RETAIL SECTOR. Research & Forecast Report Jakarta Retail Q Supply Jakarta. Accelerating success. Cumulative Supply of Retail Spaces in Jakarta

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1 Research & Forecast Report Retail Q4 215 Accelerating success. Two shopping malls have confirmed a rescheduling of their openings until early 216 and One Belpark therefore was the only new shopping centre completed in DKI in 215 adding 23,65 of new retail space to DKI s cumulative supply in of 4.45 million. Going forward, DKI is expected to witness 12 new shopping centres totalling of 444, opening in Similarly, only one shopping centre, Aeon Mall BSD, began operating in in 215 bringing the cumulative supply to 2.34 million in this area. More than 585, of new retail spare will be available in during The occupancy rate in DKI stabilised at 86.8% while in it was registered at 83.%. The average rental rate for all classes of shopping centres in DKI was IDR535,285 / / month, growing at 5.5% YoY, while a higher growth of 12.1% YoY was experienced by shopping centres in the which recorded the average rental rate at IDR344,353 / / month. Ferry Salanto Associate Director - Research RETAIL SECTOR Supply Cumulative Supply of Retail Spaces in 5,, 4,5, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, F 217F 218F Existing Supply Annual Supply As of 214, it was projected that 38, of new retail space will begin operations in in 215. Shopping Mall at Pancoran and Pantai Indah Kapuk Mall were projected to be completed on schedule and open in 215. Nevertheless, based on construction progress, these two malls have confirmed a rescheduling of their openings until early next year. A shopping centre located within a mixed-use development in South called One Belpark finally began operating in 215. The mall, which uses the same name as the complex One Belpark, brought 23,65 of new retail space. With the ceasing of operations of Tebet Green Mall, the cumulative supply was 4.45 million in 215, very moderate growth YoY.

2 Cumulative Supply of Retail Space in Based on Marketing Scheme 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, Based on construction progress, is expecting five shopping centres to begin operating in Four of those shopping centres are expected to open in 216. In addition, Pantai Indah Kapuk Mall Neo Soho at Podomoro City and Shopping Mall at Pancoran seem ready to open. Together with Mall at Bassura City, these four shopping centres will bring 93, of additional retail space in 216. As of 4Q 215, only five of 11 future shopping centres are still in the planning stages in. Most of these retail centres are expected to being operations in 218. In 215, construction work was started on Aeon Mall at Garden City. A future shopping centre within Fatmawati City Centre complex was announced in 215. Cumulative Supply of Retail Space in Based on Area For Lease For Sale 216F 217F 218F West East North In 214, expected to see 11 new shopping centres that would bring 528, of new retail space in Most of these shopping centres will begin operating in 217. Currently, is expected to see 12 new shopping centres in However, these shopping centres will bring lower additional supply than the projections made in 214. In addition to One Belpark, Pondok Indah Mall 3 and Mall at Bassura City are recent additions to shopping centres slated for Conversely, each landlord has confirmed that two future shopping centres in Central and South delayed their completion dates for another year. Comparison of New Supply in 214 and 215 4, 35, 3, 25, 2, South Central CBD 2, 4, 6, 8, 1,, Existing Supply in 215 Future Supply in F Based on area, East and West are expected to become growing areas that will provide new retail space in the future. In addition, there will be larger availability of potential land to be developed. Ongoing and future infrastructure projects will help these areas see an increase in additional retail space. Increased infrastructure is expected to boost residential developments, particularly around the areas connected by infrastructure networks. Later, growing residential areas will need more supporting facilities, such as shopping centres. 15, 1, 5, as of 214 as of Research & Forecast Report Q4 215 Retail Colliers International

3 Greater Area ( - Bogor, Depok, Tangerang, Bekasi) Cumulative Supply of Retail Space in 3,, 2,5, 2,, 1,5, 1,, 5, F 217F 218F Existing Supply Annual Supply Similar to, only one shopping centre, Aeon Mall BSD, began operating in in 215. This is the first of four malls that will be built by Aeon Group (a mall developer from Japan) by 218. Afterwards, in addition to, this developer will also build its own malls in Deltamas (Bekasi) and Sentul (Bogor). With the contribution by Aeon Mall BSD of 75,, the cumulative supply in reached 2.34 million in 215, growth of 3.3% YoY. will see more future supply than of around 58, of new retail space in Four shopping centres are under construction and slated for completion in Two shopping centres, Bekasi Trade Centre 2 and Q Big BSD, are expected to begin operating and bring 125, new retail space in 216. Most future shopping centres in are in the planning stage and expected to begin operations in 218. The projected completion time of future retail centres in 218 may change depending on their construction progress in 216. Cumulative Supply of Retail Space in Based on Marketing Scheme Cumulative Supply of Retail Space in Based on Area 2,5, Bekasi 2,, 1,5, Tangerang 1,, Depok 5, Bogor F 217F 218F 3, 6, 9, 1,2, For Lease For Sale Existing Supply in 215 Future Supply in F Based on area, Bekasi and Bogor are the main contributor areas that will provide future shopping centres. Bekasi will lead and contribute 319, from seven new shopping centres in Aeon Mall Sentul, which is in the planning stage, increased the future additional supply in Bogor by 168,. Almost 6% of the total future supply in Bogor will be contributed by Aeon Mall Sentul. Tangerang showed a decreasing number of shopping centres but contributed three shopping centres in Currently, Tangerang only introduced two futureshopping centres, which will bring less than 1, in Developers with good reputation are still dominating retail development in. Most shopping centre projects in are owned by Sinarmas, Lippo, Megapolitan, Gapura Prima, Plaza Indonesia or Aeon. Their previous success is expected to become an advantage for them in getting many tenants and visitors in new areas. 3 Research & Forecast Report Q4 215 Retail Colliers International

4 New Supply Pipeline shopping centre location region developer NLA () development Status 216 Pantai Indah Kapuk Mall Pantai Indah Kapuk North Agung Sedayu 3, Under Construction Shopping Pancoran Pancoran South Agung Podomoro 8, Under Construction Neo SOHO Mall (Podomoro City) Slipi West Agung Podomoro 4, Under Construction Mall at Bassura City Cipinang East Synthesis Karya Pratama 15, Under Construction 217 New Harco Plaza Glodok West Agung Podomoro 6, Under Construction Holland Vilage Mall Cempaka Putih Central Lippo Karawaci 4, In Planning 218 Aeon Mall Garden City Cakung East Aeon 9, Under Construction Green Pramuka City Pramuka Central akarta Duta Paramindo Sejahtera 3, In Planning Mal Puri Indah 2 Puri Indah West Antilope Madju Puri Indah 5, In Planning Pondok Indah Mall 3 Pondok Indah South Metropolitan Kentjana 6, In Planning Shopping Mall at Podomoro Park Buaran East Agung Podomoro 4, In Planning 216 Bekasi Trade Center 2 Bulak Kapal Bekasi Gapura Prima 56, Under Construction Q Big BSD City Tangerang Sinarmas Land 69, Under Construction 217 Grand Dhika City Mall Bekasi Bekasi Adhi Persada Realty 24, Under Construction Metropolitan Mall Cileungsi Cileungsi Bogor Metropolitan Land 25, Under Construction 218 Plaza Indonesia Jababeka Jababeka Bekasi Plaza Indonesia & Graha Buana 55,685 Under Construction Cikarang Aeon Mall Deltamas Deltamas Bekasi Aeon 9, In Planning Aeon Mall Sentul Sentul Bogor Aeon 15, In planning Embarcadero Bintaro Tangerang Lippo Karawaci 3, In Planning Hollywood Central Cikarang Bekasi Graha Buana Cikarang 25, In Planning Kota Harapan Indah Bekasi Bekasi Hasana Damai Putera 51, In planning Living World Jababeka Jababeka Bekasi Kawan Lama 18, In Planning Vivo Sentul Lifestyle Cibinong Bogor Megapolitan 3, In Planning Vivo Sentul Trademall Cibinong Bogor Megapolitan 13, In Planning 4 Research & Forecast Report Q4 215 Retail Colliers International

5 Occupancy The Occupancy 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Annual Supply and Demand rates of 9.8 and 86.3%, respectively. Due to additional space, the occupancy rates at upper-class malls declined significantly in 214 and rebounded gradually in 215. The occupancy rates at middle-lower class malls continued to decline in the last two years. Declining performance at trade malls caused the occupancy rates at middle-lower class malls to drop 3.81% YoY to 77.7% as of 4Q 215. Occupancy Based on Mall Grade 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 45, 375, 3, 225, 15, 75, Upper Class Middle Class Middle Low Class The occupancy rate at shopping centres in was 83% on average during 215. New retail space caused the occupancy rate to decline as of 2Q 215. Occupancy climbed again, although very slightly, to 83.7% as of 4Q 215. Good absorption at newly operating malls helped the occupancy in grow by 2% YoY. Annual Supply and Demand 3, 25, , Annual Supply Annual Demand 15, Since the decline from 95 to 85% in 28 due to the economic crisis, the occupancy rates in fluctuated until 214. Slowing demand in caused the occupancy rate to decline continuously in those two years. Limited additional supply in 215 helped the occupancy rate increase, although moderately, to 86.8%. However, large future supply will likely cause the occupancy rate to decline again in 216. Moreover, some future shopping centres only have a few pre-committed tenants as of 4Q 215. Except for middle-lower class, malls showed an increase in occupancy rates, although very modest, YoY. Upper and middle-class shopping centres had occupancy 1, 5, -5, -1, Annual Supply Annual Demand Research & Forecast Report Q4 215 Retail Colliers International

6 Occupancy Rates Based on Cities in The Greater 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Bogor Depok Tangerang Bekasi Based on area, the occupancy rate in Bekasi and Depok increased YoY. Shopping centres that have started operations since 213 helped the occupancy rate in Bekasi to reach 85.7%, growing 4.3% YoY. These shopping centres brought around 17, of additional retail space and currently remain less than 1% unoccupied. In addition to newly operating malls, the other malls also continued to perform well and occupancy in Depok grew 1.9% to 86.2%. The occupancy in Depok was the highest in BoDeTabek as of 4Q 215. Conversely, the average occupancy rate in Tangerang was the lowest in the last two years. Some shopping centres had declining occupancy in Slowing absorption at shopping centres located in the secondary area of Tangerang also contributed to bringing the occupancy to 79.5%, a drop of 1.4% YoY. The occupancy in Bogor also declined, although moderately. As of 4Q 215, the occupancy rate in Bogor was 82%. On the retail side, both local and foreign brands are continuing to expand their businesses, particularly in At least five retailers, H&M and Uniqlo (fashion retailers), Cinemaxx and Blitz (entertainment), and Jysk (Home Furnishing) actively opened new outlets in the last two years. Another retailer aiming at the Indonesian market is LuLu Hypermarket, the retail division of the multinational LuLu Group International based in UAE (United Arab Emirates). Lulu generally operates as freestanding hypermarket and thus far has one operating store in the Cakung area. Some Active Retailers in Retailer Type Origin Opened at H&M Fashion Sweden Pondok Indah Mall, Gandaria City, Grand Indonesia, Mal Kelapa Gading, Mal Taman Anggrek, Lotte Shopping Avenue, Kota Kasablanka, Emporium Pluit, Aeon Mall BSD, Summarecon Mal Bekasi, Summarecon Mal Serpong Uniqlo Fashion Japan Pondok Indah Mall, Gandaria City, Kota Kasablanka, Grand Indonesia, Aeon Mall BSD Jysk Home Furnishings Denmark Kuningan City, Pejaten Village, Aeon Mall, Margo City Blitz Megaplex Entertainment Indonesia Grand Dadap City, Bekasi Cyber Park, Grand Galaxy Park Cinemaxx Entertainment Indonesia Plaza Semanggi, f X Lifestyle, Supermal Karawaci, WTC Matahari Serpong, Metropolis Town Square Tangerang Other brands will also soon open new stores. Several brands, such as Berluti, Antony Morato, Chopard and Superga seem ready to invigorate the market. Most of these retailers are categorised as luxury brands. Banana Republic and Zara Home also occupied space at Pondok Indah Mall, and Plaza Indonesia is continuing to refresh their tenancy mix with some new brands. Mostly branded fashion retailers will occupy space at this shopping centre. Overall, the retail market is expecting challenges. Indonesia is still considered a potential market for new brands, especially foreign retailers. Nevertheless, on the other hand, economic turmoil in the last two years caused purchasing power to decrease and upper-class customers will likely restrict their shopping in the near future. The expansion of online shopping business will not change occupancy rates of the shopping malls because they typically do not need retail space to operate. Nevertheless, the physical experience of shopping is still valid because shoppers prefer to see the real product, have direct interaction with the crowd and other real experiences like eating, hanging out with family and friends, etc. In short, a mall is more than just a place to shop. 6 Research & Forecast Report Q4 215 Retail Colliers International

7 Asking Rents Average Asking Rents on Typical Floor of Retail Centre in and IDR6, IDR5, IDR4, IDR3, IDR2, IDR1, Average Asking Rents on Typical Floor of Retail Centre in the CBD and Outside CBD IDR9, IDR75, IDR6, IDR45, The current slowing economy has caused consumers to curb their shopping, especially for secondary needs. The weakening purchasing power likely will have an impact on retailers revenue and will also trigger adjustments in the asking rents at shopping centres. Landlords are expected to be more thoughtful in adjusting asking base rents in order to maintain occupancy in the future. As of 4Q 215, the average rental rate for all classes of shopping centres was IDR535,285//month, growing 5.5% YoY. Based on area, the CBD had an average asking rent of IDR829,652/ /month. Most of the average asking rents in the CBD were between IDR3, and 6,//month. Only five shopping centres had an average asking rate above IDR6,/ /month. These shopping centres are categorised as upperclass malls and have asking rents for their vacant space at between IDR9, and 2,4,//month currently. In outside the CBD, the average asking rate was IDR442,435/sq m/month as of 4Q 215. South, excluding the CBD area, recorded the highest average asking rent. Most of the asking rents in South were also between IDR3, and 6,/sq m/month, similar to the CBD. The average rent in South was IDR57,22//month as of 4Q 215, 31.3% lower than in the CBD. This is because only three shopping centres in South having asking rents above IDR6,//month. Two shopping centres in West also had an average rental rate above IDR6,, which made the average for this area the second highest at IDR497,8//month. Conversely, the average asking rent in East was the lowest at IDR297,637/ /month as of 4Q 215 Range of Asking Rents Based on Area in IDR2,5, IDR2,, IDR3, IDR1,5, IDR15, IDR1,, IDR5, CBD Outside CBD Both tenants and landlords are currently facing unfortunate situations. Weakening local currency (rupiah) against the US dollar in 215 had the effect of increasing costs, particularly of branded and imported goods. As a result, retailers have been increasing the prices of those goods. It is likely that landlords will respond by offering an adjustment in rental rates at their shopping centres. However, Colliers noted that the average number of visitors to the malls generally decreased in 215. CBD Central South North East West 7 Research & Forecast Report Q4 215 Retail Colliers International

8 Based on mall grade, upper-class malls have an average rent of IDR1,31,383//month as of 4Q 215, growing 6.2% YoY. Three shopping centres in this class have adjusted their rents significantly YoY. Good occupancy helped landlords of these malls feel confident in increasing their asking rents. Meanwhile, the average asking rents at middle and middle low classes of shopping malls were IDR392,91 and 278,343//month as of 4Q 215, respectively. There is a big gap between the average rents at upper and lower class shopping centres. However, the YoY growth of average rents at lower class malls was higher than at upper class. Despite the big gap, asking rents at middle middle low class shopping centres are more affordable for potential tenants. Those tenants will feel more comfortable negotiating with landlords. Most of the time, tenants generally obtain a transacted rent at a more affordable rent. Due to slow demand and economic turmoil, potential tenants will become more demanding. In some cases, despite the high transaction rates, some brands are often used as a magnet to attract other tenants. Those tenants generally receive considerable compensation, such as a large discount off the rental rate or free rent for a few months. Average Asking Rents on Typical Floor of Retail Centre Based on Mall Grade IDR1,1, IDR88, IDR66, IDR44, IDR22, The decreasing number of visitors, as mentioned above, the slowing economy and larger additional supply likely will keep projected asking rents relatively stable in 216. Average Asking Rents in IDR4, IDR35, IDR3, IDR25, IDR2, IDR15, IDR1, IDR5, Bogor Depok Tangerang Bekasi Shopping centres owned by well-known developers brought the average asking rent in to IDR344,353/ month as of 4Q 215, growing 12.1% YoY. In addition to maintaining healthy occupancy, creating an interesting tenancy mix became a key to success for attracting more visitors. Furthermore, increasing purchasing power made landlords confident in increasing their asking rents. Good absorption, particularly at some shopping centres that started operations in , also caused landlords to adjust their asking rents, particularly for their first tenants. Upper Class Middle Class Middle Low Class 8 Research & Forecast Report Q4 215 Retail Colliers International

9 Based on area, Tangerang, Bekasi and Bogor have average asking rents above IDR3,//month. As of 4Q 215, only the Depok area still recorded an average rent below IDR3,/ /month. The average asking rent in Tangerang continued as the highest in, at IDR38,794//month. However, Bogor and Bekasi were areas with higher growth of average asking rents YoY. Currently, the average asking rents in Bekasi and Bogor are IDR343,341 and 324,616//month, respectively, showing growth of 18.3 and 28.4% YoY., Due to maintaining good occupancy year by year allowed one shopping centre in Bogor to increase their asking rents significantly in mid Another shopping centre also increased their rents after doing renovations and a revision of the tenancy mix. Meanwhile, as of 4Q 215, the average asking rent in Depok was IDR252,852/ /month, the lowest in. This is due, on average, to the asking rents of shopping centres in Depok being between IDR2, and 3,//month. Service Charge Average Service Charges in and IDR12, IDR1, IDR8, IDR6, IDR4, IDR2, Service charges in have continued to show an increase in growth since 21, and the average service charge was above IDR1,//month since mid-214. Since then, the average service charge grew 2.5% quarterly. As of 4Q 215, service charges at shopping centres in were IDR114,636// month and 4% of these shopping centres in, based on number, had a service charge above IDR1,//month. Most of those are located in South, including the CBD area. So far, hikes in fuel cost, electricity tariff and minimum wage have caused service charges to increase. Nevertheless, currently, the government has decided to lower fuel prices and electricity tariffs, effective as of January 216. However, the minimum wage is expected to be increased at the same time, so service charges will continue to increase next year despite showing slow growth. Average Service Charges Based on Mall Grade IDR18, IDR15, IDR12, IDR9, IDR6, IDR3, Upper Class Middle Class Middle Low Class Around 7% of the shopping centres in currently have service charges between IDR5, and 1,// month. Only 1%, represented by six shopping centres, have higher service charges. These shopping centres have kept their service charges above IDR1,//month since mid-215 and have been relatively stable up to the end of the year. Overall, service charges in were IDR85,347//month as of 4Q 215, growing 9% YoY. Average Service Charges in IDR 1, IDR 8, IDR 6, IDR 4, IDR 2, IDR Bogor Depok Tangerang Bekasi 9 Research & Forecast Report Q4 215 Retail Colliers International

10 52 offices in 67 countries on 6 continents United States: 14 Canada: 31 Latin America: 24 Asia: 39 ANZ: 16 EMEA: 18 $2.3 billion in annual revenue Primary Authors: Ferry Salanto Associate Director Ferry.Salanto@colliers.com Colliers International Indonesia World Trade Centre 1th & 14th Floors Jalan Jenderal Sudirman Kav Indonesia TEL million square meters managed 16,3 professionals and staff About Colliers International Group Inc. Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 16,3 professionals operating from 52 offices in 67 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 1 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 1 consecutive years, more than any other real estate services firm. colliers.com/indonesia Copyright 213 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.