancy level has been Outside the CBD, average selling price was stable at IDR37 million. Sales was
steady at 81.4%, but 2020 will be a challenging year as supply is projected to recorded around 6,500 sq m within a year, which was lower than the 2018
grow by 9.6% YOY. We anticipate occupancy rate to fall to 77-78%. absorption. Take-up commitment rate for new supply in 2019-2020 is less
than 30%.

RENT MOVED UP MODESTLY In TB Simatupang, average selling price was recorded at IDR34 million.
Currently, there are less than 30,000 sq m of unabsorbed office spaces for
Average rent in the CBD consecutively dropped from Q2 to Q4 2019. Rent sale in existing buildings.
was recorded at IDR276,456, down by 1% QOQ or 2.7% YOY. Landlords will
face a challenging situation in adjusting rent amidst the anticipated slow
Average selling price
absorption in 2020. Furthermore, most future office buildings that planned
to operate in 2020 offer rent lower than the market price.
Rent of Grade A and premium class buildings is currently recorded at
IDR311,188, relatively unchanged compared with that in 2018. Lower grade
buildings fetch an average of IDR228,385 (Grade B) and IDR173,265 (Grade
C), which is relatively flat YOY.
Outside the CBD, we see that some landlords of new office buildings near
the CBD have a tendency to quote rents that are higher than market
average. As a result, average rent rose by 2.2% QOQ to IDR196,159 in Q4
2019 or up by 1.9% YOY. A similar trend will likely occur in 2020. Some
landlords offer a higher rent, justifying it with their good location and
building specification, but there will be buildings that plan to lower their rent
and this could push the overall rent to stay relatively stable in 2020.
South Jakarta is still the most expensive business location outside the CBD.
Nonetheless, the average rent in South Jakarta dropped by 2% to register at
IDR210,377 this quarter, particularly because some newly operating Source: Colliers International
buildings quote lower rent upon completion. At TB Simatupang, average
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Primary Authors: For further information, please contact:
Eko Arfianto Ferry Salanto
Senior Manager | Research | Indonesia Senior Associate Director| Research | Indonesia
+62 21 3043 6726 +62 21 3043 6730
Eko.Arfianto@colliers.com Ferry.Salanto@colliers.com

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