Jakarta Market Report

Transcription

1 Research & Forecast Report Jakarta 4th Quarter 2013 Jakarta Market Report Office, Apartment, Expat Housing, Retail & Industrial Accelerating success.

2 Research & Forecast Report 4Q Jakarta 2013 Office Jakarta 4th Quarter Office 2013 Office Market Report Accelerating success.

3 Contents Lease Office 3 Supply in the CBD 3 Supply in the Outside CBD 5 Supply in TB Simatupang 6 Occupancy 9 Annual Demand 9 Future Demand 10 Asking Base Rental 11 Service Charges 12 Strata Title 13 Supply 13 Take Up Rates 13 Asking Prices 14 Concluding Thoughts 15 2 Research & Forecast Report 4Q 2013 Office Colliers International

4 Lease Office Supply in the CBD The CBD Office Cumulative Supply By Ferry Salanto Associate Director Research The asking base rent for office buildings in the CBD increased by an average of 34.2% and 11.1% y-o-y for both rupiah and US dollar rents respectively. With the weakening rupiah against the US dollar (from IDR9,646 in December 2012 to IDR 12,087/USD in December 2013), the equivalent rupiah rental cost for US dollar buildings increased by 37.2% y-o-y. This resulted in the softening growth of US dollar rents as seen in the last two quarters of In the reviewed quarter, the average base rent in US dollars reached US$34.78/ sq m/month while in rupiah it was recorded at IDR227,946/sq m/month. Meanwhile, the average asking price of strata-title office in the CBD is currently listed at IDR28.7 million/sq m. There is practically no change compared to last quarter, although it was 3.2% higher than in the previous year. A more significant 5.7% increase to US$3,500/sq m occurred for strata-title office prices in US dollar. - Ferry Salanto Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and collaboration, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. We represent property investors, developers and occupiers in local and global markets. Our expertise spans all property sectors office, industrial, retail, residential, rural & agribusiness, healthcare & retirement living, hotels & leisure. sq m 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Existing Supply F Annual Supply All of office buildings that are projected to begin operation in 2013 have been completed bringing 145,332 sq m of new space in the CBD during In early 2013, there was no additional office supply and the cumulative supply in 1Q 2013 was 4.62 million sq m, similar to that at the end of Subsequently, the second quarter saw sizeable office space, which was 68% of the total annual supply in DBS Tower, which is part of a mixeduse development called Ciputra World 1, became the largest contributor. The others are small-scale office buildings of around 4,000 to 11,000 sq m. In the two remaining quarters, Menara Prima 2 (began operation in 3Q 2013) and Tempo Pavilion 2 (started operation in 4Q 2013). This additional space brought the cumulative supply in the CBD to 4.77 million sq m. Tempo Pavilion 2, as well as Tempo Pavilion 1, which has operated previously, are office buildings formerly known as Bina Mulia. These two office buildings are rejuvenated with new façade to the buildings built in 1983 and With their new appearance, these buildings are expected to be able to compete with other newer office buildings located along Jalan Rasuna Said. Eight office buildings begin operation during 2013, yet the total annual office space for that year was 50% lower than in the previous year. The total office supply in 2013 was only larger than in ahead. 2015F 2016F 3 Research & Forecast Report 4Q 2013 Office Colliers International

5 In 2013, the office market anticipated a substantial amount of office space. Based on the information from each developer, we expect substantial yearly supply projections for 2014 to However, approaching the end of 2013, the completion of several office buildings were rescheduled or postponed. It was hitherto estimated that there would be a huge supply during with an approximate projection of 1.67 million sq m. The revised projections show that the amount of office space during that period will decrease to 1.23 million sq m, shrinking almost 36%. The major change in future supply will have impact to supply projection in 2015 and There are two office buildings that were scheduled to be finished in 2014 but which will be delayed to 2015, while other two buildings projected to be completed in 2016 will be finished in Therefore, there are big discrepancies between the initial projections from early 2013 and recent projections at the end of From early 2013 to 3Q 2013, the office market still anticipated a significant number of supply for 2016 of almost a million square metres. As of the end of 2013, around six buildings that were previously projected to be finished in 2016 have been rescheduled to Some of the upcoming buildings will not offer the entire space to the market. For example, Telkom Landmark Tower in Jalan Gatot Subroto will be largely occupied for internal use (PT. Telkom) while 10% of the remaining space will be offered to the public. Another case is the Convergence Building in the Rasuna Epicentrum Complex, which will be partially offered for lease (around 20% of the total building area). Future Annual Supply ( ) in the CBD with Revised Projection Three buildings, including Wisma Mulia 2, Sahid Sudirman Center and Satrio Square, are projected to complete earlier than previous schedule. Lippo Kuningan will become the first office building to be completed in early 2014 followed by Convergence, which is also catching up construction progress to begin operation soon in While the announced projects continue their construction progress, several new office projects in Sudirman were launched throughout 2013, namely Sequis Tower, Astra Tower and World Trade Center III. Other projects in Satrio include Chitaland and Tower 2 at Ciputra World 1, and a new project called The Tower in Gatot Subroto. In Jalan Thamrin, besides Twenty Thamrin (previously known as Lippo Thamrin Office Tower), another tall building is also planned to be built on the land where the existing shopping centre e X Plaza is now. The existing shopping centre will be demolished in early 2014 and the office construction is expected to commence soon thereafter. During 2013, around 81% of the annual supply was marketed as offices for lease. In , the composition between strata-title and leased offices will be quite balanced. Of the total projected supply of 1.23 million sq m, 51% is marketed as offices for lease (at 13 of 23 projects). About 32.8% of the 1.23 million sq m will be located along Jalan Gatot Subroto at six office buildings. For some time, the Sudirman corridor has been the main contributor of new office space. However, with limited land in Sudirman, Jalan Gatot Subroto will become the largest supply contributor during Future Supply in the CBD Based on Area 2016F Gatot Subroto Satrio 2015F 2014F Rasuna Said Mega Kuningan Thamrin 2013 Sudirman 0 200, , , ,000 1,000,000 sq m Initial Projection Revised Projection 0 150, , ,000 sq m 4 Research & Forecast Report 4Q 2013 Office Colliers International

6 Supply in the Outside CBD The total office supply entering the outside CBD market during 2013 was 150,576 sq m or only 42% of total that in Four office buildings, including Talavera Suites, DIPO Business Center, The CEO and The Vida were the new supply in 4Q 2013 and contributed a total of 52,797 sq m. The new supply in 4Q 2013 was the largest quarterly supply of the year. With an additional 150,576 sq m, the cumulative supply in the outside CBD was 2.28 million sq m. Although the total supply in 2013 is lower than in the previous year, the market is anticipating a significant amount of new office space in the outside CBD over the next two years. In 2014, 370,382 sq m of additional supply is projected to enter the market. Outside CBD Office Cumulative Supply 3,500,000 3,000,000 2,500,000 Future Annual Supply ( ) in the Outside CBD with Revised Projection 2016F 2015F 2014F , , , , ,000 sq m Initial Projection Revised Projection sq m 2,000,000 1,500,000 1,000, ,000 Future Supply in the CBD Based on Area West Jakarta 0 East Jakarta Existing Supply F Annual Supply 2015F 2016F North Jakarta Based on marketing scheme, 82.1% of the existing cumulative office space in the outside CBD area is marketed for lease. However, this ratio will change in line with the growing amount of office space for sale during the two years ahead when 688,532 sq m or 67% will be marketed for sale. New office supply in the outside CBD area during 2013 was only found in South and West Jakarta, with 34% in West Jakarta. The completion of the Ulujami Kebon Jeruk section of JORR 1 (Jakarta Outer Ring Road) will alleviate the access from South Jakarta to West Jakarta, to the international airport and to other growing areas in Tangerang, such as Alam Sutera, Serpong, Karawaci and Bintaro. This will support the growth of commercial development in those areas. South Jakarta Central Jakarta 0 250, , ,000 sq m The fastest growing commercial area in South Jakarta, TB Simatupang, continues to be a major contributor of office supply in South Jakarta (47%). 5 Research & Forecast Report 4Q 2013 Office Colliers International

7 Supply in TB Simatupang TB Simatupang Office Cumulative Supply Future Annual Supply ( ) in TB Simatupang with Revised Projection 1,100,000 sq m 1,000, , , , , , , , , , F 2015F 2014F Existing Supply F Annual Supply 2015F 2016F 0 100, , ,000 sq m Initial Projection Revised Projection Five of six office buildings began operations during 2013 in outside CBD are located in TB Simatupang. Despite no new supply in 1Q 2013, several office buildings in TB Simatupang sequentially entered the market in the remaining quarters. Alamanda Tower and Oleos 2 operated in 2Q 2013 and then Beltway Office Tower 3 followed, entering the market in 3Q After that, two office buildings in the south of TB Simatupang Road, Talavera Suites and The CEO, added 22,195 sq m of new supply in late Two office buildings completed construction and were new supply in 4Q 2013, including Talavera Suites and The CEO, which added 22,195 sq m. During 2013, a total of 68,976 sq m were added to the office space inventory in TB Simatupang which brought the cumulative supply to 497,806 sq m. This represents 22% of the total supply in the outside CBD area. The TB Simatupang area will also see huge annual supply in Since the 90 s, the annual supply in TB Simatupang was generally below 100,000 sq m, however, the annual supply projections for 2014 are for 263,415 sq m. All of the buildings projected to be finished in 2014 seem to be expediting construction to stay on schedule. 6 Research & Forecast Report 4Q 2013 Office Colliers International

8 List of New Office Buildings Operating During 2013 Office building projects name location SGA Marketing scheme CBD Area DBS Tower (Ciputra World Jakarta) Satrio 64,000 For Lease & Sale 18 PARK Tower A Sudirman 4,814 For Lease 18 PARK Tower B Sudirman 4,570 For Lease MD Entertainment (Perkantoran Setiabudi) Rasuna Said 11,000 For Sale 18 PARK Tower E Sudirman 4,233 For Lease Tempo Pavilliun 1 (ex Bina Mulia 2) Rasuna Said 7,075 For Lease Menara Prima 2 Mega Kuningan 40,000 For Lease Tempo Pavilliun 2 (ex Bina Mulia 1) Rasuna Said 9,640 For Lease outside CBD Area Blue Green Office Boutique Meruya 20,000 For Lease DIPO Business Park Slipi 19,600 For Sale Prudential Centre Kasablanka 31,000 For Lease The Vida Kebun Jeruk 11,000 For Lease tb simatupang Alamanda Tower TB Simatupang 33,000 For Lease & Sale Talavera Suite TB Simatupang 17,172 For Lease Beltway Office Park Tower 3 TB Simatupang 9,600 For Lease Oleos 2 TB Simatupang 4,181 For Lease The CEO TB Simatupang 5,023 For Lease New Supply Pipeline projected completion Office building projects name location SGA Marketing scheme status development CBD Area 2014 Sinarmas MSIG (Chase Tower) Sudirman 75,000 For Lease Under Construction 2014 Lippo Kuningan Rasuna Said 30,500 For Lease Under Construction 2014 The Noble House Office Tower Mega Kuningan 45,000 For Lease Under Construction 2014 Gran Rubina Tower 1 Rasuna Said 31,438 For Sale Under Construction 2014 Convergence* Rasuna Said 10,000 For Sale Under Construction 2015 Ciputra World Jakarta 2 Satrio 70,000 For Lease & Sale Under Construction 2015 International Financial Center 2 Sudirman 50,000 For Lease Under Construction 2015 AIA Center (Menara Selaras) Sudirman 36,596 For Lease Under Construction 2015 Cemindo Tower (Rasuna Tower) Rasuna Said 60,995 For Lease Under Construction 2015 Sahid Sudirman Center Sudirman 138,500 For Sale Under Construction 2015 Office ST Regis Gatot Subroto 88,914 For Lease & Sale Under Construction 2015 Telkom Landmark Tower II* Gatot Subroto 13,000 For Lease Under Construction 2015 Satrio Square Satrio 24,600 For Sale Under Planning 2015 Bahana Office Tower Mega Kuningan 50,000 For Lease Under Construction 2015 Satrio Tower Satrio 31,604 For Lease Under Construction 2015 Wisma Mulia 2 Gatot Subroto 80,000 For Lease Under Construction 2015 Lippo Thamrin Office Tower Thamrin 16,500 For Sale Under Planning 2016 Mangkuluhur Tower Gatot Subroto 53,000 For Lease & Sale Under Construction continued 7 Research & Forecast Report 4Q 2013 Office Colliers International

9 New Supply Pipeline projected completion Office building projects name location SGA Marketing scheme status development 2016 Menara Palma 2 Rasuna Said 50,000 For Lease Under Construction 2016 Gran Rubina Tower 2 Rasuna Said 32,000 For Sale Under Planning 2016 Centennial Tower Gatot Subroto 100,000 For Sale Under Construction 2016 Icon Tower Sudirman 72,500 For Lease Under Construction 2016 The Tower Gatot Subroto 67,000 For Sale Under Construction continuation outside cbd Area (exclude tb simatupang) 2014 GP Plaza Slipi Jaya 12,204 For Sale Under Construction 2014 Wisma 77 Tower 2 S Parman 24,200 For Sale Under Construction 2014 Kirana Two Jl Yos Sudarso 17,563 For Lease & Sale Under Construction 2015 Menara Sentraya Blok M 52,072 For Sale Under Construction 2015 ST Moritz Office Tower Puri Indah 19,500 For Sale Under Construction 2015 Puri Indah Financial Tower Puri Indah 38,500 For Sale Under Construction 2015 MNC Tower II Kebon Sirih 20,000 For Lease Under Construction 2015 Jakarta Box Tower Kebun Sirih 36,000 For Lease Under Construction 2015 Soho Capital S Parman 36,000 For Sale Under Construction 2015 Altira Yos Sudarso 40,000 For Sale Under Construction 2015 Maxima Tower Kelapa Gading 8,000 For Lease Under Construction 2015 Holland Village Cempaka Putih 27,000 For Sale Under Construction 2015 One Tower Kemayoran 21,400 For Sale Under Planning 2016 Gallery West Kebun Jeruk 29,000 For Sale Under Construction 2016 L'Venue Pasar Minggu 41,597 For Sale Under Planning 2016 Sky 18 Tower Pasar Minggu 27,500 For Sale Under Planning 2016 Soho Pancoran MT Haryono 30,000 For Sale Under Construction 2016 T Tower (BJB Tower) MT Haryono 24,000 For Lease Under Planning tb simatupang 2014 Green Kosmo Mansion (GKM) Tower TB Simatupang 23,000 For Sale Under Construction 2014 The Manhattan Square TB Simatupang 39,375 For Lease & Sale Under Construction Office Park (Cityland Tower) TB Simatupang 40,000 For Lease & Sale Under Construction 2014 South Quarter Tower 1 TB Simatupang 40,778 For Sale Under Construction 2014 Gedung Aneka Tambang Tower 2 TB Simatupang 16,000 For Lease Under Construction 2014 Plaza Oleos TB Simatupang 39,778 For Lease & Sale Under Construction 2014 Metropolitan Tower TB Simatupang 44,000 For Lease & Sale Under Construction 2014 Palma Tower TB Simatupang 20,484 For Lease Under Construction 2014 Graha MRA TB Simatupang 13,000 For Lease Under Construction 2015 South Quarter Tower 2 TB Simatupang 40,778 For Lease Under Planning 2015 AD Premier TB Simatupang 18,900 For Lease Under Construction 2016 The Manhattan Square Tower 2 TB Simatupang 39,375 For Lease Under Planning 2016 Naras Tower TB Simatupang 19,000 For Lease Under Planning 2016 Beltway Office Park Tower 4 TB Simatupang 25,600 For Lease Under Planning 2016 South Quarter Tower 3 TB Simatupang 40,778 For Lease Under Planning 8 Research & Forecast Report 4Q 2013 Office Colliers International

10 Occupancy The level of office absorption in the CBD declined in line with weakening economic conditions that occurred in the middle of Tenants are largely taking a wait-and-see position when it comes to the need for expansion. This became a strong factor in driving the average occupancy rate in the CBD to drop although supply in 2013 was far less than in Historically, after the global financial crisis in , the occupancy rates trended upward from 2010 to 2012, growing with an average of 3.4% per year. Starting in early 2013, the occupancy rate was still at 97%. The occupancy rate at the end of 2013 was 96.5%. The occupancy rate for office buildings in the outside CBD saw a positive trend in the last three years. During , the average growth of the occupancy rate for office buildings in the outside CBD increased by 1.9% per year. After reaching 92.8% in 2012, the occupancy rate of office buildings in the outside CBD continued to climb, albeit moderately. The occupancy rate closed 2013 at 95.3%. The occupancy rate in TB Simatupang was 96.1% in 4Q 2013, a decline of 1.5% y-o-y. Occupancy Rate in the CBD and Outside the CBD 100% 95% 90% 85% 80% 75% 70% CBD Outside CBD (excl. TB Simatupang) TB Simatupang Annual Demand Annual Office Supply and Demand in the CBD sq m 450, , , , , , , ,000 50, Annual Supply Annual Demand In the CBD, the annual office absorption during 2013 was the lowest in the last six years. Not only did the slowing economy during the second semester reduce demand in the CBD, the increasing rental rates and limited availability of office space has also dampened space requirements. Nevertheless, with the current vacancy level of around 3%, the office market is still experiencing an equilibrium. Annual Office Supply and Demand in the Outside CBD sq m 450, , , , , , , ,000 50, Annual Supply Annual Demand 9 Research & Forecast Report 4Q 2013 Office Colliers International

11 It is interesting to note that total office absorption during 2013 in the outside CBD was double that in the CBD area. Most probably, the expensive occupancy cost was the major driver for tenants to opt for non-prime office areas. Tenants are now thinking about efficiency. A presence in the main commercial areas, like the CBD, is still needed for companies image, however, office space for back office functions can be relocated to less expensive locations in the outside CBD area or even in the Greater Jakarta area. Future Demand Pre-Committed Absorption of Future Office in the CBD 2016F Annual Office Supply and Demand in TB Simatupang 450, F 400,000 sq m 350, , , , , ,000 50, Annual Supply Annual Demand The TB Simatupang area remains a preferred location for nonservice industries. The annual supply during was always counterbalanced by the annual absorption. Therefore, the occupancy rate for office buildings in TB Simatupang was relatively stable with an average of 96.6% during that period. A challenging period will occur in 2014, when with huge annual supply projections of sq m, the occupancy performance may slow. 2014F 0 150, , , , ,000 sq m Annual Supply Space Absorbed At the beginning of 2014, the projected new office supply has secured 40% pre-commitment, which is a good start to a challenging year. The pre-commitment level for 2015 is also good, given that the marketing time for the projected buildings is still long. Pre-Committed Absorption for Future Office in the Outside CBD 2016F 2015F 2014F 0 150, , , , ,000 sq m Annual Supply Space Absorbed 10 Research & Forecast Report 4Q 2013 Office Colliers International

12 With about 40% of the total annual supply of 2014 pre-committed, the marketing of the remaining space will be easier. Similarly, the overall supply projected to begin operation in 2015 has secured a good commitment level to ensure that the office market over the next two years will maintain good performance. Amid the increasing office rents in the CBD, offices located in the outside CBD area will benefit by offering more affordable rental costs. Pre-Committed Absorption for Future Office in TB Simatupang 2016F 2015F 2014F 0 150, , , , ,000 sq m Annual Supply Space Absorbed Asking Base Rental The average growth of the asking base rent for office buildings in the CBD increased by 7.9% per quarter during 2013 or 34.2% higher y-o-y. The increase brought the asking base rent to IDR227,946/sq m/month. Throughout 2013, the highest growth was in the second quarter at 19.5% when several office buildings increased their base rental rates by an additional IDR40,000 to 60,000. The upward trend continued in the remaining quarters but with slower growth. During the last quarter of 2013, the growth was insignificant probably because of the slowing demand and the very expensive occupancy cost in the CBD. At least six office buildings significantly increased their base rent during 2013 by about IDR90,000 to 100,000. In addition to the limited space available, the market price was the major reason for landlords to raise base rents by more than 50%. In early 2013, several office buildings located along Jalan Sudirman, significantly adjusted the base rent, which widened the gap of average rental rates between the end of 2012 and 1Q 2013 by more than 8%. But the growth of US dollar-based rental rates slowed approaching the end of the year. Rental costs in US dollars are becoming very expensive, particularly because landlords are uncontrollably adjusting the US dollar rentals based on the occupancy rate of the buildings. In 2012, US dollar rents had grown a significant amount compared to the previous year. In the first semester of 2013, rising confidence and optimism about the market continued where at least nine buildings adjusted rental rates twice in a year. With the rents in US dollars rising so high and the further weakening rupiah against the US dollar, the overall rental costs in rupiah are becoming very expensive. This has softened the growth in US dollar rents as seen in the last two quarters of As of 4Q 2013, one premium grade office building has cut the asking rental rate by almost 15% compared to the previous quarter. In the reviewed quarter, the average rent in US dollars was down to USD34.78/sq m/month compared to USD35.10/sq m/month in the previous quarter. Despite the lower growth, several office buildings adjusted their asking base rent to USD10.00/sq m/month. These office buildings together drove the average base rent for office buildings charging in USD to grow by 10.1% over Based on grade, the asking base rent for premium office buildings in the CBD is currently IDR608,618/sq m/month (a combined figure of buildings charging both USD and rupiah). Dampening local currency against the US dollar is also becoming a contributor to the increase in base rent. Average Gross Rental in the CBD Based on Grade Base Rent IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000 IDR 400,000 IDR 300,000 IDR 200,000 IDR 100,000 IDR 0 Premium Grade A Grade B Grade C IDR 80,000 IDR 70,000 IDR 60,000 IDR 50,000 IDR 40,000 IDR 30,000 IDR 20,000 IDR 10,000 IDR 0 Service Charge Base Rental Service Charge 11 Research & Forecast Report 4Q 2013 Office Colliers International

13 Average Asking Base Rental in the CBD IDR 480,000 IDR 420,000 IDR 360,000 IDR 300,000 USD USD USD USD The average rental rate of office buildings charging in rupiah in TB Simatupang grew by 1.6% q-o-q and is currently IDR139,931/ sq m/month, an increase of 43.5% y-o-y. Similarly, on the US dollar front, the average asking rental rate was USD20.00/sq m/ month in 4Q 2013, climbing 9.8% q-o-q and significantly rising by 56% y-o-y. Average Asking Base Rental in TB Simatupang IDR 240,000 USD IDR 240,000 USD IDR 180,000 USD IDR 120,000 USD IDR 180,000 USD IDR 60,000 USD 5.00 IDR 0 USD 0.00 IDR 120,000 USD IDR USD IDR 60,000 USD 5.00 Several new office buildings charging US dollar rent have affected the average base rent in the outside CBD area. These new office buildings offer base rents higher than the market average, ranging from USD23.00 to 35.00/sq m/month. The influx of these new buildings has brought the average base rent for buildings charging in US dollars to USD21.04/sq m/month or 3.1% higher than the previous quarter. This figure shows a significant increase of 35.6% y-o-y. The overall change in rupiah rent jumped by 24.4% y-o-y although the q-o-q change has been relatively flat. The influx of new office buildings during the quarter cannot elevate the average base rent for office buildings charging in rupiah. The average base rent was IDR153,432 psm / month. Average Asking Base Rental in the Outside CBD IDR 300,000 IDR 240,000 USD USD IDR IDR Service Charges 2010 A fuel price hike, which directly increased the electricity tariff, as well as the adjustment in the minimum wages have impacted the escalating operational costs. This subsequently affected the service charge. In the CBD, there were four office buildings in Mega Kuningan that adjusted the service charge in early In the same period, 13 office buildings in Sudirman also increased their service charge by an additional IDR10,000 to 20,000 sq m. In some other areas in the CBD, several buildings also adjusted their service charges. With the overall adjustment, the average service charge was IDR60,721/sq m/month in 4Q 2013 or almost 7% higher than in the same period of USD 0.00 IDR 180,000 IDR 120,000 IDR 60,000 USD USD USD 5.00 For office buildings charging in USD, the service charge was USD6.69/sq m/month in 4Q New office buildings began operation during 2013 that quote service charges below the market average have caused the overall calculation of service charges lower by almost 5% y-o-y. The highest service charge adjustment was at a building in Jalan Thamrin that charges an additional USD2.00. IDR 0 USD USD 2013 IDR USD 12 Research & Forecast Report 4Q 2013 Office Colliers International

14 Currently, three office buildings are quoting the highest service charges in the range of IDR100,000 to 115,000/sq m/month. Two office buildings are in Sudirman and the other in Mega Kuningan. Additionally, 11 office buildings charging rent in US dollars are asking high service charges of above USD8.00/sq m/ month. Six of those are in Jalan Sudirman. The highest service charge of USD10.00/sq m/month is at an office building in Jalan Sudirman. Average Service Charges IDR 80,000 IDR 70,000 IDR 60,000 IDR 50,000 IDR 40,000 IDR 30,000 IDR 20,000 IDR 10,000 IDR CBD Outside CBD (excl. TB Simatupang) TB Simatupang Service charges for office buildings located in TB Simatupang and surrounding area were higher than in the outside CBD with two office buildings asking high service charges of above IDR80,000/sq m/month. Overall, the average service charge in the TB Simatupang area is IDR74,637/sq m/month, reflecting an adjustment of 9.2% y-o-y. The service charges for office buildings charging in US dollars remains unchanged at USD4.80/sq m/ month. In the outside CBD, the average service charge is only IDR44,358/ sq m/month. This remains the same as in the previous quarter, growing only by 4.6% y-o-y. In US dollar tariffs, the service charge is an average of USD5.48/sq m/month. Strata-title Office Supply After having a total of 190,597 sq m of strata-title office supply in 2012, the CBD witnessed only 11,000 sq m of additional supply in 2013 from the operation of an office building in the Setiabudi area. The cumulative supply of offices for sale (strata-title) in the CBD was 816,829 sq m by the end of 2013, representing 17% of the total office space in the CBD. The supply of offices for sale is projected to grow in Gran Rubina seems to meet its target of completion together with the Convergence that has a small proportion of its space for stratatitle sale. These two office buildings will contribute 41,438 sq m of office for sale in the CBD in The amount of strata-title office space in the CBD will be substantial in 2015 and Sizeable office space will come from the completion of Sahid Sudirman Center, Centennial, Office St. Regis and The Tower. Should these buildings begin operation, it is forecast that around 55% of the total supply during 2015 and 2016 will be offered as strata-title space. In the outside CBD, DIPO Business Center became the latest strata-title office building to begin operation in Previously, supply was contributed by Alamanda Tower, which offers office space both for lease and for sale. The addition of these two buildings contributed 36,100 sq m of new strata-title office space, bringing the cumulative supply in the outside CBD area to 432,526 sq m in Similar to the CBD, a substantial number of strata-title office space is anticipated to come on stream during 2014 and Ten of the 13 projected office buildings will be marketed for sale in These will contribute approximately 200,000 sq m or about 55% of the total annual supply in Six of 11 office projects in 2015 will also be offered for sale. This represents 194,472 sq m. Of these, most office buildings, particularly on the 2014 schedule, are in TB Simatupang. In TB Simatupang, the supply situation will be quite challenging because the annual supply of office space for sale in TB Simatupang is projected to contribute 81% of the total supply in the outside CBD in Take-up Rates Limited new supply during 2013 has pushed the take-up rate in the CBD to 99.4%, the same as in In the outside CBD, the take-up rate was 95% in 2013, an increase of 4.2% y-o-y. Two new office buildings began operation in 2013, i.e. Alamanda Tower and DIPO Business Center, have been well absorbed. Meanwhile, the outside CBD still recorded an 80% rate of sales. 13 Research & Forecast Report 4Q 2013 Office Colliers International

15 Annual Supply and Absorption Based on Area in the CBD sq m 200, , , , , ,000 80,000 Asking Prices The average asking prices of strata-title office space in the CBD are currently listed at IDR28.7 million/sq m. There is practically no change compared to last quarter, although it was 3.2% higher than in the previous year. An office building that has been in operation since 2012 in the Sudirman area became the main contributor to the increase in In one year, this office building raised its asking price by 13.6%. More significant increases occurred for strata-title office space charging in US dollars with an average of USD3,500/sq m or 5.7% higher than last year. 60,000 Asking Price in the CBD 40,000 20,000 IDR 48,000,000 USD 4,000 0 IDR 42,000,000 USD 3, IDR 36,000,000 USD 3,000 Annual Supply Annual Take-up IDR 30,000,000 USD 2,500 Annual Supply and Absorption Based on Area in the Outside CBD IDR 24,000,000 IDR 18,000,000 IDR 12,000,000 USD 2,000 USD 1,500 USD 1, ,000 IDR 6,000,000 USD , , ,000 IDR USD 0 sq m 120, ,000 IDR USD 80,000 60,000 40,000 20, Annual Supply Annual Take-up Some office prices in the CBD have exceeded the average market price. In some cases, office space is offered at IDR43.3 million/ sq m on average, while the price at buildings in US dollars is USD4.700/sq m. The average prices for office space outside the CBD are currently IDR21.7 million/sq m and USD2.800 psm. Prices of underconstruction office buildings in the outside CBD go beyond the average price, reaching about IDR27 million/sq m on average. The price of strata-title office buildings in TB Simatupang saw significant growth, especially for future buildings. Currently, asking prices for office buildings in TB Simatupang are offered in the range of IDR23 to 35 million/sq m. This climbed more rapidly than in the previous year when it was IDR18 to 22 million/sq m. 14 Research & Forecast Report 4Q 2013 Office Colliers International

16 Concluding Thoughts The first half of 2014 will be a tough period for the office market after the value of the rupiah plummeted and with the upcoming legislative and presidential elections, which will add more uncertainty to foreign investors, who are expected to adopt a wait-and-see stance before pouring money into the country. On the office market, demand for office space tapered off since the second half of 2013 and will likely continue into early Continued rent and price adjustments will likely dwindle as rents and prices in US dollars have moved upward quite significantly when converted to local currency. With the hope that the rupiah will not continue to plunge further, office rents and prices are expected to stabilize, otherwise, a currency mechanism will probably be implemented as a way out for both landlord and tenant. The currency mechanism will cap a certain and agreeable value for the US dollar. The agreeable value is the reference when the exchange rate fluctuates, meaning that when the current exchange rate is below the agreeable value, the currency use will be in US dollar. Otherwise, when the current exchange rate is above the agreeable value, the agreeable value is used as the multiplier. Areas outside of the CBD or the fringe areas of Jakarta will become more attractive as alternative locations while the CBD becomes increasingly expensive. Expanding tenants will consider non-prime locations for part of their organisations that do not need exposure in the CBD. Likewise, relocation decisions might possibly be conducted in stages. All in all, office leasing activities will still continue to grow in 2014 with infrastructure, construction and insurance companies propelling the market, only less aggressive than in the previous period. With a potentially sluggish market in the beginning of the year, buildings with sizeable vacant space will be more flexible in negotiating rental costs. 15 Research & Forecast Report 4Q 2013 Office Colliers International

17 Research & Forecast Report Jakarta Apartment 4th Quarter 2013 Apartment Market Report Accelerating success.

18 Contents Apartment For Strata Title 3 Supply 3 Demand 8 Asking Price 9 Apartment For Lease 8 Supply 11 Occupancy 12 Average Rental Rates 12 Outlook 13 2 Research & Forecast Report 4Q 2013 Apartment Colliers International

19 Apartment for Strata-title Supply By Ferry Salanto Associate Director Research The additional new units during the quarter brought the cumulative supply of stratatitle apartments in Jakarta to 132,344 units at the end of an increase of 12.9% y-o-y. Likewise, the average asking price of strata-title apartments in Jakarta continued to demonstrate growth of 21.6% over the previous year to IDR23.8 million/sq m. All areas, including the CBD, South Jakarta and non-prime areas, showed an upward trend in price. Two main factors which are the key triggers for developers to increase apartment prices are resilient sales performance and the progress of construction. During 4Q 2013, six strata-title apartment projects comprised of almost 4,000 units entered the market. West and North Jakarta account for two projects, while the central business district (CBD) and South Jakarta have one project each. GP Plaza is the new project located in Slipi, adopting mixed-use concept combining office, apartment and retail. The New Royal Suite Tower is the fourth tower being completed out of a total of six towers of St Moritz superblock project in Puri Indah. Similarly, North Jakarta also saw one new project from Sherwood Residence (Richmond Tower) and one extension tower from Green Lake Sunter (North Tower). Massive apartment developments are coming from Pancoran Riverside (comprising three towers) in South Jakarta and Tamansari Semanggi (Tower B), which is the extension of the existing Tamansari Semanggi (Tower A) in the CBD. The number of apartment units in this quarter could be higher, as some projects have experienced delay in the finishing work stage and are rescheduled for completion in the next three to six months. Annual Supply During ,000 25% - Ferry Salanto 20,000 20% 15,000 15% 10,000 10% 5,000 5% Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and collaboration, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. We represent property investors, developers and occupiers in local and global markets. Our expertise spans all property sectors office, industrial, retail, residential, rural & agribusiness, healthcare & retirement living, hotels & leisure Annual Supply Growth 0% 3 Research & Forecast Report 4Q 2013 Apartment Colliers International

20 List of Strata-title Apartment Projects During 2013 Apartment projects name location region no. of units Completed in 1Q 2013 Green Palace Apartment (Tower S) Kalibata South Jakarta 630 The Royal Springhill (Tower Marygold and Magnolia) Kemayoran Central Jakarta 384 The Residences at Dharmawangsa 2 Dharmawangsa South Jakarta 89 Green Lake Sunter (Tower South) Sunter North Jakarta 876 d Green Pramuka (Tower Faggio and Pino) Jend. A. Yani Central Jakarta 2,000 Completed in 2Q 2013 Green Palace Apartment (Tower V) Kalibata South Jakarta 630 Kemang Village (The Tiffany Tower) Kemang South Jakarta 240 Casa Grande (Montana Tower) Kasablanka South Jakarta 289 Casa Grande (Montreal Tower) Kasablanka South Jakarta 313 Sunter Icon (2 towers) Sunter North Jakarta 750 East Park Apartment (Tower A) Pulojahe East Jakarta 550 Rusunami Delta Cakung Cakung East Jahe 520 The H Tower HR Rasuna Said CBD 162 Completed in 3Q 2013 Kebagusan City (Tower B) Kebagusan South Jakarta 548 Green Bay Pluit (Bay View) Pluit North Jakarta 3,096 Completed in 4Q 2013 GP Plaza Slipi West Jakarta 320 Pancoran Riverside Pengadegan South Jakarta 1,9000 Green Lake Sunter (North Tower) Sunter North Jakarta 876 Tamansari Semanggi (Tower B) Karet Semanggi North Jakarta 620 St. Moritz (New Royal Suite) Puri Indah West Jakarta 150 Sherwood Residence (Richmond Tower) Kelapa Gading North Jakarta 125 Overall, the additional units during the quarter brought the cumulative supply of strata-title apartments in Jakarta to 132,344 units at the end of In other words, total supply during this quarter alone contributed as much as 3.1% of Jakarta s apartment stock or an increase of 12.9% y-o-y. In 2008, supply growth was on the ebb at an average of 5.5% when the global economic crisis occurred. It then started picking up in 2010 with an average increase of 6.2% per annum until In 2012 to 2013, the growth declined by 7.35%. Total annual supply of 2013 accounts for 15,068 units. These units were provided by 18 projects comprising 29 towers. The apartment projects completed during 2013 are mainly located in South Jakarta (34%) followed by North Jakarta (22%). Various classes of apartment projects flowing in the market are mostly categorised as middle-low to middle-upper class, which are scattered in the CBD as well as South, North and West Jakarta. Meanwhile, only low class apartment projects entered in East Jakarta during Until the end of 2013, middle-low projects still dominated the Jakarta apartment market (40%) followed by low class (29%). South Jakarta is also the location of any class apartment projects. The CBD is the only location where low class apartments cannot be found considering high land prices in this area. 4 Research & Forecast Report 4Q 2013 Apartment Colliers International

21 The Composition of Apartment Class in Each Region 35,000 Future Supply Apartment ( ) based on no. of units 30,000 25,000 20,000 West Jakarta 14% CBD 5% Central Jakarta 21% 15,000 10,000 5,000 East Jakarta 21% 0 CBD Central Jakarta South Jakarta North Jakarta East Jakarta Analysis of Apartment Market in West Jakarta Luxury Upper Middle-Up Middle-Low Low North Jakarta 20% South Jakarta 19% Based on our data, we anticipate a further supply growth from 2014 to 2015 with an additional 45,184 units scheduled to enter the market. A large portion of new apartments will be concentrated in the area outside the CBD, such as Central, East and North Jakarta. Massive apartment units in Central Jakarta target students and workers because they are situated in a location where the rental market is potentially strong, ie, close to the university or commercial area. East Jakarta will see an additional 9,359 apartment units, mostly from Bassura City superblock and Green Signature Cawang, which have the advantage of proximity to the downtown and easy accessibility by public transportation. Overall, South Jakarta remains a favourite location for many apartment projects with limited units, which characterizes the area as an exclusive location. The CBD, on the other hand, is becoming less built because land is limited. East Jakarta 13% North Jakarta 17% based on no. of projects West Jakarta 14% CBD 12% South Jakarta 31% Central Jakarta 13% 5 Research & Forecast Report 4Q 2013 Apartment Colliers International

22 New Supply Pipeline ( ) Apartment name location region no. of units 2014 Ambassade Residence (Tower A) Puri Denpasar CBD 234 Luxurious Raffles Residences Satrio CBD 64 The Grove HR Rasuna Said CBD 438 St. Moritz (The New Ambassador Suite Tower) Puri Indah West Jakarta 200 La Venue (South Tower) Pasar Minggu South Jakarta 341 The Grove Suite HR Rasuna Said CBD 151 Kemang Village (The Intercontinental) Pangeran Antasari South Jakarta 400 Kemang Village (The Infinity) Pangeran Antasari South Jakarta 175 The Aspen at Admiralty Fatmawati South Jakarta 860 The Windsor (Tower II) Puri Indah West Jakarta 164 Pakubuwono Terrace (Tower 2) Kebayoran Lama South Jakarta 720 The Pakubuwono Signature Pakubuwono South Jakarta 188 Sherwood Apartment (Wellington Tower) Kelapa Gading North Jakarta 100 Sherwood Apartment (Regent Tower) Kelapa Gading North Jakarta 100 The H Residence MT Haryono East Jakarta 383 Pluit Seaview (Maldives Tower) Pluit North Jakarta 940 Sudirman Suites Jend. Sudirman CBD 380 Senopati Penthouse Senopati South Jakarta 63 Sky Terrace Lagoon Kalideres West Jakarta 525 LA City Apartment (Tower A) Lenteng Agung South Jakarta 980 Setiabudi Sky Garden (Tower 1) Setiabudi CBD 426 La Maison Barito (Tower 1) Barito South Jakarta 80 Botanica Apartment (3 Towers) Simprug South Jakarta 626 The DI Panjaitan East Jakarta 422 The Bellevue Pondok Indah South Jakarta 60 Gading Greenhill Pegangsaan Dua North Jakarta 700 Elpis Residence Gunung Sahari Central Jakarta 791 Capitol Park Apartment (Tower T) Salemba Central Jakarta 727 Capitol Park Apartment (Tower U) Salemba Central Jakarta 976 Northern Ancol Residence Ancol North Jakarta 800 The Mansion at Dukuh Golf Residence (Aurora Tower) Kemayoran Central Jakarta 522 The Mansion at Dukuh Golf Residence (Bellavista Tower) Kemayoran Central Jakarta 612 Green Palm Residence Kosambi West Jakarta 1,000 The Green Pramuka (Chrysant Tower) Pramuka Central Jakarta 1,000 The Green Pramuka (Bougenville Tower) Pramuka Central Jakarta 1, East Park Apartment (Tower C) KRT Radjiman East Jakarta 550 Belmont Residence (Montblanc Tower) Meruya Ilir West Jakarta 350 Teluk Intan (Saphire Tower) Teluk Gong North Jakarta 1,100 Kemang Village (The Bloomington Tower) Pangeran Antasari South Jakarta 150 The Royal Olive Residence Buncit Raya South Jakarta 225 Woodland Park (Cendana Tower) Kalibata South Jakarta 218 Woodland Park (Matoa Tower) Kalibata South Jakarta 221 The 2 Satrio CBD 119 The Orchard 2 Satrio CBD 349 continued 6 Research & Forecast Report 4Q 2013 Apartment Colliers International

23 Apartment name location region no. of units continuation Senopati Suites 2 Senopati South Jakarta 81 Setiabudi Sky Garden (Tower 2) Setiabudi CBD 160 Tifolia Apartment Perintis Kemerdekaan North Jakarta 500 Green Signature Apartment MT Haryono South Jakarta 800 Pluit Seaview (Belize Tower) Pluit North Jakarta 300 Gianetti Apartment Kemanggisan West Jakarta Park Avenue Gandaria South Jakarta 279 Nine Residence Warung Buncit South Jakarta 246 Callia Apartment Perintis Kemerdekaan North Jakarta 560 St. Moritz (New Presidential Tower) Puri Indah West Jakarta 150 Pakubuwono Terrace (Grand Tower) Pakubuwono South Jakarta 435 The Oak Tower Sky Garden Perintis Kemerdekaan North Jakarta 700 Pluit Seaview (Ibiza Tower) Pluit North Jakarta 500 Pluit Seaview (Bahama Tower) Pluit North Jakarta 650 Satu8 Residence Kedoya West Jakarta 174 Providence Park Permata Hijau South Jakarta 114 Kencana Residence Pondok Indah South Jakarta 173 Bassura City (Flamboyan Tower) Basuki Rahmat East Jakarta 1,000 Bassura City (Edelweis Tower) Basuki Rahmat East Jakarta 1,000 Bassura City (Dahlia Tower) Basuki Rahmat East Jakarta 1,000 Bassura City (Cattleya Tower) Basuki Rahmat East Jakarta 600 Bassura City (Alamanda Tower) Basuki Rahmat East Jakarta 600 District 8 (Eternity Tower) Senopati South Jakarta 400 District 8 (Infinity Tower) Senopati South Jakarta 280 The Nest Apartment Meruya Utara West Jakarta 1,100 Menteng Park Cikini Central Jakarta 756 Point 8 (Air Crew Tower) Daan Mogot West Jakarta 546 Gallery West Kebon Jeruk West Jakarta 280 Green Bay Pluit (Sea View) Pluit North Jakarta 2,072 Izzara Apartment TB Simatupang South Jakarta 450 Lexington Residences Pondok Pinang South Jakarta 300 The Suite (W Hotel Tower) Satrio CBD 200 The Green Pramuka (Orchid Tower) Pramuka Central Jakarta 1,000 The Green Pramuka (Penelope Tower) Pramuka Central Jakarta 1,000 The Green Pramuka (Scarlet Tower) Pramuka Central Jakarta 1,000 The Aspen Peak at Admiralty Fatmawati South Jakarta 644 Casablanca East Residence (3 Towers) Pahlawan Revolusi East Jakarta 1,904 Signature Park Grande MT Haryono South Jakarta 1,100 Metro Park Residence Kebon Jeruk West Jakarta 1,200 7 Research & Forecast Report 4Q 2013 Apartment Colliers International

24 Demand Demand for apartment units in Jakarta is still dominated by investor type buyers, as this sector continues to offer interesting returns. A relatively increasing capital gain also remains a major attraction for investor buyers. However, given the fact that only certain projects are considered to have potential investment return, the overall market softens with the downturn in the take-up rate. There are a number of projects which have not been officially launched but have already been introduced to loyal customers. The average take-up rate at the end of 2013 experienced a minor decrease to 86.1% q-o-q. In the last three years, the average take-up rate of apartments in Jakarta recorded an increase of 0.94% per quarter. During that period, buyers had been quite positive about economic conditions and at the same time the middle income segment has been growing, primarily in Jakarta. Such conditions have helped accelerate sales performance of the Jakarta apartment market, as evidenced by the gradual growth of the take-up rate during 2010 to In some cases, developers offered uncomplicated payment methods and attractive marketing gimmicks to entice buyers and boost sales. Quarterly Average Take-Up Rates ( ) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2013 The cumulative take-up rate of existing apartment projects in 2013 reached 93.4% and has been forging ahead since 2008, leaving only 2,944 units vacant; while the pre-sales rate of projects achieved 74.1%. Take-Up Rates of Existing and Future Apartments 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Existing Future The CBD continued to achieve the highest take-up rate compared to other areas, with an average of 97.1%. This figure suggests a 1.5% increase from the previous quarter or 9.5% increase YoY as a result of continued absorption in the CBD, besides the fact that there are only a few new projects being launched. Similar to the CBD being a favourite location for either second homes or as an investment for those who expect recurring rental income and/ or capital appreciation South Jakarta also recorded an increase in take-up rate compared to the previous quarter and last year s figure in the same period, with 0.8% and 2.9% respectively. Meanwhile, new projects outside the CBD and South Jakarta are quite abundant, particularly projects with massive units targeting middle to low segments. As a result, the take-up rate of apartments in Non-Prime Area (excluding the CBD and South Jakarta) at the end of 2013 fell by 1% compared to the previous quarter. Take-Up Rate Performance in Some Areas in Jakarta Area 4Q q Q 2013 q-o-q y-o-y CBD 87.7% 95.6% 97.1% 1.5% 9.5% South Jakarta 86.1% 88.1% 88.9% 0.8% 2.9% Non-Prime Area 79.6% 84.1% 83.1% -1.0% 3.5% 8 Research & Forecast Report 4Q 2013 Apartment Colliers International

25 It is interesting to see the good take-up rate performance of under-construction apartment projects in Jakarta recently. Although Bank of Indonesia has announced a new mortgage regulation to tighten its loan-to-value (LTV) to financing-tovalue (FTV) ratios for property loans (which raises a minimum down payment for additional property purchase in Indonesia), demand still grows, albeit slower. The reason being that apartment financing using mortgages is not taking a substantial portion of the overall property commercial purchases, especially in the middle to upper segment. Banks are becoming prudent and as a result many developers formulate strategy schemes like pre-launched booking, which will trigger apartment purchase balloon payment methods. Ownership financing for apartments, such as KPA (apartment mortgage facility from banks), is now tightened. Balloon payment method is a preferable solution from developers for buyers to purchase apartments. Buyers will need to pay a down payment installment to the developer (generally around 30% to 50% of the total apartment price) without interest during the construction period. Subsequently when the project is physically conspicuous, the bank is more confident to continue with ownership financing through mortgage. In some special cases, banks are willing to finance for property ownership given that developers have a good long track record and consumers are an easy-approval type of buyer. Asking Price The average asking price of strata-title apartments in Jakarta continued to demonstrate growth over the previous quarter s figure by 3.4%. All areas, including the CBD, South Jakarta and Non-Prime Area, showed an upward trend in price, increasing by an average of 1.9%, 6.2% and 2.1% respectively. Further, by the end of the fourth quarter, the average asking price of the Jakarta apartment market grew by 21.6% y-o-y. Average Asking Price (/sq m) of Apartments in Jakarta IDR 40,000 By location, apartment prices in all areas have shown an upward trend since Non-Prime Area registered the most significant increase, by 11% throughout 2013; while South Jakarta recorded only 4% increase YoY. Some of the new developments, particularly the projects located in middle-upper class areas like Puri Indah, Pantai Indah Kapuk, Menteng, Tendean, Tanjung Duren and Casablanca (which offer better building quality and good concept), launched their products with higher asking prices than the average market price. The recent trend in selling new apartments is to provide furnished units (kitchen set, wardrobe, sanitary, air conditioner and water heater), which translates into higher asking prices. Apartment Price (/sq m) Comparison for the Last Two Years period cbd south jakarta non-prime area 4Q 2011 IDR 23,828,588 IDR 17,189,527 IDR 14,812,173 4Q 2012 IDR 29,817,081 IDR 20,717,032 IDR 15,656,812 4Q 2013 IDR 36,174,524 IDR 25,854,554 IDR 18,298,766 Two main factors being the key trigger for developers to increase apartment prices are resilient sales performance and progressive construction activity. The trend of increasing apartment prices in the CBD, South Jakarta and Non-Prime Area will likely continue in the upcoming year since many projects are approaching their scheduled handover dates. In our assessment, the average price of apartment units in 2014 will increase by 10-15%, through medium to optimistic scenarios. The most significant increase is anticipated for apartment projects in South Jakarta, particularly in more favourable areas such as Pondok Indah, Senopati and Kemang. The expatriate rental market is very strong in these areas. In Non-Prime Area particularly the projects scattered in middle to upper class areas such as Menteng, Pantai Indah Kapuk, Tanjung Duren and Puri Indah average apartment price is expected to rise. IDR 35,000 IDR 30,000 IDR 25,000 IDR 20,000 IDR 15,000 IDR 10,000 IDR 5,000 IDR 0 1Q Q Q Q Q Q Q Q Q Q Q Q 2013 CBD South Jakarta Non-Prime Area Average 9 Research & Forecast Report 4Q 2013 Apartment Colliers International

26 The Average Asking Price up to 2013 and Projection up to 2014 IDR 30,000,000 IDR 27,365,897 IDR 25,000,000 IDR 20,000,000 IDR 26,176,076 IDR 15,000,000 IDR 10,000,000 IDR 5,000,000 IDR F Average Moderate Optimistic 10 Research & Forecast Report 4Q 2013 Apartment Colliers International

27 Apartment for Lease Supply There was no new development of apartment-for-lease (serviced and non-serviced) projects in Jakarta during 4Q Two serviced apartment projects, Fraser Menteng Residence and Ascott Kuningan, were scheduled to open in 3Q 2013 but again experienced delay. All of the projects are in the finishing work stages at the moment. Fraser Residence Menteng is scheduled to open in early January 2014 and will be fully operational when the whole building s facilities are ready Meanwhile Ascott Kuningan will open in mid Thus, the total stock of apartments for lease at the end of 2013 was steady at 8,206 units. The development of apartment-for-lease projects in Jakarta has been limited for the past few years. In fact, some old apartment projects that operated as non-serviced apartments converted their units into strata-title apartments for sale. Amidst growing competition from both serviced apartments and new stratatitle apartment projects which are offered for lease developers of non-serviced apartment have found reason to sell old units rather than suffer spending for operation costs. Quite a few existing non-serviced apartments are running down and having sizeable vacant space while on the other hand, developers should spend the cost of maintaining the buildings. Additional supply up to 2016 will be composed of several new apartment developments listed in the table below. It is estimated that approximately 968 units of seven serviced apartment developments will invigorate the leasing market. The development of apartment-for-lease projects is still concentrated in the CBD and South Jakarta over the next three years, as these areas are central business and have more facilities to support residents needs, such as international school, hospital and shopping malls. New Supply Pipeline Apartment projects name location region no. of units 2014 Fraser Residence Menteng Menteng Central Jakarta 128 Ascott Kuningan Jakarta Satrio CBD Fraser Suites at Ciputra World Jakarta 2 Satrio CBD 200 Fraser Place at Setiabudi Sky Garden Karbela Selatan CBD 150 One Park Avenue KHM Syafi i Hadzami South Jakarta 60 La Maison Barito (Tower 2) Barito South Jakarta Oakwood at District 8 Senopati South Jakarta Research & Forecast Report 4Q 2013 Apartment Colliers International

28 Occupancy The occupancy level has regained strength after the holiday season during 3Q 2011 (Eid Fitri). Some apartments for lease (serviced and non-serviced) performed well up to the end of Demand was largely made up of existing tenants who came back after the holiday and some new expatriates from a newly established company opening their first branch office in Jakarta. Occupancy Performance of Non-Serviced Apartments Area 3Q Q 2013 q-o-q CBD 81.72% 82.37% 0.65% South Jakarta 78.95% 79.02% 0.07% Non-Prime Area 75.92% 75.99% 0.07% Average Rental Rates (/sq m/month) Area 3Q Q 2013 CBD include South Jakarta USD26.66 USD26.56 Non-Prime Area USD15.59 USD15.49 In 2014 some serviced apartments, mostly located in the CBD, are planning to increase the asking rental rates by 10-15% per unit per month. Meanwhile a few serviced apartments are still skeptical about the political condition in 2014; and therefore are more moderate in raising rental rates by 6-7% per unit per month. The management continues with the decision to increase the rental rates in anticipation of inflation and the hike in the electricity tariff. Occupancy Performance of Serviced Apartments Area 3Q Q 2013 q-o-q CBD 78.53% 79.00% 0.47% South Jakarta 79.02% 77.01% -2.01% Non-Prime Area 56.44% 56.44% 0.00% The occupancy performance in the CBD posted an upward increase for both serviced and non-serviced apartments. A number of multinational companies, embassies and amenities in this area are driving factors for expatriates opting to live in the CBD. The occupancy level of serviced apartments in South Jakarta registered a minor drop mainly because of expatriate contract expiration that should be replaced in early next year. On the other hand, Non-Prime Area witnessed limited demand because there are not many new developments. The majority of the long-term leasing market continues to be derived from the oil, mining, embassies, banking, insurance, telecommunications and finance industries. Leasing activities generated from short-stay tenants are expected to remain active, particularly from business travellers and transient workers. Average Rental Rates Nothing changed during the quarter and the average rental rate of apartments for lease remained relatively stable compared to the previous quarter. The minor QoQ discrepancy was more influenced by exchange rate volatility because some rental tariffs are still quoted in Indonesian Rupiah. In general, the average rental rate per square metre in 4Q 2013 was approximately US$21 per sq m per month. However, the average rental rate for leased apartments (both serviced and non-serviced) in the CBD area including South Jakarta, registered a minor QoQ decrement. In Non-Prime Area, average rental rate was down since many apartment-for-lease projects applied Indonesian Rupiah currency for the transaction and thus the denomination in US Dollars was somewhat down. 12 Research & Forecast Report 4Q 2013 Apartment Colliers International

29 Outlook The real estate sector, including commercial and residential property, has been the investor s dream showing spectacular growth amid a booming economy, growing middle class and low interest environment. Demand for strata-title apartments over the past three years has been very strong as Jakarta s people have taken to inner-city living. Prices have been skyrocketing in 2010 to 2012 with high volume sales. The more challenging conditions outlined above resulted in a softening of demand growth and moderate price increases in 4Q The combination of a hike in interest rates and stricter mortgage regulation during this year made sales volume lower than the previous year and resulted in pricing being less aggressive. However, domestic demand remains resilient and investment opportunities are still abundant as Indonesian property prices are among the lowest in Southeast Asia, with considerable potential for high yield rental investments. In the long term, the trend of highrise living is very much here to stay; and with the prices still low by regional standards, there remains plenty of upside in the years ahead. In terms of apartments for lease, we expect more expatriates from multinational companies, embassies and non-governmental organisations (NGOs) to come to Indonesia as business activities continue despite the fact that legislative and presidential elections in mid-2014 contribute to uncertainty. At the same time, both local and foreign companies and investors are aggressively expanding their projects throughout the country, not only in Jakarta but also in smaller cities. In short, our view is that the negative impact that may occur as a result of the uncertainty surrounding the election will be limited. Investors are mostly optimistic regarding Indonesia s economic outlook. This illustrates the level of confidence that international investors have towards Indonesia s long-term prospects. 13 Research & Forecast Report 4Q 2013 Apartment Colliers International

30 Research & Forecast Report Jakarta Residential Expatriate Housing 4th Quarter 2013 Expatriate Housing Market Report Accelerating success.

31 Contents Expatriate Housing 3 Demand 4 Apartment For Expatriates 5 Occupancy 6 2 Research & Forecast Report 4Q 2013 Residential Expatriate Housing Colliers International

32 Expatriate Housing For the last three years, Indonesia s economy has experienced a fast growth. Multinational corporations pursue to operate, expand or establish their companies in Indonesia; and therefore continue to require expatriates in many higher management positions. Accordingly, this comes with the need for housing accommodation. By Ferry Salanto Associate Director Research Ferry.Salanto@colliers.com A continued increase in demand for expatriate housing has allowed landlords to demand a minimum of two to three years of rent in advance instead of one year advance payments as before. Not only have rental terms changed but rental rates have substantially increased by at least 20% and above. Meanwhile, rental tariffs for selected expatriate apartments have increased more slowly, in particular when the apartments are operated by an international chains since they rely on corporate pricing often set by overseas headquarters. Nevertheless, a number of apartment buildings gave notice that in early January 2014, their service charge would increase by 13.5%. This will inflate the overall rental cost even more in Ferry Salanto Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and collaboration, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. We represent property investors, developers and occupiers in local and global markets. Our expertise spans all property sectors office, industrial, retail, residential, rural & agribusiness, healthcare & retirement living, hotels & leisure. The growing economy has resulted in price increases and this is noticeable in the Jakarta property market. Continued influx of foreigners looking for residences that match similar criteria has been a factor in driving rents higher. On the other hand, many of the multinational companies demand property that fulfills security requirements such as being in a gated community or homes with close proximity to an international school. This further pushes prices to increase. Finding an ideal home is becoming more challenging and a large portion of expatriate standard housing is commonly located in South Jakarta because of the shorter commute time to most of the international schools. Continuous increase in demand for houses that meet expatriates criteria has triggered landlords to request a minimum of two to three years in advance instead of one year in advance payments as before. In recent times, it is hard to find landlords who are willing to negotiate a one year lease on a house. Not only have rental terms changed but rental rates have substantially increased by at least 20% and even in some cases 30% and above. Quite a few tenants are shocked with the significant increases and are being forced to move to smaller, older or different property that is not in a prime location because of this. Although multinational companies typically have an allowance for rent increases from year to year, few are prepared or willing to accommodate rent increases of this scale and are unwilling to revise their employees living allowances. This combined with the increase of the US Dollar against the Rupiah in which almost all rents are quoted, has put a huge strain on housing budgets. Land in Jakarta is becoming scarce and land prices have increased uncontrollably. Landlords are becoming savvy and are demanding a better return on their investment. It is now very difficult to find houses empty for more than a month before they have a new tenant moving in, particularly in prime developed areas such as Kebayoran Baru with close proximity to the central business district, or an area situated near to Jakarta International School. Given such conditions, landlords are now able to dictate the pricing for their properties. Overall, the increase of asking rental rate for expatriate housing ranged from 20 to 40% compared to the previous semester. Moreover, in the favoured locations with limited availability of housing to expatriates standards, such as Permata Hijau, Menteng and Kebayoran Baru areas, the landlords have been confident enough to raise the asking rental rates by 55 to 60%. 3 Research & Forecast Report 4Q 2013 Residential Expatriate Housing Colliers International

33 Housing Rental Rates in Several Expatriate Areas expatriate housing by area size (sq m) rental range (us$/unit) menteng 4-5 Bedrooms House 500-1,200 4,500-15,000 kuningan 4-5 Bedrooms House ,000-12,000 Pondok indah 4-5 Bedrooms House 450-1,000 4,500-15, Bedrooms Townhouse/Complex ,000-4,500 kebayoran baru 4-5 Bedrooms House 600-1,500 5,000-15, Bedrooms Townhouse/Complex ,500-8,500 permata hijau, simprug 4-5 Bedrooms House 400-1,500 4,000-12, Bedrooms Townhouse/Complex 220 3,000 kemang 3 Bedrooms Townhouse/Complex ,000-4,500 4 Bedrooms Townhouse/Complex ,500-5, Bedrooms House ,000-5, Bedrooms House 550-1,000 3,500-7,000 cilandak 3 Bedrooms Townhouse/Complex ,000-3,500 4 Bedrooms Townhouse/Complex ,250-6, Bedrooms House ,500-5, Bedroom House ,500-7,000 cipete 3 Bedrooms Townhouse/Complex ,000-4,000 4 Bedrooms Townhouse/Complex ,500-6, Bedrooms House ,000-3, Bedroom House ,500-7,000 pejaten 3 Bedrooms Townhouse/Complex ,500-7,000 4 Bedrooms House ,000-7,000 Demand Demand for expatriate housing is still concentrated in the South Jakarta area, with demand generated for expatriate housing during 2H 2013 from oil and gas, mining, and banking and insurance sectors. 4 Research & Forecast Report 4Q 2013 Residential Expatriate Housing Colliers International

34 Apartment for Expatriates Unlike landed houses, rental tariff for apartments are relatively more controlled, in particular when the apartment is part of an international chain operator, as they rely on corporate pricing often set out by overseas headquarters. Typically apartments will incorporate a 10 to 12% yearly increase. Given the predicted increase, apartment building leases are normally only one year so that the escalation can be incorporated. This is yet to include service charge fees that can vary greatly from building to building depending on the grounds they upkeep and types of facilities they offer. Apartment pricing typically includes 10% VAT and 11% service charge. A number of apartment buildings have given notice that in early January 2014, their service charge will increase by 13.5%. This will inflate prices even higher in Even though there will be a large number of apartments completed in 2014, apartment building owners remain extremely optimistic that they will be able to maintain their pricing and keep their occupancy rates very high as they are now. Stand-alone housing however, is not increasing with the rate of demand; therefore it is highly unlikely that rents will be decreasing in the foreseeable future. As long as Jakarta continues to experience rapid growth and still requires the assistance of expatriates, Jakarta landlords will enjoy dictating rental prices. Apartment Rental Rates in Several Expatriate Areas apartment by area size (sq m) rental rate (us$/unit) non-serviced apartment serviced apartment sudirman 2 Bedrooms Apartment ,500-4,000 3,900-4,525 3 Bedrooms Apartment ,200-5,000 4,550-6,800 menteng 2 Bedrooms Apartment ,000-3,900-3 Bedrooms Apartment ,350-5,000 - kuningan 2 Bedrooms Apartment ,500-3,500 2,800-4,800 3 Bedrooms Apartment ,000-4,500 3,400-5,050 continued 5 Research & Forecast Report 4Q 2013 Residential Expatriate Housing Colliers International

35 apartment by area size (sq m) rental rate (us$/unit) non-serviced apartment serviced apartment continuation pondok indah Bedrooms Apartment ,000-2,750 3,100-4,200 3 Bedrooms Apartment ,800-3,500 4,000-5,000 Kebayoran baru 2 Bedrooms Apartment ,750-4,000-3 Bedrooms Apartment ,500-6, Bedrooms Apartment ,000-10,000 - permata hijau, simprug 3-4 Bedrooms Apartment ,700-4,000 3,200-3,250 kemang 3 Bedrooms Apartment ,500-2,000 - cilandak 3 Bedrooms Apartment ,500-1,900 cipete 3-4 Bedrooms Apartment ,500-5,000 pejaten 4 Bedrooms Apartment ,000-7,000 Occupancy Upper class apartments generally captured high occupancy of between 75% and 99%. This figure suggested an increase in average occupancy compared to what was achieved in the previous semester. Average Occupancy Rate of Selected Apartments Preferred by Expatriates 100% 80% 60% 40% 20% 0% A B C D E Average Notes: A: Dharmawangsa, The Capital Residence, SCBD Suites, Pakubuwono Residence B: The Residence, Plaza Senayan, The Plaza Residence, Airlangga, Senayan City C: Setiabudi Residence, Golf Pondok Indah, Somerset Grand Citra, The Ascott, Menteng Eksekutif D: Aston Rasuna, Batavia, Somerset Berlian, Puri Casablanca, Casablanca E: Taman Rasuna, Palm Court, Puri Imperium 6 Research & Forecast Report 4Q 2013 Residential Expatriate Housing Colliers International

36 Research & Forecast Report Jakarta Retail 4th Quarter 2013 Retail Market Report Accelerating success.

37 Contents Supply 3 Jakarta 3 Greater Jakarta 5 Occupancy 6 Jakarta 6 Greater Jakarta 9 Asking Rental Rates 10 Jakarta 10 Greater Jakarta 11 2 Research & Forecast Report 4Q 2013 Retail Colliers International

38 Supply Jakarta By Ferry Salanto Associate Director Research The q-o-q average base rental rate was relatively flat at IDR476,030/ sq m/month which indicates a moderate yearly increase of 4.4%. However, due to the electricity tariff hikes in early 2013, the service charge of some malls was adjusted by 10 to 30% to IDR88,889/sq m/ month during Ferry Salanto There are only three shopping centres that have been operating in Jakarta up to 3Q 2013, namely, Pondok Indah Street Gallery, Cipinang Indah Mall and Lotte Shopping Avenue. Additionally, as of 4Q 2013, only The Baywalk, developed by Agung Podomoro, officially operates During the year, the total annual supply of retail space in Jakarta was 107,100 sq m and this brought the cumulative supply to 4.25 million sq m, as of List of Shopping Centers Operate During 2013 Jakarta Retail Cumulative Supply Based on Marketing Scheme 3,500,000 3,000,000 2,500,000 shopping centers location region Lotte Shopping Avenue Satrio South Jakarta Pondok Indah Mall Street Gallery Pondok Indah South Jakarta Cipinang Indah Mall Cipinang East Jakarta The Bay Pluit Pluit North Jakarta 2,000,000 1,500,000 1,000, , F 2015F 2016F Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and collaboration, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. We represent property investors, developers and occupiers in local and global markets. Our expertise spans all property sectors office, industrial, retail, residential, rural & agribusiness, healthcare & retirement living, hotels & leisure. for Lease for Sale At more than 100,000 sq m, the total annual supply in 2013 is, in fact, lower than that in 2012 which reached 164,981 sq m. The moratorium on retail development in DKI Jakarta issued in 2011 has impacted the growth of retail space in Jakarta. The moratorium says that any retail development of more than 5,000 sq m will not be allowed, with particular concern for projects located in the CBD, South and Central Jakarta. Hence, the number of shopping centres projected to be in operation in 2014 will decrease, with only St. Moritz and other two small-scale expansion projects. 3 Research & Forecast Report 4Q 2013 Retail Colliers International

39 Since operations began at Lotte Shopping Avenue in 2Q 2013, there has been no additional shopping centre development in the CBD and thus far, there are no plans for new, sizeable retail space projected to be developed in the CBD up to Of the total 4.25 million sq m of retail space in Jakarta, 19.5% is in the CBD. The majority of retail space in Jakarta is scattered around North, South and Central Jakarta. Over the next three years, the market will not see any additional supply in either the CBD or Central Jakarta. The upcoming retail centres in Jakarta will be mainly located in West Jakarta, followed by East, South and North Jakarta. During , there will be four new shopping centres contributing 247,200 sq m in West Jakarta. The Puri Indah area continues to be an area with good potential in West Jakarta because of the growing high-class residential area. Six of the ten future shopping centres projected to begin operations during have started construction. Most of the under-construction shopping centres will begin operations during while other projects, namely Grand Cipulir, Holland Village and Mall Puri Indah 2, are in the planning stages and projected to be completed in Since 2009, very few strata-title retail centres have been built. In 2015, the extension of Pulo Gadung Trade Centre will be marketed as a strata-title retail centre, in response to the good performance of the existing centre. Thus far, no construction activity has been seen, although this project is scheduled to be completed in Jakarta Retail Annual Supply During Based on Region 2016F 2015F 2014F , , , ,000 CBD Central Jakarta South Jakarta North Jakarta East Jakarta West Jakarta New Supply Pipeline in Jakarta shopping centers location region NLA (sq m) Status 2014 Mal Puri Indah Extension Puri Indah West Jakarta 3,000 Under Construction Mal Kelapa Gading III extension Kelapa Gading North Jakarta 6,000 Under Construction St. Moritz Puri Indah West Jakarta 129,200 Under Construction 2015 Central Park Mall Extension Slipi West Jakarta 40,000 Under Construction PIK Mall Pantai Indah Kapuk North Jakarta 30,000 Under Construction Shopping Pancoran South Jakarta 8,000 Under Construction Pulo Gadung Trade Center extension Pulo Gadung East Jakarta 10,000 In Planning 2016 Mal Puri Indah 2 Puri Indah West Jakarta 75,000 In Planning Holland Village Mall Cempaka Putih Central Jakarta 40,000 In Planning Grand Cipulir Cipulir South Jakarta 40,000 In Planning 4 Research & Forecast Report 4Q 2013 Retail Colliers International

40 Greater Jakarta Area (BoDeTaBek - Bogor, Depok, Tangerang, Bekasi) During 2013, the annual retail space in the Greater Jakarta area grew by almost three times compared to In 2012, three shopping centres contributed 108,000 sq m, while in 2013, nine shopping centres opened. Seven shopping centres have been officially operating until 3Q 2013 bringing new space of 234,585 sq m. The last two remaining retail centres are Cimone City Mall in Tangerang and Cibinong City Mall in Bogor, which opened in the last quarter of 2013, contributing 70,000 sq m, bringing the total annual supply to 304,585 sq m. This annual supply figure raised the cumulative retail supply in the Greater Jakarta area to 2.13 million sq m. List of Shopping Centers Operate During 2013 shopping centers location region Plaza Cibubur extension Cibubur Depok Bekasi Junction Bekasi Bekasi Summarecon Mall Bekasi Bekasi Bekasi Grand Metropolitan Mall Kalimalang Bekasi Mall Ciputra Citra Gran Cibubur Bekasi Grand Galaxy City Mall Kalimalang Bekasi The Breeze Sinar Mas Land Serpong Tangerang Cibinong City Mall Cibinong Tangerang Cimone City Mall Cimone Tangerang Greater Jakarta Retail Cumulative Supply Based on Marketing Scheme Overall, Tangerang and Bekasi remain the main retail space contributors, where each area contributed 35% of the total supply in the Greater Jakarta (BoDeTaBek) area. During 2013, Bekasi alone saw an additional 210,285 sq m of new retail supply, which represented 69% of the total annual supply in BoDeTaBek for In , Tangerang and Bekasi again will contribute around 72% of the 323,000 sq m total supply. The construction progress on future projects such as Centro Cinere and Bintaro xchange suggests that these two shopping centres are working towards completion in AEON in BSD City has already started ground breaking work as the initial stage of construction activity. According to our records, there are no new retail centres scheduled to begin operations in that have begun construction work. The continued growth of other property sectors, such as industrial and residential, in both Bekasi and Tangerang, helps to sustain retail business in these regions. Greater Jakarta Retail Cumulative Supply Based on Regions Bekasi Tangerang Depok 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , for Lease F for Sale 2015F 2016F Bogor 0 100, , , , F 2015F 2016F The growing housing development in Cinere, Depok becomes a potential target market for retail business. Cinere Bellevue Suite is a future mall responding to the prospective market in the neighborhood and positions itself as a mall offering a family and lifestyle concept. Also in the southern part of Outer Jakarta, Cibinong in Bogor region is also becoming a location for quite a few middle-class housing estates. There are at least three retail centres operating in this area and Cibinong Citymall is the latest, opening at the end of On the strata-title front, retail space for sale in BoDeTaBek represents 36% of the cumulative supply up to Since the start of operations of Bekasi Junction in early 2013, there will be no other new strata-title retail centre in Research & Forecast Report 4Q 2013 Retail Colliers International

41 New Supply Pipeline in Greater Jakarta shopping centers location region NLA (sq m) Status 2014 Bintaro Xchange Bintaro Tangerang 45,000 Under Construction Cinere Bellevue Suite Cinere Depok 28,000 Under Construction AEON Mall BSD City Serpong Tangerang 75,000 Under Construction 2015 AEON Mall Deltamas Deltamas Bekasi 21,000 In Planning Cimandala City Mall Cimandala Bogor 60,000 In Planning Plaza Indonesia Jababeka Bekasi 20,000 In Planning 2016 Bekasi Trade Center 2 Bulak Kapal Bekasi 56,000 In Planning Living World Jababeka Jababeka Bekasi 18,000 In Planning Comparison of Annual Retail Supply in Jakarta and BoDeTaBek During Occupancy 600, ,000 Jakarta Annual Supply and Occupancy in , , , , Jakarta F BoDeTaBek 2015F 2016F 500, , , , , % 94% 92% 90% 88% 86% 84% 82% 80% 78% Annual Supply Occupancy 6 Research & Forecast Report 4Q 2013 Retail Colliers International

42 For the last five years, the occupancy level has been relatively steady and reached its peak in 2012 (at 89%) when large new supply was on the market but underpinned by healthy economic conditions. In the early quarters of 2013, the occupancy level was 89% and dropped moderately by 1.7% in the following quarter due to an adjustment after the operations of new shopping centres totalling 107,000 sq m. In the third quarter, the occupancy level bounced back to 88.6% because no new retail space started operations in that period. At the end of 2013, the combination of a new influx of retail space and the downswing in the economy, highlighted by a weakening rupiah against the US dollar drove the occupancy rate down to 87.7%. The overall occupancy performance in 2013 was not all that bad with moderate volatility. The retail market during 2013 was also challenged by external determining factors like the increasing basic electricity tariff and minimum wage hike, as well as the weakening rupiah. These factors had an impact on some retailers, causing them to vacate premises, contributing to the vacancy level. Contrary to the conditions mentioned earlier, new malls operating during 2013 have reported high commitment levels from major tenants. Some shopping centres, during 2013, introduced new concepts, such as Lotte Shopping Avenue promoting a Korean style or Baywalk Mall as the first mall in Jakarta overlooking the seafront, combining leisure, entertainment, shopping and dining concepts. During 2013, various famous brands have opened in Jakarta, mainly from the fashion and accessories sectors. Two foreign branded fashion and accessories retailers have opened their first stores in Indonesia to provide the latest branded products to local shoppers. Established Swedish high-street fashion retailer, Hennes & Maurizt (H&M) opened their first store at Gandaria City mall occupying around 2,400 sq m of retail area and their second store at Pondok Indah Mall 1 taking around 1,700 sq m on the ground floor. Their next store will be opened at Grand Indonesia Shopping Mall in March 2014 occupying 4,000 sq m of retail area. Other mid-up fashion retailers that have already set up operations in Indonesia include American clothing retailer Forever 21, Zara of Spain and Uniqlo of Japan. Uniqlo is one of the most expansive retailers in Jakarta. After occupying Lotte Shopping Avenue, their second store opened in Mall Taman Anggrek in November The latest store in 2013 has opened at Mall Kelapa Gading 3. Gallery La Fayette, a department store from France, also opened their first store at Pacific Place Mall Jakarta and Porsche Design, an exclusive brand founded in 1972, also opened at this mall. More luxury brands flowing into the country suggests that Indonesia continues to be a promising market for up-scale products. Besides fashion, hypermarkets continue to be the main attraction for newly opened shopping centres like Cipinang Indah Mall. This mall secured Carrefour as the anchor of the mall. List of active Major Retailers Opened During 2013 Retailers line of products opened at space taken (sq m) H&M Fashion & Accessories Pondok Indah Mall 1 1,700 H&M Fashion & Accessories Gandaria City 2,400 Uniqlo Fashion & Accessories Lotte Shopping Avenue 2,600 Galleries Lafayette Department Store Pacific Place 12,000 Carrefour Hypermarket Cipinang Indah 5,000 Uniqlo Fashion & Accessories Mall Taman Anggrek 2,000 Uniqlo Fashion & Accessories Mall Kelapa Gading 3 2,650 The majority of retail space projected to begin operations in 2014 will mainly come from St. Moritz Mall, with a small portion coming from the extension of existing retail centres. Despite providing a sizeable retail space, this mall has secured some commitments from major tenants, who have confirmed that they will open soon at the mall, which is located in West Jakarta. In 2014, a significant amount of retail space in the biggest mall in Indonesia, Grand Indonesia, will be occupied by two foreign retailers who plan to occupy a total of around 25,000 sq m.. Retailers Plan to Open in 2014 Retailers line of products Shopping mall space taken (sq m) opening in H&M Fashion & Accessories Grand Indonesia 4,000 March 2014 Central Department Store Grand Indonesia 21,000 September Research & Forecast Report 4Q 2013 Retail Colliers International

43 Amount of Space Absorbed in Newly Operating and Future Shopping Centers in Jakarta ( ) Occupancy Rates of Shopping Centers for Lease (Mall) and Strata-title Center (Trade Center) 100% % 80% 70% 2014F 60% 50% 2015F 40% 30% 20% 2016F 10% 0% 0 30,000 60,000 90, , , , Absorbed Supply for Lease for Sale While shopping centres for lease are experiencing a relatively upward trend, the performance of strata-title shopping centres (providing retail space for sale) continues to decline, at least during the last four years. In 2012, the occupancy rate was 71.3% and in 2013, down to 69.9%. Tenants in Newly Operated and Future Shopping Centers in Jakarta During shopping center Completion anchor tenant mini anchor Lippo Mall Kemang 2012 SOGO, Debenhams, Hypermart Ace Hardware, Fitness First Platinum, Cinema XXI, Best Denki Kota Kasablanka 2012 SOGO, Carrefour Ace Hardware, Cinema XXI, Electronic Solution, Informa, Toys Kingdom, Muji Store, Celebrity Fitness Lotte Shopping Avenue 2013 Lotte Department Store Ranch Market, Fitness First Platinum, Cinema XXI, Best Denki, Lollipops, Lotte Duty Free, Toys City Cipinang Indah 2013 Carrefour - The Baywalk Ace Hardware, Cinema XXI, Farmers Market, Electronic Solution, Informa, Time Zone, Toys Kingdom, Home Solution, Gold s Gym St. Moritz 2014 Debenhams Electronic City, Cinema XXI, Ranch Market, Sea World Indonesia 8 Research & Forecast Report 4Q 2013 Retail Colliers International

44 Greater Jakarta Area (BoDeTaBek - Bogor, Depok, Tangerang, Bekasi) Similar to Jakarta, the average occupancy rates of shopping centres in the BoDeTaBek area were also affected by the influx of new retail space. In 2012, the occupancy rate was 84.1%. It continued to rise by less than 2% in 1Q With new retail supply flooding into the Greater Jakarta area in 2Q to 4Q 2013, occupancy rates tended to soften. Despite having recorded good commitments from tenants, tenants may need some time to prepare for their openings and therefore, physical occupancy in the newly operating malls is lower than the actual commitment. The last quarter occupancy level was 81.2% and gradually climbed to 83.1% in 4Q Cibinong City Mall opened with Carrefour and Matahari as the main anchor tenants. It is the third Matahari Department Store in Bogor. Apart from the abovementioned major tenants, other tenants also opened in the mall, such as Cinema XXI, ACE Hardware, Fun World and Informa. At Grand Metropolitan, Gramedia Kids became one of tenants that officially operates. Currently, this mall has secured more than 90% committed tenants. Retailers Open During 2013 Retailers line of products opened at space taken (sq m) Lotte Mart Supermarket Bekasi Junction 8,000 Gramedia Kids Bookstore Grand Metropolitan Mall 1,000 Centro Department Store Grand Metropolitan Mall 12,000 Farmers Market Supermarket Grand Metropolitan Mall 2,000 Ace Hardware Home Furnishing Summarecon Mall Bekasi 3,700 Carrefour Hypermarket Cibinong City Mall 5,000 Matahari Department Store Cibinong City Mall 6,400 Lotte Mart Supermarket Cibinong City Mall 8,000 Gramedia Home Furnishing Grand Galaxy City Mall 1,300 Amount of Space Absorbed in Newly Operating and Future Shopping Centers in BoDeTaBek ( ) 2013 Retailers Plan to Open in 2014 Retailers name Line of Products Shopping mall space taken (sq m) AEON Department AEON Mall Store Cinema XXI Entertainment Grand Metropolitan Mall 2, F 2015F 2016F 0 80, , , ,000 Absorbed Supply 9 Research & Forecast Report 4Q 2013 Retail Colliers International

45 Tenant List in Newly Operated and Future Shopping Centers in BoDeTaBek During Retailers name Completion anchor tenant mini anchor Shopping Mall Alam Sutera 2012 SOGO, Giant The Food Hall, Funworld, Gramedia, Cinema XXI, Chipmunks Playland & Cafe, Electronic Solution, Home Solution Mall Balekota 2012 Hypermart, Matahari Electronic Solution, Ace Hardware, Gramedia, Informa, XXI, Toys Kingdom, Amazone The Breeze Gold s Gym, Chipmunks Playland Bekasi Junction 2013 Lotte Supermarket 21 Cineplex Grand Metropolitan Mall 2013 Centro Farmers Market, Toys Kingdom, Funworld Summarecon Mall Bekasi Star Department Store, Cinema XXI The Premiere, The Food Hall, Ace Hardware, Best Denki Cibinong City Mall 2013 Carrefour, Matahari Funworld, Hari Hari, Ace Hardware, Cinema XXI, Informa Mall Ciputra Citra Gran 2013 Matahari, Hypermart Gramedia, Farmers Market, Best Denki, Time Zone Cimone City Mall 2013 Lotte Mart - Grand Galaxy Blitz Megaplex, Farmers Market, Lotus, Funworld, Ace Hardware Bintaro Xchange 2014 Centro Farmers Market, Best Denki, RockStar Gym, Frigo Ice Skating Cinere Bellevue 2014 Hypermart The Body Shop, Guardian, Century Health Care, Paper Clip, Time Zone, Best Denki, Cinema XXI, Celebrity Fitness, RockStar Gym Future Tenants Activity; Foreign retailers continue to aim at Indonesia to expand their coverage Foreign retailers continue to penetrate Indonesia as one of the biggest south-east Asian markets. Courts Asia, the Singaporebased electronics and furniture retailer, will break ground on its first outlet in Indonesia. This retailer, which targets middleclass consumers, plans to open 12 new outlets in Indonesia by Ten of those will be located in Jakarta and the greater area. Another foreign retailer entering the Indonesian market is LuLu Group from the Middle East. This Abu Dhabi-based retailer will begin operating an outlet of 20,000 sq m at the end of LuLu Hypermart consists of supermarkets and department stores. Asking Rental Rates Jakarta The q-o-q average rental rate is relatively flat at IDR 476,030/sq m/month. In 2013, average rental rates only climbed moderately by 4.4% mainly due to the influx of new shopping centres beginning operations during Some new retail centres operating during 2013 came with higher rents because of their good locations and landlords confidence. Several older malls also adjusted their rental rates due to better occupancy after doing renovation / refurbishment or re-layout tenancy mix. Another way for owners to raise the rent is by adjusting the pegged rate (adjusted exchange rate of the rupiah against the US dollar, normally below the current value). Average Asking Base Rental Rates in Jakarta IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000 IDR 400,000 IDR 300,000 IDR 200,000 IDR 100,000 IDR All Class Upper Class Overall, the CBD area continues to fetch the highest rental rates ranging from IDR 458,996 to 947,034/sq m/month. Except for the rental adjustments at the new malls, by and large, rental rates only grew moderately during Only Plaza Indonesia and Plaza Senayan, quote US dollar rents using a floating exchange rate. West Jakarta was the second most expensive area with rental rates ranging from IDR 322,077 to 580, /sq m/month, higher than South Jakarta, which offers between IDR 296,728 and 494,392/sq m/month. 10 Research & Forecast Report 4Q 2013 Retail Colliers International

46 On a y-o-y basis, compared to the same period last year, the minimum rental rates edged higher by 2.4% while the maximum rental rates rose by 4.5%. Retail areas where the maximum rental rate is applicable are mainly prime spots in a retail center. Average Asking Base Rental and Occupancy Rates Based on Area in Jakarta IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000 IDR 400,000 IDR 300,000 IDR 200,000 IDR 100,000 North East IDR 0 80% 85% 90% 95% CBD Average Asking Base Rental Rates in Jakarta* IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000 IDR 400,000 IDR 300,000 IDR 200,000 IDR 100,000 IDR 0 *CBD includes parts of South and Central Jakarta South Central West Central Jakarta North Jakarta West Jakarta South Jakarta East Jakarta Greater Jakarta Area (BoDeTaBek - Bogor, Depok, Tangerang, Bekasi) Overall, during 2013, average asking rental rates fluctuated somewhat. In the early quarters, the average rental rates averaged IDR 282,702/sq m/month but decreased in 2Q Many factors have impacted the rental adjustment in A mall in the Cibubur area, for example, can quote higher rental rates after being expanded and rejuvenated. In some cases, there are malls offering relatively low rental rates initially but which keep adjusting the rental rates in line with their healthy occupancy. In 3Q 2013, the average rental rate was IDR 278,046/sq m/month. The average rental rate closed at IDR 280,381/sq m/month in 4Q Rental adjustment during the quarter was also introduced by a mall located in Bekasi. Meanwhile, two malls located in Karawaci, Tangerang and Margonda, Depok have been able to maintain good performance and therefore confidently introduced higher rental rates. New shopping centres that just began operations in the Bogor and Tangerang areas are charging a higher than market average rent. To the contrary, two shopping centres located around BSD, Tangerang have introduced lower rents to lure more tenants. Average Asking Base Rental Rates IDR 300,000 IDR 250,000 IDR 200,000 IDR 150,000 IDR 100,000 IDR 50,000 IDR During 2013 the average rental rates increased by 7% compared to previous year. The average rental rates of shopping centres located in Tangerang are the highest in the Greater Jakarta area underpinned by the existence of some good shopping centres located in areas like Karawaci, Serpong and Alam Sutera. In general, the rental rates range from IDR 200, ,000/sq m/month. Bekasi has the second highest offered rental rates at between IDR 200,000 and 350,000/sq m/month. 11 Research & Forecast Report 4Q 2013 Retail Colliers International

47 Asking Base Rental Rates Based on Region IDR 350,000 IDR 300,000 IDR 250,000 IDR 200,000 IDR 150,000 IDR 100,000 IDR 50,000 IDR Bogor Depok Tangerang Bekasi Average Service Charges in Jakarta and BoDeTaBek IDR 100,000 IDR 90,000 IDR 80,000 IDR 70,000 IDR 60,000 IDR 50,000 IDR 40,000 IDR 30,000 IDR 20,000 IDR 10,000 IDR Service charges are the main concern during 2013 primarily due to a basic electricity tariff hike in each quarter and the adjustment in the minimum wage. The overall services tariff for mall operation is mainly composed of utility costs of more than 40%. Utility cost is comprised of largely electricity cost (for lighting, elevators and lifts) and some for the cost of water. In Jakarta, the service charge was IDR88,889/sq m/month at the end of The biggest increase occurred in 2Q 2013 when it grew by 4% compared to the previous quarter mainly because of the electricity tariff hikes in early The hike in electricity tariff was responded by several malls by adjusting the service charges by around 10-27%. There were some malls that adjusted the service charges by around 30 or even 50% during Most of these malls are located in the Pondok Indah, Puri Indah and Kelapa Gading areas. As such, the overall service charge grew by 9.3% y-o-y. In Jakarta alone, currently, 16 shopping centres are asking service charges equal or more than IDR 100,000/sq m/month and three of those (classified as premium shopping centres) ask service charges of around IDR 130,000/sq m/month. In the interim, the BoDeTaBek recorded lower growth than Jakarta at 3.3% y-o-y, which brought the average service charge to IDR 63,347/sq m/month. In 2013, some shopping centres located in Tangerang and Bekasi were asking the highest service charges of around IDR 80,000-90,000/sq m/month. Jakarta BoDeTaBek 12 Research & Forecast Report 4Q 2013 Retail Colliers International

48 Research & Forecast Report Jakarta Industrial Estate 4th Quarter 2013 Industrial Estate Market Report Accelerating success.

49 Contents Supply 3 Demand 4 Industrial Land Prices 5 Land Price 5 Maintenance Cost 6 Outlook 6 2 Research & Forecast Report 4Q 2013 Industrial Estate Colliers International

50 Supply By Ferry Salanto Associate Director Research The industrial land transactions during 2013 totalled 442 hectares representing just 69% of the total recorded in The limited availability of developed land is the major reason total sales dampened during Industrial land prices were somewhat up in the first half of 2013 but were suppressed in the following half due to slowing land absorption. Overall industrial land prices only increased by an average of 18.9% y-o-y in all regions and reached US$159.32/sq m. - Ferry Salanto Colliers International is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and collaboration, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. We represent property investors, developers and occupiers in local and global markets. Our expertise spans all property sectors office, industrial, retail, residential, rural & agribusiness, healthcare & retirement living, hotels & leisure. The general situation in the industrial market remained the same for the last couple of years with supply availability becoming the major issue. There was no new industrial land opened during the quarter. Thus, the total serviceable industrial land in the six regions (Serang, Tangerang, Jakarta, Bekasi, Karawang and Bogor) remained 8,798 ha, which is 112 ha more than the total stock in The major issue in the industrial supply during 2013 was the limited stock of land on offer. Additional supply this year was basically sold out as pre-commitment sales occurred before the land was developed. This land issue has been a problem since 2011 when significant absorption of industrial land started to occur. Industrial land transactions were mainly active during the first half of During that period, buyers looking for industrial land had to search at several estates and most frequently could not decide because land is not available. This situation has put industrial landlords into a better bargaining position in offering adjusted prices and choosing the tenants they want. In some cases, some developers, particularly in the Bekasi or Karawang regions, are able to sell raw land at the price of ready-to-use land (even though the land is not ready for sale). This will be beneficial for both parties as landlords will receive some of the cash in advance while buyers will get the current price in anticipation of further increases when land is in a ready-to-use condition. The abovementioned situation mostly happened in the first half In the following half, transaction activity relatively softened and thus, limited land availability seems to have an insignificant impact. The situation when inquiries tapered off should be perceived as an opportunity for several industrial estates to speed up their expansion plans to be able to deliver land on schedule in 2014 and anticipate the rise of the industrial market, which is expected to occur after the elections. There are some plans for expansion at the existing industrial estates and for the opening of new industrial estates. The expansion of existing industrial estate seems to be a more realistic plan because the existing tenants would potentially become strong buyers. Other industries may eye the expansion of existing industrial estates because of their reputation and established infrastructure and facilities. New industrial estates will face more challenges in getting tenants. Having an anchor tenant with a big name allows industrial developers to attract more tenants. The availability of ready-to-build land was generally limited in 2013, however, some industrial developers actually hold a big parcel of undeveloped land for industrial location. There are some expansion plans scheduled to materialise in 2014, indicating that a significant amount of new land of around 628 ha at several industrial estates will potentially be ready in Research & Forecast Report 4Q 2013 Industrial Estate Colliers International

51 Potential Newly Developed Industrial Land (Net Size in Ha) region number of industrial estates planning to provide new land total new land scheduled for 2014 (ha) total new land with indefinite schedule (ha) Bogor 1-3 Bekasi Tangerang Karawang Serang Distribution of Industrial Land in Six Regions In the last quarter of 2013, the largest single transaction, a secured land transaction of 8 ha, occurred at one industrial estate located in the Karawang area. In total, in the Karawang area, ha was sold, which was actually higher than the last quarter figure. All in all, the Bekasi region captured the highest amount of land sales this quarter with a total of ha. Meanwhile, despite being lower than the abovementioned two regions, Serang consistently recorded land sales with almost 5 ha during the quarter. During 2013, Karawang Jabar Industrial Estate, ranked first in terms of amount of land being sold. The latest transaction to Toyota of around 150 ha made up all of the sales for this estate, even though the land will only be ready later. Green Land is ranked number two, selling around 75 ha during 2013 with the most transactions being in auto-related industries. Annual Industrial Land Sales 1400 Serang 21% Jakarta 10% Bogor 2% Bekasi 26% Karawang 36% Tangerang 5% hectares Demand The total industrial land transactions during 2013 reached ha or only 69% of the total transactions recorded in Industrial sales reached a peak in 2011 when almost 1,250 ha of land was transacted. For the last two years, the total annual industrial transactions have been lessening; only ha were sold in 2012 and it further dropped in The level of demand has been quite strong since 2010, however, limited land stock availability is the major issue that has dampened total sales during all of 2012 and Limited stock also changes the overall composition of land being transacted. The largest transaction occurring in 2013 was also a pre-commitment sale because land being transacted was not ready-to-build land The largest land transaction during the quarter was recorded in Suryacipta with one steel-related company from Malaysia buying around 8 ha. Apart from that, another 3.4 ha were sold to a Japanese auto parts company. Other sizeable transactions occurred in Bekasi. Greenland International Industrial Center confirmed several transactions to the automotive industry from Japan and US with a total of 8.7 ha. In the same region, Bekasi Fajar saw a total of 6.1 ha sold to two automotive companies from Japan. The total land being transacted in Serang was only 4.96 ha with all operating industrial estates contributing to the sales. KIEC reported total sales of around 3 ha to the construction industry. Other industrial estates, like Modern Cikande has been consistently recording sales every quarter. This quarter, transactions were concluded by a food processing company of Singapore (for expansion), together with a local steel company and a chemical company from Malaysia. All three transactions during the quarter totalled almost 2 ha in Modern Cikande. This has been the smallest quarterly transaction for Modern Cikande during Research & Forecast Report 4Q 2013 Industrial Estate Colliers International

52 Other industrial land transactions were also monitored in Delta Silicon where around 5 ha of land were released to automotive companies and companies providing workshop facilities. Meanwhile, MM2100 reported that they only sold a small parcel of land to an automotive company from Japan. Similarly, Kota Bukit Indah in Karawang only recorded a single small transaction from a gas company. All in all, auto-related companies accounted for most of the transactions concluded during the quarter. Other active industries include steel, construction and chemicals. Land Sales Recorded During 2013 at Each Industrial Estate Karawang Jabar Industrial Greenland International Suryacipta Millenium Modern Cikande Bekasi Fajar Jababeka Delta Silicon KIIC Krakatau Industrial Estate Kota Bukit Indah Kota Bukit Indah (Indotaisei) Kawasan Industri Kujang MM2100 Industrial Town Cumulative Supply, Demand and Take-up Rates 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Cumulative Supply (ha) Take-up Rate (%) hectares 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Cumulative Demand (ha) Similar to the composition in 2012, most transactions during 2013 were composed of automotive and related industries with 55% of the total sales. Up to 4Q 2013, transactions concluded by automotive industries accounted for a total of almost 243 ha. The majority of land transactions by automotive and related industries occurred in either the Bekasi or the Karawang areas. Other active industries during 2012 were the food and beverage industries, followed by logistics, building materials, SFB developers, chemicals, steel related, building materials and packaging. Types of Activities Industries During 2013 Printing 0.22% Steel-related 3.47% Food & Beverage 13.53% Chemicals 2.91% Electronics 0.11% Automotive 54.83% Oil & Gas Related 0.99% Manufacturing 0.70% Logistics/ Warehousing 5.42% Packaging 1.69% Industrial Land Prices and Maintenance Cost Land Price Metal Heavy 1.38% Equipment 0.68% Building Material 2.94% Medical 0.09% Developer 0.45% Others 10.58% In this report, although there are some industrial estates quote land prices in rupiah, the currency is converted into US dollar because most active industrial estates quote prices in US dollars. As a result, the average price has been quite volatile, particularly when the exchange rate fluctuates. For example, in Bogor and Serang, all industrial estates in these regions offer industrial land in rupiah. With a weakening rupiah against the US dollar, despite maintaining the price at the same level, the average prices in US dollars are somewhat weakening. 5 Research & Forecast Report 4Q 2013 Industrial Estate Colliers International