H2 2022 ColliersQuarterly Surabaya

Semi Annual | Office| Surabaya | 4 January 2023
The office market will remain favourable to

tenants as space availability options are
plentiful
Insights & recommendations

In view of the pandemic, a flexible office hour strategy has been increasingly adopted by many companies
over the past two years. Some companies have reduced their office space footprint and considered moving
to serviced office/co-working spaces. However, some companies decided to stay where they were instead
of relocating. Many companies need an official address for company branding. Occupying office space is
likely to generate more clients and increase company profits, so many companies prefer to stay in their
own offices rather than becoming flexible office users or operating their businesses from shophouses.
Besides location, supporting amenities are also considered important by most tenants when occupying
office space. Budget is the main issue for prospective tenants whether to stay or relocate. Reshaping
existing space into smaller sizes by using partitions has become a way for landlords to provide suitable
office sizes and match the budgets of tenants. Landlords are currently still adaptive and accommodative to
negotiation about tenants' needs, including in terms of rent and service charges.
2023–25
H2 2022 Full Year 2022 Annual Avg.
Several types of companies are expected to return
to the market, actively looking for expansion, in
the near term. Nevertheless, the possibly reduced -2,330 sq m 3,841 sq m 3,789 sq m
Demand
number of employees will minimise the level of
demand for space.
Construction activity has slowed. We expect to see

limited additional supply up to 2025. 0 sq m 0 sq m 23,488 sq m
Supply
Annual Avg Growth

HOH/ YOY/ 2023–2025/
End H2 End 2022 End 2025
Raising rental rates has yet to become a priority 0% -3.8% -2.3%
for landlords and rents are likely to continue to be
Rent depressed. IDR139,696 IDR139,669 IDR132,276
Half of the cumulative supply is still vacant; the -0.4 -4.77 1.53
average vacancy rate is expected to be around
Vacancy 47% between 2022-2025. 46.3% 46.7% 48.1%
Buyers are very selective and take-up likely to be 3.3% 3.3% 0.78%
very limited. Sales price growth is expected to be
Selling Price
very modest between 2022-2025. IDR30mio IDR30mio IDR32.3mio
Source: Colliers. Note: IDR15,563 = 1 USD.
1
The pipeline of ongoing projects Cumulative supply based on area
is still very limited Existing Supply 2022 Future Supply 2023-2025
The construction of some office projects is slowing.

Pelindo Place Office Tower is expected to be the only North Surabaya
office building completed this year, bringing the
cumulative supply to 609,325 sq m up to the end of East Surabaya
2022.
West Surabaya
Several developments are likely to be developed in
Surabaya. However, current construction progress South Surabaya
was hampered by the pandemic, meaning some
completions will be rescheduled. Furthermore, some Central Surabaya
developers are cautious about starting new
construction. 0 100,000 200,000 300,000
Cumulative supply Source: Colliers
Existing Supply Annual Supply

700,000
Flexibility is a key element to
600,000 reworking business strategy; small
500,000 offices may see a renaissance
400,000
In 2022, large additional supply caused the average
300,000 occupancy rate to fall to 53%, although this was
200,000 relatively stable throughout the year. Demand for office
100,000 buildings in Surabaya is still relatively limited. With no
new supply, occupancy is expected to see slight growth
0
in 2023.
2023E
2024E
2025E
2016
2017
2018
2019
2020
2021
2022
Despite the tough market, there have been some stand-

out performers. Start-up companies are still the main
Source: Colliers demand drivers for office space in Surabaya, especially
in the IT and financial sectors. The development of
technology and digital currency trading has encouraged
the growth of new companies to create algorithms and
automate transactions. Shipping and logistic companies
are the other types of companies which occupy office
space in Surabaya. However, these companies mostly
only require small office space.
2
Several sectors that were previously severely affected Occupancy by area
by the pandemic, such as the travel and tourism
sector, have started to recover as demand for tourist Central Surabaya South Surabaya
West Surabaya East Surabaya
activities, including religious tours (such as umrah),
North Surabaya
increases. Consulting companies that provide interior
100%
services, such as decoration and smart home systems,
are currently busy looking for office space. As well as 80%
being used as office space, they will utilise part of the
space as product showrooms. 60%
Other than conventional leases, flexible serviced 40%

offices are one of the alternatives for landlords to
provide ready-to-use space of smaller size. Demand 20%
for these types of office space is high, especially for
new businesses in Surabaya. As businesses grow, they 0%
tend to move to a more traditional unit in the same 2016 2017 2018 2019 2020 2021 2022
building when the company is more mature and Source: Colliers
stable. This is one reason landlords continue to
provide co-working spaces or dedicated units for
flexible office spaces in their buildings. Asking rents are mostly holding
Recently, we have seen some co-working-space firm, but the gap between asking
operators facing financial issues. However, the
rents and actual transactions
operators have not closed as some users are still
occupying space which means that occupancy has not remains significant
dropped significantly. Furthermore, some landlords
The impact of the pandemic on the office sector in
have taken over and operate the co-working spaces
Surabaya is still very noticeable. Landlords are
themselves. In the future, revenue sharing between
constantly trying to meet the needs of prospective
co-working space operators and landlords will be
tenants. The decline in occupancy rates has led
become an option to avoid the current situation.
landlords to freeze occupancy costs in the past two
Some landlords will manage serviced offices with their
years, with their top priority being to maintain
own brand/name.
occupancy instead of increasing rental rates.
Annual supply, demand and occupancy Tenant incentives may no longer be a given, but
landlords are offering various packages to meet the
Annual supply Annual demand Occupancy
budgets of prospective tenants. Providing serviced
100,000 90% offices/co-working spaces with flexible payment
80% methods and ready-to-use spaces are some options
80,000 70% for tenants. With a conventional lease, most landlords
60% now allow tenants to leave the space without
60,000
50% returning it to a bare condition. This can help
40% persuade any prospective tenant to take up the old
40,000
30% fittings and fixtures and reduce or avoid fitting-out
20,000 20% costs.
10%
In general, there has been no change in rental rates in
0 0% most office buildings in Surabaya, except for a newly
2023E
2024E
2025E
2016
2017
2018
2019
2020
2021
2022
completed office building that made adjustments to

set more competitive rental rates. The average rent
Source: Colliers was IDR 139,669 in H2 2022 and the service charge
remains unchanged at IDR64,000. Due to increases in
the minimum wage, landlords will probably adjust
service charges in 2023.
3
Average asking base rent Buying space as an investment is
IDR200,000 still preferable
There is still demand from individual investors for
IDR160,000
strata-title offices in Surabaya. However, there were
not many sale transactions and the average office
IDR120,000
sales price was at IDR 30 million in 2022, a 3.3%
decrease compared to 2021. The slowing business
IDR80,000
climate due to the pandemic encouraged more unit
owners to undertake sub-lease schemes to avoid
IDR40,000
paying service charges.
IDR0 Other than individual investors, companies with

strong financial backgrounds, such as some national
2023E
2024E
2025E
2016
2017
2018
2019
2020
2021
2022
or private banking sector or state-owned companies,

are the main targets of landlords. Strategic office
Source: Colliers locations and flexible operational hours will become
the main selling point to attract more buyers.
Average asking base rent by area
Selling price
Central Surabaya South Surabaya
West Surabaya East Surabaya 40
North Surabaya
Selling Price (in IDR mio)
IDR250,000 32
IDR200,000
24
IDR150,000
IDR100,000 16
IDR50,000
8
IDR0
2016
2017
2018
2019
2020
2021
2022
0
2023E
2024E
2016
2017
2018
2019
2020
2021
2022
Source: Colliers
Source: Colliers
4
Appendix
New pipeline projects
SGA Marketing Developme

Project Name Location Developer
(sq m) Scheme nt Status
2023
Under
Capital Square HR Muhammad Greenwood 39,950 For Lease
construction
2026
Puri Galaxy (Sinar

One Galaxy Dharmahusada 31,450 For Lease In planning
Galaxy Group)
Citraland Vittorio Office Tower Menganti – Citraland Citraland 22,500 For Lease In Planning
Sentral Tunjungan Office Tunjungan Indadi Land 30,000 For Lease In Planning
Source: Colliers
5
For further information, please contact:
Ferry Salanto Eko Arfianto
Senior Associate Director | Senior Manager | Research |
Research | Jakarta Jakarta
62(21) 3043 6730 62(21) 3043 6726
Ferry.Salanto@colliers.com Eko.Arfianto@colliers.com
About Colliers
Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment
management company. With operations in 63 countries, our 18,000 enterprising professionals work
collaboratively to provide expert real estate and investment advice to clients. For more than 27 years,
our experienced leadership with significant inside ownership has delivered compound annual
investment returns of approximately 20% for shareholders. With annual revenues of $4.6 billion and
$92 billion of assets under management, Colliers maximizes the potential of property and real assets
to accelerate the success of our clients, our investors and our people. Learn more at
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Legal Disclaimer
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communication is not intended to cause or induce breach of an existing listing agreement.
Semi Annual | Apartment | Surabaya | 4 January 2023
Stagnation remains, and could continue

next year

Despite business and economic activities returning to normal, in 2022, we have not seen improvement in
the demand side or supply side of apartments in Surabaya. Prices have moved at a slow, steady pace
because of slow sales and increasing numbers of secondary units for sale, which puts downward pressure
on price growth.
Furthermore, as the central bank increased interest rates by 175 basis points (bps), we believe that
mortgage rates will likely increase and this could soften the apartment market in general. Looking ahead,
with a relatively pessimistic economic outlook expected to feed through to purchasing power, consumer
sentiment could be affected in 2023. Therefore, we encourage developers to continue to implement
attractive flexible payment terms to attract potential buyers.
2023–2025
Demand: Demand for apartments in Surabaya

remained flat at 86.3% and we expect limited
Demand growth in future years 86.3% 86.3% 86 – 87%
The number of completed units in 2022 was well

below the historical annual supply. 341 units 341 units 2,628 units
Supply
Annual Avg Growth

HOH/ YOY/ 2023–2025/
The average asking price stood at IDR22.2 million 4%

in 2022. Similar to demand, we expect asking
Price prices will grow modestly until 2025. IDR22.2mio IDR22.2mio IDR24.9mio
1
Strata-title apartment Supply by area
Central
Project completion continue to face delays Surabaya
due to pandemic 8.43%
This year, there were only 341 new additional units West
Surabaya
from the completion of the Darmo Hill Apartments
42.34%
located in the West Surabaya area, which targeted the
middle-class segment. Including newly completed
projects, the total existing supply of apartments in
Surabaya reached 53,466 units. Location-wise,
apartment projects are still concentrated in East and Surabaya
West Surabaya, given that these areas have the most East
42.58%
developed infrastructure, as well as being popular
South
areas for residential living. We expect there will be Surabaya
7,885 new units from ten projects in the next three 6.65%
years. This future supply is the lowest compared to Source: Colliers
previous years, as some projects are still experiencing
delays or are on on-hold because of the pandemic.
Potential buyers remain indecisive during
Developers will most likely focus on finishing their
the uncertainty, thus price remain
ongoing projects and not prioritise launching new
projects amidst the current challenging situation. We stagnant
understand that only Pakuwon is expected to The absorption rate increased by only 0.11% HOH or
introduce a new project in early 2023. 0.21% YOY to 86.3%. This small increment is due to
limited sales, as well as there being no new project
Annual supply
launches. This has been due to a lack of contributions
10,000 by big payers such as Ciputra and Pakuwon. Other
developers have been struggling to boost sales.
8,000
Take-up rate performance across regions
H2 2021 H1 2022 H2 2022 HOH YOY

6,000
average:
Units
West
88.35% 88.49% 88.61% 0.12% 0.26%
3,955 units Surabaya
4,000
East
85.73% 85.84% 85.89% 0.05% 0.16%
Surabaya
2,000
South
81.12% 81.12% 81.49% 0.37% 0.37%
Surabaya
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Central
82.21% 82.25% 82.25% 0.00% 0.04%
Surabaya
Source: Colliers
Source: Colliers
2
Although business and economic activities have Serviced apartment
improved, the strata-title apartment market has not.
We have not seen investors buying yet, given the little Supply
incentive for investing in apartments in the current
As at H2 2022, the supply of apartments remained
situation. In addition, rising interest rates have
stable, mainly because there was no new supply in the
resulted in many potential buyers delaying purchases
market. Looking forward, in 2023, the market is
and waiting for more certainty on where interest
expecting an additional 405 new serviced apartment
rates will stabilise.
units from Somerset Samator Surabaya and Somerset
Last November, Bank Indonesia stated that Tamansari Surabaya. The total stock of serviced
Indonesia‘s GDP in 2023 will grow slower than in 2022, apartments stayed at 805 units, with most of the units
at 4.37% due to the impact of domestic monetary located in West Surabaya (63.5%), followed by Central
tightening. In our view, this could lead to a slowdown Surabaya (18.6%). Central and West Surabaya are
in apartment sales and consumers might opt to delay known for their premium locations where multi-
purchasing. We expect that the absorption rate will national companies, as well as expatriates, prefer to
remain steady at 86-87% in 2023. stay. On the other hand, East Surabaya is started to
The asking price of apartments in Surabaya remains gain popularity for serviced apartments. Besides local-
at an average of IDR 22.16 million (+0.2% HOH or +1% leisure travellers, the area mainly targets expats from
YOY). The current slow market puts more pressure the Rungkut Industrial Estates and foreign students or
on developers in determining prices. Many delegates to the surrounding universities in the area.
apartment projects have not increased prices, instead
keeping the product affordable to attract potential
buyers. Buyers may still need some convincing for Domestic leisure and corporate demands
them to overcome their lack of activity. Individual drive the leasing activities this year
investors may still be keen to commit to buying, but
The occupancy rate jumped significantly by 6.5% HOH
are concerned about capital gains, as well as the
to 52.1%. The main drivers were domestic-leisure and
delivery time of a property as several projects were
local corporate demand, as many groups from
put on hold due to the impact of the pandemic.
corporates or government usually hold meetings or
seminars around the end of the fiscal year in early
Take-up rate performance across regions
December. In addition, we have also seen an influx of
H2 2021 H1 2022 H2 2022 HOH YOY
enquiries from expats searching for serviced
apartments. Owing to the surge in leasing demand,
West serviced apartments in Surabaya increased their
22,426,847 22,691,135 22,865,454 0.8% 2.0%
Surabaya rental rate by an average of 2.7% HOH to
East IDR335,449/sq m/month.
17,322,493 17,322,493 17,325,312 0.0% 0.0%
Surabaya
Looking forward, softer global economic conditions
South
20,192,885 20,311,996 20,311,996 0.0% 0.6% may moderate demand from expatriates. Together
Surabaya
with the new supply and demand moderating, it may
Central be that, in 2023, the occupancy rate will fall. However,
31,595,359 32,007,012 32,007,012 0.0% 1.3%
Surabaya
although rental rates have tended to be relatively
Source: Colliers fixed , we believe that serviced apartments may be
more flexible in their rental negotiations to retain or
Looking forward, the asking price of apartments in
attract tenants.
Surabaya is likely to move at a slow and steady pace
because of the slow growth in sales. Consumers are
still in a wait-and-see mode until the economic
situation improves. We expect that average price
growth will be in the range of 2 to 3% between 2023-
2025.
3
Occupancy rate Rental rate
100%
IDR350,000
80% IDR300,000
IDR250,000
60%
IDR200,000
40%
IDR150,000
20% IDR100,000
IDR50,000
0%
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
H2 2021
H1 2022
H2 2022
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
H2 2021
H1 2022
H2 2022
Source: Colliers Source: Colliers
Appendix
Under construction project
Apartment Name Location Region Developer #Units
2023
Capital Square Residence Jl. HR Muhammad West Surabaya Greenwood Sejahtera 453
Tamansari Emerald Jl. Emerald Mansion West Surabaya Wika Realty 568
The Trans Icon Apartment Jl. Frontage Ahmad Yani South Surabaya CT Corporation 1,100
East Coast Mansion (Tower Bella) Pakuwon City East Surabaya Pakuwon 700
2024
Puncak MERR Apartment Jl. Raya Kedung Baruk East Surabaya Puncak Group 2,200
Grand Shamaya Lagoon Jl. Embong Sawo No 1 Central Surabaya PT PP Property 380
The Grand Stand Jl. Raya Darmo Permai Selatan 90 West Surabaya PT Multi Tower Sentosa 307
Westown View Jl. Raya Wiyung West Surabaya PT PP Property 936
Citraland Vittorio Jl. Raya lontar No.299 West Surabaya Ciputra 512
Kyo Society Jl. Panjang Jiwo South Surabaya Tanrise Group 729
Source: Colliers
4
Ferry Salanto Hern Rizal Gobi
62(21) 3043 6730 62(21) 3043 6727
Ferry.Salanto@colliers.com Rizal.Gobi@colliers.com
About Colliers
Legal Disclaimer
Semi Annual | Retail | Surabaya | 4 January 2023
Retail activity is gradually improving, but

demand has yet to catch up with supply
growth

The performance of Surabaya’s shopping malls continues to vary. Many malls have struggled, displacing
many tenants. Nonetheless, others continued to see tenant expansion with F&B retailers dominating the
trend. More events and exhibitions are being held on a regular basis. In terms of visitor numbers, several
malls are beginning to return to pre-pandemic levels.
The mall owners use this situation to their advantage in order to continue to grow. Various new strategies
and concepts are being implemented in order to entice more people to return to malls. A more favourable
situation is expected to assist tenants in optimising the number of visitors and sales. After nearly two years
of being closed due to the pandemic, several tenants carried out renovations by changing the store’s
concept. Some of them have also been relocated by landlords in order to attract more visitors to the mall.
2023–2025
Local and national tenants continue to show a
strong interest in retail spaces of all types.
Specifically, restaurant tenants have expressed a
Demand 2,940 sq m -17,011 sq m 17,369 sq m
clear preference for existing space over new
construction.
Four malls are expected to be completed by 2025,

with supply expected to grow at a rate of 2% per
annum, between 2022 and 2025. 10,080 sq m 10,080 sq m 25,682 sq m
Supply
Annual Avg Growth
HOH/ YOY/ 2023–2025/
Looking ahead, increased demand, bolstered by -0.3% -0.3% 1.9%

normalising footfall, will continue to support rental
Rent
growth. The average rent is expected to rise by 2% IDR445,442 IDR445,442 IDR471,495
per year, between 2022 and 2025.
Retail vacancy has continued to fall, albeit at a 0.4 2.36 0.04

slower rate. However, additional supply will
Vacancy moderately increase vacancy every year between
30.8% 30.8% 30.9%
2022 and 2025.
Landlords are expected to consider raising

-0.1% 0.3% 3%
maintenance costs after maintaining them during
Service the pandemic. Overall, the average service charge
Charge
will rise by a maximum of 3% per year in the IDR140,739 IDR140,739 IDR153,789
2022–2025 period.
1
Construction projects are still moving at a snail’s pace.
Small supply increase to end the As a result, the completion of some projects will most
year likely be pushed back, and mall openings will be
delayed. Nevertheless, Surabaya has welcomed a new
Cumulative supply mall, Trans Icon, which will open in H2 2022. This mall
increased Surabaya’s total retail supply to 1.21 million
1,400,000
sq m by the end of 2022. Future retail supply in
1,200,000 Surabaya is expected to be relatively limited during
2023-2025 period due to slow construction progress.
1,000,000
800,000
Consumer traffic begins to
600,000
improve, encouraging more
400,000
retailers to return to the physical
200,000
0
mall
2023E
2024E
2025E
2016
2017
2018
2019
2020
2021
2022
Annual supply, demand and occupancy
Annual supply Annual demand Occupancy

Source: Colliers
150,000 85%
Cumulative supply based on area
100,000 80%
Existing Supply 2022 Future Supply 2023-2025
Central Surabaya 50,000 75%
South Surabaya
0 70%
2023E
2024E
2025E
2016
2017
2018
2019
2020
2021
2022
West Surabaya
-50,000 65%
East Surabaya
Source: Colliers
North Surabaya
Retail is expected to be one of the fastest property
0 150,000 300,000 450,000 sectors to recover due to economic growth and
Source: Colliers
reduced mobility restrictions. With consumer traffic
returning to nearly pre-Covid levels, shopping malls
are preparing to welcome more visitors and revenge
shopping, which will fuel retail growth.
2
Landlords continue to survive and improve mall
performance. Some mall owners have changed
Landlords are still squeezed
tenancy mixes and refreshed their mall’s appearance. between being unable to raise
Some mall landlords used innovative strategies to
provide larger open spaces for visitors, such as rents and managing tenants
amphitheatres and outdoor dining areas. Several mall
owners have also adopted a pet-friendly concept, Asking base rent and service charge
which is undoubtedly supported by the
implementation of strict health protocols to ensure Base rent Service charge
the comfort of other visitors. Another effort taken by IDR600,000
mall operators is to improve the mall facade.
IDR480,000
Retail is currently returning to normalcy. More tenants
that were in the process of being fitted out last IDR360,000
semester are now open. Some retailers are
expanding, especially sports fashion and new concept IDR240,000
supermarkets. Following the trends in Jakarta, several
retailers will look to expand their operations in IDR120,000
Surabaya. Despite the fact that mall store closures
IDR0
and opening traffic is very dynamic, F&B retailers,
2023E
2024E
2025E
2016
2017
2018
2019
2020
2021
2022
particularly local F&B retailers, continue to be the
main driver in Surabaya. The malls, which continue to
maximise the concept of ‘malls as a meeting point’, Source: Colliers
are also supporting the growth of F&B retailers. Aside
from food and beverage, segments such as clothing In the current low-demand environment, landlords
and sports apparel will grow. are under pressure to keep occupancy costs relatively
stable in the 2020–2022 period. Nonetheless, the
Nevertheless, the cost of fitting-out is currently a
completion of a new middle-upper-class mall in 2022
major impediment to new retail development. Micro-
has locked in the average rent at IDR445,422. From
concepts of larger brands, particularly F&B retailers
2020 to2022, the service charge remained relatively
(restaurants), are likely to become more prevalent.
stable at IDR140,000.
The micro-concept is a scaled-down version of the
large group retailer. This trend enables retailers to Demand is expected to strengthen despite very slow
transition to smaller, more efficient stores with a focus growth, with mall visitor numbers returning to pre-
on take-out options. pandemic levels. These factors are likely to cause
landlords to reconsider raising the occupancy cost,
Aside from malls that continue to perform well, others
which has been stagnant for the last three years.
have yet to recover from the effects of the pandemic
and have declined in 2022. Big tenants left malls, The increase in minimum wages will also have an
leaving large vacant spaces that have yet to be filled. impact on the operational costs of shopping malls,
Most of these malls only have tenants on the ground which is one of the motivators prompting landlords to
and lower floors. As result, the average occupancy adjust the service charge. However, we anticipate that
rate is still on the decline. After being disrupted by the both rent and service charges will rise in line with
pandemic and many stores closing, several malls are inflation in 2023.
in the process of renovating, both in terms of tenancy
mix and overall facelifts. Newly opened malls in 2021
and 2022 also had an impact on occupancy, which fell
2.4% in 2021 and reached 69% in 2022. Some stores
are still being fitted out and are expected to open
soon. However, some malls will be completed, posing
a significant challenge to occupancy rates in the
coming years.
3
Appendix
Under construction projects
Expected NLA
Project Name Region Developer
(sq m)
2023
Samanea (Capital Square) South Surabaya Greenwood Sejahtera 8,500
Pakuwon City Mall (East Coast Centre 3) East Surabaya Pakuwon 36,920
2024
Lagoon Avenue Dharmahusada East Surabaya PP Properti 12,545
2025
Citraland CBD Mall West Surabaya Ciputra Surya Tbk 36,000
Source: Colliers
4
Ferry Salanto Eko Arfianto
62(21) 3043 6730 62(21) 3043 6726
Ferry.Salanto@colliers.com Eko.Arfianto@colliers.com
About Colliers
Legal Disclaimer
Semi Annual | Industrial Estate | Greater Surabaya | 4 January 2023
Gresik is ready to welcome EV related

industries

Generally, industrial land sales have synergy with the level of direct investment into the manufacturing
sector. We believe that higher direct investment will translate into more industrial land sales. The
government’s commitment to developing EV in Indonesia is real and we are expecting a surge in demand
for industrial land from the EV-related industries, particularly in the Gresik area, in the next few years.
Logistics demand remained active in 2022 with the pandemic gradually contained, and the retail sector
regained some momentum alongside a strong performance from e-commerce. Going forward, with the
downtrend of pandemic related cases followed by the easing of social restrictions, the performance of the
warehouse sector is likely to be positive.
No new supply and land Ngawi – east Java, but it is still in the planning stage.
Therefore, until the end of 2022, the total supply of
expansion this year industrial land in Greater Surabaya stayed at 3,118
hectares (gross area).
Industrial land contributor in Greater Surabaya
One interesting project is the Halal Industrial Park
Surabaya (HIPS) in Sidoarjo. Built on 148 hectares in the Safe-
Sidoarjo 8% n’Lock industrial park, HIPS claims to be the first and
16%
the biggest halal industrial park in Indonesia. About
Pasuruan 50 land plots (c.a. 2 hectares) have been sold and in
Tuban
8%
18% operation since HIPS commenced in late 2021.
Indonesia has set a target to become the centre of
the halal industry in 2024, given that its potential has
yet to be fully developed. According to the State
Global Islamic Economy Report, 2020-2021,
Mojokerto
13% Indonesia's sharia economy sector is ranked fourth in
the world, whilst the Muslim fashion industry is third
Gresik
in the world. Indonesia is the biggest market in Asia
37% for halal products, with over 88% of its population
being Muslim, and offers an excellent opportunity for
Source: Colliers foreign and domestic companies.
During H2 2022, there was no expansion or new

addition of industrial estates in the Greater Surabaya
area. However, one of the state-owned companies
plans to operate a new industrial estate located in
1
Industrial land sales to synergize New sectors, i.e. EV will drive land sales
with FDI in the manufacturing Looking forward, Indonesia has abundant potential
for electrical vehicles and related industries, owing to
sector ample nickel reserves. Efforts to step up EV battery
production are underway in Eastern Indonesia where
Generally, industrial estates in Surabaya recorded few
nickel is in abundance. Whilst still in its early stages
land transactions, of no more than 1 hectare, except
globally, EVs should see massive growth as countries
for JIIPE. Substantial land transactions were made by
aim to boost this segment to reduce their carbon
Java Integrated Industrial and Port Estate (JIIPE) in
footprint. According to recent data from the Indonesia
Gresik, with some 44.5 hectares sold in 2022. The
Investment Co-ordination Board (BKPM),
latest land sale was to Xinyi Glass – one of the world's
manufacturing investment was 42.8% of total
leading glass manufacturers which is headquartered
investment value, with the basic metal industry, metal
in Hong Kong. We expect that JIIPE will attract more
goods, non-machinery and equipment recording the
investors in the next year as the Freeport smelter
highest investment at about IDR131.8 trillion.
project develops and the presence of reputable
Furthermore, the huge foreign direct investment (FDI)
anchor occupiers such as Xinyi Glass. Upon
in the basic metals industry will help the development
completion of the smelter development, we expect it
of EV manufacturing facilities, and translate into land
will attract other copper-related and metal-related
sales in the future. Industrial estates in East Java
industries. In addition, its special economic zone (SEZ)
should benefit given their proximity to Surabaya, the
status and vast infrastructure (deep seaport, jetty
second largest city after Jakarta.
terminal, power plant, etc) will further help JIIPE to
secure more land sales, particularly to smelters and
manufacturers.
Election will have minimal impact to FDI
Demand of Industrial Estate in Greater Surabaya Next year will be a political year. Despite the belief
that investors will take a wait-and-see position during
Vacant
elections, we are of the view that the impact on
29% industrial land sales will be minimal given their long-
term investment nature.
Sold
71%
Source: Colliers
2
Investment realization H1 2022 The recent S&P Global survey showed that Indonesia’s
manufacturing PMI was down to 50.3 in November
from 51.8 in October. This was due to the increase in
global economic uncertainty which caused a decline in
new demand and output. Overall, sentiment in the
manufacturing sector remained positive, but
confidence dipped to its lowest level since June.
S&P Global Indonesia Manufacturing PMI
Source: S&P Global
Price remains stable

Data were collected 11-23 November 2022
In the second half 2022, the overall asking prices of

industrial land in Greater Surabaya remained the
Warehouse market
same as previously. Amidst sluggish sales
Source: BKPM Logistics continued to perform well
performance, we expect developers will maintain
amidst an uncertain economic
current prices in 2023. However, developers are more
accommodating on offers they receive given that environment
currently it is a buyer’s market. Warehouse demand remained strong in 2022 with the
pandemic gradually contained and the retail sector
Land price
regained some momentum alongside a strong
IDR7,500,000 performance from e-commerce. As at H2 2022, the
overall occupancy rate for modern warehouses was
79.1%, with e-commerce and logistics tenants
IDR6,500,000 dominating demand. In 2023 there will be one
additional modern warehouse project from MMP
Manyar (phase 2) with a building size of about 1.64
IDR3,500,000 IDR3,500,000 hectares, and expected to complete by 2024.
In terms of rental rates, modern warehouse rental
rates were stable in the range of IDR65,000 to
75,000/sq m/month, whilst traditional warehouse
IDR1,500,000 IDR1,350,000 rentals ranged from IDR25,000 to IDR45,000/sq
m/month, depending on accessibility and building
quality. We are of the view that current rental rates
Central Surabaya South Surabaya North Surabaya
will hold steady despite the rise in leasing activities.
Source: Colliers Currently, the focus is more on securing large volume
for a longer period, whilst rentals will follow. Such a
situation has been witnessed over the past few years.
Landlords can maintain current rental rates and be
more accommodating in discussing other terms.
3
Going forward, with plenty of uncertainties clouding the F&B sector, with 25.8% and 17.8% YOY,
local and external markets, landlords are wary of respectively. Furthermore, the manufacturing
making further aggressive rental adjustments next industry, which contributed 17.9% of Indonesia’s GDP
year. We believe the warehouse market should continued its expansion by growing 4.83% YOY. It is
continue to benefit from the growing penetration of e- anticipated that the F&B and manufacturing segments
commerce, larger inventory holdings, and supporting will be the next focal point. The unrelenting growth of
demand even in an economic slowdown. According to retail and e-commerce activities, as well as domestic
recent data by Statistics Indonesia (BPS), GDP growth trade, is likely to encourage increased demand for
in Q3 2022 was mainly driven by transportation and warehouse space in the coming year.
warehouse storage, followed by accommodation and
Distribution of the Growth of GDP Q3 2022
4
Ferry Salanto Hern Rizal Gobi
62(21) 3043 6730 62(21) 3043 6727
Ferry.Salanto@colliers.com Rizal.Gobi@colliers.com
About Colliers
Legal Disclaimer
Semi Annual | Hotel | Surabaya | 4 January 2023
Hospitality industry improvement

Surabaya’s hotel industry is improving as the year 2022 comes to a close. It cannot be denied that hotel
occupancy rates have increased as more business trips and MICE activities are being held at hotels.
According to past trends, the start the start of 2023 for businesses will be slow. Many business activities will
pick up again in March, but because the month of Ramadan ends in March, followed by the Eid al-Fitr
holiday in April, it is likely that business will pick up again in the middle of semester 1.
2023–2025
Supply will still be limited. There is a possibility

that additional supply could become available
Supply 0 room 293 rooms 185 rooms
while waiting for market conditions to improve.
Annual Avg Growth

HOH/ YOY/ 2023–2025/
3% 11.4% 12.7%
Occupancy will improve as business activities
resume.
Occupancy 55.9% 55.9%
1.6% 14.9% 5%
The room rate will rise in tandem with occupancy
rates, and eventually start to increase.
Room rate USD36.8 USD36.8
1
Hotel overview According to the Colliers database, there will only be
one new hotel built by 2025. Market conditions are
In H2 2022, there will be no new hotel supply. one of the reasons for the low supply of new hotels.
Surabaya's new hotel rooms were added in semester Surabaya’s hotel market is not as large as those in
1 of 2022, with a total of 293 rooms. Surabaya does Jakarta or Bali, and pandemic conditions have caused
not have the same supply of new hotel rooms as the Surabaya hotel market to decline.
Jakarta. It could be because Surabaya’s business
activities are not as extensive as those in Jakarta. Performance
Surabaya, however, remains a transit hub for Eastern
Monthly average occupancy rate (AOR)
Indonesia. Surabaya’s hotel distribution is primarily
concentrated in Central Surabaya, the city’s economic 2018 2019 2020 2021 2022
and business centre. Surabaya's hotel supply is 100%
dominated by 3-star establishments.
80%
Surabaya’s supply of new hotels has been
concentrated in three areas between 2018 and 2022: 60%
Central Surabaya, South Surabaya and West Surabaya.
Central Surabaya and South Surabaya are business 40%
and economic districts; additionally, South Surabaya is
the gateway to Juanda Airport in Sidoarjo. West 20%
Surabaya is a business centre in Surabaya.
Furthermore, West Surabaya has easy access to 0%
industrial areas outside of Surabaya, such as Gresik,
Aug
Jan
Feb
Dec
Nov
Jun
Jul
Oct
Sep
Mar
Apr
May
Sidoarjo and Mojokerto.

Source: STR
Annual room supply

Monthly average room rate (ARR)
3-Star 4-Star 5-Star 2018 2019 2020 2021 2022

500
USD60.00
400
USD48.00
300
USD36.00
200
USD24.00
100
USD12.00
0
USD0.00
2023E
2024E
2025E
2018
2019
2020
2021
2022
Aug
Jan
Feb
Dec
Nov
Jun
Jul
Oct
Sep
Mar
Apr
May
Source: Colliers Source: STR
2
The hotel sector in Surabaya is becoming busier,
especially as we approach the end of the year, as
many business people, from corporations and the
government, engage in hotel activities. Several foreign
visitors have also begun to arrive in Surabaya,
particularly since international flights have resumed.
However, the number of international and domestic
flights has not returned to normal. As a result, the
number of passengers on airplanes has decreased.
Furthermore, the high cost of plane tickets has
become one of the factors influencing many people’s
decision to fly to Surabaya, primarily in the last year.
Domestic visitors, mainly those from the Java region,
can still reach Surabaya hotels by car or train.
Domestic visitors continue to dominate the Surabaya
market. Government and corporate organisations are
the two most important markets. Apart from business
trips, MICE activities have become increasingly
popular. In terms of numbers, meetings and seminars
are closer to pre-pandemic conditions, but they are
still slightly lower in terms of participant numbers.
This is due to the fact that meeting room capacity in
hotels is not fully optimised; many are still using
rooms with 75 – 80% of normal capacity. This
ultimately affects revenue.
In terms of performance, 2022 has the best
performance since 2019, and it is hoped that this
trend will continue in the coming years. The peak
performance in 2022 will decline by the end of 2022
because it is the Christmas and New Year’s holidays,
and business activity will slow down, then pick up
again in February 2023. Also, because March is the
month of Ramadan and April is the month for Eid al-
Fitr, it is likely that a significant increase will occur at
the end of the first semester.
3
Ferry Salanto Nurul Yonasari
Senior Associate Director | Senior Research Executive |
Research | Jakarta Research | Jakarta
62(21) 3043 6730 62(21) 3043 6728
Ferry.Salanto@colliers.com Nurul.Yonasari@colliers.com
About Colliers
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Semi Annual | Office| Surabaya | 4 January 2023

The office market will remain favourable to

Insights & recommendations

Construction activity has slowed. We expect to see

Annual Avg Growth

is still very limited Existing Supply 2022 Future Supply 2023-2025

The construction of some office projects is slowing.

Cumulative supply Source: Colliers

Existing Supply Annual Supply

Despite the tough market, there have been some stand-

Other than conventional leases, flexible serviced 40%

completed office building that made adjustments to

IDR0 Other than individual investors, companies with

or private banking sector or state-owned companies,

SGA Marketing Developme

Puri Galaxy (Sinar

Stagnation remains, and could continue

Insights & recommendations

Demand: Demand for apartments in Surabaya

The number of completed units in 2022 was well

Annual Avg Growth

The average asking price stood at IDR22.2 million 4%

Source: Colliers. Note: IDR15,563 = 1 USD.

H2 2021 H1 2022 H2 2022 HOH YOY

Source: Colliers Source: Colliers

Apartment Name Location Region Developer #Units

Westown View Jl. Raya Wiyung West Surabaya PT PP Property 936

Retail activity is gradually improving, but

Insights & recommendations

Four malls are expected to be completed by 2025,

Looking ahead, increased demand, bolstered by -0.3% -0.3% 1.9%

Retail vacancy has continued to fall, albeit at a 0.4 2.36 0.04

Landlords are expected to consider raising

Annual supply, demand and occupancy

Annual supply Annual demand Occupancy

Central Surabaya 50,000 75%

Samanea (Capital Square) South Surabaya Greenwood Sejahtera 8,500

Lagoon Avenue Dharmahusada East Surabaya PP Properti 12,545

Citraland CBD Mall West Surabaya Ciputra Surya Tbk 36,000

Gresik is ready to welcome EV related

Insights & recommendations

During H2 2022, there was no expansion or new

S&P Global Indonesia Manufacturing PMI

Source: S&P Global

Price remains stable

In the second half 2022, the overall asking prices of

Distribution of the Growth of GDP Q3 2022

Hospitality industry improvement

Insights & recommendations

Supply will still be limited. There is a possibility

Annual Avg Growth

Source: Colliers. Note: IDR15,563 = 1 USD.

Sidoarjo and Mojokerto.

Annual room supply

3-Star 4-Star 5-Star 2018 2019 2020 2021 2022

Source: Colliers Source: STR

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