Research & Forecast Report Accelerating success. After undergoing a gloomy outlook in 4Q, leasing and sales of office space began to pick up momentum in 1Q 214. Further, average asking base rental rates in the CBD showed a growth of 8.6% that brought the average rent to IDR247,444 / / month. Similarly, asking base rents in US dollar-denominated buildings moved upward slightly by 3.7% q-o-q to USD35.91 / / month. The average occupancy rate in the CBD stabilized at 96.5%. In terms of strata-title office buildings, average asking prices also increased both in US dollars and in rupiah to USD4,75 / and IDR45.9 million / respectively. - Ferry Salanto, Associate Director Research Office for Lease Supply in the CBD The CBD Office Cumulative Supply 8,, 7,, 6,, 5,, 4,, 3,, 2,, 1,, Existing Supply Similar to the same period last year, no new office supply entered the market in the CBD as of 1Q 214. With no new office buildings beginning operations, the cumulative supply was still 4.77 million as of 1Q 214. Despite no new supply, construction activity for office buildings in the CBD was seen to continue progressing. Besides the buildings that were mentioned in previous reports, construction for some new office buildings began to appear. At least five leading buildings will potentially become new icons in Jakarta, which include Thamrin Nine (in Jalan Thamrin), Astra Tower and World Trade Centre III (in Jalan Sudirman), PCPD Tower (in the SCBD) and World Capital Tower (in Mega Kuningan). These five future high-rise buildings will be completed in 217. A high-rise office building is also in planning and will be built at the Ciputra World 1 Complex. However, construction was not in progress as monitored during this quarter. Ciputra, as the developer, is currently starting construction of Ciputra World Office Tower 2, which is part of the existing Ciputra World Jakarta compound and is planned to be operational in 215. An office building that is also projected to be operational in 215 and has begun its construction is Satrio Tower. These office buildings will be part of the 7, of projected total new supply in 215. The CBD office market is still waiting for construction of several office buildings that have been announced previously, including Gran Rubina Tower 2 and Thamrin Twenty. Based on numbers, from 214 to 217, there will be 32 new office buildings in the CBD with a total space of 2.21 million. Sudirman will become the most active region by contributing 11 projected office buildings (933,141 ). On the contrary, future supply in Thamrin will be the smallest with only two office buildings. Despite having not been legalized, issues about increasing building coverage and plot ratio area became the highly anticipated information for developers. This will be related to strategic areas that are owned by developers, especially in the CBD. This is because those areas can be developed with higher and larger office buildings. For the existing old and mid-rise buildings, this condition will present the option to demolish the old buildings and re-build new ones, maximizing the plot ratio. At least two existing office buildings, located in Sudirman, and one office building in Setiabudi are planned for redevelopment.
Future Supply in the CBD Based on Area 2, 4, 6, 8, 1,, Sudirman Thamrin Mega Kuningan Rasuna Said Satrio Gatot Subroto In line with high demand, additional supply for office buildings will continue to record significant growth in 215 and 216. The supply of office buildings in the Outside CBD is projected to grow by 33% over the previous year with total space of around 385, in 215. Office buildings such as The Suites (in Pantai Indah Kapuk, North Jakarta), Menara Sentraya (in Blok M, South Jakarta) and St Moritz office tower (in Puri Indah, West Jakarta) are continuing their construction progress and will begin operations in 215. Based on area, South Jakarta is still the main contributor of office supply in the Outside CBD. Of the 1.6 million projected office supply from 214 to 217, 67.6% will be in South Jakarta and 75.5% of the 713,39 total future supply in South Jakarta will be in the TB Simatupang area. Future Supply in the Outside CBD Based on Area Supply in the Outside CBD Gedung Aneka Tambang 2, which is located in TB Simatupang (South Jakarta), was the only office building to begin operations in the Outside CBD as of 1Q 214. This office building for lease brought 16, of new additional supply and raised the cumulative supply to 2.29 million. A total office supply for 214 is projected to reach over 289, sq m a historic high after a significant office supply in. Based on the construction progress, after Gedung Aneka Tambang 2, Wisma 77 Tower 2 and Green Kosmo Mansion will soon be ready to begin operations. Based on marketing scheme, the majority or 63% of the projected annual supply in 214 will be for strata-title sale. 1, 2, 3, 4, 5, Central Jakarta South Jakarta North Jakarta East Jakarta West Jakarta Outside CBD Office Cumulative Supply 7,, 6,, 5,, 4,, 3,, 2,, 1,, Existing Supply 2 Research & Forecast Report 1Q 214 Office Colliers International
Supply in TB Simatupang Future Supply in TB Simatupang TB Simatupang Office Cumulative Supply 1,1, 1,, 9, 8, 7, 6, 5, 4, 3, 2, 1, 1, 2, 3, 4, 5, Outside CBD exclude TB Simatupang TB Simatupang Existing Supply As of 1Q 214, the additional supply in Jakarta was only contributed by Gedung Aneka Tambang 2, which is in TB Simatupang. Despite the rapid growth and availability of infrastructure still being debated, this area is constantly evolving. As of 1Q 214, 513,86 of total space of offices has been in operation in TB Simatupang. By the end of 214, TB Simatupang will see an additional supply of 219,637. This total projected supply in 214 will be the largest since 199 and even higher than the additional supply of office space in TB Simatupang from to. However, we noted that no new office buildings have started construction in TB Simatupang in early 214. All construction activities are carried out by office buildings that started construction last year. 3 Research & Forecast Report 1Q 214 Office Colliers International
New Supply Pipeline projected completion Office building projects name location SGA Marketing scheme status development CBD Area 214 Sinarmas MSIG Sudirman 75, For Lease Under Construction 214 Lippo Kuningan Rasuna Said 3,5 For Lease Under Construction 214 The Noble House Office Tower Mega Kuningan 45, For Lease Under Construction 214 Gran Rubina Tower 1 Rasuna Said 31,438 For Sale Under Construction 214 Convergence Rasuna Said 36,367 For Lease & For Sale Under Construction 215 Ciputra World Jakarta 2 Satrio 7, For Lease & For Sale Under Construction 215 International Financial Center 2 Sudirman 5, For Lease Under Construction 215 AIA Center Sudirman 36,596 For Lease Under Construction 215 Cemindo Tower Rasuna Said 6,995 For Lease Under Construction 215 Sahid Sudirman Center Sudirman 138,5 For Lease & For Sale Under Construction 215 Office Tower @ ST Regis Gatot Subroto 9,511 For Lease Under Construction 215 Telkom Landmark Tower II Gatot Subroto 65, For Lease Under Construction 215 Satrio Square Satrio 24,6 For Lease Under Construction 215 Bahana Office Tower Mega Kuningan 5, For Lease Under Construction 215 Satrio Tower Satrio 31,64 For Lease Under Construction 215 Wisma Mulia 2 Gatot Subroto 8, For Lease Under Construction 215 Lippo Thamrin Office Tower Thamrin 16,5 For Sale In Planning 216 Mangkuluhur Tower Gatot Subroto 53, For Lease & For Sale Under Construction 216 Menara Palma 2 Rasuna Said 5, For Lease Under Construction 216 Gran Rubina Tower 2 Rasuna Said 32, For Sale Under Planning 216 Centennial Tower Gatot Subroto 1, For Sale Under Construction 216 Icon Tower Sudirman 72,5 For Lease Under Construction 216 The Tower Gatot Subroto 56,492 For Sale Under Construction 217 SSI Tower Rasuna Said 1, For Lease In Planning 217 Prosperity Tower @ Distict 8 Sudirman 71,545 For Sale Under Construction 217 World Capital Tower Mega Kuningan 72, For Sale Under Construction 217 World Trade Center 3 Sudirman 7, For Lease Under Construction 217 Sequis Life Tower 2 Sudirman 8, For Lease Under Construction 217 Treasury Tower @ District 8 Sudirman 139, For Sale Under Construction 217 Chitaland Satrio 1, For Lease In Planning 217 Gayanti City Gatot Subroto 25, For Lease In Planning 217 Astra Tower Sudirman 1, For Lease Under Construction 217 Thamrin Nine Thamrin 45, For Sale Under Construction 217 PCPD Tower Sudirman 1, 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 S Parman 24,2 For Sale Under Construction 214 Kirana Two Kelapa Gading 17,563 For Lease & For Sale Under Construction 215 Menara Sentraya Blok M 52,72 For Sale Under Construction 215 ST Moritz Office Tower Puri Indah 19,5 For Sale Under Construction 215 Puri Indah Financial Tower Puri Indah 38,5 For Sale Under Construction 215 The Suites Pantai Indah Kapuk 13,2 For Sale Under Construction 215 MNC Tower II Kebon Sirih 2, For Lease Under Construction 215 Jakarta Box Tower Kebun Sirih 36, For Lease Under Construction 215 Soho Capital S Parman 36, For Sale Under Construction continued 4 Research & Forecast Report 1Q 214 Office Colliers International
projected completion Office building projects name location SGA Marketing scheme status development continuation 215 Altira Yos Sudarso 4, For Sale Under Construction 215 Maxima Tower Kelapa Gading 8, For Lease Under Construction 215 One Tower Kemayoran 21,4 For Sale In Planning 216 Lippo Tower Holland Village Cempaka Putih 27, For Lease & For Sale Under Construction 216 Gallery West Kebun Jeruk 29, For Sale Under Construction 216 L'Venue Pasar Minggu 41,597 For Sale Under Planning 216 Sky 18 Tower Pasar Minggu 27,5 For Sale In Planning 216 Soho Pancoran Pancoran 3, For Sale Under Construction 216 T Tower (BJB Tower) Pancoran 24, For Sale Under Construction tb simatupang 214 Green Kosmo Mansion Tower TB Simatupang 23, For Lease & For Sale Under Construction 214 The Manhattan Square TB Simatupang 39,375 For Lease & For Sale Under Construction 214 18 Office Park TB Simatupang 4, For Lease & For Sale Under Construction 214 Plaza Oleos TB Simatupang 39,778 For Lease & For Sale Under Construction 214 Metropolitan Tower TB Simatupang 44, For Lease & For Sale Under Construction 214 Palma Tower TB Simatupang 2,484 For Lease Under Construction 214 Graha MRA TB Simatupang 13, For Lease Under Construction 215 South Quarter Tower 1 TB Simatupang 4,778 For Sale Under Construction 215 South Quarter Tower 2 TB Simatupang 4,778 For Lease Under Construction 215 AD Premier TB Simatupang 18,9 For Lease Under Construction 216 The Manhattan Square Tower 2 TB Simatupang 39,375 For Lease In Planning 216 Naras Tower TB Simatupang 19, For Lease In Planning 216 Beltway Office Park Tower 4 TB Simatupang 25,6 For Lease In Planning 216 South Quarter Tower 3 TB Simatupang 4,778 For Lease In Planning 217 The Manhattan Square Tower 3 TB Simatupang 39,375 For Lease In Planning 217 Signum South Tower TB Simatupang 54, For Lease In Planning Occupancy Occupancy Rate in the CBD and Outside the CBD 1% 95% 9% 85% As of 1Q 214, the occupancy of office buildings in the CBD stabilised at 96.5%. With limited office space available in the CBD, however, vacant spaces above 1, were still found at several office buildings. The most significant vacant space, approximately 13,, is at an office building located in Sudirman that has been in operation since 1991. Two other office buildings in Sudirman also have vacant space of around 1, - 2,, while in Thamrin, a building is still offering around 2,. Nonetheless, a lot of available vacant space is balanced by an invasion of new tenants, keeping the occupancy rate above 95%. 8% 75% 7% 2 21 22 23 24 25 26 27 CBD Outside CBD (excl. TB Simatupang) TB Simatupang Relocation activity was identified from one building to another building, both located in the Mega Kuningan area. This telecommunications company, after being acquired by another telecommunications company, has vacated 7% of the total space they occupied and moved to a newer building. This relocation had no impact on the occupancy rate in the CBD. By next year they will move entirely to the new building, followed by an expansion. 5 Research & Forecast Report 1Q 214 Office Colliers International
After a continuous upward trend since, the occupancy rate in the Outside CBD decreased modestly by less than 1% QoQ to 94.6%. This minor change was mainly driven by the only office building coming this quarter that has secured high a precommitment level with some tenants having already started operations as of 1Q 214. Annual Office Supply and Demand in the CBD Future Demand Expansion by existing tenants will still be the main factor for occupancy rates to potentially increase in the CBD. An existing tenant from the chemical industry (fertilizers) will add around 2, at an office building in Gatot Subroto. In other corridors, a clothing apparel company (Adidas) will extend their space by around 1, at an office building in Sudirman. 45, 4, 35, Pre-Committed Absorption of Future Office in the CBD 3, 25, 2, 15, 1, 5, Annual Demand Although the overall occupancy rate in the Outside CBD was down moderately, office buildings in TB Simatupang noted a slight increase. Office buildings in Pondok Indah have lifted the occupancy rate by less than 1% to 96.2% as of 1Q 214. Annual Office Supply and Demand in the Outside CBD 2, 4, 6, 8, 1,, Space Absorbed Future office buildings that are expected to begin operations from 214 to 217 in the CBD have achieved 32.1% pre-commitment. Pre-commitment has reached 4% as of 1Q 214. 3, 25, 2, 15, 1, Pre-commitment levels for office buildings in 214-217, including those already in operation, are 23.3% lower in the Outside CBD. Pre-commitment at office buildings in 214 reached 37.4% as of 1Q 214. The sales of strata-title offices have contributed around 53% of the total pre-committed absorption in 214. 5, -5, Annual Demand 6 Research & Forecast Report 1Q 214 Office Colliers International
Pre-Committed Absorption for Future Office in the Outside CBD Asking Base Rental Average Base Rental in the CBD Based on Grade IDR 71,82 IDR 592,35 IDR 473,88 USD 6. USD 5. USD 4. IDR 355,41 IDR 236,94 IDR 118,47 USD 3. USD 2. USD 1. Pre-Committed Absorption for Future Office in TB Simatupang 2, 4, 6, 8, 1,, Space Absorbed 2, 4, 6, 8, 1,, Space Absorbed IDR Premium Grade A Grade B Grade C USD. In early 214, the office market was forecast to show a slowdown in movement given the lacklustre performance in the last six months of and in anticipation of the uncertain situation due to the political agenda in Indonesia in 214. Surprisingly, despite not yet having recovered, the average base rental rates in the CBD showed growth of 8.6% QoQ, which brought the average rental rates to IDR247,444 per per month for office buildings charging in local currency as of 1Q 214 or growing by 37.9% YoY. Based on space availability, some office buildings have adjusted their base rental rates by IDR5, to 1,. Office buildings in the Sudirman area continue to contribute to the increase in the rental rates. No Grade A office buildings adjusted their rates as of 1Q 214; only buildings categorised as Grades B and C adjusted their rental rates due to market prices and space availability. Office buildings charging in US dollars also recorded an increase of 3.7% QoQ, which is the highest quarterly growth since last year. The main cause of this increase was an adjustment in the asking base rent of an office complex in the SCBD area. Limited vacant space had caused this office complex to adjust their asking base rent by more than double. In addition, some office buildings owned by Mulia Group increased their base rent between USD2. and 7. psm. These raised the average asking base rent for office buildings charging in US dollars to USD35.91 per per month as of 1Q 214. 7 Research & Forecast Report 1Q 214 Office Colliers International
Average Asking Base Rental in the CBD IDR 473,88 IDR 414,645 IDR 355,41 IDR 296,175 IDR 236,94 IDR 177,75 IDR 118,47 IDR 59,235 IDR IDR USD 4. USD 35. USD 3. USD 25. USD 2. USD 15. USD 1. USD 5. USD. The average base rental rates for office buildings in rupiah also recorded an increase by 5.3% QoQ in the Outside CBD. Several office buildings increased their base rental rates by an additional IDR2, to 4, psm. Newly operating office buildings that offer higher rent above the market average also caused the average rental rates to rise. The average asking rental rate is currently IDR161,418 per per month. For rent in US dollars, office buildings in TB Simatupang characterised much of the change. Although less than 1% QoQ, this increase led the average base rent to USD21.25 per per month as of 1Q 214. A more significant increase was shown by office buildings charging in rupiah in TB Simatupang, including the Pondok Indah area. As a growing area that continues to become a prioritised location for office tenants, the asking base rent currently is IDR155,833 per per month, up 11.4% QoQ. Albeit lower, the average base rents in US dollars moved upward by 4.3% QoQ, which brought the average base rent to the current USD2.86 per per month. USD Average Asking Base Rental in TB Simatupang IDR 296,175 IDR 236,94 IDR 177,75 IDR 118,47 IDR 59,235 IDR IDR USD Source: Colliers International Indonesia IDR - ResearchUSD USD 25. USD 2. USD 15. USD 1. USD 5. USD. Strata-title Office Supply and Absorption in the CBD 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 27 Annual Take-up The strata-title office buildings in all of Jakarta comprised less than 2% of the cumulative supply as of 1Q 214. The total space of strata-title office buildings in the CBD is 18.9% of the total supply or 816,829. After the opening of MD Place last year, offices for sale in the CBD will see Gran Rubina in 214. There is another office building that is also located within the Rasuna Epicentrum mega-complex in Jalan Rasuna Said, called Convergence Office Tower. But this office building will only sell approximately 3% of the total building space to the public. By projecting an additional 41,438 from this building, the total supply of office space for sale will be 858,267 in 214. Quite limited additional supply of strata-title office buildings brought the take-up rate to 99% in and it will likely remain around that level in 214. Indeed, the pre-commitment level is high. The pre-commitment level of future strata-title office buildings, which will begin operations in 214, has reached 6% thus far. Overall, the average pre-commitment level for future strata-title office buildings in the CBD that will begin operations from 214 to 217 has reached 62.7%. A high level of demand will have an impact on selling prices. After experiencing a continued increase for the last three years, prices of strata-title offices in the CBD were quite stable in the quarter. The average selling price, based on available space in the CBD, stood at around IDR45.9 million per, while the price at buildings in US dollars was USD4,75 per. These represent average prices of available office spaces for sale that have been in operation since to, including future office buildings that have already been offered this quarter. Although the average prices look high, there are office spaces in the CBD that are offered at a minimum of IDR39 million per. Prices of office buildings quoting in rupiah range from IDR39 to 55 million per, while prices in US dollars range from USD3,85 to 5,75 per. 8 Research & Forecast Report 1Q 214 Office Colliers International
and Absorption in the Outside CBD Asking Price 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 27 Annual Take-up IDR 59,235, IDR 53,311,5 IDR 47,388, IDR 41,464,5 IDR 35,541, IDR 29,617,5 IDR 23,694, IDR 17,77,5 IDR 11,847, IDR 5,923,5 IDR USD 5, USD 4,5 USD 4, USD 3,5 USD 3, USD 2,5 USD 2, USD 1,5 USD 1, USD 5 USD With total space of 432,526 or 17.7% of the cumulative supply in the Outside CBD, the take-up rate was seen to increase slowly to 95% as of 1Q 214. This take-up rate only grew by.5% QoQ. Similar to the CBD, pre-commitment sales for strata-title offices in the Outside CBD also recorded a quite significant increase. On average, the pre-commitment sales for strata-title offices that will begin operations from 214-217 in the Outside CBD have reached 46.3% as of 1Q 214. In 214 alone, the takeup rate is 52.7%. However, the asking prices for office buildings in the Outside CBD were not as aggressive as in the CBD area. The increasing asking prices in the Outside CBD were much influenced by offices for sale in TB Simatupang where they are currently IDR27 million per. The average asking price for office buildings in the Outside CBD, excluding TB Simatupang, was IDR26.4 million per or 3% lower than in TB Simatupang. Asking Price Based on Area IDR 59,235, USD 5, IDR 47,388, USD 4, IDR 35,541, USD 3, IDR 23,694, USD 2, IDR 11,847, USD 1, IDR USD CBD (USD) CBD (IDR) Outside CBD excl. TB Simatupang (IDR) TB Simatupang (USD) TB Simatupang (IDR) IDR USD 9 Research & Forecast Report 1Q 214 Office Colliers International
Concluding Thought With the background of a gloomy outlook back in mid-, a number of companies were indicating a hold on their expansion plans. Decision-makers are presented with a continued weakening of local currency that is anticipated to worsen the whole economic outlook. The impact of the legislative election in early April this year will amplify the worries among business practitioners. Notwithstanding the dismal perspective for 214, surprisingly, quite a few companies that held back on expansion plans in started to proceed with their plans during the first quarter of 214, highlighted by a significant number of office space purchases or leases. The increasing confidence level implies that the country still has long-term business prospects. The expectation of future clean and pro-business leaders has inspired positive sentiment among leading developers. They strongly believe that political transition this year will lead to a better Indonesia and will be the momentum for the Indonesian economy to vibrate. Thus far, the vacancy rate in 214 is low while demand is expected to become more resilient, which would trigger an increase in office rents. In the main other business areas like TB Simatupang, business execution was relatively slower than in the CBD although inquiries for office locations is quite high. The challenge for this location remains at the infrastructure. Nevertheless, TB Simatupang is still perceived as a location that minimizes commuting distance from home to office. Buildings with back access will benefit most from this situation. Office rent in the CBD keeps getting more expensive and this presents an opportunity for office buildings in the other nonprime areas. The idea of relocating part of an office division that does not need the exposure of the CBD has just started in the last few years, however some corporations are not ready for this concept although the communications technology has become so sophisticated. The culture in some corporations is not ready, even with video teleconferencing technology. Physical meetings are required frequently and therefore an office location in a nonprime area but still easily accessible to the CBD, like the Tanah Abang area, is becoming quite popular because the rental rates are much lower than in the CBD. Given that, other areas like MT Haryono with close proximity to the CBD will potentially become secondary locations for companies needing a lower rental rate for their non-core divisions.. 1 Research & Forecast Report 1Q 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 Primary Authors: Ferry Salanto Associate Director Jakarta 62 21 521 14 ext 134 Ferry.Salanto@colliers.com $2.1 billion in annual revenue 1.46 billion square feet under management Colliers International Indonesia World Trade Centre 1th & 14th floors Jalan Jenderal Sudirman Kav. 29-31 Jakarta 1292 Indonesia TEL 62 21 521 14 15,8 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with over 13,5 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 Accelerating success.