RETAIL SECTOR. Highlight. Research & Forecast Report Jakarta Retail 3Q Supply Jakarta. Accelerating success.

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1 Research & Forecast Report Retail 3Q 2015 Accelerating success. RETAIL SECTOR Highlight The recent sluggishness of economic growth and newly opened shopping centres in DKI with low occupancy brought occupancy rates down modestly by less than 1% YoY to 85.3% as of 3Q Meanwhile, average asking rents at shopping centres in climbed 6.1% YoY to IDR542,221 sq m/month as of 3Q This is due to the limited amount of available premium retail space together with mall upgrading caused some shopping centres to introduce an increase in asking rents QoQ. Supply Cumulative Supply of Retail Space in After almost a year without additional space, again saw a new shopping centre as of 3Q Although only softly launched, some stores have opened at One Belpark. This shopping centre, located at Fatmawati (in South ) provides 23,650 sq m of additional space. At the same time, around 6,000 sq m has been removed from the existing supply due to the cessation of operations of a small retail facility within a mixed-use project also in South. Issues regarding licensing or permission from the government caused this retail centre to be sealed in early July Cumulative Supply of Retail Space in Based on Marketing Scheme 3,500,000 3,000,000 2,500,000 5,000,000 4,500,000 4,000,000 3,500,000 2,000,000 1,500,000 1,000,000 3,000,000 2,500, ,000 2,000,000 1,500,000 1,000, YTD 2015F 2016F 2017F 2018F 500,000 0 For Lease For Sale YTD 2015F Existing Supply Annual Supply 2016F 2017F 2018F This contrary condition contributed by some retail centres has brought moderate growth of the cumulative supply YoY to 4.45 million sq m as of 3Q is expecting to see another shopping centre by the end of Pantai Indah Kapuk Mall is in the final stages of construction, and is expected to be completed soon. 1 Research & Forecast Report 3Q 2015 Retail Colliers International

2 will continue to see modest growth in the cumulative supply. Three retail centre developments that are integrated with apartments projects, will contribute additional retail space in The three retail centres are also showing significant development progress, and are seemingly able to achieve completion during the first half of Aside from those under construction, more upcoming retail centres have been announced. After POIN Square became operational in 2005, TB Simatupang area will see additional retail spaces again. A new shopping centre is expected to become part of a massive development developed by Agung Sedayu in TB Simatupang. As of 3Q 2015, this project, together with the six other future projects scattered in other parts of, are still in the planning stages. It is expected that they will be completed in The moratorium on shopping centre development in DKI has reduced the number of new development permits. Among shopping centre landlords, this has brought the concept of rejuvenating the existing shopping centres. The majority of old retail premises underwent low occupancy performance and declining shopper traffic, and a capital expenditure is needed to rejuvenate shopping centre in order to boost performance, and as a result to quote higher rents. This is also evident for malls with high occupancy levels, in order to step into the next level of service quality. We have witnessed several old and lessperforming shopping centres being revived with new looks and new tenancy to transform into better retail space in the midst of the limited retail supply in. More foreign retail investors are eyeing the Indonesian market due to the huge market opportunity particularly in the Greater area, which is the second most populous metropolitan area in the world, with circa 30 million people. The latest, Aeon from Japan, has penetrated Indonesia. After operating in Tangerang, Aeon will soon commence construction of a shopping mall project in Cakung, East. Together with West, East is expected to become the largest contributor of additional retail space by Aeon Mall Cakung itself, which will be developed within Garden City estate in East, is projected to become the largest mall in with a total area of around 90,000 sq m. The ongoing and future infrastructure projects such as toll roads, MRT (Mass Rapid Transport) and LRT (Light Rail Transit) are expected to become a main driver for property sectors, including retail, to grow. The under-construction MRT line will mainly serve the business area in the south of and the downtown while the newly initiated LRT project will serve the fringe of and will be integrated with the MRT and other transport links. citizens are increasingly becoming aware of their easy access to shopping centres. Developers are benefiting from the infrastructure plans to provide easier access, yet the infrastructure projects trigger an increase in the land value. Greater Area (BoDeTaBek - Bogor, Depok, Tangerang, Bekasi) BoDeTaBek Cumulative Retail Space Supply 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 Cumulative Retail Space Supply Based on Area YTD 2015F 2016F 2017F 2018F West Existing Supply Annual Supply East North South Central CBD The absence of a new shopping centre has caused the cumulative supply in BoDeTaBek to register a figure similar to that in the previous quarter of 2.34 million sq m. Based on construction progress, it is again projected that no new shopping centres will enter the market by the end of 2015, bringing the growth of the cumulative supply to only 3.3% YoY. Later, the number of additional space at retail centres in BoDeTaBek will be larger and will register an average growth of the cumulative supply at 6.6% in , , , ,000 1,000,000 Existing Supply as of 2015YTD Future Supply in F 2 Research & Forecast Report 3Q 2015 Retail Colliers International

3 The less-popular trade mall concept or strata-title retail will still be found in BoDeTaBek, despite only in small amounts of retail space. Retail space for sale will contribute less than 15% of the total additional supply in BoDeTaBek by the end of BoDeTaBek Cumulative Supply Based on Marketing Scheme 2,500,000 2,000,000 1,500,000 1,000, , For Lease YTD For Sale The growing infrastructure development in the city could lead to the implementation of the Transit Oriented Development (TOD) concept. The TOD, is a type of community development that includes a mixture of housing, offices, retail space and/ or other amenities integrated into a walkable neighbourhood and located within a short distance of quality public transport like the MRT or LRT. The TOD will also drive people to opt for urban remigration by developing buffer zones as prime areas for working and shopping activities. Furthermore, remigration will distribute the load in to BoDeTaBek or to new surrounding areas such as Lippo Karawaci, Jababeka, Sentul City and South Tangerang (BSD City, Alam Sutera and Summarecon Serpong) or east, west and south of the town. Currently, we can see that the developments in BSD City are still growing rapidly. Aside from Aeon, which will soon begin operating, a shopping mall called Q-Big has been under construction since early This shopping centre will bring a power centre* concept and will be occupied by selected tenants with areas of 5,000-10,000 sq m. (*A power centre is an unenclosed shopping centre that usually contains three or more big box retailers and various smaller retailers with a common shared parking area). 2015F 2016F 2017F 2018F PT Plaza Indonesia Jababeka formally started its mixed development, namely, Mayfair Estate & Parklands in Jababeka City. This project will be built gradually in four development phases. A shopping centre will be built during the first and second phases of development. This shopping centre project will be aimed at a middle upper-class community with many expatriates who work and live in Jababeka industrial estate. This shopping centre is going to bring international chains of department stores, supermarkets, theatres and fitness centres. This retail project will also be supported by an international fivestar hotel. In addition to the one in, Aeon will commence other projects in Deltamas and Sentul. In Deltamas, similar to the project in, Aeon will develop a shopping centre that is larger than the existing mall in BSD City. In Sentul, Aeon, together with Sentul City, will also start construction of a mall around the end of 2015 that is expected to open in The developer is actively looking for a lot of potential land to be developed, without inquiring whether the locations are in nonprime areas provided that it is within an area with considerable purchasing power. Overall, most future shopping centres in BoDeTaBek are in the planning stage as of 3Q 2015 and more additional space in BoDeTaBek is expected be completed in BoDeTaBek Retail Space Cumulative Supply Based on Area Bekasi Tangerang Depok Bogor 0 300, , ,000 1,200,000 Existing Supply as of 2015YTD Future Supply in F 3 Research & Forecast Report 3Q 2015 Retail Colliers International

4 Retail Centre Development in the Pipeline retail centers name location region developer NLA (sq m) development Status 2015 Pantai Indah Kapuk Mall Pantai Indah Kapuk North Agung Sedayu 30,000 Under Construction 2016 Shopping Pancoran Pancoran South Agung Podomoro 8,000 Under Construction Neo SOHO Mall (Podomoro City) Slipi West Agung Podomoro 40,000 Under Construction Mall at Bassura City East Synthesis Karya Pratama 15,000 Under Construction 2017 New Harco Plaza Glodok West Agung Podomoro 60,000 Under Construction Holland Village Mall Cempaka Putih Central Lippo Karawaci 40,000 In Planning 2018 Pramuka City Pramuka North Duta Paramindo Sejahtera 30,000 In Planning Pondok Indah Mall 3 Pondok Indah South Metropolitan Kentjana 60,000 In Planning Mal Puri Indah 2 Puri Indah West Antilope Madju Puri Indah 50,000 In Planning Shopping Mall at Podomoro Park Buaran East Agung Podomoro 40,000 In Planning Aeon Mall Garden City Cakung East Aeon 90,000 In Planning BoDeTaBek 2016 Bekasi Trade Center 2 Bulak Kapal Bekasi Gapura Prima 56,000 Under Construction Q Big BSD City Tangerang Sinarmas Land 69,000 Under Construction 2017 Metropolitan Mall Cileungsi Cileungsi Bogor Metropolitan Land 25,000 Under Construction Grand Dhika City Mall Bekasi Bekasi Adhi Persada Realty 24,000 Under Construction 2018 Plaza Indonesia Jababeka Jababeka Bekasi Plaza Indonesia & Graha Buana 55,685 Under Construction Cikarang Vivo Sentul Lifestyle Cibinong Bogor Megapolitan 30,000 In Planning Vivo Sentul Trademall Cibinong Bogor Megapolitan 13,000 In Planning AEON Mall Deltamas Deltamas Bekasi Aeon 90,000 In Planning AEON Mall Sentul Sentul Bogor Aeon 100,000 In planning Embarcadero Bintaro Tangerang Lippo Karawaci 30,000 In Planning Living World Jababeka Jababeka Bekasi Kawan Lama 18,000 In Planning Hollywood Central Cikarang Bekasi Graha Buana Cikarang 25,000 In Planning Kota Harapan Indah Bekasi Bekasi Hasana Damai Putera 51,000 In planning 4 Research & Forecast Report 3Q 2015 Retail Colliers International

5 Occupancy Occupancy 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% BoDeTaBek The occupancy rate in still looks erratic, albeit in a modest way. In fact, since 2H 2014, the occupancy has climbed, although moderately. However, the sluggishness of economic growth recently and newly operating shopping centres brought the occupancy down modestly QoQ to 85.3% as of 3Q Middle- to low-class shopping centres seemingly have been most affected by the slowing economic growth. The occupancy rate at this class of shopping centre was only at 77.7% as of 3Q 2015, falling 2.8% QoQ. Purchasing power is generally weakening and this has led to vacated spaces at middle- to low-class shopping centres that were used by fashion and accessories stores. Fashion consumption has become a secondary option. On the other hand, food and beverage retailers still attract more visitors as meeting points during both working and after office hours. We have witnessed the tendency of people to be more frugal when visiting shopping centres and spending money shopping. Also, shoppers are generally becoming less interested in visiting old-fashioned shopping centres, with less attractive tenancy mix, and bad accessibility both for vehicles and pedestrians and minimal parking. In addition, the shopping centre development moratorium has also opened opportunity for developers to revamp the building and re-layout the existing tenancy mix to attain higher occupancy and rental rates. Weakening or slowing purchasing power also has an impact on upper-class shopping malls. Although not as prevalent, the aggregate vacant space during the quarter has caused the occupancy at upper-class shopping centres to slightly decrease to 90.8%. However, some new, committed tenants are ready to occupy space at some upper-class shopping centres in. Occupancy Based on Mall Grade 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Upper Classes Middle Classes Middle Low Classes Some foreign retailers are continuing to look for space to open their next stores. Uniqlo (fashion retailers from Japan) will open their latest store around October 2015 and occupy around 2,000 sq m at Pondok Indah Mall 2. Local fashion chain retailer, Matahari Department Store is also expanding actively in by opening at Pasaraya, both at Blok M and Manggarai, in South. This department store plans to open more stores this year to increase their sales. Some other upper-class shopping centres will optimise their tenancy mixes to create a new atmosphere within the mall. In quite a few retailers plan to open and replace existing tenants at shopping centres around Senayan, Central. Similarly, this will happen at upper-class shopping centres in Thamrin, Central. More luxury brands will come and occupy space, such as Phillip Lim, Mulberry, A. Testoni, Stella McCartney, Weekend Maxmara, Keds, Carl Zeiss, The Shoe Dept, Living Soul and Michael Kors. Among wealthy Indonesians, the younger generation is quite enthusiastic in trying new products from foreign brands and this is another reason for fashion retailers to expand their stores in. In contrast, the occupancy level of shopping centres in the BoDeTaBek area was better than in. Some shopping centres owned by reputable developers helped move the occupancy upward by 2% QoQ to 83.6%. Those shopping centres that have been operating since currently have less than 5,000 sq m of vacant space each. A shopping centre operating for less than half a year in Tangerang reports that more than 50% of their stores have already opened. 5 Research & Forecast Report 3Q 2015 Retail Colliers International

6 The occupancy in Tangerang and Bekasi is trending upward, while in Depok and Bogor it was stagnant QoQ. The occupancy rates in Tangerang and Bekasi were 83.4 and 85.4%, respectively, as of 3Q However, in general, the competition among shopping centres in Bekasi remains high. Depok and Tangerang also showed a similar trend. Some shopping centres in the outside main areas will be quite hard to compete with. Several areas in Tangerang such as Cimone, Dadap and Pamulang are mainly populated by typical neighbourhood malls that serve a smaller catchment area with occupancy below the market average. Those located in the main city of Tangerang, which covers a wider market, had better occupancy rates. In other cases, like in Bogor, the old shopping centres continue to see challenges from the development of single retail buildings such as hyperstores. Occupancy Rates in BoDeTaBek 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Bogor Depok Tangerang Bekasi H&M will launch their new store by occupying around 650 sq m at Supermal Karawaci in an attempt to attract young people and an upper level community living in Karawaci, Tangerang. Currently, they are working on fitting out and it is estimated that they will open around November Asking Rents Average Asking Rents on Typical Floor of Retail Centre in and BoDeTaBek IDR 600,000 IDR 500,000 IDR 300,000 IDR 200,000 BoDeTaBek Average asking rents at shopping centres in climbed 6.1% YoY to IDR542,221 sq m/month as of 3Q Limited available space and mall repositioning caused some shopping centres to introduce an increase in asking rents QoQ. Average asking rents in South showed the highest growth of 4.6% QoQ to IDR586,898 sq m/month. Despite showing moderate growth, average asking rents in Central still remain the highest at IDR764,732 sq m/month. In other areas, the average asking rents were between IDR300 and 500,000 sq m/month. Average Asking Rents on Typical Floor of Retail Centre in Several Regions in IDR 900,000 IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000 IDR 300,000 IDR 200,000 CBD Central South North East West 6 Research & Forecast Report 3Q 2015 Retail Colliers International

7 Higher rents both in Central and South were influenced by shopping centres in the CBD area. Asking rents at shopping centres in the CBD itself were IDR829,652 sq m / month as of 3Q 2015 and climbed 6.3% YoY. Average Asking Rents on Typical Floor of Retail Centre in the CBD and Outside of CBD IDR 900,000 IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000 IDR 300,000 IDR 200,000 CBD Outside CBD The highest asking rents in the CBD were also contributed by middle- to upper-class shopping centres. Some upper-class shopping centres even have reached more than IDR1,000,000 sq m/month on average. Those shopping centres helped to bring the average rents for upper-class shopping centres to IDR1,031,383 sq m/month as of 3Q 2015, climbing 6.2% YTD. Asking rents at upper-class shopping centres also widened the gap from the lower class, which are between IDR280,000 and 400,000 sq m/ month. The adjusted asking rents at lower-class shopping malls have become a dilemma for landlords and developers, especially with the recent slowing economy in Indonesia. Landlords at lower-class shopping malls prefer to maintain occupancy rather than adjust the rents. However, in order to raise revenue, landlords possibly will adjust rents by re-positioning their shopping centres and rearranging their tenancy mix. Average Asking Rents on Typical Floor of Retail Centre Based on Mall Grade IDR 1,200,000 IDR 1,000,000 IDR 800,000 IDR 600,000 IDR 200,000 In BoDeTabek, asking rents jumped more significantly than in, by 12.5% YTD to IDR346,769/sq m/month. Asking rents at shopping centres in Bekasi and Tangerang are still the highest as of 3Q Despite being lower than Tangerang, asking rents in Bekasi showed significant growth QoQ. Two shopping centres owned by well-known developers contributed to bringing the asking rents in Bekasi to IDR343,341/sq m/month, jumping 20.1% YoY. As reported earlier, asking rents in Bogor also jumped significantly YTD due to revamping and available space at some shopping centres. Depok has become an area that shows very moderate growth of asking prices YoY. Average Asking Rents in BoDeTaBek IDR 320,000 Upper Classes Middle Classes Middle Low Classes IDR 240,000 IDR 160,000 IDR 80,000 Bogor Depok Tangerang Bekasi 7 Research & Forecast Report 3Q 2015 Retail Colliers International

8 Service Charge Average Service Charges in and BoDeTaBek IDR 120,000 Since jumping significantly in the previous quarter, the average service charge in BoDeTabek showed moderately growth to IDR85,464 sq m/month as of 3Q Increasing service charges were due to yearly adjustments at some shopping centres. Average Service Charges Based on Mall Grade IDR 175,000 IDR 80,000 IDR 150,000 IDR 60,000 IDR 125,000 IDR 40,000 IDR 20,000 IDR 75,000 IDR 50,000 IDR 25,000 BoDeTaBek Average service charges continue to increase in. As of 3Q 2015, the average service charge was IDR114,537 sq m/month, climbing 11.8% YTD. In the CBD, the average service charge was IDR143,580 sq m/month, and IDR107,211 sq m/month in the outside CBD. High service charges in the CBD area were mainly contributed by upper-class malls with service charges between IDR110,000 and 280,000 sq m/month. However, at two middle class-shopping centres service charges were more than IDR100,000 sq m/month. Average Service Charges in Several Regions in IDR 150,000 IDR 120,000 IDR 90,000 Most service charges at shopping centres in BoDeTaBek are between IDR50,000 and 100,000/sq m/month. Only a few shopping centres have service charges below IDR50,000/ sq m/month. Commonly, those are old shopping centres. Service charges at some popular shopping centres were above IDR100,000/sq m/month. Average Service Charges in BoDeTaBek IDR 80,000 IDR 60,000 IDR 40,000 Upper Classes Middle Classes Middle Low Classes IDR 60,000 IDR 20,000 IDR 30,000 CBD Central South North East West Bogor Depok Tangerang Bekasi 8 Research & Forecast Report 3Q 2015 Retail Colliers International

9 502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia: 39 ANZ: 160 EMEA: 108 $2.3 billion in annual revenue Primary Authors: Ferry Salanto Associate Director ext 134 Ferry.Salanto@colliers.com Colliers International Indonesia World Trade Centre 10th & 14th floor Jalan Jenderal Sudirman Kav Indonesia TEL million square meters managed 16,300 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world. colliers.com Copyright 2015 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.