Jakarta Property Market Report

Transcription

1 Research & Forecast Report 4Q 2013 Jakarta 2nd Quarter Office 2014 Jakarta Property Market Report Accelerating success.

2 Contents Office Sector 4 Apartment Sector 13 Expatriate Housing Sector 22 Retail Sector 26 Industrial Estate Sector 34 2 Research & Forecast Report 2Q 2014 Contents Colliers International

3 Highlight By Ferry Salanto Associate Director Research Office Sector Total office space in DKI Jakarta increased modestly by only 87,063 sq m during the first half of the year with occupancy stable at 96%. A major increase in supply, however, is expected in the next four years with cumulative supply possibly increasing by 51% from 7.1 million sq m to 10.7 million sq m. The increase assumes the completion of 74 buildings which are now under construction or being planned and would result in a drop in occupancy below 90%. Average asking base rental rates in IDR denominated buildings in the CBD rose moderately by around 2% this quarter, reaching IDR252,114 psm / month. Likewise, the average base rental rate for US dollar denominated buildings moved slightly upward to USD36.32 psm / month. Apartment Sector There were 3,466 new apartment units which became available during the quarter resulting in a total of 145,390 apartment units in DKI Jakarta. The average asking price for strata-title apartments in Jakarta climbed by 16% YoY to IDR25.5 million psm. Prices in the CBD were recorded at IDR39.7 million psm, an increase of 17% YoY. Expatriate Housing Sector Leasing activity during 1H 2014 was stable; however, landlords of expatriate house have been pushing for increases in rental rates. With the recent election of the new president of Indonesia, overseas companies are expressing more confidence in the economic outlook and thus are planning to expand their businesses and bring in more expatriates. In some highly demanded locations, asking rents for expatriate housing soared by 15 to 20% or in the range of USD400 to 500 / month / unit. 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. Retail Sector There are no significant changes in the retail space supply in either DKI Jakarta or the rest of Jabodetabek. Total retail space stock for both areas remained at 6.56 million sq m. Given the limited increase in retail space and the continued demand, average asking base rental rates for upper class shopping malls recorded a 11.6% increase to IDR842,315 in the first six months of the year. The average asking rental rates for typical retail space available is now IDR504,629 psm / month in Jakarta (all classes) and IDR302,618 psm / month in the rest of Jabodetabek. Industrial Estate Sector Total industrial land sales recorded during the quarter totalling hectares was the highest for the last five consecutive quarters, but only because of a sizeable purchase of land at Modern Cikande by a food industry player from Thailand. Prices of industrial land remained unchanged during the quarter. 3 Research & Forecast Report 2Q 2014 Highlights Colliers International

4 OFFICE SECTOR Leased Office The cumulative supply of office buildings in Jakarta (CBD and outside CBD area) will reach around 7.5 million sq m by the end of 2014, bringing the growth rate of the Jakarta cumulative supply to 6.5% in 2014, which is higher than in the previous year. The office supply in Jakarta is projected to increase rapidly from 2015 to 2018 at an average of 10.2% per year. Supply in the CBD CBD Office Cumulative Supply 8,000,000 7,000,000 6,000,000 5,000,000 s q m 4,000,000 3,000,000 2,000,000 1,000, YTD 2014F 2015F 2016F 2017F 2018F Existing Supply Annual Supply Annual CBD Future Office Distribution Based on Sub Market 2018F 2017F 2016F 2015F 2014F 0 150, , , , ,000 s q m Sudirman Thamrin Mega Kuningan Rasuna Said Satrio Gatot Subroto 4 Research & Forecast Report 2Q 2014 Office Colliers International

5 Up to the reviewed quarter, the CBD area continued to contribute the most space, comprising 67.2% of the cumulative office supply in Jakarta. Lippo Kuningan, which began operationin 2Q 2014, is the first new office building in the CBD in 2014 and contributes 30,500 sq m. This office building, which is located in Rasuna Said, brought the cumulative supply in the CBD to its current 4.79 million sq m. After Lippo Kuningan, 187,805 sq m of additional supply will enter the market in the CBD by the end of Including office buildings that have been in operation, the total annual supply during 2014 in the CBD will reach 218,305 sq m. Future office buildings in the CBD are projected to provide a huge amount of space at 2.27 million sq m from 2015 to Next year alone, the CBD will see 619,199 sq m of additional office space or almost 30% of the total projected additional supply in Based on the status of development of 40 new office building projects (totalling 2.46 million sq m) located in the CBD from , 30 office buildings (1.95 million sq m) are under construction. With almost 80% under construction as of 2Q 2014, it appears that all of this additional office space in the CBD from 2014 to 2018 will seemingly be completed. The Sudirman area is still the largest contributor of supply in the CBD, based on location. However, the Satrio and Mega Kuningan areas are expected to see the most significant growth. Sequentially, those areas will record growth of 137% and 100% respectively from 2014 to In addition to Satrio and Mega Kuningan, with large land availability, Gatot Subroto will become the next corridor to grow, by 77% during the same period. Sudirman will only contribute 47%, more than Rasuna Said (32%) and Thamrin (11%). Annual Outside CBD Future Office Distribution Based on Region 2018F 2017F 2016F 2015F 2014F 0 100, , , , ,000 s q m Central Jakarta South Jakarta North Jakarta East Jakarta West Jakarta The total additional supply of office buildings in the outside CBD in 2014 is projected to reach 245,604 sq m contributed by 10 office buildings. Once again, South Jakarta will become the main contributor of office supply in 2014 as seven of the office buildings or 78% of the total additional space in 2014 will be located in South Jakarta. As of 2Q 2014, two office buildings officially began operations and brought the cumulative supply to 2.34 million sq m in outside CBD. One office building, Green Kosmo Mansion (GKM) Tower, is in South Jakarta, and another, Kirana Two, is in North Jakarta. Three office buildings are located outside of South Jakarta, including Kirana Two, GP Plaza and Wisma 77 Tower 2. Supply in the Outside CBD Outside CBD Office Cumulative Supply s q m 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, YTD 2014F 2015F 2016F 2017F 2018F South Jakarta will continue leading in future supply in outside CBD from 2015 to Additional supply of 0.9 million sq m is projected to enter the market by Of this additional space, 59% will be in South Jakarta. Central and West Jakarta will follow with 16 and 13%, respectively. South Jakarta will see an additional 150,000 sq m per year from 2014 to The total 747,215 sq m provided during in South Jakarta is still more than the total additional supply of the other regions during that period. Based on development status, 62.5% of the total projected future supply (36 buildings) from 2014 to 2018 in the outside CBD have begun construction as of 2Q This is at 24 office buildings under construction. This current development status also signifies that at future office buildings in the outside CBD, almost all projected supply will meet the completion date. Existing Supply Annual Supply 5 Research & Forecast Report 2Q 2014 Office Colliers International

6 Supply in TB Simatupang TB Simatupang Office Cumulative Supply s q m 1,000, , , , , , , , , , Existing Supply YTD 2014F Annual Supply As mentioned above, most parts of South Jakarta will be the main contributors of future supply, mainly office buildings in TB Simatupang. Gedung Aneka Tambang 2 and Green Kosmo Mansion are newly operating office buildings in TB Simatupang. The total annual supply in TB Simatupang will be 191,637 sq m in The cumulative supply in TB Simatupang totaled 536,806 sq m as of 2Q This represents the total supply in South Jakarta or 78% of the total supply in the outside CBD. 2015F 2016F 2017F 2018F Annual Outside CBD Future Office Distribution: TB Simatupang and Other Area 2017F 2016F 2015F 2014F 0 100, , , , ,000 s q m Outside CBD exclude TB Simatupang TB Simatupang After contributing 191,637 sq m, the office market in TB Simatupang will continue to see a significant amount of space in Together with 2014, the total new supply will increase by 336,093 sq m in TB Simatupang. The total future supply from 2014 to 2015 will be contributed by 11 office buildings. New Supply Pipeline projected completion Office building projects name location SGA Marketing scheme status development CBD Area 2014 Convergence Rasuna Said 36,367 For Lease & Sale Under construction 2014 Gran Rubina Tower 1 Rasuna Said 31,438 For Sale Under construction 2014 Sinarmas MSIG (Chase Tower) Sudirman 75,000 For Lease Under construction 2014 The Noble House Office Tower Mega Kuningan 45,000 For Lease Under construction 2015 AIA Center (Menara Selaras) Sudirman 47,000 For Lease Under construction 2015 Bahana Office Tower Mega Kuningan 50,000 For Lease & Sale Under construction 2015 Cemindo Tower (Rasuna Tower) Rasuna Said 60,995 For Lease 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 Lippo Thamrin Office Tower Thamrin 16,500 For Sale In planning 2015 Sahid Sudirman Center Sudirman 138,500 For Lease & Sale Under construction 2015 Satrio Square Satrio 24,600 For Lease Under construction 2015 Satrio Tower Satrio 31,604 For Lease Under construction 2015 Telkom Landmark Tower II Gatot Subroto 65,000 For Lease Under construction 2015 Wisma Mulia 2 Gatot Subroto 65,000 For Lease Under construction 2016 Centennial Tower Gatot Subroto 100,000 For Sale Under construction 2016 Gran Rubina Tower 2 Rasuna Said 32,000 For Sale In planning 2016 Mangkuluhur Tower Gatot Subroto 53,000 For Lease Under construction 2016 Menara Palma 2 Rasuna Said 50,000 For Lease Under construction 2016 Menara Pertiwi Mega Kuningan 41,456 For Sale Under construction continued 6 Research & Forecast Report 2Q 2014 Office Colliers International

7 projected completion Office building projects name location SGA Marketing scheme status development continuation 2016 Office ST Regis Gatot Subroto 90,511 For Lease Under construction 2016 T Tower (BJB Tower) Gatot Subroto 24,000 For Sale Under construction 2016 The Tower Gatot Subroto 56,492 For Sale Under construction 2017 Gayanti City Gatot Subroto 25,000 For Lease In planning 2017 Prosperity Distict 8 Sudirman 71,545 For Sale Under construction 2017 Sequis Life Tower 2 Sudirman 80,000 For Lease Under construction 2017 Sudirman 7.8 Sudirman 52,000 For Sale In planning 2017 Sopo Del Tower A Mega Kuningan 80,000 For Lease & Sale In planning 2017 Sopo Del Tower B Mega Kuningan 40,000 For Lease In planning 2017 Treasury District 8 Sudirman 139,000 For Sale Under construction 2017 Thamrin Nine Thamrin 45,000 For Lease Under construction 2017 World Capital Tower Mega Kuningan 72,000 For Sale Under construction 2018 Astra Tower Sudirman 100,000 For Lease In planning 2018 Icon Tower Sudirman 72,500 For Lease In planning 2018 Mangkuluhur Tower II Gatot Subroto 50,000 For Lease In planning 2018 PCPD Tower Sudirman 96,000 For Lease Under construction 2017 SSI Tower (Graha Surya Intenusa) Rasuna Said 100,000 For Lease In planning 2018 Tower Two at The City Center Sudirman 39,204 For Lease In planning 2018 Tower Ciputra World Jakarta 1 Satrio 70,000 For Lease & Sale In planning 2018 World Trade Center III Sudirman 70,000 For Lease Under construction outside cbd Area (exclude tb simatupang) 2014 GP Plaza Slipi 12,204 For Sale Under construction 2014 Wisma 77 Tower 2 Slipi 24,200 For Lease Under construction 2015 Altira Sunter 40,000 For Sale Under construction 2015 Jakarta Box Tower Kebon Sirih 36,000 For Lease Under construction 2015 Maxima Tower Kelapa Gading 8,000 For Lease Under construction 2015 Menara Sentraya Blok M 52,072 For Lease & Sale Under construction 2015 MNC Tower II Kebon Sirih 20,000 For Lease Under construction 2015 Nariba Office Suites Mampang 4,200 For Lease Under construction 2015 One Tower Kemayoran 21,400 For Lease In planning 2015 Puri Indah Financial Tower Puri Indah 38,500 For Sale Under construction 2015 Soho Capital Slipi 36,000 For Sale Under construction 2015 St Moritz Office Tower Puri Indah 19,500 For Sale Under construction 2015 The Suites Pantai Indah Kapuk 13,200 For Sale Under construction 2016 BKP Office Tower Sunter 16,000 For Lease In planning 2016 Gallery West Kebun Jeruk 29,000 For Lease & Sale Under construction 2016 Lippo Tower Holland Village Cempaka Putih 27,000 For Sale In planning 2016 L'Venue Pasar Minggu 41,597 For Sale In planning 2016 Sky 18 Tower Pasar Minggu 27,500 For Sale In planning 2016 Soho Pancoran Pancoran 30,000 For Sale Under construction 2017 Ciputra Business District Kemayoran Tower 1 Kemayoran 40,000 For Sale In planning 2017 Ciputra Business District Kemayoran Tower 2 Kemayoran 40,000 For Lease In planning 2018 Kota Kasablanka Office Tower 2 Casablanca 90,000 For Lease In planning continued 7 Research & Forecast Report 2Q 2014 Office Colliers International

8 projected completion Office building projects name location SGA Marketing scheme status development continuation tb simatupang 2014 Graha MRA 13,000 For Lease Under construction 2014 Plaza Oleos 39,778 For Lease & Sale Under construction 2014 Palma Tower 20,484 For Lease Under construction 2014 The Manhattan Square 39,375 For Lease & Sale Under construction Office Park (Cityland Tower) 40,000 For Sale Under construction 2015 AD Premier 18,900 For Lease Under construction 2015 Metropolitan Tower 44,000 For Lease & Sale Under construction 2015 South Quarter Tower 1 40,778 For Sale Under construction 2015 South Quarter Tower 2 40,778 For Lease Under construction 2016 Beltway Office Park Tower 4 25,600 For Lease In planning 2017 The Sima 60,000 For Lease Under construction 2017 South Quarter Tower 3 40,778 For Lease In planning 2017 The Manhattan Square Tower 2 39,375 For Lease & Sale In planning Occupancy Occupancy Rates in the CBD and Outside the CBD CBD Annual Office Supply and Demand in the CBD 100% 95% 90% 85% 80% 75% 70% 450, , , , , , , ,000 50, YTD YTD s q m CBD Outside CBD (excl. TB Simatupang) TB Simatupang Annual Supply Annual Demand Despite a slight decline QoQ, the occupancy rate for office buildings in the CBD remained steady as of 2Q 2014, at 96%, where it has been for the past year. Nearly 65% of office buildings in the CBD recorded relatively stable occupancy rates in 2Q Most office buildings that recorded growing occupancy were in Mega Kuningan. Despite the majority remaining relatively stable, office buildings in Gatot Subroto and Rasuna Said also saw improving performance. 8 Research & Forecast Report 2Q 2014 Office Colliers International

9 Good location, easy access, good building quality and management, and integration into commercial areas, such as shopping centres and apartments, have become the key elements for office buildings maintaining their occupancy performance. Annual Office Supply and Demand in TB Simatupang 100,000 Based on grade, a decreasing occupancy rate of 1.1% was recorded at Premium office buildings, while Grade A office buildings weakened 2.6% QoQ. Grade C office buildings only saw a slight drop in the occupancy rate QoQ. Only Grade B office buildings saw growth of 0.5% in the same period. s q m 80,000 60,000 40,000 Outside CBD Annual Office Supply and Demand in the Outside CBD 300, ,000 20, Annual Supply Annual Demand YTD s q m 200, , ,000 50,000 0 Demand for Future Offices Pre-Committed Absorption of Future Office in the CBD 2018F YTD 2017F Annual Supply Annual Demand New additional supply caused the occupancy rate for office buildings in the outside CBD to weaken, although less than 1%. Currently, the average occupancy rate is 93.2%. The occupancy rates for office buildings in North Jakarta showed the most significant drop, slumping 6.5% QoQ. TB Simatupang Despite falling by 2.9%, TB Simatupang is still a major driver of the occupancy rate in the outside CBD. The average occupancy rate in TB Simatupang was 93.2% as of 2Q F 2015F 2014F 0 150, , , , ,000 s q m Annual Supply Space Absorbed Historically, since it was recorded at 70% in early 2000, the occupancy rate in TB Simatupang reached 90% in Then the occupancy rate remained above 90%, with an average of 96% from 2003 to Today, there are quite limited large spaces available at office buildings in TB Simatupang. Even newly operating office buildings have achieved healthy occupancy. A new office building in TB Simatupang has reached above 50% of committed occupancy in the first year of operation. 9 Research & Forecast Report 2Q 2014 Office Colliers International

10 Pre-Committed Absorption for Future Office in the Outside CBD 2018F 2017F 2016F 2015F 2014F 0 150, , , , ,000 s q m Annual Supply Space Absorbed Pre-Committed Absorption for Future Office in TB Simatupang Asking Base Rent Average Asking Base Rent (Based on Available Space) in the CBD by Grade IDR 708,000 IDR 649,000 IDR 590,000 IDR 531,000 IDR 472,000 IDR 413,000 IDR 354,000 IDR 295,000 IDR 236,000 IDR 177,000 IDR 118,000 IDR 59,000 IDR 0 Premium Grade A Grade B Grade C Average Asking Base Rent in the CBD USD USD USD USD USD USD USD USD USD USD USD USD 5.00 USD F IDR 472,000 IDR 413,000 USD USD F IDR 354,000 IDR 295,000 USD USD F IDR 236,000 IDR 177,000 USD USD F IDR 118,000 IDR 59,000 USD USD F IDR 0 USD , , , , ,000 s q m Annual Supply Space Absorbed IDR USD 2014 YTD Abundant supply from 2014 to 2018 will present a challenge for the office market, particularly in the CBD. As of 2Q 2014, future office buildings projected to be completed in 2014 have achieved 40% commitment occupancy. Overall, with projected additional supply of 2.46 million sq m by 2018 and the commitment occupancy at 25%, the CBD office market will find it difficult to maintain occupancy above 90%. A similar trend seemingly will be seen in the outside CBD. Excluding TB Simatupang, commitment occupancy for projected future office buildings in 2014 was 10%. On the other hand, future office buildings in TB Simatupang are performing well at 54.7% as of 2Q By reaching above 50% commitment in only two quarters, the big challenge for office buildings in TB Simatupang will be in 2015 due to the large supply projected to enter the market. Low vacancy is still the main reason for landlords to adjust base rents, and coupled with limited supply, the asking base rent is currently IDR252,114 psm / month. The asking base rent grew by 1.9% QoQ and 17.6% YoY. Some office buildings noted a very significant adjustment. However, this increase was followed by the strong performance of several buildings, which have had an average occupancy close to 100% since last year. The average rental rates of office buildings charging in US dollars only grew by 1.1% QoQ, as of 2Q Asking base rent for offices charging in US dollars was USD36.32 psm /month, growing 5.4% YoY. Currently, based on available spaces, nine office buildings offered a base rent of USD50.00 psm / month and more. In addition to performance, building quality and location are key factors in those office buildings becoming the most expensive in the CBD, and in all of Jakarta. 10 Research & Forecast Report 2Q 2014 Office Colliers International

11 The average base rent in the outside CBD was steady QoQ. This growth has put the average base rent currently at IDR164,727 psm / month. Office buildings charging in USD were at USD22.54 psm / month. Growth at office buildings in West Jakarta was the highest at 15.2% QoQ. Office buildings in Slipi were still the main contributor, bringing the average base rent to IDR180,144 psm / month in West Jakarta. South Jakarta achieved the highest base rent at IDR188,069 psm / month, but only recorded growth below 1% QoQ. High base rent in South Jakarta was still influenced by the performance of office buildings in TB Simatupang, including Pondok Indah. Currently, base rent in TB Simatupang was IDR157,368 psm / month. Office buildings charging in USD were at USD21.7 psm / month, growing 3.9% QoQ. This growth was similar to office buildings charging in IDR during the same period. Average Asking Base Rental in TB Simatupang IDR 354,000 IDR 295,000 USD USD Strata-title Office Asking Price (Combining Office Buildings Charging in IDR and USD) IDR 60,000,000 IDR 50,000,000 IDR 40,000,000 IDR 30,000,000 IDR 20,000,000 IDR 10,000,000 IDR CBD TB Simatupang Outside CBD exclude TB Simatupang YTD IDR 236,000 IDR 177,000 IDR 118,000 IDR 59,000 USD USD USD USD 5.00 There was no change in performance at strata-title office buildings in the CBD with the current total supply at 816,829 sq m. The lack of new supply kept take-up rates at 99.4% as of 2Q 2014 and there was no growth QoQ. This level of take-up rate indicates that almost all existing space has been sold out in the CBD. IDR IDR Service Charges 2012 USD YTD USD 0.00 Increasing electricity tariffs effective by mid-2014 for industrial sectors will bring about a significant correction in service charges in the remainder of 2014 and early Currently, service charges for all classes of office buildings in the CBD were IDR65,208 psm / month as of 2Q 2014, an increase of nearly 10% YoY. Office buildings charging in USD recorded a slight increase of 3.1% in the same period, bringing the average service charges to USD6.76 psm / month. Office buildings in the outside CBD charging in rupiah also showed significant growth of 7.1% YoY. Currently, service charges were IDR46,155 psm / month as of 2Q Office buildings in South Jakarta charged more at IDR48,389 psm / month. Populated by mostly good quality buildings, the average service charge in TB Simatupang was even higher at IDR74,418 psm / month as of 2Q Increasing demand for strata-title office buildings had an impact on the performance of future supply. At least from 2014 to 2017, the committed take-up rate has achieved 46.3% of the 952,931 sq m of future office space for sale. Strata-title offices for sale, which will be operational in 2014 alone, have been at 57%. The high take-up rate performance at strata-title offices for sale, especially future supply, has caused the selling price to rise. Currently, selling prices for strata-title offices in the CBD are in the range of IDR40 to 80 million psm. Location has allowed Sudirman to have the highest asking prices ranging from IDR60 to 80 million psm. Take-up rates for offices for sale in the outside CBD have been slightly adjusted at Green Kosmo Mansion. Despite still being high, currently, the take-up rate of offices for sale in the outside CBD is 94.2%, down 1.3% QoQ. The asking price currently is IDR32.5 million psm. The office buildings for sale in the outside CBD have asking prices in the range of IDR25 to 45 million psm. Two office buildings located in Blok M (South Jakarta) and Slipi (West Jakarta) had higher selling prices than other office buildings in the outside CBD area. 11 Research & Forecast Report 2Q 2014 Office Colliers International

12 Concluding Thoughts A substantial supply projection in the CBD will inevitably have a big impact on the weakening figure of asking base rental and occupancy rates. Demand for office space will still be resilient, however, the growth of office supply will seemingly reduce the occupancy level over the three next years. The office market is predicted to experience contraction in the asking base rental rates amidst increasingly high competition among new buildings. Well-performing office buildings with limited available space mainly underpin the current high asking rental rates. Rental rates will be adjusted once the market witnesses sizeable available office space. 12 Research & Forecast Report 2Q 2014 Office Colliers International

13 Apartment Sector Apartment for Strata-title Supply As of the end of June 2014, eight apartment projects with 3,466 new apartment units, have been handed over during 2Q This quarter s additional supply is largely located in South Jakarta, both by number of apartment units and number of projects (1,364 units at three apartment projects). Other regions, like East Jakarta, introduced 812 new units at two apartment projects, while the CBD, West Jakarta and Central Jakarta contributed one project each, accounting for 37.2% of the total units. With the additional new units mentioned above, the total cumulative supply of strata-title apartments was 137,056 units, an increase of 2.6% over the previous quarter. Two upper-class projects, Kemang Village (The Intercon) and The East at Essence Darmawangsa, are located in the expatriate community area in South Jakarta, i.e. the Kemang and Darmawangsa areas. The Intercon tower was the sixth tower at the Kemang Village project being handed over, while The East tower at Essence Darmawangsa was the last tower being handed over after two previous towers, Eminence (in 2008) and The South (in 2013), entered the market. Both Kemang Village and Essence Darmawangsa are planning to launch their second phases of development, which focus on residential projects, and will be located adjacent to the existing development. Another project, Pakubuwono Terrace (South Tower) project, which is located on border of South Jakarta and Tangerang, continues to deliver the second tower which comprises 720 units and targets the middlelow segment. Sentra Timur Residence with Tower Orange and The Hive Tamansari contributed as much as 10.3% of the total stock of apartments in East Jakarta during 2Q Perumnas (state-owned housing developer) collaborated with Bakrieland to develop Sentra Timur Residence, which is located near the bus terminal in Pulo Gebang, in order to accommodate buyers of the low to middle-low segment. The Hive Tamansari, which targeted the middle-upper segment is a mixed-use project, located in Cawang and comprised of condotel and apartment components. Locations like West Jakarta, Central Jakarta, and CBD only contributed one project each. The operation of a brand new project in Puri Indah, The Windsor (Tower I), added an upper segment project to West Jakarta. Verde Apartments (Tower East) and The Green Pramuka (Tower Chrysant) are both extensions of the existing projects located in Rasuna Said and Jl. A. Yani and target the upper and low segments, respectively. During this quarter, the Jakarta apartment market saw more additional supply from newly-launched projects. There are seven projects with a total potential stock of 2,133 units, 41% less than last quarter. This slowing figure indicates that developers tend to take a wait and see attitude, waiting for the results of the presidential election. 13 Research & Forecast Report 2Q 2014 Apartment Colliers International

14 List of Completed Projecs During 2Q 2014 development location region Developer No. of Units Kemang Village (The Intercon) Jl. Pangeran Antasari South Jakarta Lippo Karawaci 400 The East at Essence Complex Dharmawangsa Jl. Dharmawangsa X South Jakarta PT. Prakarsa Semesta Alam 244 Pakubuwono Terrace (South Tower) Jl. Kebayoran Lama South Jakarta PT Selaras Mitra Sejati 720 Verde Apartment (Tower East) Jl. HR. Rasuna Said CBD Farpoint Realty 114 The Windsor (Tower I) Jl. Puri Indah West Jakarta PT Antilope Madju Puri Indah 176 Sentra Timur Residence (Tower Orange) Jl. Pulo Gebang East Jakarta Bakriland Development 390 The Tamansari Jl. DI Panjaitan East Jakarta Wika Realty 422 The Green Pramuka (Tower Chrysant) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Total 3,466 Newly Launched Apartments During 1Q 2014 development location region no. of units expected completion time asking price/sq m (excluding VAT) Springhill Golf Suites Kemayoran Central Jakarta ,600,000 The H Residence Kemayoran (Amethyst Tower) Kemayoran Central Jakarta ,600,000 Ciputra International Puri Indah (Tower I) Puri Indah West Jakarta ,000, Avenue Apartment Daan Mogot West Jakarta ,800,000 Sentra Timur Residence (Tosca Tower) Pasar Rebo East Jakarta ,000,000 Bassura City (Tower Jasmine and Heleconia) Basuki Rahmat East Jakarta ,500,000 *estimated At the six newly launched apartment projects, there are two on-hold projects (partly constructed), i.e. The H Residence Kemayoran and 19 Avenue Apartment, that were acquired by two developers. HK Realtindo took over one tower of Apartment Menara Rajawali (Chrysant Tower) in the Kemayoran area and continued the unfinished work. This apartment tower was then renamed The H Residence Kemayoran (Amethyst Tower). Similarly, a rusunami project (low cost apartment project), called Rusunami Orchad Palace, was taken over by Margayahu Land who changed the concept into a more commercial apartment project and renamed the project 19 Avenue Apartments. Springhill Golf Suites and Ciputra International Puri Indah (Tower I) are brand new projects that target the middle to upper segments. In Bassura City compound, Tower Jasmine and Heleconia are the second phase of the previous six towers thatwas old in the first phase. At the beginning of 2014, we anticipated that a total of 20,899 new apartment units would enter the Jakarta apartment market. Overall, during 1H 2014, some 4,712 units have entered the market or 23% of the total units. This indicates a relatively slow supply growth compared to the last three years, when the average of 8,498 apartment units were added to the market in the first semester of each year. Several projects that were previously scheduled to open in this quarter were delayed due to a variety of reasons. Slow finishing work due to technical problems, such as testing the electrical and mechanical elements of the apartment projects was most frequently reported by developers as causing delays. 14 Research & Forecast Report 2Q 2014 Apartment Colliers International

15 New Supply Pipeline ( ) Apartment name location region no. of units 2014 Woodland Park (Matoa tower) (1Q) Kalibata South Jakarta 221 Pakubuwono Terrace (Tower North) (1Q) Kebayoran Lama South Jakarta 750 Sherwood Residence (Wellington) (1Q) Kelapa Gading North Jakarta 100 Kemang Village (The Infinity) (1Q) Antasari South Jakarta 175 Ambassade Residence Tower A Puri Denpasar CBD 234 Raffles Residences Satrio CBD 64 MyHome Apartment at Ciputra World Satrio CBD 136 Setiabudi Sky Garden (tower 1) Rasuna Said CBD 426 Verde Apartment (Tower East) Rasuna Said CBD 114 Pasar Baru Mansion (2 towers) Pasar Baru Central Jakarta 520 Elpis Residence Gunung Sahari Central Jakarta 791 Capitol Park Apartment Salemba Central Jakarta 1,700 The Mansion at Dukuh Golf Residence (Aurora Tower) Kemayoran Central Jakarta 522 The Mansion at Dukuh Golf Residence (BellaVista Tower) Kemayoran Central Jakarta 612 The Green Pramuka (Tower Chrysant) Pramuka Central Jakarta 1,000 The Green Pramuka (Tower Bougenville) Pramuka Central Jakarta 1,000 Sentra Timur Residence II (2 Towers) Pasar Rebo East Jakarta 810 Titanium Square Pulo Gebang East Jakarta 725 The Tamansari Cawang East Jakarta 422 Sherwood Residence (Regent) Kelapa Gading North Jakarta 100 Pluit Seaview (Tower Maldives) Pluit North Jakarta 940 Gading Greenhill Pegangsaan Dua North Jakarta 700 Northern Ancol Residence Ancol North Jakarta 800 La Venue - South Tower Pasar Minggu South Jakarta 341 Kemang Village (The Intercon) Antasari South Jakarta 400 The East at Essense Complex Dharmawangsa Dharmawangsa South Jakarta 244 The Aspen at Admiralty Fatmawati South Jakarta 860 Pakubuwono Terrace (Tower South) Kebayoran Lama South Jakarta 720 The Pakubuwono Signature Pakubuwono South Jakarta 188 Senopati Penthouse Senopati South Jakarta 63 LA City Apartment (Tower A) Lenteng Agung South Jakarta 980 La Maison Barito Barito South Jakarta 80 Botanica Apartment (3 Towers) Simprug South Jakarta 626 The Bellevue at Pondok Indah Pondok Indah South Jakarta 40 Green Central Tower Cerberra Gajah Mada West Jakarta 420 The Windsor (Tower I) Puri Indah West Jakarta 176 The Windsor (Tower II) Puri Indah West Jakarta 164 Sky Terrace Lagoon Kalideres West Jakarta 525 Metro Park Residence Kebon Jeruk West Jakarta 1,200 Green Palm Puri Kosambi West Jakarta 1,000 continued 15 Research & Forecast Report 2Q 2014 Apartment Colliers International

16 Apartment name location region no. of units continuation 2015 East Park Apartment (Tower C) KRT Radjiman East Jakarta 550 The Residence (CWJ 2) Satrio CBD 119 The Orchad Satrio (CWJ 2) Satrio CBD 349 Setiabudi Sky Garden (tower 2) Setiabudi CBD 160 T - Plaza Residence (Tower B) Pejompongan Central Jakarta 500 Menteng Park Cikini Central Jakarta 756 The Grreen Pramuka (Tower Orchid) Pramuka Central Jakarta 1,000 The Grreen Pramuka (Tower Penelope) Pramuka Central Jakarta 1,000 The Green Pramuka (Tower Scarlet) Pramuka Central Jakarta 1,000 The H Residence Kemayoran (Amethyst) Kemayoran Central Jakarta 800 Green Signature Apartment MT. Haryono East Jakarta 800 Bassura City (Tower Flamboyan) Basuki Rahmat East Jakarta 1,000 Bassura City (Tower Edelweiss) Basuki Rahmat East Jakarta 1,000 Bassura City (Tower Dahlia) Basuki Rahmat East Jakarta 1,000 Bassura City (Tower Cattleya) Basuki Rahmat East Jakarta 600 Bassura City (Tower Alamanda) Basuki Rahmat East Jakarta 600 Teluk Intan (Tower Saphire) Teluk Gong North Jakarta 1,100 Tifolia Apartment Perintis Kemerdekaan East Jakarta 500 Pluit Seaview (Tower Belize) Pluit North Jakarta 300 Callia Apartment Perintis Kemerdekaan East Jakarta 560 The Oakwood Sky Garden (2 Towers) Pluit North Jakarta 700 Pluit Seaview (Tower Ibiza) Pluit North Jakarta 500 Pluit Seaview (Tower Bahama) Pluit North Jakarta 650 Green Bay Pluit (Sea View) Pluit North Jakarta 2,072 Kemang Village - The Bloomington Antasari South Jakarta 150 The Royal Olive Residence Tower I Buncit Raya South Jakarta 225 Woodland Park (Cendana Tower) Kalibata South Jakarta 218 Senopati Suites 2 Senopati South Jakarta 81 1 Park Avenue Gandaria South Jakarta 279 Nine Residence Warung Buncit South Jakarta 246 Providence Park Permata Hijau South Jakarta 114 Kencana Residence Pondok Indah South Jakarta 173 District 8 (Tower Eternity) Senopati South Jakarta 400 District 8 (Tower Infinity) Senopati South Jakarta 280 Izzara Apartment (2 225 unit) TB. Simatupang South Jakarta 450 Lexington Rersidence (Tower 1) Pondok Pinang South Jakarta 270 Lexington Rersidence (Tower 2) Pondok Pinang South Jakarta 270 The Aspen Peak at Admiralty Fatmawati South Jakarta 644 Belmont Residence (Tower Montblanc) Meruya Ilir West Jakarta 350 Gianetti Apartment Kemanggisan West Jakarta 500 St. Moritz (New Presidential Tower) Puri Indah West Jakarta 150 Satu8 Residence Kedoya West Jakarta 174 The Nest Apartment Meruya Utara West Jakarta 1,100 Point 8 (Air Crew Tower) Daan Mogot West Jakarta 546 Gallery West Kebon Jeruk West Jakarta Avenue Apartment Daan Mogot West Jakarta 338 continued 16 Research & Forecast Report 2Q 2014 Apartment Colliers International

17 Apartment name location region no. of units continuation 2016 St Moritz (The New Ambassador Suite Tower) Puri Indah West Jakarta 200 The H Residence MT Haryono East Jakarta 383 Sudirman Suites Sudirman CBD 380 Senopati Suites 3 Senopati South Jakarta 54 Signature Park Grande MT Haryono East Jakarta 1,100 Grand Pakubuwono Terrace Kebayoran Lama South Jakarta 435 Sentosa Residence Cempaka Putih Central Jakarta 687 Gold Coast Apartment (Atlantic Tower) Pantai Indah Kapuk North Jakarta 568 Grand Pancoran Pancoran South Jakarta 120 Sudirman Hill Residence Karet Central Jakarta 255 Apartment Pejaten Park Residence Warung Buncit South Jakarta 380 Belmont Residence (TowerAthena) Meruya West Jakarta 165 Four Winds Permata Hijau South Jakarta 122 Capitol Suites Prapatan Raya Central Jakarta 327 Puri Mansion Apartment (Tower A) Puri Kembangan West Jakarta 900 Madison Park Tanjung Duren West Jakarta 1,200 Gayanti City (2 Towers) Gatot Subroto CBD 318 Verde Two (Tower 1) Rasuna Said CBD 152 Verde Two (Tower 2) Rasuna Said CBD 152 Bellevue Place Tebet South Jakarta 128 Kebayoran Icon Kebayoran Lama South Jakarta 256 Veranda Pesanggrahan West Jakarta Regatta London Tower Pantai Mutiara North Jakarta 276 Central 88 (2 Towers) Kemayoran Central Jakarta 612 Holland Village Cempaka Putih Central Jakarta 400 Domaine Sudirman CBD 186 Skyline Residence (2 Towers) DI Panjaitan East Jakarta 481 Kemang Penthouse Kemang South Jakarta 262 The Foresque Pasar Minggu South Jakarta 600 Springhill Golf Suites Kemayoran Central Jakarta 450 Sentra Timur Residence (Tosca Tower) Pulogebang East Jakarta 133 Taman Anggrek Residence Tanjung Duren West Jakarta 3,000 Puri Orchad (3 Tower) Kembangan West Jakarta 3,000 The Langham Residences Senopati South Jakarta 57 Anandamaya Residences (3 towers) Sudirman CBD 500 Maqna Residence Meruya West Jakarta 380 Vittoria Residence (3 tower) Daan Mogot West Jakarta 1,100 One Otium Residence Antasari South Jakarta 160 Wang Residence Kedoya West Jakarta 250 The Pejaten Pejaten South Jakarta Research & Forecast Report 2Q 2014 Apartment Colliers International

18 Demand The overall performance of the Jakarta apartment market in 2Q 2014 slowed modestly to 85.3%, down from 86.1% in the previous quarter. The softening demand, which began in 2H 2013 still continues in this quarter. Besides the current economic conditions and some measures from the government to curb speculation in the property market, the upcoming presidential election is likely have an impact by hampering buying activities of both end users and investors. Furthermore, the continued influx of newly launched apartments in this period, which was not counterbalanced by good absorption, has resulted in a lower take-up rate than in the previous quarter. The Take-Up Rates Comparison Between Existing Projects and Future Projects take-up 1Q Q 2014 QoQ change Existing 94.3% 94.6% 0.26% Pre-Sales Rate 72.6% 71.2% -1.45% Average 86.1% 85.3% -0.81% Asking Price This quarter still witnessed a climb in asking prices, particularly in prime locations, such as the CBD area and some particular areas in South Jakarta. Overall, the average asking price of stratatitle apartments in Jakarta was IDR25.5 million psm, increasing by 5% QoQ and 16% YoY. The softening demand that began in 3Q 2013 stimulated a rise in prices at a moderate pace compared to the previous year, when the average asking price grew aggressively by 13% per year. Average Asking Price of Strata-title Apartment in Jakarta IDR 30,000,000 IDR 25,000,000 IDR 20,000,000 IDR 15,000,000 IDR 10,000,000 The take-up rates vary in different sub-markets. The CBD area still achieved the highest at 94.8%, followed by South Jakarta and Non-prime areas with 89.7 and 82%, respectively. Limited new apartment supply for the last few years has resulted in the increasing absorption trend in the CBD area. Meanwhile, during April - June, South Jakarta and Non-prime areas recorded a downward trend, dropping modestly by around 1%. IDR 5,000,000 IDR 0 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 Average Take-Up Rate Performance in Different Location (%) Area 2Q q Q 2014 QoQ change YoY change CBD 91.3% 93.2% 94.8% 1.6% 3.5% South Jakarta 83.1% 90.0% 89.7% -0.3% 6.6% Non-Prime Area 81.8% 83.3% 82.0% -1.3% 0.2% With concerns about possibly slowing demand, developers continued to attract buyers and potential investors through exhibitions and advertising. Other than regular promotions, such as overseas holidays, direct gadget prizes, and discounts, some projects offered a cash back and referral fee system. All in all, the flexibility in payment terms, such as extended instalments was the most striking factor to accelerate sales. Another alternative term of payment offered by some developers is providing 60-month installment payment for ready-to-use project. In normal market practice, long-term instalment payment is only applicable for project under construction. By location, South Jakarta recorded the highest increase of all areas compared to the previous quarter and last year s figure in the same period by 8 and 23%, respectively. The accelerating price that occurred in South Jakarta was largely driven by the new projects that are located in premium areas, such as Senopati and Pondok Indah. Projects, such as Langham Residence and Pondok Indah Residences, which are located in the Senopati and Pondok Indah areas, respectively, introduced initial prices beyond the average market price due to their exclusivity and location in the prestigious areas. These two locations are much preferred by expatriates owing to their proximity to the international schools, upscale shopping malls, and expatriate communities. On the other hand, the new trend at new apartment projects is that they are generally offered as semi-furnished units equipped with A/C, water heater, kitchen set, and wardrobe, which raised the overall price increases in the Non-prime area. In general, the continuing construction activities and good sales performance of the projects in the CBD area have resulted in an overall price rise of 4% QoQ or 16% YoY. The recent political situation may hamper buying activities from both end users and investors. In fact, consistent progress of construction activities will help boost buyer confidence in their purchasing decisions. 18 Research & Forecast Report 2Q 2014 Apartment Colliers International

19 Average Asking Price (in IDR) in Different Locations Area 2Q q Q 2014 QoQ change YoY change CBD 33,981,607 38,282,223 39,702,373 4% 17% South Jakarta 23,434,989 26,687,843 28,724,626 8% 23% Non-Prime Area 16,932,956 18,819,110 19,609,236 4% 16% Considering that Non-prime areas and South Jakarta areas still have a number of potential vacant lots to be developed for residential use, we anticipate a further increase in the apartment price in Jakarta in the coming quarters. Apartment For Lease Supply During the first half of 2014, we saw no new supply of apartments for lease in Jakarta. However, the apartment market is still expecting 630 new serviced apartment units by The new apartment developments consist of 280 units at two projects, Ascott Kuningan and TBS Linera Serviced Apartments, which will be completed in (3Q or 4Q) 2014, and the remaining 350 units are at two projects, i.e Fraser Place Setiabudi at Setiabudi Sky Garden and Fraser Suites at Ciputra World 2. All of the projected future apartments will be operated as serviced apartments. As such, until the end of 2Q 2014, the total supply of apartments for lease (serviced and non-serviced) in Jakarta remained at 8,334 units. By location, apartments for lease in Jakarta are mainly scattered around the CBD and South Jakarta areas, at around 43 and 35%, respectively. By grade, most apartments for lease in Jakarta are classified as middle-upper grade projects, followed by middlelower grade at 74 and 14%, respectively. As expatriates are the target market for most serviced apartment projects, the developments are primarily characterised by better building maintenance and higher rental rate. Apart from that, a minority of apartments for lease projects are middle-lower class, comprising old, non-serviced apartment projects located in South Jakarta. Distribusi Apartment For Lease Based on Region North Jakarta 5% West Jakarta 6% CBD 43% South Jakarta 36% Central Jakarta 10% List of Future Apartment For Lease Projects Name of development year of operation location area no. of units TBS Linera Apartment Service 2014 Jl. Intan No. 25 Cilandak Barat South Jakarta 110 Ascott Kuningan Jakarta 2014 Jl. Prof Dr Satrio CBD 170 Fraser Suites at Ciputra World Jakarta Jl. Prof. Dr. Satrio CBD 200 Fraser Place at Setiabudi Sky Garden 2015 Jl. Karbela Selatan CBD Research & Forecast Report 2Q 2014 Apartment Colliers International

20 Average Rental Rates The overall asking rental rates for apartments for lease increased slightly during 2Q The QoQ increase in the rental rate was mostly due to some old apartments having renovated some of their units and then offering them at higher prices. The renovation work created a rent discrepancy between the standard and the renovated units, ranging from USD200 to 400 per unit. On the other hand, some serviced apartment operators with projects in the South Jakarta area confidently feel that their high occupancy rate is the basis for raising the rental rates slightly, between USD100 and 150 / unit / month. Average Rental Rates (psm/month) in Different Areas Rental Rate (psm/month change Area 1q Q 2014 QoQ CBD including South USD27.58 USD % Jakarta Non-Prime Areas USD15.64 USD % Overall, the average rental rates of serviced apartments in the CBD (including South Jakarta) and the Non-prime areas increased modestly by 0.9% compared to the previous quarter. Serviced apartments in the CBD area (including South Jakarta) posted an average rent of USD33.20 psm / month, while the non-serviced apartments quoted a cheaper rate at an average of USD26.70 psm / month. Serviced apartments located in the Non-prime areas reached USD17.80 psm / month, while the non-serviced apartments charged less at USD13.20 psm / month. Average Rental Rates of Apartment For Lease (Serviced and Non-Serviced) USD USD USD USD USD USD 5.00 USD YTD CBD (including South Jakarta) Non-prime Area Occupancy Rates The dynamic market for Jakarta apartments for lease during 2Q 2014 has made the overall occupancy rate increase by 0.8% to 76.6%. All apartment submarkets, including serviced and nonserviced, have experienced an upward trend compared to the previous quarter, by 0.2 and 1.9%, respectively. The Occupancy Rates of Serviced and Non-Serviced Apartment take-up 1Q Q 2014 QoQ change Serviced 70.5% 72.4% 1.9% Non-Serviced 78.4% 78.6% 0.2% Quite a few transactions occurred in the apartment for lease market in Jakarta during this fiscal period, especially in May when a number of expatriates, particularly from Japan, relocated to Indonesia. On the other hand, newcomers, mostly corporate tenants, took both short-term and long-term leases. Regular tenants of apartments for lease, particularly in the South Jakarta area, were still dominated by Asian expatriates, such as Japanese and Koreans. Furthermore, the increase in the occupancy rate during the quarter was underpinned by corporate tenants from big local banks that occupied a number of units for training purposes. This contributed to the increase in the occupancy rate in South Jakarta s serviced apartments. Active industries that generate demand for apartments for lease continue to be oil and gas, construction, banking and financial, manufacturing, and embassies. Average Occupancy Level of Apartment For Lease (Serviced) occupancy 1Q Q 2014 QoQ change CBD 78.8% 82.0% 3.2% South Jakarta 76.1% 83.8% 7.7% Non-prime area 51.9% 52.7% 0.9% Average Occupancy Level of Apartment For Lease (Non-Serviced) occupancy 1Q Q 2014 QoQ change CBD 84.1% 84.6% 0.5% South Jakarta 78.1% 78.3% 0.3% Non-prime area 75.9% 75.9% 0.1% The increase in the electricity tariff effective 1 July 2014 has yet to have a substantial impact on serviced and non-serviced apartments. It will not cause apartments for lease to raise their rental rates or service charges immediately because the tariff will be charged directly to the tenants. 20 Research & Forecast Report 2Q 2014 Apartment Colliers International

21 In anticipation of tougher competition from strata-title apartment units offered for lease and operated like non-serviced apartments, the serviced apartments offered more benefits and facilities to entice tenants. In addition to the standard facilities, such as 24-hour security system and swimming pool, many serviced apartment projects offered various plus points that cater to the needs of residents. These include special facilities like a lounge, library or free breakfast, and daily services, such as free school bus for the children, personal grocery delivery, and daily maid services, which are not normally available with nonserviced apartments or strata-title apartments. Concluding Thought The political circumstances has been the most stirring factor affecting buyer sentiment. The apprehension over the presidential election led to a wait-and-see attitude for apartment buyers who may postpone their buying decisions in the short term. This is evidenced by the softening demand since 1Q 2014 that impacted the slowing growth in asking prices. On the other hand, the high interest rate, depreciation of rupiah, and stricter mortgage regulations remain the concerns of developers in their attempts to keep sales at a healthy level. In fact, quite a few developers are initiating various creative strategies that will likely boost sales of apartments. The apartment for lease market will grow moderately until 2015, with a total of four projects in the pipeline located in the CBD and South Jakarta areas. In addition, massive new stock of new strata-title apartments located in close proximity to the CBD can potentially put downward pressure on occupancy levels of both serviced and non-serviced apartments. The hike in the electricity tariff in July has not immediately caused apartments for lease to raise their service charges or rental rates. In fact, the serviced and non-serviced apartments charge a rental rate based on daily services, quality of furnishings and facilities in the apartments. The electricity tariff is charged directly to the tenants based on their usage. 21 Research & Forecast Report 2Q 2014 Apartment Colliers International

22 Expatriate Housing Sector Expatriate Housing Indonesia s economy has experienced rapid growth in the past three years. Multinational corporations have pursued operation and expansion plans or decided to establish their companies in Indonesia. This trend has given rise to the demand for expatriates in many high management positions. Accordingly, a substantial need for housing accommodations has emerged. The number of houses designed for expatriate occupation, particularly in preferred areas such as Kebayoran Baru, Pondok Indah, Kemang, Cipete, Kuningan and Menteng, is limited due to the continuing demand and slow supply. Meagre land availability in preferred expatriate locations has also restricted the number of new houses. In 1H 2014, three housing compound developments in South Jakarta were established. The three compounds in Pejaten, Cipete and Cilandak have various housing units, ranging from 8 to 10 units each and having 3- to 4+1-bedroom types of housing. These newly built houses have relatively smaller units compared to the older houses, and have adopted a minimalist concept. South Jakarta area remains irreplaceable as an expatriate home location because it provides almost all the needs of expatriates, such as international schools, entertainment centres, shopping spots, golf courses and other points of interest. Typical houses designed for expatriates are generally considered premium properties due to their excellent specifications and prime locations. The disproportionality between limited supply and resilient demand for expat housing has given rise to the take-it or leave-it attitude of landlords. Even with leasing activity reaching a plateau in the first semester of 2014, landlords of expatriate houses are still confident in maintaining the rental rates or in increasing the rental due to the historical market performance that has recorded a great success last year. In fact, they expect to see continued demand in upcoming years. The supply of stand-alone houses remains relatively flat, in contrast to continuing inquiries for such products. Thus, it is highly unlikely that rents will decrease in the future. As long as Indonesia s economic growth and long-term prospects remain positive, overseas corporations would still aim for Jakarta as their business destination, which would most likely heighten the number of expatriates. If standardized expat housing remains flat, landlords will continue to dictate rental prices. Overall, the increase in the asking rental rate for expatriate housing ranges from 15% to 20% or USD per month per unit house compared to the figure in the previous semester. Currently, the minimum house rental for expatriates is USD3,000 per month per unit. In our database, the prices range from a minimum of USD3,000 for a three-bedroom type of house in Cipete to a maximum of USD15,000 per month per unit for a 4- to 5-bedroom house in Kebayoran, Menteng and Pondok Indah areas. 22 Research & Forecast Report 2Q 2014 Expatriate Housing Colliers International

23 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 ,500-12,000 Pondok indah 4-5 Bedrooms House 450-1,000 4,500-15,000 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 4,500-12, Bedrooms Townhouse/Complex 220 3,500 kemang 3 Bedrooms Townhouse/Complex ,500-5,000 4 Bedrooms Townhouse/Complex ,500-5, Bedrooms House 550-1,000 4,000-7,000 cilandak 4 Bedrooms Townhouse/Complex ,000-6,500 3 Bedrooms Apartment + Study ,500-5, Bedroom House ,000-7,000 cipete 3 Bedrooms Townhouse/Complex ,500-5,000 4 Bedrooms Townhouse/Complex ,500-6, Bedrooms House ,000-3, Bedroom House ,500-7,000 pejaten 3 Bedrooms Townhouse/Complex ,000-7,000 4 Bedrooms House ,500-7, Research & Forecast Report 2Q 2014 Expatriate Housing Colliers International

24 Demand The demand for expatriate housing during this semester is still at a good level, but not as aggressive as that in the past two years. Based on the number of orientations conducted by Colliers International Indonesia, this semester posted an increase of 26% compared to the rate in the same period in By contrast, the increasing number of orientations is not in accordance to the increase in the number of deals. There are some factors that the expatriates take into consideration in delaying their decision, such as the election and the fear of weak rupiah exchange rate against US dollar. Some companies have prioritized their concerns over the election and have decided to undertake a wait-and-see approach until the new president is confirmed. Furthermore, most housing demands generally come from expatriates with children, so the delay in the deals is particularly associated with the education year schedule, namely, when school starts. Allegation of sexual assault at the Jakarta International School (JIS) has also increased anxiety amongst expatriates with kids at pre-school level. JIS has taken serious action in addressing this issue to redeem its reputation as the most prominent international school in Indonesia. JIS aims to involve parents in developing a better system to protect children from sexual crimes, and is actually in the process of obtaining proper license from the Ministry of Education. JIS expects to reopen its kindergarten school sometime in August this year. Demand for expatriate housing is still concentrated in the South Jakarta area, with demand generators for expatriate housing in 1H 2014 still coming from oil and gas, mining, banking and insurance and consultant companies. Apartment for Expatriates Unlike landed houses, rental tariff for selected apartments for expatriates is relatively more controlled, particularly when the apartment is part of an international chain operator, because they rely on corporate pricing often set by overseas headquarters. Overall, the asking rental rate of apartments for lease (both non-serviced and serviced apartments) has increased by 3.5% compared to the figure in 2H Meanwhile, for stratatitle apartments that are rented out to expatriates, the limited number of 3- and 4-bedroom units, particularly those in strategic locations, can drive the rental rate to increase by 25% compared to last semester s figure. Although a large number of new apartment units will be completed in 2014, strata-title apartment owners, particularly those located in the most sought-after areas for expatriates, remain very optimistic that they will be able to maintain their pricing and keep their occupancy rates as high as they are at present. Currently, a typical two-bedroom non-serviced apartment (including strata-title apartments, which are rented out to expatriates) is offered from a minimum of USD2,500 to a maximum of USD4,300 per month, whereas the three-bedroom type is offered from USD2,800 to USD6,000 per month. The most expensive non-serviced apartment is located in Kebayoran Baru area, e.g. Dharmawangsa, which is offered from USD8,000 to USD10,000 per month for 4- to 5-bedroom type apartments. Meanwhile, two-bedroom serviced apartments are offered from a minimum of USD3,150 to a maximum of USD5,600 per month, whereas three-bedroom types are offered from USD3,450 to USD7,500 per month. Furthermore, serviced apartments with more than three bedrooms are offered from USD3,350 to USD6,400 per month. Apartment Rental Rates in Several Expatriate Areas apartment by area size (sq m) rental rate (usd/unit) non-serviced apartment serviced apartment sudirman 2 Bedrooms Apartment ,500-4,000 4,250-5,600 3 Bedrooms Apartment ,500-6,000 5,000-7,500 menteng 2 Bedrooms Apartment ,000-3,900-3 Bedrooms Apartment ,350-5,000 - kuningan 2 Bedrooms Apartment ,500-3,500 3,150-5,500 3 Bedrooms Apartment ,000-4,500 3,450-5,500 >3 Bedrooms Apartment 440 5,500-7,000 kemang 3 Bedrooms Apartment ,500-4,500 - continued 24 Research & Forecast Report 2Q 2014 Expatriate Housing Colliers International

25 apartment by area size (sq m) rental rate (usd/unit) non-serviced apartment serviced apartment* continuation pondok indah Bedrooms Apartment ,500-3,000 3,500-4,200 3 Bedrooms Apartment ,800-3,500 4,000-5,400 >3 Bedrooms Apartment ,500-5,000 5,650-6,400 Kebayoran baru 2 Bedrooms Apartment ,200-4,300 - >3 Bedrooms Apartment ,000-10,000 - permata hijau, simprug >3 Bedrooms Apartment ,700-4,000 3,350-3,400 cilandak >3 Bedrooms Apartment ,450-3,950 3 Bedrooms Apartment + Study 300 4,500 cipete >3 Bedrooms Apartment ,000-6,000 pejaten 1-3 Bedrooms Townhouse/Complex ,500-3,000 *exclude Breakfast Occupancy Upper-class apartments generally recorded high occupancy rates between 79% and 97%. Overall, the average occupancy stood at the same level as that 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 25 Research & Forecast Report 2Q 2014 Expatriate Housing Colliers International

26 RETAIL SECTOR Supply Jakarta Cumulative Retail Supply in Jakarta (For Lease and For Sale 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , YTD 2014F 2015F 2016F 2017F 2018F for Lease for Sale With no additional new shopping center this quarter, the total retail space in Jakarta remained unchange presents and caused the cumulative supply to remain the same as in the previous quarter at 4.32 million sq m as of 2Q St Moritz is the last shopping centre projected to begin operation in Thus far, the additional supply of shopping centres in Jakarta only recorded growth of 3.3% per year from 2011 to Since the retail moratorium issued by the government of DKI Jakarta province in 2011, the total supply of shopping centres in Jakarta has only increased by 333,081 sq m. From 2015 to 2017, the supply of new shopping centres in Jakarta will see increasing growth of 3.4% per year. It is forecast that during this period, Jakarta will see an additional 473,000 sq m of new shopping centres. Several shopping centres, which are still in the planning stages, are projected to enter the market as new supply in This includes New Harco Plaza, Jatinegara City and Mall at Green Pramuka City. The vacuum in new strata-title shopping centres in Jakarta has existed for almost five years. Projected to be completed in 2015, the extension project of Pulogadung Trade Centre, will invigorate the strata-title retail market in Jakarta. Jakarta will see another retail centre for sale, i.e. New Harco Plaza, which is expected to begin construction soon. 26 Research & Forecast Report 2Q 2014 Retail Colliers International

27 As the government of DKI Jakarta limit the permits for developing new shopping centres in Jakarta, developers are looking at the acquisition and revamping of existing shopping centres. A notable developer has taken ownership of a mall in Kramat, Central Jakarta. The developer acted quickly to make some changes to the façade and tenancy layout by temporarily relocating the existing tenants to a vacant floor. Without major construction works, t the developer converted this shopping centre into retail space for strata-title sale. In addition to that, a hotel will be part of the integrated commercial compound to synergise with the shopping centre. Large land availability is stimulating the increasing development of the shopping centre supply in East and West Jakarta. Geographically, East and West Jakarta are connected to surrounding cities, especially Bekasi and Tangerang, respectively. Growing residential projects including landed houses in Bekasi and Tangerang have had an impact, which is why shopping centres have the potential to be developed in East and West Jakarta. Seven of 13 future shopping centres in Jakarta during will be located around East and West Jakarta, while South and Central Jakarta will contribute five shopping centres with the remainder in North Jakarta. Annual Future Retail Supply in Jakarta Contributed by Region Future Retail Supply (2H ) by Region in Jakarta East Jakarta 25% West Jakarta 5% CBD 0% North Jakarta 50% Central Jakarta 12% South Jakarta 8% Greater Jakarta Area (BoDeTaBek - Bogor, Depok, Tangerang, Bekasi) Cumulative Retail Supply in the Greater Jakarta (BoDeTaBek) West Jakarta 2,000,000 East Jakarta 1,600,000 North Jakarta 1,200,000 South Jakarta 800,000 Central Jakarta 400,000 CBD , , , F 2015F 2016F 2017F YTD 2014F for Lease for Sale 2015F 2016F 2017F 2018F After contributing 351,585 sq m in the previous year, similar to Jakarta, there was no new supply of shopping centres in the BoDeTaBek area as of 2Q Two shopping centres that will bring an additional 100,000 sq m of new supply are expected to be completed by the end of New supply of shopping centres in the BoDeTaBek area will be developed in areas such as Cikarang (Bekasi) and Cibinong (Bogor). The development of shopping centres continues to expand in line with the growth of other property sectors, especially apartments and landed houses. The residential growth in Cikarang and Cibinong areas has triggered new shopping centre developments. 27 Research & Forecast Report 2Q 2014 Retail Colliers International

28 Notable developers continue to observe the prospects of BoDeTaBek as those areas still have availability of very large plots of land. In the Cikarang area, the joint venture of Plaza Indonesia Realty, Jababeka and Kawan Lama will develop shopping centres with building areas of around 20,000 to 25,000 sq m. Those shopping centres are projected to become operational sequentially in the next three years ( ). Megapolitan Group is expediting the development progress of Cinere Bellevue Suites while also beginning the construction of Vivo Sentul. The latter project was previously known as Cimandala City. One of two planned shopping centres at this future mixeduse development will be marketed for sale. Another developer, Lippo, also will announce their new project in the Bintaro area. Within this mixed-use development, a mall with an area of 40,000 sq m will be integrated with residential projects. Another project, AEON Mall Indonesia, will also contribute additional retail supply in BoDeTaBek. Another AEON mall will also be built in Cibinong, Bogor in As of 2Q 2014, it is projected that there will be an additional 435,000 sq m of new shopping centres in BoDeTaBek by This number indicates that shopping centres in BoDeTaBek will record growth of 5% per year from 2014 to Annual Future Retail Supply in Greater Jakarta Based on Region Future Retail Supply (2H ) by Region in Jakarta Bekasi 48% Bogor 15% Depok 6% Tangerang 31% Annual Retail Space Supply Comparison Between Jakarta and BoDeTaBek 600, ,000 Bekasi Tangerang 400, , , ,000 Depok 0 Bogor YTD 2014F 2015F 2016F 2017F 2018F 0 50, , , , , ,000 Jakarta BoDeTaBek 2014F 2015F 2016F 2017F 28 Research & Forecast Report 2Q 2014 Retail Colliers International

29 New Supply Pipeline in Jakarta shopping centers location region NLA (sq m) Status 2014 St. Moritz Puri Indah West Jakarta 129,200 Under Construction 2015 Central Park Mall Extension Slipi West Jakarta 40,000 Under Construction Pantai Indah Kapuk Mall Pantai Indah Kapuk North Jakarta 30,000 Under Construction Shopping Pancoran Pancoran South Jakarta 8,000 Under Construction 2016 AEON Mall Garden City Cakung East Jakarta 90,000 In Planning Grand Cipulir Cipulir South Jakarta 40,000 In Planning Holland Village Mall Cempaka Putih Central Jakarta 40,000 In Planning Mal Puri Indah 2 Puri Indah West Jakarta 75,000 In Planning Pulo Gadung Trade Center extension Pulo Gadung East Jakarta 10,000 In Planning 2017 Jatinegara City Jatinegara East Jakarta 50,000 In Planning Green Pramuka City Pramuka North Jakarta 30,000 In Planning New Harco Plaza Taman Sari West Jakarta 60,000 Under construction New Supply Pipeline in Greater Jakarta shopping centers location region NLA (sq m) Status 2014 AEON Mall BSD City Serpong Tangerang 75,000 Under construction Centro Cinere (Cinere Bellevue Lifestyle) Cinere Depok 28,000 Under construction 2015 AEON Mall Deltamas Cikarang Bekasi 90,000 In Planning Plaza Jababeka Cikarang Bekasi 20,000 In Planning 2016 Bekasi Trade Centre 2 Bulak Kapal Bekasi 56,000 In Planning Grand Dadap Mall Dadap Tangerang 20,000 Under construction Living World Jababeka Cikarang Bekasi 18,000 In Planning VIVO Sentul Lifestyle Cimandala Bogor 30,000 In Planning VIVO Sentul Trademall Cimandala Bogor 13,000 In Planning 2017 AEON Mall Bogor Cibinong Bogor 20,000 In Planning Embarcadero Bintaro Tangerang 40,000 In Planning Hollywood Central Cikarang Bekasi 25,000 In Planning 29 Research & Forecast Report 2Q 2014 Retail Colliers International

30 Occupancy Rates Occupancy Rates of Shopping Centres For Lease (Malls) and Strata-title Centres (Trade Centres) in Jakarta 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Pre-Commitment Level of Space Absorption in Newly Operating and Future Shopping Centres in Jakarta ( ) 2014F 2015F 2016F YTD for Lease for Sale 0 50, , , , , ,000 Absorbed Supply Annual Retail Supply and Demand of Retail Space in Jakarta 500, , , , , YTD Annual Supply Annual Demand The occupancy rate for shopping centres for lease in Jakarta was 89.2% as of 2Q The remaining 10.8% vacancy means that around 306,000 sq m has not been occupied. Despite being relative flat QoQ, occupancy rates have grown by 1.9% YoY and demonstrate that the annual demand could reach approximately 110,000 sq m in one year. South Jakarta, including the CBD, saw the highest growth of occupancy level at 5.8% YoY. This growth also has driven the average occupancy rate at shopping centres in South Jakarta to 90.7% and contributed 71,790 sq m of annual demand to the overall Jakarta market YoY. This growth also demonstrated that shopping centres in South Jakarta continue to be the preferred locations for retailers to expand their businesses. Some shopping centres, such as Lotte Shopping Avenue (LOVE), Kota Kasablanka, Kuningan City, Lippo Mall Kemang and Pondok Indah Street Mall, continue to underpin the performance of the Jakarta retail market in general. The growth in occupancy rates at shopping centres in East Jakarta also saw a similar trend. Despite remaining flat at 0.3% QoQ, the occupancy rate grew by 3.8% YoY. Cipinang Indah Mall, which has been in operation since 2013, helped to bring the average occupancy rate to 86.5% in 2Q The performances QoQ of shopping centres in North, West and Central Jakarta reached a plateau. West and Central Jakarta also saw flat growth in occupancy rates YoY. Only shopping centres in North Jakarta saw higher growth of 2.6% YoY. 30 Research & Forecast Report 2Q 2014 Retail Colliers International

31 Tight competition can be seen at shopping centres in Mangga Dua, Glodok and surroundings. Those areas are included in the areas mentioned above (West, Central and North Jakarta). There are at least 16 shopping centres in these regions with a total area of 445,495 sq m, representing 10% of the total supply in Jakarta. Six of the 16 shopping centres are for sale and contribute 58.3% of the total retail space in the Mangga Dua and Glodok areas. The average occupancy rate for those shopping centres was 75% with approximately 110,000 sq m of space still vacant, 65% of which is retail space for sale. Other areas which also have tight competition are Kelapa Gading and Pluit, which contribute 365,868 sq m and 250,152 sq m, respectively. Due to new supply at The Baywalk, the average occupancy rate for shopping centres in Pluit was 76%. Almost all shopping centres in Kelapa Gading saw occupancy rates above 90%, but the low performance of a retail centre for sale (Kelapa Gading Trade Centre) caused the average occupancy rate in Kelapa Gading to be around 85%. With vacant space of around 55,000 sq m in Kelapa Gading including Sunter, 60% is at that retail centre for sale. On the tenant side, entertainment retailers, especially cinemas, seemingly will face tough competition in the future. A longexperienced group in this business will meet a serious challenge from a new brand, called Cinemaxx, that was introduced by property developer, Lippo Group. As a first start, Lippo, which owns several malls in the JaBoDetaBek area, will not renew the contracts for cinema operators when their leases expire in Shopping centres for lease (malls) reached 90% occupancy since 2007 while occupancy of shopping centres for sale only reached 71% as of 2Q With the current cumulative 1.45 million sq m, vacant space at shopping centres for sale in Jakarta amounted to 421,534 sq m. Of this vacant space, almost 80% is at retail centres for sale in North and Central Jakarta. Annual Supply and Demand of Retail Space in BoDeTaBek 500, ,000 Average Occupancy Rates in Several Regions of BoDeTaBek 100% 90% 80% 70% 60% 50% Bogor Depok Tangerang Bekasi Average Pre-Commitment Level of Space Absorption in Newly Operating and Future Shopping Centres in DeBoTaBek ( ) 2014F 2015F 2016F 0 50, , , , , ,000 Absorbed 2012 Supply YTD 300, , , , YTD Annual Supply Annual Demand A slight increase was demonstrated by the average occupancy rates for shopping centres in the BoDeTaBek area. With no additional retail supply during the quarter, occupancy stood at 82.9% as of 2Q The good performance of shopping centres in Tangerang dan Bekasi helped to maintain moderate growth of the occupancy rate at 0.9% QoQ. New shopping centres in Tangerang and Bekasi that have been operating since 2013 helped the average occupancy rates in each of those areas to grow by 1.8% QoQ. Bogor and Depok recorded below 1% for each of the occupancy rates. 31 Research & Forecast Report 2Q 2014 Retail Colliers International

32 YoY, the annual retail space absorption in the BoDeTaBek area was 161,269 sq m. Retail space absorption during 2Q 2014 was the lowest, contributing around 15,000 sq m or only 9.8% of the total demand YoY in BoDeTaBek. These absorption numbers were only contributed by two areas, Tangerang (7,000 sq m) and Bekasi (8,000 sq m). Meanwhile, total space absorbed in 1Q 2014 was 57,913 sq m (comprising 36% of total demand during 2Q Q 2014). Asking Base Rental Rates Jakarta Average Asking Base Rental Rates in Jakarta (psm/month) IDR 900,000 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 YTD Upper Class All Class The Performance of Average Asking Base Rents vs Occupancy Rates in Different Regions of Jakarta Occupancy 100% 98% 96% 94% 92% 90% 88% 86% 84% 82% 80% East akarta WestJakarta North Jakarta Central Jakarta IDR 200,000 IDR 400,000 IDR 600,000 IDR 800,000 Asking Base Rent (psm/ month) SouthJakarta CBD Average base rent at shopping centres in Jakarta continued climbing from 2012 to 2Q From 2012 to 2013, the average base rent grew moderately by 2.1% YoY. The growth was 6.0% higher in 2014 than in the previous year, bringing the average base rent for typical retail space to IDR504,629 psm / month as of 2Q Shopping centres in the CBD are still the main contributor to the increasing base rent in Jakarta. A premium mall located around Thamrin has raised their base rent by approximately 30% over the previous quarter. Limited vacant space has motivated landlords to confidently adjust their base rents, especially for premium leasable areas. This newly launched rate has raised the average base rent for shopping centres in the CBD to an average of IDR787,440 psm / month. There is a fairly big gap in average asking base rent between inside and outside the CBD. Currently, the highest base rent in the outside CBD is only IDR484,190 psm / month in West Jakarta. South Jakarta follows at IDR477,150 psm / month, at several shopping centres around Kemang, Pejaten, Gandaria, Casablanca and Pondok Indah. Shopping centres in North Jakarta averaged IDR342,383 psm / month as of 2Q 2014, while shopping centres in Central Jakarta (excluding the CBD) and East Jakarta saw almost similar rates at IDR296,258 and 294,902 psm / month, respectively. Most shopping centres in East Jakarta are categorised as middle to middle-low class and the majority of those malls have kept their base rents at around IDR200, ,000 psm / month. Only some malls in Cibubur and Rawamangun, due to limited vacant space, charge around IDR300, ,000 psm / month. In addition to the limited vacant space, repositioning and major revamping have also caused a mall belonging to Lippo to currently have the highest average base rent in East Jakarta. Similarly, base rents in Central Jakarta, excluding the CBD, were lower because several of them are old shopping centres. BoDeTaBek Average Asking Base Rental Rates in Different Region in BoDeTaBek (psm/month) IDR 400,000 IDR 350,000 IDR 300,000 IDR 250,000 IDR 200,000 IDR 150,000 IDR 100,000 IDR 50,000 IDR YTD Bogor Depok Tangerang Bekasi 32 Research & Forecast Report 2Q 2014 Retail Colliers International

33 The Performance of Average Asking Base Rents vs Occupancy Rates in Different Regions of BoDeTaBek Occupancy 100% 97% 94% 91% 88% 85% 82% 79% 76% 73% 70% Depok Bekasi IDR 200,000 IDR 250,000 IDR 300,000 IDR 350,000 IDR 400,000 Asking Base Rent (psm/ month) Bogor Tangerang Base rents at shopping centres outside Jakarta (BoDeTaBek) are in the range of IDR250, ,000 psm / month. The average base rent was steady at IDR302,618 psm / month as of 2Q Due to moderate growth of base rents QoQ, shopping centres in Tangerang were the highest at IDR360,091 psm / month based on area. Bekasi, Bogor and Depok followed at IDR286,186, IDR272,396 and IDR253,235 psm / month, respectively. Service Charge Average Service Charges in Jakarta and BoDeTaBek IDR 120,000 IDR 100,000 IDR 80,000 IDR 60,000 IDR 40,000 IDR 20,000 IDR YTD Jakarta BoDeTaBek Almost all shopping centres in Jakarta experienced an upward adjustment in their service charges during the last three years. The increasing operational costs have always been the reason for the adjustment. In 2013, service charges was adjusted by 8.6% YoY. Currently, service charges are IDR99,303 psm / month, an increase of 12.4% over Compared to last quarter, service charges only moved upward modestly by 3.1%. The adjustment in the service charges in 2014 is expected to be the highest in the last five years. The average service charge at middle-upper class malls has risen by 3.1% QoQ, the highest growth of all classes. Currently, the average service charge for middle-upper class shopping centres is IDR130,467 psm / month. The highest increase in the service charges was experienced by the middle-lower class at 5.3% QoQ, which brought the average service charges for this segment to IDR63,335 psm / month. BoDeTaBek Service charges in BoDeTaBek as of 2Q 2014 were IDR77,462 psm / month and only saw an increase of 1.5% QoQ. Based on region, service charges in Tangerang and Bekasi were the highest compared to other regions at IDR88,332 and 87,531 psm / month, respectively. As of 2Q 2014, service charges in Bekasi saw an increase of around 15%, at two shopping centres that raised their service charges by about 20% over the previous quarter. Tangerang and Depok also saw an increase although a very modest one. Two shopping centres in Tangerang raised their service charges by about 10%. There was no change in the service charges for shopping centres in Bogor during the quarter. Service charges in BoDeTaBek are forecast to rise until the end of This will occur at several malls that will potentially increase their service charges because they did not adjust them in recent years. Concluding Thought The hike in the electricity tariff will undoubtedly have a direct impact on the adjustment in the service charges, which will take effect at least in This will be a new challenge for both retailers and mall operators. From the landlords perspective, retail business is projected to be bullish given the fact that supply will grow in a regulated manner,) particularly in the DKI Jakarta area. On the positive side, this will allow areas other than DKI Jakarta to grow as well, particularly since the cities surrounding Jakarta have been transformed into a growing residential area that largely underpins the economic activity. 33 Research & Forecast Report 2Q 2014 Retail Colliers International

34 Industrial Estate Sector Supply The amount of sales recorded during 2Q 2014 was not in line with additional new land stock during the quarter. The status of industrial land under construction remains the same as in the previous quarter. Several industrial estates are pursuing construction to provide ready-to-use industrial land at least by In Serang, two main industrial estates are working on developing land that is scheduled to be operational in Modern Cikande is preparing 220 ha of land at Phase 5. Likewise, KIEC is also rushing their next 200 ha expansion, which will be delivered in stages. In Bekasi, Delta Silicon is preparing a sizeable piece of land of 162 ha that they introduced earlier in the year. In total, not much ready-to-use land is available for sale in Bekasi. Ready industrial plots of land for sale can only be found in Jababeka, Bekasi Fajar, Delta Silicon and Greenland. Not many industrial land lots are available in Tangerang as many operating industrial estates in this region are relatively old estates. Only Millennium provides land for sale in any considerable amount. This estate anticipates that 500 ha of land will be available but have yet to announce the exact schedule. Karawang is currently the region with the most potential sizeable lots to be developed, not only at the operating estates but also at several new industrial estates. Kota Bukit Indah and Suryacipta still hold land with the potential to expand. At least around 280 ha can be developed by Suryacipta as their third stage of development. Similarly, Kota Bukit Indah may proceed with the development of the remaining 30% of land in the second phase. Other potential future supply will come from the consortium of PT. Trans Hexa Karawang, comprising PT. Esa Kertas Nusantara; PT. Permata Bumi Kencana; PT. Canggih Bersaudara Muliajaya; PT. Sumber Air Mas Pratama; PT. Bintang Puspita Dwikarya; PT. Pertiwi Lestari and PT. Batuah Bauntung Karawang Primaland. The companies in this consortium opened an access road to the main toll road to serve the member companies. This consortium potentially holds around 2,000 ha of land where some companies are already working to cut and fill the land. The consortium involves a large group of companies like Salim, Agung Podomoro, Artha Graha and Gajah Tunggal Group. 34 Research & Forecast Report 2Q 2014 Industrial Estate Colliers International

35 Distribution of Industrial Land in Six Regions Demand Serang 21% Karawang 36% Jakarta 10% Bogor 2% Tangerang 5% Bekasi 26% Large of total transactions were underpinned by Modern Cikande industrial estate that helped the overall performance of industrial sales this quarter. Contributing around 65% of the total sales alone, a total of ha of industrial land was sold during the quarter. This has fuelled the overall sales during 1H 2014 to reach ha, although this is still less than the sales in the same period last year. The substantial number of transactions in Modern Cikande was concluded by the existing tenant from Thailand that runs a food-processing business and took around 110 ha as part of their expansion plan. Modern Cikande is among the industrial estates that hold potential land stock for an industry looking for sizeable land either for business extension or new establishment. Compared to other industrial estates, the land sales activity in Modern Cikande was also considered the most active one with several land transactions coming from a shoe company from Taiwan (new investment), local packaging company, local warehouse and logistics company. All of these transactions comprised a total of ha, a very significant land transaction concluded by one industrial estate for the last few years. While Modern Cikande recorded a substantial amount of land sales, another industrial estate in the same region reported zero sales during the quarter. Basically, this estate is in the process of concluding a transaction that will likely be recorded in the next quarter. Overall, the industrial market in the Serang area, which is located farther west of Jakarta, is still promising, particularly for the food, steel and chemical industries. Serang offers very competitive prices for industrial land in the two major industrial estates with similar quality to those in the east of Jakarta. The regional government in Serang is also developing better transport infrastructure to position this region as worthwhile as an industrial location. In the east, the Bekasi region registered a total of 54.5 ha during the quarter, very much fuelled by several land transactions in Greenland Industrial Estate. Greenland sold a total of around 37 ha comprised of three lots to automotive-related companies. Of all the active industrial estates, only MM2100 reported zero sales during the quarter. The limited availability of land for sale has been the same issue for this estate. The counterpart of MM2100, Bekasi Fajar, reported total sales of around 6 ha to several industries like automotive-related, metals and warehousing. Similar to MM2100, Bekasi Fajar continues to receive inquiries for vacant land but the shortage in land stock prevents them from selling. Jababeka continued to record sales, albeit lower than in the previous quarter, of around 6.5 ha. Sales during the quarter were mainly dominated by the expansion of existing industries like plastics, packaging and warehousing. For the last three consecutive quarters, Delta Silicon has been quite consistent, selling around 5 ha every quarter. Almost similar to the sales recorded by Jababeka, Delta Silicon sold industrial land to auto parts, printing and a warehouse developer. Delta Silicon start selling the newly-opened Delta 8 area of around 4 ha, while small parcels of land of around 1 ha were sold in several areas in Delta 5 and Delta 6. Albeit small, total sales in Karawang, was better than last quarter with a single of around 7.5 ha recorded in Suryacipta by an automotive component company. Overall, the issue of limited ready-to-use land remains the problem for Karawang although it holds a lot of big, vacant raw lots to be developed. Annual Industrial Land Sales hectares YTD 35 Research & Forecast Report 2Q 2014 Industrial Estate Colliers International

36 Land Absorption During 2Q 2014 Land Sales Recorded During 2Q 2014 at Each Industrial Estate Modern Cikande Greenland International Industrial Centre Suryacipta Jababeka Types of Activities Industries During January - June 2014 Food & Beverage 52% Plastics 2% Steel-related Oil & Gas Related 1% 1% Logistics/ Warehousing 10% Packaging 2% Metal 1% Others 4% Bekasi Fajar Delta Silicon Automotive 28% hectares 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 1,000 0 Take-up Rate (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% YTD Cumulative Supply (ha) Cumulative Demand (ha) Industrial Land Prices With the limited supply of industrial land continuing as the main issue, land prices were surprisingly reaching a plateau. None of the operating industrial estates introduced new prices. Higher prices were only quoted for small lots. Many industrial operators think that so far, amid slowing inquiries for industrial land, it is not the right moment to introduce new prices, particularly when dealing with the existing tenants that plan to expand. Some industrial estates are holding their remaining land assets waiting for the right moment to introduce premium prices. Indusrial land price seemsin the chart price looks to move upward mainly because of the adjustment in the exchange rate. The overall quarterly exchange rate performance in 2Q 2014 is higher than in 1Q Overall prices have been relatively flat. The average industrial land in Bekasi maintained the highest price compared to other regions, ranging from USD195 to 235 psm. Karawang also fetched high prices just below Bekasi in the range of USD170 to 200 psm / month. During 1H 2014, the market witnessed that for several years, the domination of the automotive industry was beaten by the food industry as a result of a huge transaction concluded by Modern Cikande. Nevertheless, the market will continue to anticipate further inquiries from the auto-related industry. Automotive will remain the main sector acquiring industrial land. Besides the two most active sectors, the market also saw continued inquiries from the warehouse and logistics industries. 36 Research & Forecast Report 2Q 2014 Industrial Estate Colliers International

37 Greater Jakarta Industrial Land Prices US D/ sq m $240 $210 $180 $150 $120 $90 $60 $30 $ YTD Bogor Tangerang Karawang Bekasi Serang Average Industrial Maintenance Cost On the back of increasingly operational costs, two industrial estates introduced new maintenance tariffs. Since early June, one industrial estate in Karawang adjusted the tariff from the previous USD0.06 to 0.07 psm / month. In Bekasi, one industrial estate started quoting USD0.072 psm / month, up from the previous USD0.06 psm / month. Thus far, in the prime industrial areas, like Bekasi and Karawang, maintenance costs range from USD0.07 to 0.08 psm / month. Only a few industrial estates quote a maintenance fee below that. In Other areas like in Serang, we still see maintenance costs at an average of USD0.04 psm / month (converted from rupiah using IDR11,625 = USD1). In Bogor, the maintenance cost is still at an average of USD0.065 psm / month. Greater Jakarta Industrial Maintenance Cost US D/ sq m/ month $0.09 $0.08 $0.07 $0.06 $0.05 $0.04 $0.03 $0.02 $0.01 $ YTD Bogor Tangerang Karawang Bekasi Serang Industrial Land Prices and Maintenance Costs* region Land price (per sq m) *1USD = Rp 11,625 maintenance costs (per sq m per month) lowest highest average lowest highest average Bogor USD USD USD USD 0.06 USD 0.06 USD 0.06 Bekasi USD USD USD USD 0.06 USD 0.08 USD 0.07 Tangerang USD USD USD USD 0.03 USD 0.08 USD 0.06 Karawang USD USD USD USD 0.05 USD 0.10 USD 0.06 Serang USD USD USD USD 0.03 USD 0.05 USD 0.04 Outlook In some industrial estates, the search for land by potential industrialists and investors still continues amidst the scarcity of ready-to-build industrial land. Industrialists needing industrial land have to approach developers with land banks and with a commitment to deliver as scheduled. This will likely remain a major issue at least until the end of The pre-commitment purchase (before the land is ready to use) has been a normal practice for the last couple of years, allowing land owners to prepare land with a guarantee of absorption. The legislative and presidential elections only had a negligible effect on industrial investors proceeding with investment decisions, in particular for existing tenants needing to expand within the industrial estate. The existing tenants or other businesses that have been investing in Indonesia are more confident in making decisions than are new investors so industrial transactions were mainly concluded by internal tenants needing to expand. Many investors still believe that there will be a lot of opportunity for this country given the big plans for better infrastructure, the huge population and hopefully, a better business environment. High industrial land prices and limited land stock have pushed several industrial developers to keep their remaining assets by leasing property. Originally, only a few industrial estates specifically offered land and/or buildings for rent (two in Karawang and one in Bogor). Several industrial estates started to build standard factory buildings and warehouses on the remaining land to produce a recurring income. Either way, there are industrial landlords starting to develop commercial areas on their remaining land to optimise the increasing value of the land. Industrial land prices are predicted to remain relatively flat for the rest of the year, which indicates that 2014 will be a consolidation year for the industrial market. Investors will be cautious and land owners will likely maintain the current prices as they have been adjusted quite significantly over the previous period. Furthermore, several landlords with under-construction development of new ready-to-use land indicated that they will deliver their projects in Thus, we foresee that 2015 will be the time for the industrial market to bounce, particularly when the political situation cools down. 37 Research & Forecast Report 2Q 2014 Industrial Estate Colliers International

38 38 Research & Forecast Report 1Q 2014 Colliers International