Property Sector Overview

Transcription

1 1Q 2013 i the knowledge research & forecast report jakarta REAL ESTATE Property Sector Overview office sector During the first quarter of 2013, the average asking base rental rates in the CBD continued to rise increasing by 8% (US$) and 6% (IDR) QoQ. Buildings with US dollar tariffs were recorded at an average of US$33.83/sq m/month while those in rupiah stood at IDR179,429/sq m/month. This increase in rental rates was mainly driven by the scarcity of good quality office space with only a 3% vacancy rate in the CBD. On the strata-title front, average asking prices for both US dollar and rupiah building have gone up modestly by around 2% QoQ to US$3,375/sq m and IDR28.4 million/ sq m, respectively. apartment sector The average apartment price, for units in the CBD, has climbed substantially (26%) YoY from IDR25.9 to 32.6 million/sq m. In South Jakarta, apartment prices went up by 25% YoY from IDR17.8 to 22.5 million/sq m. Similarly, in the apartment for lease sub-sector, the average asking rental rates in the CBD climbed significantly by 11.2% QoQ from US$23.69 to 26.34/sq m/month. retail sector The retail market continues to perform well, albeit with moderate price increase, with average asking base rental rates for all class shopping centres in Jakarta rising 3% QoQ to IDR468,084/ sq m/month. We anticipate a further increase in asking rental rates, given that the amount of retail space in the future will be quite limited (particularly in ). Of the total 313,500 sq m of space to be completed in 2013, 82% has already been booked. In 2014, there will be only 9,000 sq m of retail space completed but 53% has already been pre-committed. Similarly, of a total of 70,000 sq m projected to be added to the 2015 market, 32% has been reserved. industrial estate sector Serang recorded the highest increase in land prices, 22%, during the quarter. However, land prices in Bekasi remained the highest compared to other regions, at an average of US$215.03/sq m. During the quarter, overall land prices in all regions saw a 10.5% increase on average. Total land sales registered during the quarter was 243 hectares of which a 150-ha sale was concluded by the newly-opened Karawang Jabar Industrial Estate to a leading automotive company. Again, land transactions occurring during the quarter were dominated by pre-commitment sales (74%), for which payment was made in advance, but hand-over will be conducted upon completion of infrastructure.

2 jakarta 1q 2013 OFFICE Office Sector Supply JAKARTA the CBD Sees No New Supply During 1Q 2013 The construction activity in the CBD is seeming to dwindle during 2013; however, this does not mean that the Jakarta office market is starting to weaken. In particular, during 2013, new office stock in the CBD will be very limited. Landlords of the future office buildings scheduled to be completed this year are still testing the waters and are waiting for the right moment to officially launch the projects. In 1Q 2013, there are two office buildings operate, namely Blue Green Office Boutique (in West Jakarta) and Prudential Centre (in South Jakarta) contributing additional space of 51,000 sq m. To date, total office space for the whole Jakarta area was registered at 6.8 million sq m. Projected annual office space for 2013 will be 311,908 sq m, far lower than the total annual supply for 2012 which was 547,070 sq m. Moreover, the total annual supply in 2012 was the largest since The total additional 311,908 sq m during 2013 will be contributed by 18 office buildings comprising two big projects and six small projects in the CBD. Meanwhile outside the CBD area, only two office buildings is of notable size, while the remaining eight projects are relatively small to medium size projects. Of this total space available in 2013, only around 10% are marketed as strata-title office space. Compared to 2012, strata-title offices were the majority, accounting for 67% of the total annual supply in that year. jakarta OFFICE CUMULATIVE SUPPLY s q m 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Existing Supply YTD 2013F 2014F 2015F 2016F Annual Supply cbd No new office buildings are ready for operation this quarter and the cumulative supply in the CBD remained at 4.62 million sq m which represents 67.9% of the total Jakarta office supply. Meanwhile, of the 311,908 sq m of Jakarta annual supply in 2013, 46.6% will be contributed by office buildings located in the CBD area which means that there will be 145,332 sq m new, additional supply to operate during this year. Most upcoming office space during 2013 will be supplied in the Jalan Satrio and Mega Kuningan sub-markets, contributing around 72% of the total annual supply. This is because two office towers in these sub-markets are sizeable office buildings including DBS Tower (64,000 sq m) and Menara Prima 2 (40,000 sq m). The remaining six office buildings are scattered around Jalan Rasuna Said and Jalan Sudirman with semi-gross areas between 4,000 and 11,000 sq m. The total 2013 office space in Rasuna Said was 27,715 sq m higher than in the Sudirman corridor. In Sudirman alone, three small offices located within an office park in the SCBD area will only deliver 13,617 sq m. These numbers are far below those in the previous year when the Sudirman area contributed 198,519 sq m or 68.5% of the total new supply in p. 2 Colliers International

3 jakarta 1q 2013 OFFICE Based on marketing scheme, because there will be only 11,000 sq m for strata-title sale, the majority of office space during 2013 will be offered as offices for lease (92%). This situation is mostly due to project scheduling which in 2013 is dominated by offices for lease. Composition of cbd office supply based on grade Grade C, 937,052 sq m Premium, 335,918 sq m Grade A, 1,843,864 sq m Grade B, 1,513,140 sq m cbd office cumulative supply 7,000,000 6,000,000 5,000,000 s q m 4,000,000 3,000,000 2,000,000 1,000, YTD 2013F 2014F 2015F 2016F outside cbd The outside the CBD area saw two new office towers operating in 1Q 2013, including Blue Green Office Boutique and Prudential Centre, which brought another 51,000 sq m of office space. Thus, this brings the cumulative supply in the outside the CBD to 2.18 million sq m where 82% are offered as offices for lease. The total annual office space during 2013 will be 166,576, mainly scattered in South (115,976 sq m) and West Jakarta (50,600 sq m). For the last three years, these two regions have been dominating as the main supplier of office space in the outside the CBD area. During 2010 to 2012, there was 486,573 sq m of office space entering the outside the CBD market with 51% in South Jakarta and 29% in West Jakarta. Meanwhile, North Jakarta has been developing into a commercial office area starting in the Kelapa Gading and Pluit areas. Based on marketing schemes, after contributing 143,290 sq m or 55.6% of the total annual supply in 2012, it is projected that there will be only 19,600 sq m of new strata-title office space in Colliers International p. 3

4 jakarta 1q 2013 OFFICE Composition of outside cbd office supply based on grade Grade A, 120,599 sq m Grade C, 1,383,278 sq m Grade B, 676,799 sq m outside cbd office cumulative supply 3,500,000 3,000,000 2,500,000 s q m 2,000,000 1,500,000 1,000, , YTD 2013F 2014F 2015F 2016F tb simatupang The substantial growth of the office supply in South Jakarta is largely underpinned by the growing commercial activities, particularly in TB Simatupang and Pondok Indah areas. Last year, 60% of the 142,786 sq m of new office supply in South Jakarta was located in TB Simatupang. In 2013, with a projection of 115,967 sq m of office supply in South Jakarta, 73% will be located in TB Simatupang. Since the development of the first strata-title office tower initiated by Sovereign Plaza, the number of strata-title developments continues to grow. To date, the comparison between strata-title and office buildings for lease is 2% : 98% while by the end of 2014, it will be 24% : 76%. p. 4 Colliers International

5 jakarta 1q 2013 OFFICE contribution new office supply in tb simatupang to outside cbd 2013F 2014F 2015F 2016F 0 50, , , , , , , , ,000 TB Simatupang s q m Outside CBD new supply in While new office stock during 2013 will be in short supply, 2014 will see 613,192 sq m of new office space scattered throughout all of the Jakarta area with 37% located in the CBD area. Thus far, some under-construction buildings scheduled to operate in 2014 have shown significant construction progress, such as Lippo Kuningan (previously known as Life Tower), Gran Rubina and Sinarmas MSIG Tower (previously known as Chase Tower). Meanwhile in the outside the CBD area, 18 Office Park, Manhattan Square, Plaza Oleos and Green Kosmo Mansion (GKM) are expediting the construction progress to meet the completion. Even Beltway Tower 3 has been working on the final stages of their construction. Meanwhile, several office buildings in the pipeline and planned to operate in 2015 have started construction work in In the CBD, International Financial Center (Tower 2) located in Jalan Sudirman has started with ground works. Meanwhile in Jalan Rasuna Said, an office tower called Rasuna Tower is under construction, catching their completion which is scheduled for Two other new developments in Jalan Gatot Subroto, i.e. Office Tower at St Regis and Centennial are preparing for structural work, as well as Bahana Office Tower and Noble House, located in the Mega Kuningan sub-market. annual cbd office supply based on area 2016F 2015F 2014F 2013F 0 200, , , ,000 1,000,00 sq m Thamrin Sudirman Rasuna Said Mega Kuningan Gatot Subroto Satrio Some construction work on future supply scheduled for 2016 has started. In Sudirman, two office towers, i.e. Sahid Sudirman Tower and Icon Tower have started with ground works. In Jalan Senopati, an area next to Sudirman Central Business District (SCBD), future office towers called District 8 (Towers 2 and 3) will flank the existing Office 8 tower and are now starting construction. Colliers International p. 5

6 jakarta 1q 2013 OFFICE Having reviewed the construction progress of office buildings scheduled for operations during in the CBD area and should developers commit with the delivery time, supply would strongly achieve a total of 1.63 million sq m of new office space. In the meantime, in the outside the CBD area, during , there will be 840,557 sq m of new office space. Of this figure, 58% will be located along the Jalan TB Simatupang corridor which affirms this area as the main contributor to the office supply in the outside the CBD area. Of the projected 840,557 sq m of future office space mentioned above, 61% has started construction. Again this emphasises that the area of future office space within the next three years will be substantial. annual outside cbd office supply based on area , , , , ,00 sq m Central Jakarta South Jakarta North Jakarta East Jakarta West Jakarta new supply pipeline projected completion time CBD AREA building name location SGA (SQ M) marketing scheme development status* 2013 DBS Tower (Ciputra World Jakarta 1) Satrio 64,000 For Lease and For Strata-title Under Conctruction 2013 Menara Prima 2 Mega Kuningan 40,000 For Lease Under Conctruction 2013 Perkantoran Setiabudi Rasuna Said 11,000 For Strata-title Under Conctruction PARK Tower A Sudirman 4,814 For Lease Under Conctruction PARK Tower B Sudirman 4,570 For Lease Under Conctruction PARK Tower E Sudirman 4,233 For Lease Under Conctruction 2013 Tempo Pavilliun I Rasuna Said 7,075 For Lease Under Construction 2013 Tempo Pavilliun II Rasuna Said 9,640 For Lease Under Construction 2014 Sinarmas MSIG Tower (Chase Tower) Sudirman 75,000 For Lease Under Construction 2014 Gran Rubina Tower 1 Rasuna Said 31,438 For Strata-title Under Construction 2014 Lippo Kuningan Rasuna Said 30,500 For Lease Under Construction 2014 Satrio Square Satrio 24,600 For Lease and For Strata-title Under Construction 2014 The Noble House Office Tower Mega Kuningan 45,000 For Lease Under Construction 2015 Bahana Office Tower Mega Kuningan 50,000 For Lease Under Construction 2015 Ciputra World Jakarta 2 Satrio 70,000 For Lease and For Strata-title Under Planning 2015 International Financial Center 2 Sudirman 50,000 For Lease Under Construction 2015 Mangkuluhur Tower Gatot Subroto 39,356 For Lease and For Strata-title Under Planning 2015 Menara Selaras Sudirman 36,596 For Lease Under Planning 2015 Office Regis Gatot Subroto 90,000 For Lease and For Strata-title Under Construction 2015 Rasuna Tower Rasuna Said 80,000 For Lease Under Construction continued... p. 6 Colliers International

7 jakarta 1q 2013 OFFICE new supply pipeline projected completion time building name location SGA (SQ M) marketing scheme development status* 2015 Tower Two at The City Center Sudirman 39,204 For Lease Under Planning continuation District 8 Tower 2 Sudirman 71,545 For Strata-title Under Construction 2016 District 8 Tower 3 Sudirman 139,000 For Strata-title Under Construction 2016 Graha Surya Internusa Rasuna Said 45,000 For Lease Under Planning 2016 Graha Surya Internusa 2 Rasuna Said 45,000 For Strata-title Under Planning 2016 Gran Rubina Tower 2 Rasuna Said 32,000 For Strata-title Under Planning 2016 Centennial Tower Gatot Subroto 100,000 For Strata-title Under Construction 2016 Sahid Sudirman Center Sudirman 126,600 For Strata-title Under Construction 2016 Satrio Project Satrio 100,000 For Lease Under Planning 2016 Sequis Life Tower 2 Sudirman 80,000 For Lease Under Planning 2016 World Trade Center III Sudirman 70,000 For Lease Under Planning 2016 World Capital Tower Mega Kuningan 90,000 For Strata-title Under Planning 2016 Icon Tower Sudirman 72,500 For Lease Under Construction OUTSIDE CBD AREA (exclude TB SIMATUPANG) 2013 DIPO Business Park Slipi 19,600 For Strata-title Under Construction 2013 The Vida Kebon Jeruk 11,000 For Lease Under Construction 2013 Altira Kelapa Gading 40,000 For Strata-title Under Construction 2014 GP Plaza Slipi 12,204 For Strata-title Under Construction 2014 Menara Sentraya Blok M 52,072 For Strata-title Under Construction 2014 The Suites Pantai Indah Kapuk 13,200 For Strata-title Under Construction 2014 Wisma 77 Tower 2 Slipi 24,200 For Strata-title Under Construction 2014 Kirana Two Sunter 17,563 For Lease and For Strata-title Under Construction 2015 Gallery West Kebon Jeruk 29,000 For Strata-title Under Construction 2015 L Venue Pasar Minggu 41,597 For Strata-title Under Planning 2015 Puri Financial Tower Puri Indah 38,500 For Strata-title Under Construction 2015 Sky Indah 18 Tower Kalibata 27,500 For Strata-title Under Planning 2015 SOHO Capital S. Parman 36,000 For Strata-title Under Construction 2015 St Moritz Office Tower Puri Indah 19,500 For Strata-title Under Construction TB SIMATUPANG 2013 Alamanda Tower 33,000 For Lease and For Strata-title Under Construction 2013 Gedung Aneka Tambang Tower 2 16,000 For Lease Under Construction 2013 Oleos 2 4,181 For Lease Under Construction 2013 Talavera Suite 17,172 For Lease Under Construction 2013 The CEO 5,023 For Lease and For Strata-title Under Construction 2013 Beltway Office Park Tower 3 9,600 For Lease Under Construction 2014 Green Kosmo Mansion (GKM) Tower 23,000 For Strata-title Under Construction 2014 Metropolitan Tower 44,000 For Lease and For Strata-title Under Construction 2014 Plaza Oleos 39,778 For Lease and For Strata-title Under Construction 2014 Palma Tower 20,484 For Lease Under Construction 2014 South Quarter Tower 1 40,778 For Strata-title Under Construction 2014 The Manhattan Square 39,375 For Lease and For Strata-title Under Construction continued... Colliers International p. 7

8 jakarta 1q 2013 OFFICE projected completion time building name SGA (SQ M) marketing scheme development status* continuation AD Premier 18,900 For Lease Under Planning 2015 Naras Tower 19,000 For Lease Under Planning 2015 South Quarter Tower 2 40,778 For Lease Under Planning 2015 South Quarter Tower 3 40,778 For Lease Under Planning 2015 The Manhattan Square Tower 2 39,375 For Lease Under Planning 2016 Beltway Office Park Tower 4 25,600 For Lease Under Planning 2016 Signum North Tower 18,000 For Lease Under Planning 2016 The Manhattan Square 3 39,375 For Lease Under Planning *) 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 Government. Demand the occupance based on grade in the cbd during qoq period 100% 99% 98% 97% 96% 95% 94% 93% 92% 91% 90% Premium Grade A Grade B Grade C 4Q Q 2013 The occupancy rate was less volatile during the quarter and remained at around 97%. During the quarter, premium class buildings experienced a minor drop in occupancy, but this did not affect the overall occupancy. The premium class buildings set asking rental rates far above the average market causing several tenants to recalculate occupancy costs and forcing them to search for more affordable premises. This made the vacancy rate for premium buildings relatively higher compared to the previous quarter. During the quarter, some office buildings located in Jalan Sudirman and Jalan Rasuna Said reported vacancy ranging from 1,000 sq m to 3,000 sq m. However, the situation did not much worry building owners amid this landlord market. Inquiries for quality office space continue to grow, either from tenant relocation or expansion. In Jalan Sudirman, several transactions were recorded. A multinational technology and services company based in United States will occupy around 4,143 sq m space at an office building owned by Mulia Group. An insurance company established in 1975 will be occupying space of around 1,974 sq m at an office tower within the Metropolitan p. 8 Colliers International

9 jakarta 1q 2013 OFFICE Albeit moderately, the overall occupancy rates in the outside the CBD moved up to 93.5% in 1Q Contributing the most office space for the whole outside the CBD area and further, recording an increase in occupancy by 3% QoQ, South Jakarta coloured the overall occupancy rates for the outside the CBD area. As of the reviewed quarter, the average occupancy rate in the outside the CBD area was 94.8%. More specifically, the increase in the overall occupancy in South Jakarta was driven by the occupancy figure in the TB Simatupang and Pondok Indah areas. The occupancy rate in the TB Simatupang area was 97.6% in 1Q Although we noted an oil and gas company downsizing about 60% of their existing space, other office buildings reported increasing occupancy performance. Two mineral and energy based companies acquired office space of around 1,200 sq m and 2,400 sq m while a company specialising in transport maintenance and repairing will occupy around 1,986 sq m of space at an office building located in Pondok Indah. space available and committed in the cbd ( ) Space Absorbed Annual Supply 2013F 2014F 2015F 2016F 0 200, , , ,000 1,000,00 sq m space available and committed in the outside cbd ( ) Space Absorbed Annual Supply 2013F 2014F 2015F 2016F 0 100, , , , ,000 sq m p. 9 Colliers International

10 jakarta 1q 2013 OFFICE Base Rental; Quite Slow Increasing CBD The average asking base rent for all classes of office buildings within the CBD continued to increase. In 1Q 2013, the average base rent was IDR179,429/sq m/month, climbing by 5.6% compared to the previous quarter. In the meantime, the growth of the average asking base rent for office buildings charging US dollars saw an 8.1% higher increase QoQ. At good quality office buildings, the average asking base rent for buildings charging in US dollars was US$33.83/sq m/month in 1Q There were 14 office buildings charging in US dollars located in Sudirman which introduced higher base rental rates between US$4.00 and It was also noted that four office buildings in Jalan Thamrin increased the average base rent by US$10.00 QoQ. The limited supply of good quality office stock continue to be the main factor triggering the rent increase. average asking rental rates in the cbd based on grade IDR 485,000 $50.0 IDR 388,000 $40.0 IDR 291,000 $30.0 IDR 194,000 $20.0 IDR 97,000 $10.0 IDR 0 Premium Grade A Grade B Grade C $0.00 IDR US$ average asking rental rates in the cbd IDR 388,000 IDR 339,500 IDR 291,000 IDR 242,500 IDR 194,000 IDR 145,500 IDR 97,000 IDR 48,500 IDR 0 $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.00 $ IDR US$ YTD OUTSIDE CBD In the outside the CBD area, office buildings charging in US dollars saw a higher growth of rents during the quarter. The average base rental rate was US$16.71/sq m/month, climbing by 7.8% over the previous quarter. Meanwhile, the QoQ change of base rental rates for office buildings charging in rupiah was relatively flat with an average of IDR123,819/sq m/month. p. 10 Colliers International

11 jakarta 1q 2013 OFFICE average asking rental rates in the outside cbd IDR 174,600 IDR 145,500 IDR 116,400 IDR 87,300 IDR 58,200 IDR 29,100 IDR YTD $18.0 $15.0 $12.0 $9.00 $6.00 $3.00 $0.00 IDR US$ tb simatupang Like other areas, average rental rates also rose in Jalan TB Simatupang. Compared to the previous quarter, the average base rent moved upward to IDR119,633/sq m/month reflecting a moderate increase of 2% QoQ. About four office buildings introduced higher rental rates ranging between IDR30,000 and 40,000/sq m/ month. Meanwhile, the average base rent for buildings charging in US dollars saw a significant rent increase of 15% QoQ. To date, the average asking base rent was US$17.82/sq m/month. Around nine office buildings have increased the base rent in the range of US$2.00 to 3.00/sq m/month. Buildings that introduced higher rents during the quarter include Arkadia, Beltway and Menara Talavera. Older buildings which introduced higher rental rates during the quarter have been quite successful in maintaining the quality and performance of the buildings. Another driving factor that suggests developers are becoming more confident is the limited sizeable office stock along Jalan Simatupang. average asking rental rates in tb simatupang IDR 194,000 $20.0 IDR 155,200 $16.0 IDR 116,400 $12.0 IDR 77,600 $8.00 IDR 38,800 $4.00 IDR YTD $0.00 IDR US$ Colliers International p. 11

12 jakarta 1q 2013 OFFICE Strata-Title Offices The continued absorption of strata-title office space, both in the CBD and outside the CBD, has led to an increase in the average asking price. The pre-committed space of strata-title office buildings projected to operate in 2013 has reached 100%. Likewise, strata-title buildings projected to operate during 2014 have announced that 34% have been absorbed by the market. Office buildings, such as Gran Rubina and Ciputra World 2, have already recorded a significant pre-committed take-up rate since the buildings were introduced at the end of Meanwhile, for the existing stratatitle office buildings, the take-up rate has been reaching 99%. A significant take-up figure has benefited the developers of new strata-title office buildings. New strata-title office buildings are setting offering prices in the range of IDR30 to 50 million/sq m. For existing strata-title office buildings, the average asking price recently moved upward moderately by 2.2% QoQ to an average of IDR28.4 million/sq m. Meanwhile, for buildings charging in US dollars, the average asking price was relatively flat at US$3,375/sq m. With the majority of office buildings quoting prices in rupiah, the average asking price in the outside the CBD was IDR22.7 million/sq m, experiencing 25% growth YoY. This will likely continue along with the influx of new office buildings which will operate up to These upcoming buildings have been offering asking prices of around IDR25 million/sq m. The total additional new space up to 2015 will be 453,851 sq m, of which 38% has been sold to the market. TB Simatupang is the most active region in supplying future strata-title office for sale. This area will contribute 177,878 sq m of new office space or 49% of the future total strata-title supply during in the outside the CBD area. Of this, 47% has been sold. As of 1Q 2013, the offering average asking price was IDR21.8 million/sq m. the range asking price for strata-title office Outside CBD CBD IDR 0 IDR 10,000,000 DR 20,000,000 IDR 30,000,000 DR 40,000,000 IDR 50,000,000 DR 60,000,000 service charges Basic electricity tariffs and minimum wage increases seem to be starting to affect the service charge tariffs, in particular for office buildings located in the CBD. It is reported that the average service charge for office buildings charging in rupiah rose by 7.8% compared to the previous quarter. As of 1Q 2013, the service charge tariff was IDR61,372/sq m/month. In the office buildings charging rents in US dollars, the average service charge was US$6.54/sq m/month QoQ. Some office buildings located in Thamrin and Sudirman contributed to the overall increase for the quarter. Meanwhile in the outside the CBD area, the average service charge was IDR42,557/sq m/ month for office buildings charging in rupiah while for office buildings charging rents in US dollars, the service charge was quoted at US$5.38/sq m/month. p. 12 Colliers International

13 jakarta 1q 2013 OFFICE Outlook Land scarcity in the CBD has suggested a substantial correction to the overall office space price. As seen in the market, the price of newly built strata-title offices has gone up unreasonably. Likewise, in the secondary market, owners of strata-title office space in prime locations and in good premises offered asking prices arbitrarily, most of the time beyond the average market price. Given the limited amount of quality offices, the leasing market is also quite active in strata-title premises. This will lead to continued absorption of strata-title space with buyers aiming to lease back their space amid the current premium rental rates. This is evidenced not only in the new strata-title office buildings, but also in the secondary market where office space potentially yields a good return. Land scarcity in the CBD will be a blessing for other areas, particularly those with direct access to the CBD. In the west, Jalan S. Parman has been populated with some good-quality office buildings as well as in the east side of the downtown where Jalan MT. Haryono is becoming an office space contributor. The increasingly high office prices in the CBD have an impact on the office prices of these two growing areas after the CBD and Jalan TB Simatupang. With limited supply projections during 2013 in the CBD, a landlord s market situation will remain. Consequently, both office prices and rental rates are projected to further move ahead this year. p. 13 Colliers International

14 jakarta 1q 2013 apartment Apartment Sector Apartments For Strata-title Sale Supply The year 2013 saw 3,979 newly completed units from five apartment projects comprising four new projects and one tower extension for the Green Palace Apartment project. Green Palace Apartment is part of the Kalibata City mega-project, comprising three components including Kalibata Residences, Kalibata Regency and Green Palace Apartment. All of these new LIST OF completed project in 1Q 2013 projects brought the cumulative supply of strata-title apartments in Jakarta to 121,255 units. Compared to the total quarterly supply in the 1Q 2012, this quarter s supply is 7% lower. Overall, this cumulative supply of strata-title apartments represents 94% of the total operating apartment units in the whole Jakarta area. apartment name location region Asking Price (idr/sq m) #units Green Palace Apartment (Tower S) Kalibata South Jakarta 8-9 million 630 The Royal Springhill (Tower Marygold Kemayoran Central Jakarta million 384 and Magnolia) The Residences at Dharmawangsa 2 Dharmawangsa South Jakarta 41 million 89 Green Lake Sunter (Tower South) Sunter North Jakarta million 876 The Green Pramuka (Tower Faggio and Pino) Jend. A. Yani Central Jakarta 8-9 million 2,000 Furthermore, of the total supply for this quarter, approximately 60% is located in Central Jakarta, while the remaining portions are located in North Jakarta (22%) and South Jakarta (18%). Despite being located in Central Jakarta, The Green Pramuka sits on the edge of East Jakarta, and thus is characteristic of East Jakarta, rather than the Central Jakarta. This project caters to the mid-low segment, having larger units. Based on market segmentation, the mid-low segment dominated this quarter s supply at 66%, while only a few units from The Residences at Dharmawangsa 2 offering luxury projects. Mid-segment projects completed in 1Q 2013, including Green Lake Sunter and The Royal Springhill for example, represent 32% of the stock for the quarter. Meanwhile, between January and March 2013, four new apartment projects commenced or were launched in Jakarta, with a total of 3,830 units. Two of the projects, The Capitol Park Salemba and Gallery West, are newly launched projects, while Tower Dahlia at Bassura City and Tower Orchid at The Green Pramuka are extensions to existing projects. All of these projects are located outside CBD area and will gradually enter the market in 2-3 years time. A combination of residential and commercial functions characterizes the concept proposed by the newly launched projects. As Jakarta is one of the most traffic-congested cities in the world, the back-to-the-city marketing gimmick is being promoted to boost sales for apartments which are located outside the centre of Jakarta. LIST OF newly launched project in 1Q 2013 apartment name region unit type size (sq m) #units The Green Pramuka (Tower Orchid) Central Jakarta Studio - 2BR ,000 The Capitol Park Salemba (2 Tower) Central Jakarta Studio - 3BR ,700 Gallery West West Jakarta 1BR - 3BR Bassura City (Tower Dahlia) East Jakarta Studio - 3BR p. 14 Colliers International

15 jakarta 1q 2013 apartment Other growing areas in Central Jakarta include Kemayoran and Cempaka Putih, which expect to see more apartment developments within the next 2-3 years. For example, three projects are under way in the Kemayoran area. Selling activity for Palazzo Kemayoran, which halted in 2010, has now recommenced. Marketing has commenced for The Mansion at Dukuh Kemayoran, which was abandoned during the 1998 crisis and subsequently acquired by Agung Sedayu Group. The Royal Springhill, also located in Kemayoran, is nearing the completion of its two additional towers, and is scheduled to finish in the period. Meanwhile, in the Cempaka Putih area, there are two apartment projects which are mixedused developments including Holland Village (developed by Lippo) and Sentosa Residence (developed by Bahama Group as a joint venture with Sentosa Worldwide Resorts). These apartment projects have not officially been launched, but they have already been introduced to their loyal customers. The number of new projects (i.e. both those being launched and introduced to market) has decreased significantly since Jakarta s new governor was elected in October The new Jakarta governor has brought in some changes to urban planning policy that were noted in the mid-term regional development plan (RPJMD). It is understood that the governor s priority now, and over the next five years, is to endorse massive amounts of highrise residential development targeting Jakarta s low-income segment by redeveloping the slum area into a residential area with environmental sustainability features. Further, in accommodating this low-income segment, the Jakarta government is demonstrating its focus on building more low-cost rented apartments for workers, equipped with facilities like fitness centers and improved public and green space. Therefore it is assumed that the issuing of new permits for commercially built apartments will be in lower priority. strata-title apartment cumulative supply 140, , ,000 Units 80,000 60,000 40,000 20, YTD p. 15 Colliers International

16 jakarta 1q 2013 apartment NEW SUPPLY PIPELINE 2013 apartment name location region #unit Development status East Park Apartment (Tower A) KRT Radjiman East Jakarta 550 Under Construction Green Palace Apartment (Tower V) Kalibata South Jakarta 630 Under Construction Ambassade Residence Tower A Puri Denpasar CBD 234 Under Construction Pancoran Riverside (Tanjung Kalibata) Pengadegan Timur South Jakarta 1,900 Under Construction Kebagusan City (Tower B) Kebagusan South Jakarta 548 Under Construction GP Plaza Gatot Subroto CBD 320 Under Construction Pasar Baru Mansion (2 Towers) Pasar Baru Central Jakarta 520 Under Construction Luxurious Raffles Residences Satrio CBD 64 Under Construction Kemang Village (The Tiffany) Antasari South Jakarta 240 Under Construction The East at Essence Complex Dharmawangsa Dharmawangsa South Jakarta 244 Under Construction My Home Apartment at Ciputra World Jakarta 1 Satrio CBD 136 Under Construction Sentra Timur Residence (stage 2) 3 Towers Pulogebang East Jakarta 885 Under Construction Green Lake Sunter (Tower North) Sunter North Jakarta 876 Under Construction Green Central (Tower Cerberra) Gajah Mada West Jakarta 420 Under Construction Sunter Icon (2 Towers) Sunter North Jakarta 600 Under Construction The H Tower Rasuna Said CBD 9 Under Construction The Windsor (2 Towers) Puri Indah West Jakarta 340 Under Construction Titanium Square Pasar Rebo East Jakarta 725 Under Construction Pakubuwono Terrace (Tower I) Kebayoran Lama South Jakarta 750 Under Construction Rusunami Delta Cakung (Tower D) Cakung East Jakarta 520 Under Construction Verde Apartment (Tower East) Rasuna Said CBD 114 Under Construction 2014 The Grove Rasuna Said CBD 438 Under Construction St Moritz (The New Royal Suite Tower) Puri Indah West Jakarta 196 Under Construction St Moritz (The New Ambassador Suite Tower) Puri Indah West Jakarta 200 Under Construction St Moritz (The New Presidential Suite Tower Puri Indah West Jakarta 200 Under Construction La Venue - South Tower Pasar Minggu South Jakarta 341 Under Construction The Grove Suite Rasuna Said CBD 151 Under Construction Kemang Village (The Intercontinental) Antasari South Jakarta 400 Under Construction Kemang Village (The Infinity) Antasari South Jakarta 175 Under Construction The Aspen at Admiralty Fatmawati South Jakarta 860 Under Construction Pakubuwono Terrace (Tower 2) Kebayoran Lama South Jakarta 720 Under Construction The Pakubuwono Signature Pakubuwono South Jakarta 188 Under Construction Sherwood Apartment (Richmond) Kelapa Gading North Jakarta 125 Under Construction Sherwood Apartment (Wellington) Kelapa Gading North Jakarta 100 Under Construction Sherwood Apartment (Regent) Kelapa Gading North Jakarta 100 Under Construction The H Residence MT Haryono East Jakarta 383 Under Construction Pluit Seaview (Tower Maldives) Pluit North Jakarta 940 Under Construction Sudirman Suites Sudirman CBD 380 Under Construction Senopati Penthouse Senopati South Jakarta 63 Under Construction Sky Terrace Lagoon Kalideres West Jakarta 525 Under Construction continued p. 16 Colliers International

17 jakarta 1q 2013 apartment apartment name location region #unit Development status continuation Senopati Penthouse Senopati South Jakarta 63 Under Construction Sky Terrace Lagoon Kalideres West Jakarta 525 Under Construction LA City Apartment (Tower A) Lenteng Agung South Jakarta 980 Under Construction Setiabudi Sky Garden (Tower 1) Setiabudi South Jakarta 426 Under Construction La Maison Barito (Tower 1) Barito South Jakarta 80 Under Construction Botanica Apartment (3 Towers) Simprug South Jakarta 626 Under Construction The DI Panjaitan East Jakarta 422 Under Construction Signature Park Grande MT Haryono East Jakarta 1,100 Under Construction The Bellevue at Pondok Indah Pondok Indah South Jakarta 60 Under Construction Metro Park Residence Kebon Jeruk West Jakarta 1,200 Under Construction Gading Greenhill Pegangsaan Dua North Jakarta 700 Under Construction Elpis Residence Gunung Sahari Central Jakarta 791 Under Construction Capitol Park Apartment (Tower T) Salemba Central Jakarta 727 Under Construction Capitol Park Apartment (Tower U) Salemba Central Jakarta 976 Under Construction Northern Ancol Residence Ancol North Jakarta 800 Under Construction The Mansion at Dukuh Golf Residence (Aurora Tower) Kemayoran Central Jakarta 522 Under Construction The Mansion at Dukuh Golf Residence (BellaVista Tower) Kemayoran Central Jakarta 612 Under Construction Casa Grande Residence (Montreal Tower) Casablanca CBD 313 Under Construction Casa Grande Residence (Montana Tower) Casablanca CBD 284 Under Construction Green Bay Pluit (Bay View) Pluit North Jakarta 3,096 Under Construction Demand During the first three months of 2013, the takeup rate of all projects (including those currently operating, those in the planning stages and those under construction) was recorded at 83%, reflecting a slight increase from the previous quarter s 82.2%. Nevertheless, the take-up figure suggests a promising sign for the apartment market, due to the fact that it has been above 80% since average take-up rates of strata-title apartments in jakarta 100% 80% Take-Up R ates 60% 40% 20% 0% YTD Colliers International p. 17

18 jakarta 1q 2013 apartment The completion of several apartment projects improved the buyer s confidence. Most of the newly completed projects had very good takeup levels, with 80-90% of the total units being claimed and absorbed by the market. The strata-title apartment market should also see an increase in sales growth, having benefited from high discounts for cash payments and longer cash installment payment periods offered by developers. On the other hand, albeit small in number, consumers who bought through mortgage financing from the bank enjoyed a low interest rate. Further to this, there are other practical reasons for the increased sales in apartments including the reduced travel-time to get to work and the prestige associated with living in an apartment; this is true particularly for those located downtown. average take-up comparison q-o-q region 4Q Q 2013 QoQ CBD 87.7% 88.2% South Jakarta 86.1% 87.8% Outside CBD 79.2% 80.3% pre-sales of planned and under-construction projects Developers with good track records are enjoying good sales performance with the projects they have under way. Certain locations in the CBD, and areas in South Jakarta particularly, are showing a high absorption level such as Setiabudi, Senopati, Pakubuwono and Pondok Indah, because their locations have been favored by expatriates. Premium addresses like Pondok Indah, Gandaria, Senopati, Pakubuwono, Simprug and Permata Hijau remain the most preferred locations for luxury apartments. Most of the apartment developments emphasize the green concept, as well as high building standards. In general, South Jakarta is still a favorable location for either a second home or as an investment for those who anticipate recurring rental income and/or capital appreciation. Most of the projects currently under construction in the premium locations claimed more that more than 60% absorption rate. Meanwhile, new projects beyond the CBD area are quite abundant, as many future projects are still experiencing difficulties selling units. Take-up rates for apartments under construction beyond the CBD area are sluggish compared to the previous quarter. With a large supply of mostly mid-low segment apartment units, competition for projects located beyond the CBD area is likely to tighten as each project tries to generate more sales by offering attractive concepts and more facilities. absorption rates of planned and under construction projects region 4Q Q 2013 QoQ CBD 77.9% 79.4% South Jakarta 76.2% 79.1% Outside CBD 65.8% 62.8% The high level of apartment enquiries in Jakarta has translated into creative sales strategies. One of them is auctioning apartments on the day of the launch which enables buyers to choose the best units in apartment tower. Further, several developers offer a pre-launch booking scheme which encourages costumers to buy more than one apartment unit. The promotion asks costumers to take a queue number (priority pass) for the best unit at their best price, by only paying IDR5-15 million as a booking fee. Furthermore, it is fully refundable if the costumer is not satisfied with, or did not get, the preferred unit. With Chinese New Year falling during 1Q 2013, an increased number of promotions have been offered including financing incentives like longer cash installment periods (from 30 to 36 months) with zero interest, bigger discounts of up to 30%, and various other benefits such as lucky angpao, gold rewards and grand prizes including cars. p. 18 Colliers International

19 jakarta 1q 2013 apartment Price Average asking prices for strata-title apartments have continued to demonstrate an upward trend. Given the relatively high sales rate for ongoing apartment projects, the overall apartment market witnessed somewhat higher asking prices, from an average of IDR19.6 to IDR21.0 million per sq m during the quarter. With its limited number of projects and available units, as well as continuing construction activity, the CBD managed to maintain a higher price increase on a QoQ basis, at 9.4%. On the other hand, the increase in asking price in the South Jakarta area (8.4% QoQ) was mainly triggered by the commencement of several good projects in premium locations, such as Senopati, Dharmawangsa, Pakubuwono, Permata Hijau and Pondok Indah. This quarter, the average asking price in South Jakarta was registered at IDR22.45 million per sq m. Meanwhile, areas beyond the CBD recorded an increase of 4.4% QoQ to IDR16.35 million per sq m. Overall, the average asking price of apartments in Jakarta increased by 7.8% QoQ, up by 16% YoY. average asking price in different sub markets area 4Q Q 2013 Qoq CBD IDR 29,817,081 IDR 32,619, % South Jakarta IDR 20,717,032 IDR 22,455, % Outside CBD IDR 15,656,812 IDR 16,350, % Average IDR 19,572,483 IDR 21,097, % average asking price based on sub markets R p/ s q m 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 1Q Q Q Q Q Q Q Q Q 2013 CBD South Jakarta Non CBD Average The scarcity of land in Jakarta, particularly in the CBD and a few areas in South Jakarta, has caused land prices to increase, which has led to rises in the costs associated with apartment developments. Nevertheless, the confidence to increase selling prices has remained stable, with the support of external factors like the positive economic outlook. As such, new apartments located in the CBD and South Jakarta will continue to adjust the overall market price because price is potentially corrected along with sale progress for ongoing developments. Colliers International p. 19

20 jakarta 1q 2013 apartment Apartment For Lease (Serviced and Non-serviced) Supply There is currently a declining supply of serviced apartments from the Kempinski Serviced Residence, due to the conversion of 40 units from serviced apartments to private residences, and therefore at the end of March 2013, the total cumulative supply (of both serviced and non-serviced apartments) experienced a minor decrease (by 0.5%), compared to the previous quarter. Overall, the cumulative supply of apartments for lease in Jakarta decreased modestly to 8,206 units (comprising 56.6% serviced apartments and 43.4% non-serviced apartments). composition of apartments for lease in jakarta Non - Serviced 43.44% Serviced 56.56% There are, however, two serviced apartment projects in the pipeline, including Fraser Residence Menteng and Ascott Kuningan Jakarta, comprising 128 and 170 units respectively. These projects will come on line sometime in Further, there are two more projects located in the CBD including Fraser Suites Kuningan, which is part of the Ciputra World Jakarta II mixed-used development, and Fraser Place Setiabudi; both are Fraser Hospitality developments providing a total of 350 units which are expected to be completed in LIST OF future APARTMENTs for lease (serviced) projects apartment name location region projected operation #units Fraser Residence Menteng Menteng Central Jakarta 3Q Ascott Kuningan Jakarta Satrio CBD 4Q Fraser Suites Kuningan Satrio CBD Fraser Place Setiabudi Setiabudi CBD Colliers International p. 20

21 jakarta 1q 2013 apartment Occupancy The apartment market during 1Q 2013 softened as indicated by the declining rate for all rental apartment sub-sectors (i.e. serviced and nonserviced apartments). Lease expiry and completed employment contracts are two factors that have affected the declining occupancy rates at the beginning of the year. Apart from that, the increasing rental rates affected the downturn in the occupancy rate of some non-serviced apartments, particularly those that have aged. In general, the occupancy level of apartments for lease (serviced and non-serviced) decreased by almost 2% QoQ, to an average of 76.6%. average occupancy for lease apartment 100% 80% Occupancy R ate 60% 40% 20% 0% YTD occupancy for serviced apartment region 4Q Q 2013 qoq CBD 84.55% 77.12% -7.44% South Jakarta 87.10% 84.29% -2.81% Outside CBD 61.36% 60.65% -0.71% occupancy for non-serviced apartment region 4Q Q 2013 qoq CBD 80.65% 80.47% -0.91% South Jakarta 79.72% 78.82% -0.90% Outside CBD 75.96% 75.84% -0.12% occupancy based on apartment type type 4Q Q 2013 qoq Serviced 78.16% 77.79% -0.37% Non-Serviced 79.53% 74.05% -5.48% Colliers International p. 21

22 jakarta 1q 2013 apartment During the reviewed period, the occupancy level for non-serviced apartments declined modestly by 0.37% QoQ, while for serviced apartments it dropped by 5.5%, compared to previous quarter s 79.53%. As shown in the table above, occupancy for serviced apartments significantly dropped in the CBD by 7.44%. Apart from leasing conditions, as mentioned before, the reduced occupancy rate in serviced apartments in the CBD was due mainly to both the termination of Kempinski Serviced Apartments (which always maintained high occupancy levels), and renovation works at Ascott Serviced Apartments. Rental Rates Significant changes were noted in rental rates during the first three months of Modest growth was seen in all sub-sectors, but most significant was serviced apartments located in the CBD. Overall, the average asking rents of apartments for lease in the CBD was registered at US$26.34 per sq m per month, which increased by 11.21% QoQ, or 10.29% YoY. Apartments for lease beyond the CBD (including South Jakarta) registered at US$15.4 per sq m per month, which increased by 4.26% QoQ, or 3.58% YoY. Stronger leasing activity in serviced apartments, particularly those which are operated by international brands, has given impact to adjusting to higher rental growth. Nonetheless, few landlords maintained their current rates and were reluctant to increase them in order to retain current tenants. Increasing rents were mostly found in newer projects which enjoyed higher occupancy rates and provided better quality buildings. average rental rates for apartment for lease $30.00 R ental Rate/sq m/month $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 1Q Q Q Q Q Q Q Q Q 2013 CBD Non CBD summary of average rental rates (USD/sq m/month) by region region 4Q Q 2013 CBD $23.69 $26.34 Outside CBD $14.77 $15.40 The growing demand is not the only factor influencing the rental rates for lease apartments in Jakarta however. Increases in electricity tariffs and the regional minimum wage, as well as inflation, are also more or less contributing to the adjustment of rental rates. Colliers International p. 22

23 jakarta 1q 2013 apartment Outlook The apartment market continues to benefit from steady economic growth, which is projected to peak at around 6% for Another encouraging factor is the growing middle-income group, which potentially creates a new market for apartments. Apart from these factors, the increasing price trend has been propelled by the scarcity of land, particularly in the CBD and several prime locations in South Jakarta. The occupancy rate for apartments for lease is projected to rise further, in line with expectations of increased expatriate arrival to harness business opportunities in Jakarta. Demand for serviced apartments is expected to trend upwards. Nevertheless, as most existing rental apartments in Jakarta are aging developments, there has been much opportunity for developers to build apartments or strata-title apartments that can be operated as serviced apartments (condotel), primarily those managed by international hotel operators, located within or near the CBD. p. 23 Colliers International

24 jakarta 1q 2013 retail Retail Sector Supply jakarta In 2013, up to 313,500 sq m of additional retail space will be added to the Jakarta retail market, when six new retail centres are completed (and in operation) after the first quarter of With no supply entered the market in first quarter 2013 will bring the cumulative retail space in Jakarta to a total of 4.15 million sq m. The opening of an additional three retail centres (that were forecast to be completed at the beginning of 2013) is likely to be rescheduled due to construction delays. The moratorium on new retail permits issued by the Jakarta municipality has affected future projections of retail space. In order to accommodate additional retail space, two existing retail centres in Jakarta will undergo extension works. Puri Indah Mall, located in West Jakarta, is extending its leasable space, which will be allocated to F&B. The other extension work in progress is at Mall Kelapa Gading 3. For both of these extension projects, construction works started in 2013, and are projected to be completed in Due to its size, the St. Moritz project has meant that West Jakarta has become the main contributor of retail space in Still in West Jakarta, 2014 will see an extension project at the existing Puri Indah Mall. Another extension in West Jakarta will occur in the existing Central Park Mall, which plans to be expanded to around 40,000 sq m in Further, the Pantai Indah Kapuk Mall in North Jakarta will offer mostly lifestyle and entertainment concepts. Meanwhile in South Jakarta, new retail space will support residential development in the Pancoran area. It will also offer the lifestyle concept with more F&B retailers, over the next couple of years. jakarta retail annual supply 600, , , , , , F 2014F 2015F 2016F s q m The years 2005, 2008 and 2009 were the booming period for retail supply in Jakarta. After some declining years, total annual supply of retail space bounced back in 2012, and in 2013 total annual supply will reach 313,500 sq m. However, it is anticipated to drop significantly again, with only two mall extensions amounting to around 9,000 sq m. More space is anticipated to come in 2015, but again the area will be negligible considering that Jakarta will face a deficit supply of retail space from 2015 onward. p. 24 Colliers International

25 jakarta 1q 2013 retail jakarta retail annual supply based on region Central Jakarta East Jakarta West Jakarta North Jakarta South Jakarta CBD 0 50, , , , , , , , YTD 2013F 2014F 2015F LIST OF future shopping centres in jakarta shopping centres name location Region nla (sq m) status 2013 Lotte Shopping Avenue Satrio CBD 78,000 Under Construction Pondok Indah Mall Street Gallery Pondok Indah South Jakarta 9,100 Under Construction Cipinang Indah Mall Cipinang East Jakarta 20,000 Under Construction Puliomas X Venture Pulomas East Jakarta 25,200 Under Construction The Bay Pluit Pluit North Jakarta 52,000 Under Construction St. Moritz Puri Indah West Jakarta 129,200 Under Construction 2014 Mal Puri Indah 2 (extension) Puri Indah West Jakarta 3,000 Under Construction Mal Kelapa Gading III (extension) Kelapa Gading North Jakarta 6,000 Under Construction 2015 Central Park Mall (extension) S. Parman West Jakarta 40,000 Planning Stage PIK Mall Pantai Indah Kapuk North Jakarta 30,000 Planning Stage bodetabek In the greater Jakarta area, known as BoDeTaBek (an abbreviation of surrounding cities of Jakarta including Bogor, Depok, Tangerang and Bekasi), all six of the retail projects to commence in 2013 are located in the Bekasi region. Two of these projects are to be completed within the quarter including the Bekasi Junction shopping centre (with a hyperstore from Korea as the anchor tenant) and the extension of Plaza Cibubur. These projects have brought the cumulative supply in the greater Jakarta area to 1.94 million sq m. Of this total supply, 39% is marketed as strata-title retail for sale. Bekasi Junction became the latest strata-title retail centre operating in the greater Jakarta area, after Tangerang City in After the completion of these two centres, the greater Jakarta area will see another 166,285 sq m of new retail space. Except for Bekasi, none of the other regions in the greater Jakarta area will provide new retail space during In 2014 however, all regions will have contributed new shopping centres totalling 220,300 sq m. Colliers International p. 25

26 jakarta 1q 2013 retail Based on Area, Tangerang, with growth areas like Karawaci, Bintaro, Serpong and Alam Sutera, contributed 761,482 sq m of retail space, representing around 39% of the total retail stock in the greater Jakarta area. Bekasi is the most active region for new retail space provision this year, which amounts to a total of 607,249 sq m. Almost all new shopping centres projected to be completed during 2013 are located within densely populated residential areas, which are expected to become a given captive market for those shopping centres. Meanwhile in Depok and Bogor, only a few future shopping centres will be coming on line over the next two years. Cumulative retail space in Depok registered at 269,345 sq m, while in Bogor it remained at 299,154 sq m. bodetabek retail annual supply 600, ,000 s q m 400, , , , F 2014F 2015F 2016F AEON of Japan established PT. Aeonmall Indonesia founded a joint venture company with Sinarmas Land to build AEON Mall in BSD City, Tangerang, which is planned to open in This company has also confirmed their plans to build a shopping mall in Delta Mas, Bekasi, scheduled for completion in 2015 as part of their market penetration outside of Japan. bodetabek retail annual supply based on region Bekasi Tangerang Depok Bogor 0 100, , , , , YTD 2013F 2014F 2015F p. 26 Colliers International

27 jakarta 1q 2013 retail LIST OF future shopping centres in bodetabek shopping centres name location Region nla (sq m) status 2013 Grand Galaxy Mall Bekasi Bekasi 23,000 Under Construction Bekasi Junction Bekasi Bekasi 42,000 Complete Grand Metropolitan Mall Kalimalang Bekasi 47,285 Under Construction Mall Ciputra Citra Gran Cibubur Bekasi 26,000 Under Construction Plaza Cibubur extension Cibubur Bekasi 2,000 Complete Summarecon Mall Bekasi Bekasi Bekasi 70,000 Under Construction 2014 Bintaro Xchange Bintaro Tangerang 45,000 Under Construction Lippo Cikarang Citywalk (phase 2) Cikarang Bekasi 10,000 Under Planning Cinere Bellevue Suite Cinere Depok 28,000 Under Construction The Breeze Sinar Mas Land Serpong Tangerang 24,300 Under Construction Cibinong City Mall Cibinong Bogor 40,000 Under Construction AEON Mall BSD City Serpong Tangerang 75,000 Under Planning 2015 Deltamas Mall Deltamas Bekasi Under Planning Demand jakarta retail occupancy rates based on grade 100% 80% 60% 40% 20% 0% YTD Middle Upper Middle Middle Low Albeit moderate, the increasing trend for occupancy rates continued this quarter. Occupancy stood at 88.9%, which was a modest move up from 88.7%, compared to the previous quarter. With no new additional supply entering the market in 1Q 2013, occupancy levels remained relatively stable. Despite being lower than the other regions in Jakarta, the average occupancy level for South Jakarta achieved the highest QoQ growth, recording 86.5% in 1Q 2013, which is 2.38% higher than the previous quarter. Retail centres such as Pondok Indah Mall, Pejaten Village, Kalibata Mall, Shopping Mall Gandaria, Kota Kasablanka and Lippo Mall Kemang helped to stabilize the average occupancy level in South Jakarta. Colliers International p. 27

28 jakarta 1q 2013 retail The East Jakarta region achieved an average occupancy rate of 92.67%. With limited new supply, occupancy levels were relatively stable. Plaza Kramat Jati, an old shopping centre, undertook renovation works to its exterior and rearranged its tenancy mix, which encouraged most of its tenants to commit. In the CBD area, which is populated by many in the middle- to upper-income brackets, retail centres reached occupancy rates of 91.7%, representing a slight increase compared to the previous quarter. Most prominent shopping malls within the CBD like Plaza Indonesia, Plaza Senayan, Senayan City, Grand Indonesia and Kuningan City continue to maintain their performance. Meanwhile, the average occupancy rates in other regions like West, Central and North Jakarta were down. Although occupancy is still recorded at above 90%, the average occupancy rates in West and Central Jakarta during 1Q 2013 were slightly lower than in the previous quarter. The occupancy rate in West Jakarta was recorded at 92.1%, while in Central Jakarta it registered at 93.7%. North Jakarta also noticed a modest declining trend, where occupancy was at 85.9% for this quarter. The overall upward trend in occupancy is insignificant when compared QoQ, because some retail centres also experienced a weakening occupancy rate. It has been identified that some shopping centres located in North, West and Central Jakarta experienced a slight downturn in occupancy. Evidently not all retailers will survive due to the level of competition. One notable café has had to close down, even though it is located in one of the preferred destination malls in Cilandak. In one of the CBD sub-markets, Jalan MH Thamrin, two malls experienced an increase in vacant space; with one having to release a well-known café, which will move to a luxury mall located in the SCBD area. The reason for the move is due to the fact that the café anticipated the redevelopment plans for the mall within which it was originally located (i.e. office building and high-rise residential). Meanwhile, due to lower traffic levels, the second mall will change its concept by replacing some under-performing tenants and inviting new F&B retailers to attract more crowds to the mall. bodetabek retail occupancy rates based on region 100% 80% 60% 40% 20% 0% YTD Bogor Depok Tangerang Bekasi Average occupancy rates for all retail centers located in the greater Jakarta area registered at 85.7%, posing a relatively steady performance compared to last quarter. Almost all regions in the greater Jakarta area experienced a modest increase in occupancy, in particular Bekasi. Mega Bekasi and Bekasi Square are two retail centers that helped fuel a higher occupancy performance for Bekasi, with an influx of fashion and gadget-selling retailers. Meanwhile in Tangerang, three shopping centers, including Living World, Shopping Mall at Alam Sutera and Mall Balekota, had more new tenants which also helped maintain occupancy levels in Tangerang. Several pre-committed tenants have opened at Mall at Alam Sutera. In Depok, two retailers including Ace Hardware and D Cost opened at Depok Mall. p. 28 Colliers International

29 jakarta 1q 2013 retail new foreign retailers Given a notable population and growing number of middle-income earners, a number of foreign retailers (mainly fashion retailers) are targeting the Indonesian market. In the 2Q 2013, a French department store, Gallery La Fayette, will open at Pacific Place Mall. Together with department store IROO, a Taiwanese fashion brand is also opening its first store in Indonesia. Another foreign department store from Thailand, Central Department Store, will open in Grand Indonesia around May A fashion and Swedish accessories retailer, H&M, will also open in Grand Indonesia and Pondok Indah Mall 1, in the near future. In addition to department stores and the fashion retailers, fitness centres also continue to expand their outlets in the region. After opening at Lippo Mall Kemang at the end of 2012, a fitness centre chain originating from the United Kingdom, Fitness First, will open two more outlets at other Lippo s malls. Initially, they will open at Pejaten Village in early 2013, and then in St. Moritz at the end of the year. Further, several foreign retailers will also invigorate the retail market in the capital city. Japanese clothing and accessories retailer, Uniqlo, has officially announced its plan to open a flagship store in Jakarta in mid-2013, hoping to benefit from the dynamic retail market in the city. The store is being touted as the second biggest in Southeast Asia. Another new brand aiming at this market is Penshoppe, a casualwear fashion outlet from the Philippines. They will be targeting Indonesian middle-income earners to further tap into the burgeoning youth market. Penshoppe itself has more than 300 stores in the Philippines as well as Saudi Arabia. pre-committed demand jakarta In Jakarta, the pre-committed occupancy level for newly completed and under-construction shopping centres throughout 2013 has been recorded somewhat high at 82%; about 257,000 sq m has been absorbed. Meanwhile, in the greater Jakarta area with 210,285 sq m of retail space projected to operate throughout 2013, the pre-committed level of absorption has been at the level of 71%. These numbers will further inflate, particularly in Jakarta given that retail space is relatively limited. In Jakarta, almost all new retail centres which will be completed this year have commitments from new tenants. Even for future projects like Pondok Indah Street Gallery (or Pondok Indah Mall 3), many new F&B tenants are already on the retailers waiting list for the mall that will be completed around May At Lotte Shopping Mall Avenue at Ciputra World Jakarta, the projects that will soon be completed in 2Q 2013 have confirmed leasing agreements with some new tenants to accompany the anchor, Lotte Department Store, including Ranch Market, Burger King, Cinema XXI, Gold s Gym, Hero Supermarket, Starbucks Café and Domino s Pizza. Meanwhile future shopping malls in West Jakarta (i.e. St Moritz at Puri Indah and The Baywalk at Green Bay Pluit) have reported10% and 20% vacancy levels respectively. pre-commitment level in jakarta retail F 2014F 2015F 0 30,000 60,000 90, , , , , , , , ,000 Absorbed Supply s q m Colliers International p. 29

30 jakarta 1q 2013 retail LIST OF new significant tenants in existing shopping centers retailers kind of business size (sq m) shopping centres name region when H&M Fashion and Accesories 1,700 Pondok Indah Mall South Jakarta 2Q 2013 Electronic Solutions Home Appliances Kalibata Mall South Jakarta 2013 Fitness First Lifestyle and Entertainment 1,436 Pejaten Village South Jakarta 1Q 2013 Ace Hardware Home Furnishing 3,500 Depok Mall Depok 2013 debotabek In the greater Jakarta area, some malls have secured anchor tenants, which are expected to lure other smaller tenants. Bekasi Junction has Lotte Mart as their main tenant, while the totally refurbished and extended Citra Grand Mall will have Hypermart, Matahari, Farmers Market and Gramedia as their anchor tenant. pre-commitment level in debotabek retail F 2014F 2015F 0 20,000 40,000 60,000 80, , , , , , , ,000 Absorbed (sq m) Supply (sq m) s q m Rental Rates and Service Charge rental rates In 1Q 2013, rental rates per square meter per month in Jakarta were recorded at IDR468,084. This represents a slight increase by 3% QoQ, while YoY this suggests a 21% climb. Despite being small, the increasing pegged rate also influenced the overall rental rate in Jakarta this quarter. Overall, landlords are generally maintaining their current rental rates, given a steady level of inquiries for retail space in Jakarta. Further, some projects with high occupancy are asking for higher rates, primarily for prime space locations. Meanwhile, the average rental rate in the greater Jakarta area was relatively stable at IDR263,377/sq m/month. Colliers International p. 30

31 jakarta 1q 2013 retail rental rates in jakarta (based on grade) and bodetabek IDR 800,000 IDR 700,000 IDR 600,000 IDR 500,000 IDR 400,000 IDR 300,000 IDR 200,000 IDR 100,000 IDR YTD Middle Upper Middle Middle Low Average BoDeTaBek pegged rates adjustment in jakarta IDR 8,000 IDR 7,750 IDR 7,500 IDR 7,250 IDR 7,000 IDR 6,750 IDR 6, YTD service charge Additional to the Government s minimum wage policy, which will increase operating costs, its plan to also increase electricity tariffs will pose a major impediment to retail operators, because it will affect an increase in overall rental costs. The electricity tariff alone is a major component of the total operational cost, contributing about 40%. Since early 2013, the Government decided to gradually increase electricity tariffs quarterly, both for households and industry. For industry using of above 200 KVA, the basic electricity tariff is estimated to climb by around 20% up to the end of Although the increases in electricity charges and the minimum wage have not yet entirely been implemented, some retail centres located in Pondok Indah, Blok M, Pejaten and Cilandak within South Jakarta have already increased their service charge by 25%, on average. In West Jakarta, three retail centres located in Puri Indah and Slipi have also raised their charge by 26%, on average, while two shopping centres located in the CBD increased theirs by 8%. In this quarter, the average service charge for shopping centres in Jakarta climbed by 5% QoQ to reach IDR85182 per sq m per month. While for the greater Jakarta area, service charges were only up slightly at IDR62,821 per sq m per month. It is anticipated that shopping centre operators will adjust their overall service charge costs in mid p. 31 Colliers International

32 jakarta 1q 2013 retail service charge in jakarta and bodetabek IDR 90,000 IDR 85,000 IDR 80,000 IDR 75,000 IDR 70,000 IDR 65,000 IDR 60,000 IDR 55,000 IDR 50,000 IDR 45, YTD Jakarta BoDeTaBek Outlook The growing number of middle-income consumers has been the main attraction for retailers opening stores in Indonesia, not to mention the influx of foreign retailers. Quite a few big retailers in their respective countries perceive Indonesia to be an important market. Big fashion retailers are the most active retailers penetrating this market. On the supply front, assuming that there will be continued growth in the economy, the next two years will be an unfavourable time for retailers to expand, given the scarcity in retail space during that period. Thus far, there is no official announcement on new projects, suggesting that finding new retail space will be challenging in Consequently, rents are expected to move up, reflecting the limited stock of retail space. This year alone will already be a difficult period for retailers, primarily because of the increases in electricity tariffs and new minimum wages regulations, which will translate into higher operational tariffs in shopping centres. Colliers International p. 32

33 jakarta 1q 2013 industrial estate Industrial Estate Sector Supply The year 2013 will see quite a sizeable amount of new industrial land from the expansion of several industrial estates. Thus far, only 20 ha was recognised as this quarter s supply. Kota Bukit Indah (Indotaisei), located in Karawang, concluded a sales commitment with a leading automotive company, Astra Honda Motor (AHM) and handed over part of their total land sales of 84 ha. This is the only additional new industrial stock in early Two industrial estates located adjacent to each other in Bekasi were accelerating their land clearing and infrastructure work as part of the expansion plans. Bekasi Fajar confirmed that the 50 ha extension plan, on which they are now working, would be ready in around September this year. Likewise, a neighbourhood industrial estate, MM2100 is allocating around 150 ha for their expansion plan. Still in Bekasi, while continuing to sell their land, Greenland International Industrial Centre (GIIC) at Kota Deltamas also has to make sure that what they have sold have will be delivered as promised. Thus far, GIIC is working on preparing the land, including infrastructure work, which is estimated for delivery in the July to December period. Other industrial estates have indicated that they will introduce new land opening, including Modern Cikande IE, which announced the expansion of another 100 ha as part of their fifth stage. Thus far, cut and fill works are in progress and the delivery will be in stages flowing with the construction work and market inquiries. One notable industrial estate in Karawang has also indicated that it will introduce small parcels of land sometime in With very limited land available in this industrial estate, prices will potentially be offered at a premium rate. A new industrial estate that has just concluded a sizeable transaction with a leading automotive company is Karawang Jabar Industrial Estate (KJIE) which belongs to Lippo. The total gross area of KJIE is ha and this will be divided into three phases and will be delivered in September 2013, 2014 and Apart from operating industrial estates, which are actively expanding their zones, are several upcoming industrial estates located mainly in Karawang. While some expansion projects are still underway, the transaction activity continues. However, we only recognise new supply when land is ready for occupation with ready infrastructure. With the additional 20 ha from Kota Bukit Indah, the total serviceable industrial land in the six regions (Serang, Tangerang, Jakarta, Bekasi, Karawang and Bogor) is now 8,706.3 ha. The classic industrial supply issue remains the continuing enquiries for industrial land versus the limited stock of land on offer. Since 2011, land scarcity has been a major problem for most industrial estates, and the substantial surge in land demand is at the crux of this problem. It has been reported that, in certain industrial estates, potential buyers seeking industrial land come to the estate quite frequently but this ends with no transaction because land is limited. In a landlord s market such as this, developers, like those located in Bekasi or Karawang, continue to sell raw land at the price of ready-to-use land. Buyers are taking the position of acquiring raw land at the current price anticipating a further increase when land is offered in a ready-to-use condition. They are now willing to buy raw land (at the ready-to-use price) and wait some time before the landlord delivers the land with all of the infrastructure in place. p. 33 Colliers International

34 jakarta 1q 2013 industrial estate distribution of industrial land in SIX regions Serang 21% Jakarta 10% Bogor 2% Bekasi 26% Karawang 36% Tangerang 5% Demand Compared to previous periods, sales of industrial land were sluggish. In particular, the sales activity within operating industrial estates saw the lowest number of total quarterly transactions since Fortunately enough, the total quarterly sales during 1Q 2013 was much underpinned by the sales occurring in the newly opened Karawang Jabar Industrial Estate (KJIE) involving 150 ha (gross area) of land sold to a leading automotive company. If this transaction is excluded, the total industrial transactions within operating industrial estates only involved 93 ha. Land absorption is definitely weakening. However, the main reason is not because of demand reduction, because demand is still strong. Limited land stock availability is the major issue, which will lessen total sales for the last quarters. Total sales in Karawang during 1Q 2013 jumped immensely due to sales at Karawang Jabar Industrial Estate. This newly opened industrial estate sold around 150 ha of gross land area to a leading automotive company. With this large transaction, this automotive enterprise will become the anchor of this industrial estate. However, this transaction is considered a precommitted sale because the land is still undeveloped with no infrastructure. The first phase of the land will only be ready in September this year. In total, the Karawang area sold a total of ha, which was nine times higher than that recorded last quarter. Should the KJIE transaction be excluded, the biggest transaction would be completed by Greenland International Industrial Center in Bekasi followed by Suryacipta in Karawang. In Bekasi, total sales for the first quarter of this year was less than in the fourth quarter of last year. Delta Silicon, together with Greenland International Industrial Center, was quite consistent in terms of total land being sold. Meanwhile, Jababeka still registered transactions, and is higher in scale than those of the previous quarter. Due to limited land supply, Bekasi only sold 49 ha, lesser than in the previous quarter. In Serang, total sales this quarter were reduced compared to the previous quarter, mainly because KIEC s sales figures were only 14% of what they were in the previous quarter. Likewise, Modern Cikande recorded fewer sales this quarter. Colliers International p. 34

35 jakarta 1q 2013 industrial estate hectares annual industrial land sales YT In Karawang area, Suryacipta sold two parcels of land totalling 26.7 ha to two different companies, one in the building materials business from Europe and a F&B company. Other active industrial estates registered no sales during the quarter. KIIC sales were dormant because of limited land stock to sell. Likewise, in Kota Bukit Indah (Indotaisei), they still focus on selling the remaining small parcels of land. Also they are accelerating the land clearing and infrastructure on the land they have sold to Astra. Another Kota Bukit Indah industrial estate which belongs to Besland Pertiwi reported zero sales and leasing activity during 1Q In the Bekasi region, Greenland International Industrial Center (GIIC) led in the amount of land being transacted, with 31 ha. Again, autorelated companies and chemical industries dominated all seven transactions in GIIC. In second place, Delta Silicon continued to make deals with auto-parts industry companies (50% of the total transactions), warehouse and other industries, which altogether totalled 12 ha. Jababeka sold higher amounts compared to previous quarters with a total of around 6 ha of land, comprising one transaction of 3 ha of land to a packaging company, 2 ha of land to a F&B company and 1 ha to a trading company. Other prominent industrial estates in Bekasi reported no sales mostly because they do not have land to sell. Another active region is Serang, where the two most active industrial estates operate. Modern Cikande saw a total transaction of 5.85 ha mainly to a local company comprising seven small transactions (painting ink, medical equipment, steel, kitchen appliances and chemical company). KIEC recorded a total of five transactions with a steel company, fabrication and fibre optics totalling 6.5 ha. Millennium industrial estate was likely the only active industrial estate in Tangerang selling industrial land. Millennium sold around 5 ha of land during the quarter. In Bogor, CCIE reported zero leasing activity and is consistently focusing on leasing the land. Meanwhile, Sentul Industrial Estate will sell industrial land once all the land certificate matters are rectified. p. 35 Colliers International

36 jakarta 1q 2013 industrial estate land sales recorded during 1q 2013 in each industrial estate Karawang Jabar Industrial Estate Greenland International Industrial Centre Suryacipta Delta Silicon Krakatau Industrial Estate Cilegon Jababeka Modern Cikande Millenium hectares cumulative supply, demand and take-up rates 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, YTD Cumulative Supply (ha) Cumulative Demand (ha) Take-up Rate (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% With more than 72% of the overall sales during the first quarter 2013, automotive and related industries remained the key drivers for industrial land sales. The majority of land transactions by automotive and related industries occurred in either Karawang (KJIE) or Bekasi (Delta Silicon and GIIC). Other dynamic industries during the quarter in review included F&B, building materials, chemicals, steel-related, warehousing and packaging. Colliers International p. 36

37 jakarta 1q 2013 industrial estate types of active industries in 1q 2013 Food & Beverage Printing 7% 0% Steel-Related 3% Chemicals 4% Logistics/ Warehouse 2% Packaging 1% Building Material 5% Medical 0% Othe 5% Automotive 72% Industrial Land Prices Given a limited supply with continued demand, land prices climbed by an average 10.5% QoQ. The Serang region recorded the highest jump by 21.5% QoQ. Meanwhile, Bekasi registered only a 4.3% increase this quarter (QoQ). Likewise, in Karawang, land prices increased moderately this quarter by 9.1%. The determinant factors (supply and demand performance) have kept industrial land prices moving forward. Industrial estates in Serang keep increasing their land prices. In this quarter alone, the market has witnessed price increase from an average of US$ to / sq m. Two industrial estates within Serang introduced new prices. Continuing enquiries combined with the scarcity of industrial land in this region have pushed developers to raise land prices. Meanwhile, Bekasi saw a modest percentage of increase in land prices, at 4.3% QoQ. This relatively small increase was due to the fact that land prices in this area are already higher than in other regions. Two industrial estates initiated new land prices during the reviewed quarter. Furthermore, the Bekasi region commands the highest land prices compared to other regions. One industrial estate in Bogor drove the most significant changes in the price of industrial land. In less than one year, the price of industrial land has been adjusted three times making the land price in Bogor relatively the same as in Bekasi. greater jakarta industrial land prices $240 $210 $180 U S $/s q m $150 $120 $90 $60 $30 $ YTD Bogor Tangerang Karawang Bekasi Serang p. 37 Colliers International