Apartment Sector. Research & Forecast Report Surabaya Apartment 2H Apartment for Strata-title. Supply. Accelerating success.

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1 Research & Forecast Report Apartment 2H 2015 Accelerating success. The total stock of apartment units in increased by from 18,153 in 2014 to 23,591 in The market will be swamped with an additional 28,640 units by 2019 from around 37 projects. Although the overall take-up rate of the apartment market in increased only slightly by less than 1% from 1H 2015, to 81.25%, this is quite understandable particularly during a difficult economic condition. The average asking price of apartments in increased by 4% YoY, to an average of IDR19 million / sq m, mainly driven by the addition of newly launched apartment projects with higher than market average prices. Ferry Salanto Associate Director - Research Apartment Sector Apartment for Strata-title with the hand-over of the last two towers, i.e. Yale and Princeton. The other two projects, Marvel City (Linden Tower), which is the continuation of a project on hold project since the 1998 crisis, and Gunawangsa MERR (Tower A) were brand new projects aimed at the middle and middle-lower segment, respectively. All in all, the total annual supply of strata-title apartments in during 2015 was 5,438 units, jumping significantly over the last two consecutive years, by a remarkable 233% and 207% in the respective years of 2013 and On average, those newly built apartment projects took three to four years to be completed since their first launch in Moreover, the addition of three projects in the second half of the year has brought East a larger share of apartment units than West. Distribution of Apartment Locations in South 8% Central 3% Supply As of the second half of 2015, the total stock of apartment units in increased by from 18,153 at the end of 2014 to 23,591. During 2H 2015, there were five newly completed projects, consisting of 4,658 units scattered around West and East. SuperMall Pakuwon projects in West, including the twin towers of Orchad Mansion and Tanglin Mansion, contributed about 40% of the total newly built apartments during 2H These two towers are part of Supermal Pakuwon Indah superblock and are targeted at middle segment buyers. Pakuwon is also very active in East. For example, their middlelower segment project, Educity Apartments, has been completed East 46% West 43%

2 Completed Projects During 2H 2015 Name of development location region developer No. of Units Orchad Mansion Pakuwon Indah West Pakuwon 940 Tanglin Mansion Pakuwon Indah West Pakuwon 940 Marvell City (Linden Tower) Jl. Ngagel 123 East Kentjana, Dian Istana, Avilla Prima 360 Educity Apartment (Yale & Princeton Tower) Jl. Kejawan Putih Mutiara No. 17 East Pakuwon 1,818 Gunawangsa MERR (Tower A) Jl. Kedung Baruk East PT Guna Wangsa Kreasindo 600 Total 4,658 Some developers are quite confident in introducing new projects during 2H 2015, despite the current slowdown in the economy. The increasing interest in the city living concept in as well as improvements in infrastructure development continued to stimulate the development of strata-title apartments in. As a result, has more project launches by more new developers. Six new projects and one extended project were launched and will likely be completed during All in all, East was the main contributor of upcoming projects with 42%, followed by South and West with 37 and 21%, respectively. Apartment Projects Newly Introduced/Launched in 2H 2015 apartment location region developer Expected completion time asking price/sq m* (idr million) Bale Hinggil (Tower C&D) Jl. Ir. Soekarno East PT Tlatah Gema Anugrah Grand Dharmahusada Lagoon Jl. Raya Mulyosari East PT Pembangunan Perumahan (North East Tower) BeSS Mansion Jl. Jemur Sari South PT Mandiri Sukses Sejahtera Madison Avenue Jl. Jemur Andayani 50 South PT Kertabakti Raharja Graha Golf (2 Tower) Graha Family West PT Intiland Darmo Hill (Rosewood Tower) Jl. Mayjen Sungkono West PT Lamicitra Nusantara The Rosebay Graha Family Graha Family West PT Intiland Notes: *Price excludes VAT No. of Units PT PP (Pembangunan Perumahan) continues with project expansions in with a new development called Grand Dharmahusada Lagoon in East. The project will be a mixed-use development sitting on 4.2 ha of land and consists of seven apartment towers and a lifestyle mall. Similarly, Bale Hinggil Apartments launched their two new towers (Towers C and D) which target the middle to lower segment. Two newly launched projects in South during the reviewed period are coming from new players in the apartment market, namely Bess Mansion and Madison Avenue, which are mainly targeted at students in the surrounding areas. Three new projects in West are targeted at the middle-upper segment due to their prime location in Mayjen Sungkono and Graha Family housing complex. Darmo Hill will be developed on 3ha of land, consisting of five towers. Another developer, Intiland Development will build two projects that are an entirely residential concept (no commercial component attached to those projects) within the renowned Graha Family housing complex. Graha Golf will be built on 2.8 ha of land and is composed of five strata-title apartment towers and one serviced apartment tower, while The Rosebay Graha Family offers a resort living concept of low density and low-rise development. Overall, by the end of 2015, Pakuwon had the biggest share of apartment units in followed by Puncak. Going ahead, will be flooded by a massive volume of new strata-title apartment supply over the next few years. The market anticipates receiving an additional 28,640 units by 2019 from around 37 projects. Puncak will be the most active developer should their projects be completed on time. PT PP (Pembangunan Perumahan) will potentially become the newest active developer in the next four to five years with the 2 Research & Forecast Report H Apartment Colliers International

3 development of Grand Sungkono Lagoon, Pavilion Permata (Tower 2) and Grand Dharmahusada Lagoon. Most Active Developers in up to 2019 (by Number of Units Being Developed) Of the total supply projected to be available in the next four years, East has the most at 47%, followed by West at 36%. There will be a limited number of new apartment units amounting to about 5,000 units at 10 projects in Central and South. Future Pipeline of Apartment Supply during Other 33% Pakuwon 15% 15,000 12,500 10,000 7,500 Ciputra 2% PT Tlatah Gemah Anugerah 5% PT PP 7% Gunawangsa 8% Puncak 5,000 2,500 0 Most Active Developers in up to 2015 (by Number of Units Being Developed) Ciputra 4.1% PT Aktifitas Putra Mandiri 4.2% Central Other 21.3% West East South Pakuwon 37.5% Demand The apartment market in is likely to be reasonably healthy given the trend towards apartment living in the city and the increased affluence among the working population. Robust and steady demand growth is expected to characterise the market in light of the expectation of business expansions and new students coming to every year because is the centre of business, industry and education in eastern Indonesia. Although the overall take-up rate of the apartment market in increased only slightly by less than 1% from 1H 2015, to 81.25%, this is quite acceptable particularly during a difficult economic condition. The general increase of 4.89% is largely driven by positive performance of the apartment market in the East area, where most apartments are located. Without additional projects in the pipeline, Central also posted positive performance as reflected in the 11.9% increase in the take-up rate during the reviewed period. To the contrary, the take-up rate in West and South recorded downward movement, decreasingby 2.43 and 24%, respectively, from the previous period. Despite good performance at some particular projects, the large influx of new projects that was not counterbalanced by adequate absorption put downward pressure on the take-up rate in West and South. Gunawangsa 8.0% Puncak 24.7% 3 Research & Forecast Report H Apartment Colliers International

4 Take-up Rate of Apartments in Based on Area 100% 90% 80% 70% 60% 50% 40% 20% Asking Price The overall increase in asking prices during the reviewed period was mainly driven by the addition of newly launched apartment projects with higher than market average prices in our calculations. As of 2H 2015, the average asking price of apartments in increased by 4% compared to the prior period or 5.9% YoY, to an average of IDR19 million/sq m. Average Apartment Asking Prices (/sq m) in IDR20,000,000 IDR19,000,000 0% 1H H H H 2015 IDR18,000,000 Central East West South IDR17,000,000 IDR16,000,000 In general, both existing and under-construction projects showed a downward trend during 2015, albeit moderate. The take-up rate of existing apartment projects was down from 98.2% last semester to 97.0% in this period while the underconstruction projects showed a minor drop by 1.2 % to 70.4 this semester. The slightly lower take-up rate of the existing projects was mainly due to the influx of some new projects with lower take-up rates compared to the overall existing apartment market. Meanwhile, a massive amount of newly launched projects combined with sluggish economic conditions resulted in the weakening absorption of under-construction projects. Take-up Rate of Existing and Under-Construction Apartments in 100% 90% 80% 70% 60% 50% IDR15,000,000 IDR14,000,000 IDR13,000,000 Many new upscale projects launched in West during the period pushed the average price up significantly. The new launch of one project with an offering price far below the overall price in South coupled with the sluggish demand of under-construction projects has translated into a declining price trend in this region. A continued absorption of apartment units in East resulted in a modest increase of take-up rate during the semester. No prices changed in Central particularly due to the absence of new projects and the relatively stable price. All in all, West recorded the highest increase of 8.5%, followed by East at 2.1% and Central at 0.1%. The average asking price of apartments in South declined by 0.1% compared to 1H % 20% 0% Existing Projects Under-Construction Projects 4 Research & Forecast Report H Apartment Colliers International

5 Average Apartment Asking Prices (/sq m) in Different Regions of IDR35,000,000 IDR30,000,000 IDR25,000,000 IDR20,000,000 IDR15,000,000 IDR10,000,000 IDR5,000,000 IDR0 1H H H 2015 Central East West South Going forward, apartment prices will potentially be adjusted in anticipation of better infrastructure development plans, such as the underpass of Bunderan Satelit in West that will connect HR Muhammad Street and Mayjend Sungkono Street; the Outer East Ring Road (OERR) that will connect Ruas Gunung Anyar Street and Tambak Wedi; the Outer West Ring Road (OWRR) that will connect Lakarsantri Street and Romokaliasari Street; and other future public transport including MRT, Monorail, Tram and LRT. Apartment For Lease Supply After Ascott Waterplace began operations in 1H 2015, there was no new additional supply of apartments for lease in the market. Thus, the total stock of apartments for lease in at the end of 2015 was steady at 773 units. Currently, serviced apartment projects are centralised in Central and West, where business travelers can easily access commercial and entertainment nodes. Some serviced apartment projects are also located in upscale residential areas. Similar to Jakarta, the number of apartments for lease in is negligible compared to apartments for sale (strata-title). For some years, the competition between apartments for lease and strata-title apartments offered for lease has been quite stiff. In general, most of the expatriates in are transient workers who are based in Jakarta and spend some time in. Additional supply of serviced apartment projects in the next few years will come from Citadines Marvell, Oakwood at One East Residence and a serviced apartment (operator has yet to be confirmed) by Graha Golf. Distribution of Apartments for Lease in (2015) East 9% South 4% Central West 77% Supply Pipeline of Serviced Apartments in Name of development location region year of operation no. of units Citadines Marvell Jl. Ngagel East Oakwood at One East Residence Jl. Raya Kertajaya Indah No. 79 East Graha Golf Serviced Apartment Graha Family West 2020 TBA* *TBA: to be announce 5 Research & Forecast Report H Apartment Colliers International

6 Occupancy The occupancy rate of serviced apartments in slightly decreased by 3% to 60% as of 2H The downward trend occurred due to several factors, such as the ongoing renovation of units at Novotel Suites and a number of vacant units as a result of the expiration of expatriate work contracts. Currently, most serviced apartments in are available for rent on a daily basis since it earns a higher income for the landlord compared to monthly or yearly rent. The daily clients mainly come from family gatherings, workshops or weddings, which are commonly held on the weekend. Serviced apartment in are still the favorite among foreigners, especially Asian expatriates, such as Koreans and Japanese. Since most tenants of serviced apartments in are individuals or couples without children, the 1-bedroom and 2-bedroom apartments are the most sought after units. Average Occupancy Rate of Apartments for Lease in 100% 90% 80% 70% 60% 50% 40% 20% Rental Rate Overall, the average asking rental rates of apartments for lease in reached IDR223,000 psm / month, an increase of almost 9% over 2H The increase was mainly due to an adjustment made by Ascott Waterplace, which no longer offered a rent promotion and thus increased the rental rate by 36%. In order to maintain the occupancy rates, most serviced apartments still maintain rental rates similar to the previous semester. However, given the current market situation, most serviced apartments are more cautious about the market in the upcoming year particularly because of tough competition from newly built strata-title apartments. As a result, only international serviced apartment operators are confident in increasing their rental rate by about 5% next year, while the other serviced apartments are expected to keep the current rate. Average Asking Rental Rates of Apartments for Lease IDR250,000 IDR225,000 IDR200,000 IDR175,000 IDR150,000 IDR125,000 IDR100,000 IDR75,000 IDR50,000 IDR25,000 0% IDR0 6 Research & Forecast Report H Apartment Colliers International

7 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia: 39 ANZ: 160 EMEA: 108 $2.3 billion in annual revenue Primary Authors: Ferry Salanto Associate Director Jakarta Ferry.Salanto@colliers.com Colliers International Indonesia World Trade Centre 10th & 14th Floors Jalan Jenderal Sudirman Kav Jakarta Indonesia TEL million square meters managed 16,300 professionals and staff About Colliers International Inc. Colliers International Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 16,300 professionals operating from 502 offices in 67 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 10 consecutive years, more than any other real estate services firm. colliers.com/indonesia Copyright 2013 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Accelerating success.