Property Sector Overview

Transcription

1 i PROPERTY MARKET report research & forecast report office sector Property Sector Overview office sector Base rental rates in the CBD during the first quarter of 212 continued to rise. Average asking base rental rates for all classes of office buildings in the CBD are now approximately 3% higher than this time last year and were recorded at Rp134,99//month at the end of March for Rupiah denominated buildings and US$23.26//month for US Dollar denominated buildings. The primary reason that landlords are able to obtain higher rents is that occupancy levels climbed to 94.5.% this quarter or the highest level since 199. Supply JAKARTA SUPPLY Two new buildings were completed during 1Q 212 while one building was taken out from our database. New buildings during the quarter include Multivision Tower, located in Jalan Rasuna Said and Menara Satu in Kelapa Gading, East Jakarta. These two supplied an additional office stock of 4,77. Meanwhile, an office building in the Barito area, South Jakarta was demolished and will be replaced by a new apartment tower. All in all, the total office space in Jakarta is now 6.27 million with 7% of it located in the CBD area. Office completions during 212 in Jakarta will be quite significant. Several buildings have shown rapid construction progress towards completion. The office supply grew by only 3% annually over the last ten years while the office supply from will grow by 8.7% annually. This shows a greater amount of office supply, however most of the future buildings have confirmed high commitment levels even before their completion. jakarta OFFICE SUPPLY s q m 9,, 8,, 7,, 6,, 5,, 4,, 3,, 2,, 1,, Existing Supply Annual Supply

2 Office Sector cbd existing supply Last year the office supply only grew by less than 1, (the lowest growth in the last five years). In this quarter, the operation of Multivision Tower brought the cumulative supply of CBD offices to 4.38 million. Colliers International Indonesia has reviewed the grading of existing office buildings and implemented a fairer methodology in categorising office gradings. Location and building quality criteria are the most significant factors. A CBD location of course has more weight than locations outside of the CBD while building quality includes several factors like the design of the building (architecture), lifts, mechanical & electrical, structure and green under construction Several under-construction office buildings are chasing completion targets this year including 18 Park in the SCBD and AXA Tower in Jalan Prof. Dr. Satrio. This is not confined to new buildings, as the refurbishment of Exim Melati, which will be called as Thamrin Nine, is reaching its final stage. Other office projects under construction will likely to meet with schedule as monitor in the field. Office buildings under construction are seemingly committed to meeting their completion schedules. Should these future office buildings be able to enter the market on time, the total annual office space within the CBD in 212 will be 356,131. The projection for the total annual supply in 212 will be the second largest since 1995 at 45,567. in planning While some projects have reached the construction stage, several other projects are in the pipeline and in the planning stage. Most of the projects will be located in Jalan Jenderal Sudirman including the new Chase Tower, Sudirman Center Tower, International Financial building compliance. Other factors taken into account are building size, floor plate size, age, management and maintenance, facilities and tenant profile. Thus, based on the methodology, around 45% of the buildings in the CBD are of Premium and Grade A categories. The trend this year is towards strata-title office buildings this year with around 51% of the total annual supply being marketed as office space for sale. This is a repetition of and 21 when the number of annual strata-title sales was greater than the number of offices for lease. To date, of the total office space in the CBD, 15% is office space for sale representing 637,232 million. Office space scheduled for 213 will be less than in 212 but we note that three buildings are rushing with the completion target including Rasuna Tower and Life Tower, both located in Jalan Rasuna Said and are in the middle of basement works. The other tower, Menara Prima 2 located in Mega Kuningan area is doing the structure work. According to our new office grading system, most of office buildings projected to be completed in period are categorised as Grade A buildings. Given a recent increase in land prices in the CBD, developers try to justify their income due to increasing cost. Tower 2 and Menara Selaras. Other projects in planning include Mangkuluhur Tower in Gatot Subroto, Graha Surya Internusa 2 in Jalan Rasuna Said and Rifa 2 in Jalan Prof. Dr. Satrio. CBD annual OFFICE SUPPLY BASED ON MARKETING SCHEME 3, 25, 2, 15, 1, 5, For Lease For Strata-title p. 2 Colliers International

3 outside cbd existing supply One new building, Menara Satu, located in Kelapa Gading area, officialy operates during the quarter while Darya Varia building which has been in operation since 1992 was demolished to make way for a new apartment tower. Menara Satu is offered both for lease and for sale, contributing 18,77. Thus, both additions and reductions brought the cumulative supply of office space in the outside CBD area to 1.89 million. under construction After the operation of Menara Satu, there will be an additional upcoming office space of 28,626 during 212. The great thing is that entire office buildings scheduled for 212 are rushing construction work, which brings an optimistic sense that these buildings will be finished as planned. Of the total of 227,936 of annual office space during 212, new office buildings will be concentrated in and around South and West Jakarta at 65% and 35%, respectively. Of the supply in South Jakarta, the majority will be located in TB Simatupang and surrounding areas. in planning Besides office buildings under construction, several developers have announced their plans for new office developments during This includes several buildings in TB Simatupang like Talavera Suite, 18 Office Park, Manhattan Square and South Quarter. Up to this quarter, Manhattan Square, Talavera Suite and South Quarter are actually in the early stages of construction. In North Jakarta Implementing the new grading system, around 72% of office buildings in the outside Jakarta area are categorised as Grade C particularly because of the location and the size and quality of the buildings. Offices for sale will dominate the market during 212 with a composition of strata-title offices of around 76%. However such conditions will not occur over the next two years when offices for lease will rule the market with a 65% share. The office supply in the TB Simatupang and surrounding areas grew very rapidly. With the additional supply of 8,126 during 212, the cumulative supply in TB Simatupang and surrounding areas will be 431,191, which represents2% of the total supply in the outside CBD. Even further, around 79% of the total 286,527 of future office building projected for 213 are located in TB Simatupang and surrounding areas. Five of the 12 buildings projected to be completed in 213 in the outside CBD area have started construction including Green Kosmo Mansion and Alamanda Tower in TB Simatupang, DIPO Business in Gatot Subroto, Tebet Green in MT Haryono and Office Tower within the Kota Kasablanka commercial compound. an office building called De Suites was also announced while Wisma 77 Tower 2, Gallery West and GP Plaza were also planned to be built in West Jakarta. Although the TB Simatupang area contributes the most office development in South Jakarta, other office areas like Kebayoran Baru will have new office towers located within Pasaraya Grande. outside CBD annual OFFICE SUPPLY BASED ON MARKETING SCHEME 3, 25, 2, 15, 1, 5, For Lease For Strata-title p. 3 Colliers International

4 FUTURE office buildings projected completion time building name location SGA (SQ M) marketing scheme status* CBD AREA 2Q PARK SCBD 23,136 For Lease Under Construction 2Q 212 AXA Tower Satrio 6,995 For Lease and For Strata-title Under Construction 2Q 212 Thamrin Nine (Exim Melati) MH Thamrin 8, For Lease Under Construction 3Q 212 World Trade Center 2 Sudirman 57, For Lease Under Construction 4Q 212 Office 8 SCBD 48, For Strata-title Under Construction 4Q 212 Tower One at The City Center KH Mas Mansyur 84, For Lease and For Strata-title Under Construction 4Q 212 Perkantoran Setiabudi Setiabudi 11, For Lease and For Strata-title Under Construction 4Q 212 DBS Tower at Ciputra World 1 Jakarta Satrio 64, For Lease and For Strata-title Under Construction 1Q 213 Menara Prima 2 Mega Kuningan 4, For Lease Under Construction 4Q 213 Chase Tower Sudirman 57,46 For Strata-title Under Construction 4Q 213 Life Tower HR Rasuna Said 3,5 For Lease Under Construction 4Q 213 Rasuna Tower HR Rasuna Said 8, For Lease Under Construction 4Q 213 Rifa 2 Satrio 3, For Strata-title In Planning 1Q 214 Menara Selaras Sudirman 36,596 For Lease In Planning 1Q 214 The City Center (phase 2) KH Mas Mansyur 34, For Strata-title In Planning 1Q 214 The City Center (phase 3) KH Mas Mansyur 4, For Lease In Planning 2Q 214 International Financial Center 2 Sudirman 4, For Lease In Planning 4Q 214 Sudirman Center Tower Sudirman 126,6 For Strata-title In Planning 4Q 214 Menara Palma 2 HR Rasuna Said 5, For Lease In Planning 4Q 214 Menara Pertiwi Mega Kuningan 4, For Strata-title In Planning 4Q 214 Graha Surya Internusa 2 HR Rasuna Said 4, For Lease In Planning 4Q 214 Mangkuluhur Tower B Gatot Subroto 39,356 For Lease In Planning OUTSIDE CBD AREA 2Q 212 Wisma Pondok Indah 3 Sultan Iskandar Muda 36,16 For Lease Under Construction 2Q 212 Grand Soho Slipi S. Parman 52, For Strata-title Under Construction 2Q 212 Sovereign Plaza TB Simatupang 16,2 For Lease and For Strata-title Under Construction 3Q 212 Chitatex Tower Tb Simatupang 28, For Lease Under Construction 4Q 212 Blue Green Office Boutique Meruya 2, For Lease Under Construction 4Q 212 Eighty8 Kasablanka 56,5 For Strata-title Under Construction 1Q 213 De Suites Pantai Indah Kapuk 8, For Strata-title In Planning 2Q 213 Alamanda Tower TB Simatupang 33, For Lease and For Strata-title Under Construction 2Q 213 Gallery West Kebon Jeruk 22,8 For Strata-title In Planning 4Q 213 Green Kosmo Mansion (GKM) Tower TB Simatupang 23, For Strata-title Under Construction 4Q 213 Talavera Suite TB Simatupang 16,25 For Lease In Planning 4Q 213 Graha Elnusa 2 TB Simatupang 4, For Lease In Planning 4Q Office Park (Cityland Tower) TB Simatupang 36,627 For Lease In Planning 4Q 213 Tebet Green MT Haryono 8,75 For Lease In Planning 4Q 213 Signum Tower TB Simatupang 58,5 For Lease In Planning 4Q 213 DIPO Business Park Gatot Subroto 19,6 For Strata-title Under Construction continued Colliers International p. 4

5 1Q 214 The Manhattan Square TB Simatupang 37,699 For Strata-title In Planning 2Q 214 Wisma 77 Tower 2 S. Parman 24,2 For Strata-title In Planning 2Q 214 Graha Kirana 2 Yos Sudarso 25, For Lease In Planning 4Q 214 GP Plaza Gatot Subroto 12,24 For Strata-title In Planning 4Q 214 Beltway Office Park Tower B TB Simatupang 1,5 For Lease In Planning 4Q 214 Beltway Office Park Tower D TB Simatupang 49,675 For Lease In Planning 4Q 214 South Quarter TB Simatupang 4, For Lease In Planning 4Q 214 Office Tower at Pasaraya Grande Sultan Iskandaryah 4, For Lease and For Strata-title In Planning 4Q 214 La Venue Pasar Minggu 37,168 For Strata-title In Planning continuation *) Under Construction: where construction activity is in progress, including either foundation or superstructure. Under Planning: no contruction activities on site but all permits have been approved by the fovernment. Demand cbd existing demand The absorption of existing office space within the CBD continues to show an upward trend. In, occupancy reached 94.5%, slightly higher than the previous quarter. Continued business expansion coupled with limited space availability are two factors which pushed the vacancy rate down. In certain hot area like Sudirman, the vacancy level is low (only 4%) particularly owing to the limited number of new buildings along this corridor while on the other hand, demand is robust. Likewise, finding quality office space along Jalan Thamrin is tough given the domination of old buildings in this area. Notable office space absorption during the quarter includes the occupation of around 3, in Menara Bidakara, located in Jalan Gatot Subroto. Around 1,2 of office space was leased by a shipping agency to Graha Paramita which is situated around the Rasuna Said area. A transaction made by a telecommunication operator leasing around 2, at The East building located in the Mega Kuningan area. This transaction represents general cases occurring in the Jakarta office market where tenants have to expand to the surrounding buildings due to limited space in their current premises. The common problem of buildings with low vacancy occurs when their current tenants need more space for expansion. When the presence of occupiers is relatively new, finding a neighbourhood space is the best option but relocation to the newer building will be preferred when they have occupied the premises for a long period. Other smaller office space transactions involving around 2 to 4 were completed during the quarter mainly by insurance companies, trading, mining, oil and medical related companies. cumulative supply, demand and occupancy of office space in the cbd 5,, 4,, 3,, 2,, 1,, 1 8% 6% 4% 2% % Cumulative Supply Cumulative Demand Occupancy (%) p. 5 Colliers International

6 OUTSIDE CBD existing demand The influx of Menara Satu has less impact on the overall occupancy rate because Menara Satu begins operation with high occupancy. The occupancy level as of reached 92%, a modest rise over the previous quarter. cumulative supply, demand and occupancy of office space in the outside cbd 5,, 4,, 3,, 2,, 1,, 1 8% 6% 4% 2% % Cumulative Supply Cumulative Demand Occupancy (%) pre-commitment demand Despite huge supply projections, the office market during 212 is predicted to perform well as new buildings projected to operate this year has secured a high commitment level of 77%. With three quarters remaining in this year, the office market is quite confident of maintaining a high occupancy level. The majority of offices for lease have secured occupancy of more than 6% and even buildings like WTC 2 and AXA Tower have recorded very high precommitment levels before the buildings are in operation. On the strata-title front, sales rates of underconstruction buildings projected to operate in 212 have generally reached 82% with only a building having low absorption rates (mainly due to location considerations). The only empty building is a small office building located around the Rasuna Said area but this is mainly because the owner is selling the building as an en-bloc investment. However, the other four buildings have registered very high sales rates of above 9%. Similarly, four buildings projected to operate this year have announced their major tenants with an average pre-commitment occupancy of 8%. Three new buildings are located in the Pondok Indah and TB Simatupang areas where they get big tenants like oil and gas, mining, bank and technology product companies. For buildings planned to operate in 213, only Alamanda Tower has reported of having precommitment agreement with their tenants. Strata-title buildings in the outside CBD area include partial space in Sovereign Plaza, Grand SOHO Slipi and partial space in Menara Satu. Except for the Grand SOHO with a relatively low pre-commitment level, other two buildings have been sold out. Thus far, of the total 126,527 of strata-title space projected to be completed in 213, around 18% have been reported sold. Colliers International p. 6

7 SPACE AVAILABLE AND COMMITTED IN cbd outside cbd Space Absorbed Annual Supply Space Absorbed Annual Supply within cbd area 15, 3, 45, 15, 3, 45, Rental Rates, Service Charge and Prices base rental rates Rental rates keep edging higher this quarter after moving upward quite substantially last year. The average base rental rates for rupiah listed buildings during the quarter climbed by 5% QoQ to Rp134,99//month. The increase was mainly triggered by some office buildings which introduced new tariff increases of about Rp2, - 5,//month. Landlords are motivated to introduce new rates as good quality office spaces are becoming limited while transaction activities keep flowing. Office buildings located around the Mega Kuningan area like Menara Dea and Menara Prima raised the rent tariff by 15-3% in this quarter. Other buildings like Tempo Scan in Jalan Rasuna Said also increased tariffs by 11%. Chase Plaza raised its rents as much as by 5% to keep up with the average market price while Graha Niaga increased the rental rates by more than 3% during the quarter. Landlords of office buildings charging rents in US dollars are also enjoying this brisk market and are introducing new rental tariffs during the quarter. An average increase of around 1% was recorded during the reviewed quarter, bringing average base rental rates to US$23.36/ /month. In our records, there were four buildings introducing new rates ranging from US$2. to 7. per. The East, Wisma Nusantara, Wisma 46 and Deutsche Bank are among the buildings with new rates. The average rent in the outside CBD area was Rp94,818//month. The TB Simatupang area had higher rents than other areas in the outside CBD. Since quite a few multinational companies are located along TB Simatupang, rental rates in US dollars are common. US dollar rents are quoted at an average of US$12.92//month while in Rupiah, the average is Rp95,69//month. p. 7 Colliers International

8 rental rates based on grade Premium office buildings are defined as buildings with quality above the average Grade A buildings and there are only a few buildings in this category. All Premium buildings charge US dollar rents and the average rents for this category is US$ towers are only located within business district. Currently, all Premium Grade buildings charged in US$. In, the average rental rate of Premium Grade office building was US$29.71//month. Meanwhile, Grade A buildings charge an average of US$24.26//month and the average rental rates in Rupiah was Rp18,242//month. The average rental rates for Grade B buildings was US$17.64//month and Rp111,93/sq m/month. Grade C buildings charge US$16.85/ /month and Rp98,259//month. rental rates based on grade Rp318,5 Rp273, Rp227,5 Rp182, Rp136,5 Rp91, Rp45,5 Rp Premium Grade A Grade B Grade C $35. $3. $25. $2. $15. $1. $5. $. Rp US$ strata title office Nothing much changed in strata-title offices during both in the sales price and takeup rates. The only building introducing a new price is The East, however it is only enough to lift the average price for the CBD area marginally to US$2,55/. In our records, all buildings maintained their prices at the same level as in the previous quarter. Only the future buildings in the market changed the overall price of strata-title buildings from Rp21.63 to million/. Overall take-up rates in the CBD hovered at 97.3%. Under-construction strata-title buildings within service charge In general, service charge costs remained stable QoQ. During our review, we found that several landlords anticipated a service increase should fuel prices rise, nevertheless with the recent plan to maintain fuel prices at the current level at least for the next six months, landlords will potentially postpone service tariff hikes in the short term. This quarter, the service charge tariff was Rp55,86//month in the CBD area. the CBD area including Office 8, AXA Tower and Tower One at The City Center have so far sold 94%. Similarly, office prices in the outside CBD area remained the same as in the last quarter i.e. Rp17.56 million/. Nothing is new in the market with no further changes in price of strata-title offices during the quarter. The only change was in the take-up rate for the outside CBD area due to the better performance of Gandaria 8 office tower and Menara Satu which lifted the overall take-up rates to 94.6% from the previous 91.5%. In the outside CBD, the service charges grew by 2.4% QoQ. The overall increase was initiated by several office buildings which introduced additional tariffs ranging from Rp5, to Rp1,//month. Overall the adjustment brought the overall service charges tariff to Rp41,447//month. Colliers International p. 8

9 jakarta 1q 212 Outlook Land price increases in the main commercial area will be unavoidable. The CBD area of Jakarta has recorded substantial increases in land prices particularly because of the scarcity of land, the plans for the MRT that will potentially lift the commercial value of the land and the limited number of willing sellers. Most are unmotivated sellers who offer their land at a very high price because they do not really wish to sell. Having said that, developers are pushed to build high-quality buildings to achieve high price and/or high rent to justify the land costs they have incurred. The good news is that the Jakarta government is considering an increase in the plot ratio to justify the commercial value of the land mainly in certain area within the neighbourhood of the MRT station. Thus, in the future, prime commercial areas like Jalan Sudirman and Jalan Thamrin will be adorned with skyscrapers. Rents will continue to soar during 212. The under-construction buildings projected to operate this year have secured high commitment levels meaning that the remaining vacant space will be limited. With great optimism over the outlook for the Indonesian economy, business expansion is expected to be rosy and demand for business location buoyant. This combination will bolster landlords position and accordingly will lead occupancy tariffs to increase. The positive side of land scarcity in the CBD is that it allows other parts of Jakarta to grow as commercial areas. Indeed, the profile of the prestigious CBD is still needed for multinational companies or high profile local companies but there are other growing business entities which do not require high profile locations, particularly the non-service industries, consumer goods, data centres, etc. We have noted some plans for developing office buildings outside of the main commercial areas like the CBD or TB Simatupang area. 522 offices in 62 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 21 EMEA: 118 $1.8 billion in annual revenue 1.3 billion square feet under management Over 12,3 professionals COLLIERS INTERNATIONAL INDONESIA: World Trade Centre 1th & 14th floor Jalan Jenderal Sudirman Kav Jakarta 1292 Indonesia tel FAX Michael Broomell Managing Director World Trade Centre 1th & 14th floor Jalan Jenderal Sudirman Kav Jakarta 1292 Indonesia tel ext 131 FAX Ferry Salanto Associate Director, Research World Trade Centre 1th & 14th floor Jalan Jenderal Sudirman Kav Jakarta 1292 Indonesia tel ext 134 FAX Copyright 212 Colliers International The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has bee 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.