Office Sector JAKARTA OFFICE. Supply. Colliers Quarterly Forecast at a glance 0. Office Spaces Offered For Lease. Accelerating success.

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1 Colliers Quarterly JAKARTA OFFICE Accelerating success. Office Sector Ferry Salanto Senior Associate Director Research Tight competition among office buildings put pressure on rental tariff. This will likely to continue by end of 216. Rental correction in the CBD will trigger the same situation in the other areas. Supply Office Spaces Offered For Lease CBD CBD Office Cumulative Supply In the tenants market situation, the option to relocate to other newer buildings offering better quality features and a more affordable rate is wide open. Start-up company in the online-based service will likely become demand generator now and in the future. Strata-title sales volume is relatively low which probably lead to price correction. Nevertheless, landlords tend to maintain prices at the current level with the option to lease the unsold units at competitive rates. 8,, 7,, 6,, 5,, 4,, 3,, 2,, 1,, Forecast at a glance Supply As of Q4 216, Jakarta is expecting to see 555,181 of additional supply. About 63% of the future supply will be contributed by office buildings located in the CBD area. The cumulative supply is expected to reach almost nine million by the end 216, an increase of 13% YoY. Office spaces for sale compose 51.4% of the total projected supply in 216. Occupancy Occupancy slightly dropped to 85.4% as of Q We envisage a further depreciation in occupancy level in the remainder of 216, on the back of an upcoming large supply. Rent Asking rents generally declined 4.8% QoQ to IDR329,448//month. A huge number of additional supplies and potential vacant spaces will put further pressure to the rental tariff by the end of Existing Supply Additional Supply Supply YTD Future Supply The cumulative supply remained at 5.48 million, since there were no new office buildings in Q CBD is expected to provide an additional 35,919 supply in seven new office buildings in Q The completion of these buildings will bring a cumulative supply to 5.83 million by the end of 216, a 12.5% increase YoY. Going forward, the cumulative supply is expected to grow around 9% per annum up to 219. Based on how ongoing construction is progressing, 27 out of the 3 office buildings that will be built until 219 have started construction. These 27 buildings being constructed represent 95.5% of 2.4 million total future supply up to F

2 Sudirman continues to lead as a submarket with most new spaces, contributing 44.8% of the total supply. Sudirman is also expected to provide additional 874,85 by 219. As of Q3 216, there will be a moderate number of office spaces in Satrio, Mega Kuningan and Thamrin, where there were fewer contributors to the cumulative supply based on area. In term of supply, however, there will be growth by 6%, 7% and 12% in 217, 218 and 219. In these areas, about eight office building projects that are more than 5, in size will begin operation from 216 to 219. CBD Office Cumulative Supply Based on Area Satrio Gatot Subroto Mega Kuningan Rasuna Said Sudirman Thamrin Seven office buildings that are expected to open to the public by the end of 216 will likely meet their scheduled completion time, resulting to a total supply of 666,43 in 216, which will be the largest annual supply since 199. The supply of office spaces in the subsequent year will be fewer in the CBD, following the plan to reschedule the completion of some projects. CBD Office Annual Supply Based on Marketing Scheme 7, 6, 5, 4, 3, 2, 1, 5, 1,, 1,5, 2,, 2,5, 3,, 3,5, For Lease For Sale Supply - 219F Total Supply 216YTD CBD Annual Supply 8, 7, 6, 5, The construction of offices for lease and strata-title office for sale will be quiet comparable in the CBD over the next three years. In addition to Centennial Plaza, four other strata-title office buildings Convergence (in Rasuna Said), Ciputra World 2 (Satrio), Menara Pertiwi (Mega Kuningan) and The Tower (Gatot Subroto) are expected to meet their completion by the end of 216. These office buildings will contribute a total of 34,315 sq m for the remainder of 216. The CBD expects to see large a lot more supply of strata-title offices for sale in 217; 75.2% of 364,245 of which are office spaces for sale. 4, 3, 2, 1, F Additional Supply Supply YTD Under Construction In Planning Outside the CBD Harton Tower, a newly operating office building in Kelapa Gading, North Jakarta outside the CBD area, offers 8, office spaces. Meanwhile, office spaces outside the CBD diminished in number after Tower A building within Arkadia Office Complex in was demolished. The removal of old office spaces and the addition of new ones brought the cumulative supply to 2.89 million outside the CBD as of Q3 216, and is expected to reach 3. million by the end of 216, for a 13.2% growth YoY. 2 Colliers Quarterly Jakarta Office Colliers International

3 Despite having small additional office spaces, the total supply grew significantly outside the CBD, with an expected total supply of around 66, in 216. Seven future office buildings are expected to become available, bringing 36, additional supply during the remainder of 216. Projected supply in 217 will be 45% lower than the previous year. West and South Jakarta continuously became major suppliers of new office spaces outside the CBD area, providing around 51, new office spaces or 62% of the total projected additional supply between 216 and 219. Outside the CBD Cumulative Supply 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, Existing Supply Additional Supply Supply YTD Future Supply Outside the CBD Cumulative Office Supply Based on Area F Outside the CBD Excluding Annual Supply 3, 25, 2, 15, 1, 5, Annual Supply Under Construction Additional Supply YTD In Planning will also show a decreasing number of new office spaces YoY over the next period. Last year, seven office buildings brought almost 24, of new additional supply in. The demolition of Tower A building within Arkadia Office Complex, however, brought the number slightly down to 855,75 as of Q Additional supply is expected to become available in by the end of 216, as three buildings will begin their operation, providing 18,162 new office spaces and will bring the cumulative supply to 963,912 by the end of 216, a 12.6% growth YoY. will have no additional office supply in 217. Annual Supply 25, 219F West Jakarta 2, East Jakarta North Jakarta 15, 1, South Jakarta Central Jakarta 5, 2, 4, 6, 8, 1,, 1,2, F Supply - 219F Total Supply 216YTD Annual Supply Under Construction Additional Supply YTD In Planning 3 Colliers Quarterly Jakarta Office Colliers International

4 New Supply Pipeline projected completion Office building projects name location SGA* () Marketing scheme status development CBD 216 Telkom Landmark Tower II Gatot Subroto 65, For Lease Under Construction 216 Convergence Rasuna Said 36,367 For Lease & Sale Under Construction 216 Menara Palma 2 Rasuna Said 5, For Lease Under Construction 216 Ciputra World Jakarta 2 Satrio 7, For Lease & Sale Under Construction 216 Satrio Tower Satrio 31,64 For Lease Under Construction 216 The Tower Gatot Subroto 56,492 For Sale Under Construction 216 Menara Pertiwi Mega Kuningan 41,456 For Sale Under Construction 217 PCPD Tower Sudirman 9,5 For Lease Under Construction 217 T Tower Gatot Subroto 24, For Lease & Sale Under Construction 217 Prosperity Tower (within District 8 complex) Sudirman 71,545 For Sale Under Construction 217 Treasury Tower (within District 8 complex) Sudirman 139, For Sale Under Construction 217 Sopo Del Tower B Mega Kuningan 4, For Lease Under Construction 218 Lippo Thamrin Office Tower Thamrin 16,5 For Sale Under Construction 218 Sequis Tower Sudirman 78, For Lease Under Construction 218 Sopo Del Tower A Mega Kuningan 64, For Lease Under Construction 218 Sudirman 7.8 (ex Nugra Santana) Sudirman 52, For Sale Under Construction 218 Tower Two at The City Center Sudirman 11,26 For Lease Under Construction 218 World Trade Center III Sudirman 7, For Lease Under Construction 218 Tower Ciputra World Jakarta 1 Satrio 7, For Lease & Sale Under Construction 218 Astra Tower Sudirman 8, For Lease Under Construction 219 Mangkuluhur Tower Gatot Subroto 53, For Lease & Sale Under Construction 219 Gran Rubina Tower 2 Rasuna Said 32, For Sale In Planning 219 World Capital Tower Mega Kuningan 72, For Lease & Sale Under Construction 219 Icon Tower Sudirman 72,5 For Lease Under Construction 219 Thamrin Nine Thamrin 97,5 For Lease Under Construction 219 Chitaland Satrio 9, For Lease Under Construction 219 Indonesia Satu North Tower Thamrin 13, For Lease Under Construction 219 Indonesia Satu South Tower Thamrin 12, For Lease Under Construction 219 The Hundred Mega Kuningan 45, For Lease In Planning 219 Millenium Centennial Tower Sudirman 12, For Lease Under Construction 219 Plaza Gani Djemat 2 Thamrin 8, For Lease In Planning Outside CBD exclude 216 Puri Indah Financial Tower Puri Indah 38,5 For Sale Under Construction 216 Gallery West Kebun Jeruk 29, For Sale Under Construction 216 Tamansari Parama Wahid Hasyim 1,8 For Sale Under Construction 216 One Belpark Office Pondok Labu 17,8 For Lease Under Construction 217 ST Moritz Office Tower Puri Indah 19,5 For Sale Under Construction 217 Soho Pancoran Pancoran 3, For Sale Under Construction 217 BKP Office Tower Sunter 16, For Lease Under Construction 217 Hermina Office Building Kemayoran 2, For Sale Under Construction 217 Agung Sedayu Office Tower PIK 5, For Lease Under Construction 218 One Tower Kemayoran 21,4 For Sale Under Construction 218 Ciputra Business District Kemayoran Tower 1 Kemayoran 4, For Sale Under Construction 218 Ciputra Business District Kemayoran Tower 2 Kemayoran 4, For Lease Under Construction continued 4 Colliers Quarterly Jakarta Office Colliers International

5 projected completion Office building projects name location SGA* () Marketing scheme status development continuation 218 Ciputra International Puri 1 Phase 1 Puri 15, For Lease Under Construction 218 Ciputra International Puri 2 Phase 1 Puri 2, For Lease In Planning 218 Ciputra International Puri 3 Phase 1 Puri 3, For Lease In Planning 219 MNC Tower II Kebon Sirih 6, For Lease Under Construction 219 Jakarta Box Tower Kebon Sirih 36, For Lease In Planning 219 Lippo Tower Holland Village Cempaka Putih 27, For Sale In Planning 219 Ciputra International Puri Phase 2 Puri 15, For Lease In Planning 219 Ciputra International Puri 1 Phase 3 Puri 15, For Lease In Planning 219 Ciputra Internatinal Puri 2 Phase 3 Puri 15, For Lease In Planning 216 South Quarter Tower 3 4,778 For Lease Under Construction 216 Zuria 6,584 For Lease Under Construction 216 Cibis Tower 6,8 For Lease Under Construction 218 The Sima 6, For Lease Under Construction 218 Beltway Office Park Tower 4 3,839 For Lease In Planning 219 Arkadia Tower G 3, For Lease In Planning 219 The Manhattan Square Tower 2 39,375 For Lease & Sale In Planning Demand CBD Occupancy changes in the CBD Office Building Grade Q4 Q1 216 Q2 216 Q3 216 Premium (%) Grade A (%) Grade B (%) Grade C (%) Overall CBD (%) The weakening occupancy that began in Q4 continues today. Relocations with space reduction characterised leasing activities and contributed to the decreasing number of occupancy. After moving out from Jalan Dr. Satrio, Bank Danamon s relocation left large vacant spaces in Jalan Rasuna Said (Graha Aktiva). Meanwhile, a multinational company that produces electronic devices, such as printers, scanners and projectors (EPSON), moved to from an office building in Sudirman. Other relocations involved bank and insurance companies. An insurance company that previously occupied an office building in Sudirman will move to a new office building in Gatot Subroto. Another major relocation was that of Citibank, as it moved to, bringing the overall occupancy rate in the CBD slightly declining QoQ to 84.6%. In Q3 216, all office buildings showed a similar trend in their occupancy performances. Nevertheless, premium and Grade A office buildings maintained and stabilised their occupancy rates during the quarter. A large additional supply coupled with growing business sentiment is expected to drive intense competition amongst office buildings in getting tenants, at least up to the end of 216. Some new and future Grade A and premium office buildings will seemingly push the rents down to attract more tenants. Certainly, this will provide tenants with more building options to move into and find better quality and yet affordable office spaces in the future. The current tenant market situation allows office tenants to better negotiate with the office buildings they are occupying. The pre-committed absorption level of office spaces for lease may face further downward pressure. There was around 125, of office spaces in that have not yet been occupied; the pre-committed and committed absorption level of office space in 216 was recorded at only 33%. A total of around 39, of supply for -216 has not been occupied as of Q Colliers Quarterly Jakarta Office Colliers International

6 Average Occupancy Rates in the CBD 1% 95% 9% 85% 8% 75% 7% YTD Premium Grade A All Classes Pre-Committed Absorption at the New and Future Office Buildings for Lease in the CBD Outside the CBD Occupancy changes in the CBD Office Building Grade Q4 Q1 216 Q2 216 Q3 216 Outside the CBD excluding TB Simatupang (%) (%) Occupancy has been showing a gloomy trend since outside the CBD. In 216, newly operating office buildings with large vacant spaces showed a 3.7% decrease in occupancy YTD to 87.1% as of Q This is expected to decline further, given the upcoming new office stock of around 1, by the end of 216. Based on region, most areas outside the CBD showed a soft growth in occupancy QoQ. Underpinned by the leasing activities of freight forwarding and shipping companies that became major tenants in a newly operating office building in Kelapa Gading, North Jakarta, the overall occupancy in North Jakarta was recorded at 8.1% as of Q Despite the fact that this is the region s lowest rate, North Jakarta showed the highest growth in occupancy outside the CBD QoQ. Occupancy levels in West and Central Jakarta were relatively flat at 88.5% and 91.6%, respectively. East Jakarta maintained the highest occupancy level because there is no additional supply since 211. South Jakarta, which contributed 45% of the total new office buildings that began operation from Q1 to Q3 216, showed a modest growth in occupancy QoQ. However, South Jakarta has the second lowest occupancy rate outside the CBD at 81.3%, as of Q , 2, 3, 4, Space Absorbed Space Unabsorbed After plummeting substantially in 214-, occupancy rate in continued to drop, albeit modestly, hovering at 79% to 8% in 216 YTD. Occupancy is expected to slightly improve in, given a limited supply projection in Colliers Quarterly Jakarta Office Colliers International

7 Average Occupancy Rates in Outside the CBD 1% Pre-Committed Absorption of Office Buildings for Lease in 9% 8% 7% 6% 5% 4% 3% 2% 1% % YTD Outside CBD exclude Pre-Committed Absorption of Office Buildings for Lease in Outside the CBD (excluding TB Simatupang) 2, 4, 6, 8, 1, 12, Space Absorbed Vacant Space As mentioned earlier, there will be no new office buildings in 217. Of the total office spaces (more than 2, ) available between and 216 in, the precommitted occupancy was so far only recorded at below 4%. Two large office buildings still have large vacant spaces as of Q Asking Rents CBD Average Asking Rents in the CBD IDR75, IDR6, 2, 4, 6, 8, Space Absorbed Vacant Space IDR45, IDR3, Absorption is good at two small office buildings outside the CBD, and this only helped the overall pre-committed absorption level for 216, recorded at 27.3%. Having around 1, sq m of office spaces in , the projected occupancy level may still be maintained above 85% during this period. IDR15, YTD Premium Class All Classes 7 Colliers Quarterly Jakarta Office Colliers International

8 The average asking rents in the CBD continued to decline since 214 particularly in premium office buildings. The overall average asking rent for all classes of buildings in the CBD, however, showed a gradual rising trend since the end of to 216 YTD. The overall average asking rents slip 3.6% QoQ to IDR333,786//month as of Q Few of these office buildings lowered their asking rents sharply by 2% to 35% QoQ, due to the tight competition in securing new tenants amid the general rental adjustment in the market. Based on building grade, Grade C and premium office buildings underwent the highest decline in asking rents. Premium office buildings, at an average, charge IDR431,997//month, which shows an 8.5% decrease QoQ. Meanwhile, Grade C office buildings rental tariff dropped 14.9% QoQ to IDR21,377// month. In contrast, Grade A office buildings average rental tariff climbed 2.7% QoQ to IDR377,32//month. As of Q3 216, 59 office buildings still offered rental tariff at below IDR2,//month. Most of the buildings are scattered around Rasuna Said (24 office buildings) and Gatot Subroto (11 office buildings). Dominated by Grade C office buildings, the average rents at Rasuna Said submarket were the lowest at IDR256,978//month. Meanwhile, despite having several small and old Grade C office buildings, the average asking rents in Gatot Subroto was the highest in the CBD at around IDR396,673//month. Our average rental calculation is based on available vacant space. Having said that, the newly operating Grade A office buildings in Gatot Subroto experienced a significant vacancy rate (the average charging rent is over IDR4,//month), with the overall rental calculation resulting in high rents. Average Asking Rents Based on Building Area IDR9, IDR8, IDR7, IDR6, IDR5, IDR4, IDR3, IDR2, IDR1, Premium Grade A Grade B Grade C The Range of Asking Rents of Each Submarket in the CBD IDR1,, IDR8, IDR6, IDR4, IDR2, Thamrin Sudirman Outside the CBD Rasuna Said Average Asking Rents in Outside the CBD Mega Kuningan Gatot Subroto Satrio The average asking rents outside the CBD was also on the ebb since. The average rents dropped 8.9% 216 YTD to IDR217,216//month. Most of the newly operating office buildings charged rents below market prices, between IDR15, and IDR2,//month. Some office buildings were compelled to lower their asking rents due to the tight competition to secure higher occupancy rates. IDR3, IDR25, IDR2, IDR15, IDR1, IDR5, YTD Outside CBD 8 Colliers Quarterly Jakarta Office Colliers International

9 As of Q3 216, around 87% of the total office building recorded asking rents below the average market prices outside the CBD, between IDR5, and IDR22,//month, except East Jakarta. South Jakarta, outside the CBD, showed the largest gap in rental tariffs, where 23 office buildings offered rents at above market prices. Sixteen out of the 23 office buildings are located in. The asking rents in remained the most expensive, compared to other areas, despite falling 11% in 216 to IDR236,18//month. The Range of Asking Rents of Each Area in outside the CBD IDR5, IDR4, Service charges were relatively flat in 216 YTD, standing between IDR79, and IDR8,//month. Forty-four percent of the total office buildings still introduced service charges at below IDR8,//month. Nine office buildings are marketed as strata-title office buildings for sale, which generally offer lower maintenance tariff, because electricity is separately metered. As of Q3 216, average service charge of strata-title office buildings for sale is at IDR4,975//month, whilst offices for lease is at IDR84,55//month. Average service charges outside the CBD were generally 2% lower than those in the CBD. Service charges were maintained at IDR58,//month in 216 YTD. Newly operating office buildings in -216 charged their services between IDR35, and IDR65,//month. Meanwhile, stratatitle office buildings in this area commonly introduced service charges at below IDR5,//month. IDR3, IDR2, IDR1, Central Jakarta South Jakarta North Jakarta East Jakarta West Jakarta Central and South Jakarta maintained the most expensive average service charges at IDR63,999 and IDR59,16//month, respectively. Forty percent of the total office buildings in Central Jakarta charged maintenance costs at above market prices. Also, four of these office buildings charge above IDR1,/ /month. The expensive service charge in South Jakarta area was mostly contributed by the office buildings in, with at least 25 office buildings charging above market prices, at an average of IDR62,798//month. As of Q3 216, service charges in ranged between IDR25, and IDR12,//month. Service Charges in Outside the CBD IDR15, Service Charges Service Charges in the CBD IDR12, IDR15, IDR9, IDR12, IDR6, IDR9, IDR3, IDR6, Premium Grade A Grade B Grade C IDR3, Premium Grade A Grade B Grade C 9 Colliers Quarterly Jakarta Office Colliers International

10 Strata-title Office The take-up rate moved relatively flat QoQ. We also noted that a strata-title office buildings for sale held a selling activity. Overall, due to limited substantial transactions as of Q3 216, the pre-committed take-up rate was recorded at 55.6%, out of 1.4 million total supply in the CBD from to 218. Nevertheless, the CBD area still maintained its overall take-up rate at a healthy 68% level in 216. As the take-up rate slows down, it seems to be in line with the rise in asking price. The average asking price was recorded at IDR55.2 million/ for new and soon-to-be constructed office buildings as of Q Some upcoming office buildings have adjusted their asking prices up by 7% to 2%, since the initial price when they were launched. In the meantime, asking office prices in the secondary market were offered at between IDR4 million and IDR15million/, depending on the quality of the building. Pre-Committed Take-Up Rate of Strata-title Office Buildings for Sale in the CBD Average asking price was recorded relatively flat at IDR33 million/sq m since in, lower than outside the CBD. As of Q3 216, the vacant spaces of office for sale were offered at between IDR27 million and IDR37.5 million/sq m. Other than that, the current sluggish market caused some landlords to lower their asking prices at around 1% to 3%, in order to boost sales volume in the future. Pre-Committed Take-Up Rate of Strata-title Office Buildings for Sale in Outside the CBD 5, 1, 15, 2, 25, Space Absorbed Vacant Space Range of Asking Prices at New and Future Office Buildings IDR1,, 7, 14, 21, 28, 35, Space Absorbed Space Unabsorbed IDR8,, IDR6,, IDR4,, The sales volume of projected strata-title office spaces in grew very modestly outside the CBD. As of Q3 216, 25% of the unsold spaces in remain available. The limited number of sales volume caused the average asking prices to experience a modest growth in 216YTD. Excluding, the average asking price was recorded at IDR37.1 million/ outside the CBD, a 2.4% increase compared to the previous quarter. IDR2,, CBD Outside the CBD excluding TB Simatupang 1 Colliers Quarterly Jakarta Office Colliers International

11 Concluding Thought Compared with last year s performance, a larger future supply forecasted a decreasing rent, and this is expected to continue up to the end of 216. Landlords need to immediately reach a high commitment occupancy level. On the other hand, there is a big opportunity for tenants to move to a brand new office building at the same or even cheaper rent rates. A decrease in the CBD will likely impact the asking rents outside the CBD, including. A decreasing trend for the asking rents will also compose a new circulation for demand generator. In addition to financial institutions, more start-up companies, such as online businesses, are expected to send more enquiring to the CBD. Although registering smaller sales volume, landlords confidently maintain their asking prices relatively flat, due to that fact that these landlords will use other options to lease vacant spaces. Certainly, the asking rents for these vacant spaces will follow the recent asking rent trend. For more information: Ferry Salanto Senior Asociate Director Research ferry.salanto@colliers.com Contributors: Eko Arfianto Manager Research Copyright 216 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Accelerating success.