Research & Forecast Report 2Q 214 Accelerating success. Total office space in DKI Jakarta increased modestly by only 87,63 sq m during the first half of the year with occupancy stable at 96%. A major increase in supply, however, is expected in the next four years with cumulative supply possibly increasing by 51% from 7.1 million sq m to 1.7 million sq m. The increase assumes the completion of 74 buildings which are now under construction or being planned and would result in a drop in occupancy below 9%. Average asking base rental rates in IDR denominated buildings in the CBD rose moderately by around 2% this quarter, reaching IDR252,114 psm / month. Likewise, the average base rental rate for US dollar denominated buildings moved slightly upward to USD36.32 psm / month. - Ferry Salanto, Associate Director Research Supply in the CBD CBD Office Cumulative Supply 8,, 7,, 6,, 5,, 4,, 3,, 2,, 1,, OFFICE SECTOR Existing Supply Annual Supply Leased Office The cumulative supply of office buildings in Jakarta (CBD and outside CBD area) will reach around 7.5 million sq m by the end of 214, bringing the growth rate of the Jakarta cumulative supply to 6.5% in 214, which is higher than in the previous year. The office supply in Jakarta is projected to increase rapidly from 215 to 218 at an average of 1.2% per year. Annual CBD Future Office Distribution Based on Sub Market 15, 3, 45, 6, 75, Sudirman Thamrin Mega Kuningan Rasuna Said Satrio Gatot Subroto
Up to the reviewed quarter, the CBD area continued to contribute the most space, comprising 67.2% of the cumulative office supply in Jakarta. Lippo Kuningan, which began operationin 2Q 214, is the first new office building in the CBD in 214 and contributes 3,5 sq m. This office building, which is located in Rasuna Said, brought the cumulative supply in the CBD to its current 4.79 million sq m. After Lippo Kuningan, 187,85 sq m of additional supply will enter the market in the CBD by the end of 214. Including office buildings that have been in operation, the total annual supply during 214 in the CBD will reach 218,35 sq m. Future office buildings in the CBD are projected to provide a huge amount of space at 2.27 million sq m from 215 to 218. Next year alone, the CBD will see 619,199 sq m of additional office space or almost 3% of the total projected additional supply in 215-218. Based on the status of development of 4 new office building projects (totalling 2.46 million sq m) located in the CBD from 214-218, 3 office buildings (1.95 million sq m) are under construction. With almost 8% under construction as of 2Q 214, it appears that all of this additional office space in the CBD from 214 to 218 will seemingly be completed. The Sudirman area is still the largest contributor of supply in the CBD, based on location. However, the Satrio and Mega Kuningan areas are expected to see the most significant growth. Sequentially, those areas will record growth of 137% and 1% respectively from 214 to 218. In addition to Satrio and Mega Kuningan, with large land availability, Gatot Subroto will become the next corridor to grow, by 77% during the same period. Sudirman will only contribute 47%, more than Rasuna Said (32%) and Thamrin (11%). Annual Outside CBD Future Office Distribution Based on Region 1, 2, 3, 4, 5, Central Jakarta South Jakarta North Jakarta East Jakarta West Jakarta The total additional supply of office buildings in the outside CBD in 214 is projected to reach 245,64 sq m contributed by 1 office buildings. Once again, South Jakarta will become the main contributor of office supply in 214 as seven of the office buildings or 78% of the total additional space in 214 will be located in South Jakarta. As of 2Q 214, two office buildings officially began operations and brought the cumulative supply to 2.34 million sq m in outside CBD. One office building, Green Kosmo Mansion (GKM) Tower, is in South Jakarta, and another, Kirana Two, is in North Jakarta. Three office buildings are located outside of South Jakarta, including Kirana Two, GP Plaza and Wisma 77 Tower 2. Supply in the Outside CBD Outside CBD Office Cumulative Supply 7,, 6,, 5,, 4,, 3,, 2,, 1,, South Jakarta will continue leading in future supply in outside CBD from 215 to 218. Additional supply of.9 million sq m is projected to enter the market by 218. Of this additional space, 59% will be in South Jakarta. Central and West Jakarta will follow with 16 and 13%, respectively. South Jakarta will see an additional 15, sq m per year from 214 to 218. The total 747,215 sq m provided during 214-218 in South Jakarta is still more than the total additional supply of the other regions during that period. Based on development status, 62.5% of the total projected future supply (36 buildings) from 214 to 218 in the outside CBD have begun construction as of 2Q 214. This is at 24 office buildings under construction. This current development status also signifies that at future office buildings in the outside CBD, almost all projected supply will meet the completion date. Existing Supply Annual Supply 2 Research & Forecast Report 2Q 214 Office Colliers International
Supply in TB Simatupang TB Simatupang Office Cumulative Supply 1,, 9, 8, 7, 6, 5, 4, 3, 2, 1, Existing Supply Annual Supply As mentioned above, most parts of South Jakarta will be the main contributors of future supply, mainly office buildings in TB Simatupang. Gedung Aneka Tambang 2 and Green Kosmo Mansion are newly operating office buildings in TB Simatupang. The total annual supply in TB Simatupang will be 191,637 sq m in 214. The cumulative supply in TB Simatupang totaled 536,86 sq m as of 2Q 214. This represents the total supply in South Jakarta or 78% of the total supply in the outside CBD. Annual Outside CBD Future Office Distribution: TB Simatupang and Other Area 1, 2, 3, 4, 5, Outside CBD exclude TB Simatupang TB Simatupang After contributing 191,637 sq m, the office market in TB Simatupang will continue to see a significant amount of space in 215. Together with 214, the total new supply will increase by 336,93 sq m in TB Simatupang. The total future supply from 214 to 215 will be contributed by 11 office buildings. New Supply Pipeline projected completion Office building projects name location SGA Marketing scheme status development CBD Area 214 Convergence Rasuna Said 36,367 For Lease & Sale Under construction 214 Gran Rubina Tower 1 Rasuna Said 31,438 For Sale Under construction 214 Sinarmas MSIG (Chase Tower) Sudirman 75, For Lease Under construction 214 The Noble House Office Tower Mega Kuningan 45, For Lease Under construction 215 AIA Center (Menara Selaras) Sudirman 47, For Lease Under construction 215 Bahana Office Tower Mega Kuningan 5, For Lease & Sale Under construction 215 Cemindo Tower (Rasuna Tower) Rasuna Said 6,995 For Lease Under construction 215 Ciputra World Jakarta 2 Satrio 7, For Lease & Sale Under construction 215 International Financial Center 2 Sudirman 5, For Lease Under construction 215 Lippo Thamrin Office Tower Thamrin 16,5 For Sale In planning 215 Sahid Sudirman Center Sudirman 138,5 For Lease & Sale Under construction 215 Satrio Square Satrio 24,6 For Lease Under construction 215 Satrio Tower Satrio 31,64 For Lease Under construction 215 Telkom Landmark Tower II Gatot Subroto 65, For Lease Under construction 215 Wisma Mulia 2 Gatot Subroto 65, For Lease Under construction 216 Centennial Tower Gatot Subroto 1, For Sale Under construction 216 Gran Rubina Tower 2 Rasuna Said 32, For Sale In planning 216 Mangkuluhur Tower Gatot Subroto 53, For Lease Under construction 216 Menara Palma 2 Rasuna Said 5, For Lease Under construction 216 Menara Pertiwi Mega Kuningan 41,456 For Sale Under construction continued 3 Research & Forecast Report 2Q 214 Office Colliers International
projected completion Office building projects name location SGA Marketing scheme status development continuation 216 Office Tower @ ST Regis Gatot Subroto 9,511 For Lease Under construction 216 T Tower (BJB Tower) Gatot Subroto 24, For Sale Under construction 216 The Tower Gatot Subroto 56,492 For Sale Under construction 217 Gayanti City Gatot Subroto 25, For Lease In planning 217 Prosperity Tower @ Distict 8 Sudirman 71,545 For Sale Under construction 217 Sequis Life Tower 2 Sudirman 8, For Lease Under construction 217 Sudirman 7.8 Sudirman 52, For Sale In planning 217 Sopo Del Tower A Mega Kuningan 8, For Lease & Sale In planning 217 Sopo Del Tower B Mega Kuningan 4, For Lease In planning 217 Treasury Tower @ District 8 Sudirman 139, For Sale Under construction 217 Thamrin Nine Thamrin 45, For Lease Under construction 217 World Capital Tower Mega Kuningan 72, For Sale Under construction 218 Astra Tower Sudirman 1, For Lease In planning 218 Icon Tower Sudirman 72,5 For Lease In planning 218 Mangkuluhur Tower II Gatot Subroto 5, For Lease In planning 218 PCPD Tower Sudirman 96, For Lease Under construction 217 SSI Tower (Graha Surya Intenusa) Rasuna Said 1, For Lease In planning 218 Tower Two at The City Center Sudirman 39,24 For Lease In planning 218 Tower 2 @ Ciputra World Jakarta 1 Satrio 7, For Lease & Sale In planning 218 World Trade Center III Sudirman 7, For Lease Under construction outside cbd Area (exclude tb simatupang) 214 GP Plaza Slipi 12,24 For Sale Under construction 214 Wisma 77 Tower 2 Slipi 24,2 For Lease Under construction 215 Altira Sunter 4, For Sale Under construction 215 Jakarta Box Tower Kebon Sirih 36, For Lease Under construction 215 Maxima Tower Kelapa Gading 8, For Lease Under construction 215 Menara Sentraya Blok M 52,72 For Lease & Sale Under construction 215 MNC Tower II Kebon Sirih 2, For Lease Under construction 215 Nariba Office Suites Mampang 4,2 For Lease Under construction 215 One Tower Kemayoran 21,4 For Lease In planning 215 Puri Indah Financial Tower Puri Indah 38,5 For Sale Under construction 215 Soho Capital Slipi 36, For Sale Under construction 215 St Moritz Office Tower Puri Indah 19,5 For Sale Under construction 215 The Suites Pantai Indah Kapuk 13,2 For Sale Under construction 216 BKP Office Tower Sunter 16, For Lease In planning 216 Gallery West Kebun Jeruk 29, For Lease & Sale Under construction 216 Lippo Tower Holland Village Cempaka Putih 27, For Sale In planning 216 L'Venue Pasar Minggu 41,597 For Sale In planning 216 Sky 18 Tower Pasar Minggu 27,5 For Sale In planning 216 Soho Pancoran Pancoran 3, For Sale Under construction 217 Ciputra Business District Kemayoran Tower 1 Kemayoran 4, For Sale In planning 217 Ciputra Business District Kemayoran Tower 2 Kemayoran 4, For Lease In planning 218 Kota Kasablanka Office Tower 2 Casablanca 9, For Lease In planning continued 4 Research & Forecast Report 2Q 214 Office Colliers International
projected completion Office building projects name location SGA Marketing scheme status development continuation tb simatupang 214 Graha MRA 13, For Lease Under construction 214 Plaza Oleos 39,778 For Lease & Sale Under construction 214 Palma Tower 2,484 For Lease Under construction 214 The Manhattan Square 39,375 For Lease & Sale Under construction 214 18 Office Park (Cityland Tower) 4, For Sale Under construction 215 AD Premier 18,9 For Lease Under construction 215 Metropolitan Tower 44, For Lease & Sale Under construction 215 South Quarter Tower 1 4,778 For Sale Under construction 215 South Quarter Tower 2 4,778 For Lease Under construction 216 Beltway Office Park Tower 4 25,6 For Lease In planning 217 The Sima 6, For Lease Under construction 217 South Quarter Tower 3 4,778 For Lease In planning 217 The Manhattan Square Tower 2 39,375 For Lease & Sale In planning Occupancy Occupancy Rates in the CBD and Outside the CBD CBD Annual Office Supply and Demand in the CBD 1% 95% 9% 85% 8% 75% 7% 45, 4, 35, 3, 25, 2, 15, 1, 5, 2 21 22 23 24 25 26 27 CBD Outside CBD (excl. TB Simatupang) TB Simatupang Annual Supply Annual Demand Despite a slight decline QoQ, the occupancy rate for office buildings in the CBD remained steady as of 2Q 214, at 96%, where it has been for the past year. Nearly 65% of office buildings in the CBD recorded relatively stable occupancy rates in 2Q 214. Most office buildings that recorded growing occupancy were in Mega Kuningan. Despite the majority remaining relatively stable, office buildings in Gatot Subroto and Rasuna Said also saw improving performance. 5 Research & Forecast Report 2Q 214 Office Colliers International
Good location, easy access, good building quality and management, and integration into commercial areas, such as shopping centres and apartments, have become the key elements for office buildings maintaining their occupancy performance. Annual Office Supply and Demand in TB Simatupang 1, Based on grade, a decreasing occupancy rate of 1.1% was recorded at Premium office buildings, while Grade A office buildings weakened 2.6% QoQ. Grade C office buildings only saw a slight drop in the occupancy rate QoQ. Only Grade B office buildings saw growth of.5% in the same period. 8, 6, 4, Outside CBD Annual Office Supply and Demand in the Outside CBD 3, 25, 2, Annual Supply Annual Demand 2, 15, 1, 5, Demand for Future Offices Pre-Committed Absorption of Future Office in the CBD Annual Supply Annual Demand New additional supply caused the occupancy rate for office buildings in the outside CBD to weaken, although less than 1%. Currently, the average occupancy rate is 93.2%. The occupancy rates for office buildings in North Jakarta showed the most significant drop, slumping 6.5% QoQ. TB Simatupang Despite falling by 2.9%, TB Simatupang is still a major driver of the occupancy rate in the outside CBD. The average occupancy rate in TB Simatupang was 93.2% as of 2Q 214. 15, 3, 45, 6, 75, Annual Supply Space Absorbed Historically, since it was recorded at 7% in early 2, the occupancy rate in TB Simatupang reached 9% in 23. Then the occupancy rate remained above 9%, with an average of 96% from 23 to 214. Today, there are quite limited large spaces available at office buildings in TB Simatupang. Even newly operating office buildings have achieved healthy occupancy. A new office building in TB Simatupang has reached above 5% of committed occupancy in the first year of operation. 6 Research & Forecast Report 2Q 214 Office Colliers International
Pre-Committed Absorption for Future Office in the Outside CBD 15, 3, 45, 6, 75, Annual Supply Space Absorbed Pre-Committed Absorption for Future Office in TB Simatupang Asking Base Rent Average Asking Base Rent (Based on Available Space) in the CBD by Grade IDR 78, IDR 649, IDR 59, IDR 531, IDR 472, IDR 413, IDR 354, IDR 295, IDR 236, IDR 177, IDR 118, IDR 59, IDR Premium Grade A Grade B Grade C Average Asking Base Rent in the CBD USD 6. USD 55. USD 5. USD 45. USD 4. USD 35. USD 3. USD 25. USD 2. USD 15. USD 1. USD 5. USD. IDR 472, IDR 413, USD 4. USD 35. IDR 354, IDR 295, USD 3. USD 25. IDR 236, IDR 177, USD 2. USD 15. IDR 118, IDR 59, USD 1. USD 5. IDR USD. 15, 3, 45, 6, 75, Annual Supply Space Absorbed IDR USD Abundant supply from 214 to 218 will present a challenge for the office market, particularly in the CBD. As of 2Q 214, future office buildings projected to be completed in 214 have achieved 4% commitment occupancy. Overall, with projected additional supply of 2.46 million sq m by 218 and the commitment occupancy at 25%, the CBD office market will find it difficult to maintain occupancy above 9%. A similar trend seemingly will be seen in the outside CBD. Excluding TB Simatupang, commitment occupancy for projected future office buildings in 214 was 1%. On the other hand, future office buildings in TB Simatupang are performing well at 54.7% as of 2Q 214. By reaching above 5% commitment in only two quarters, the big challenge for office buildings in TB Simatupang will be in 215 due to the large supply projected to enter the market. Low vacancy is still the main reason for landlords to adjust base rents, and coupled with limited supply, the asking base rent is currently IDR252,114 psm / month. The asking base rent grew by 1.9% QoQ and 17.6% YoY. Some office buildings noted a very significant adjustment. However, this increase was followed by the strong performance of several buildings, which have had an average occupancy close to 1% since last year. The average rental rates of office buildings charging in US dollars only grew by 1.1% QoQ, as of 2Q 214. Asking base rent for offices charging in US dollars was USD36.32 psm /month, growing 5.4% YoY. Currently, based on available spaces, nine office buildings offered a base rent of USD5. psm / month and more. In addition to performance, building quality and location are key factors in those office buildings becoming the most expensive in the CBD, and in all of Jakarta. 7 Research & Forecast Report 2Q 214 Office Colliers International
The average base rent in the outside CBD was steady QoQ. This growth has put the average base rent currently at IDR164,727 psm / month. Office buildings charging in USD were at USD22.54 psm / month. Growth at office buildings in West Jakarta was the highest at 15.2% QoQ. Office buildings in Slipi were still the main contributor, bringing the average base rent to IDR18,144 psm / month in West Jakarta. South Jakarta achieved the highest base rent at IDR188,69 psm / month, but only recorded growth below 1% QoQ. High base rent in South Jakarta was still influenced by the performance of office buildings in TB Simatupang, including Pondok Indah. Currently, base rent in TB Simatupang was IDR157,368 psm / month. Office buildings charging in USD were at USD21.7 psm / month, growing 3.9% QoQ. This growth was similar to office buildings charging in IDR during the same period. Average Asking Base Rental in TB Simatupang IDR 354, IDR 295, USD 3. USD 25. Strata-title Office Asking Price (Combining Office Buildings Charging in IDR and USD) IDR 6,, IDR 5,, IDR 4,, IDR 3,, IDR 2,, IDR 1,, IDR CBD TB Simatupang Outside CBD exclude TB Simatupang IDR 236, IDR 177, IDR 118, IDR 59, USD 2. USD 15. USD 1. USD 5. There was no change in performance at strata-title office buildings in the CBD with the current total supply at 816,829 sq m. The lack of new supply kept take-up rates at 99.4% as of 2Q 214 and there was no growth QoQ. This level of take-up rate indicates that almost all existing space has been sold out in the CBD. IDR IDR Service Charges USD USD. Increasing electricity tariffs effective by mid-214 for industrial sectors will bring about a significant correction in service charges in the remainder of 214 and early 215. Currently, service charges for all classes of office buildings in the CBD were IDR65,28 psm / month as of 2Q 214, an increase of nearly 1% YoY. Office buildings charging in USD recorded a slight increase of 3.1% in the same period, bringing the average service charges to USD6.76 psm / month. Office buildings in the outside CBD charging in rupiah also showed significant growth of 7.1% YoY. Currently, service charges were IDR46,155 psm / month as of 2Q 214. Office buildings in South Jakarta charged more at IDR48,389 psm / month. Populated by mostly good quality buildings, the average service charge in TB Simatupang was even higher at IDR74,418 psm / month as of 2Q 214. Increasing demand for strata-title office buildings had an impact on the performance of future supply. At least from 214 to 217, the committed take-up rate has achieved 46.3% of the 952,931 sq m of future office space for sale. Strata-title offices for sale, which will be operational in 214 alone, have been at 57%. The high take-up rate performance at strata-title offices for sale, especially future supply, has caused the selling price to rise. Currently, selling prices for strata-title offices in the CBD are in the range of IDR4 to 8 million psm. Location has allowed Sudirman to have the highest asking prices ranging from IDR6 to 8 million psm. Take-up rates for offices for sale in the outside CBD have been slightly adjusted at Green Kosmo Mansion. Despite still being high, currently, the take-up rate of offices for sale in the outside CBD is 94.2%, down 1.3% QoQ. The asking price currently is IDR32.5 million psm. The office buildings for sale in the outside CBD have asking prices in the range of IDR25 to 45 million psm. Two office buildings located in Blok M (South Jakarta) and Slipi (West Jakarta) had higher selling prices than other office buildings in the outside CBD area. 8 Research & Forecast Report 2Q 214 Office Colliers International
Concluding Thoughts A substantial supply projection in the CBD will inevitably have a big impact on the weakening figure of asking base rental and occupancy rates. Demand for office space will still be resilient, however, the growth of office supply will seemingly reduce the occupancy level over the three next years. The office market is predicted to experience contraction in the asking base rental rates amidst increasingly high competition among new buildings. Well-performing office buildings with limited available space mainly underpin the current high asking rental rates. Rental rates will be adjusted once the market witnesses sizeable available office space. 9 Research & Forecast Report 2Q 214 Office Colliers International
1 Research & Forecast Report 2Q 214 Office Colliers International
485 offices in 63 countries on 6 continents United States: 146 Canada: 44 Latin America: 25 Asia: 38 ANZ: 148 EMEA: 84 $2.1 billion in annual revenue Primary Authors: Ferry Salanto Associate Director Jakarta 62 21 521 14 ext 134 Ferry.Salanto@colliers.com Colliers International Indonesia World Trade Centre 1th & 14th floor Jalan Jenderal Sudirman Kav. 29-31 Jakarta 1292 Indonesia TEL 62 21 521 14 1.46 billion square feet under management 15,8 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with over 15,8 professionals operating out of more than 485 offices in 63 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the secondmost recognized commercial real estate firm in the world. colliers.com Copyright Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. Accelerating success.