colliers market report 3q 2011

jakarta rEaL EStatE research & forecast report

www.colliers.co.id

3Q 2011

Economic IndicatorsIndonesIan economIc IndIcator

2007 2008 2009 2010 2011Economic Growth (% YoY) 6.30 6.10 4.50 6.1 6.51

Inflation rate (%) 6.59 11.06 2.78 6.96 2.972

Exchange rate (rp/US$) 9,124 9,672 10,326 9.084 8,7032

SBI rate (%) 8.00 9.25 6.50 6.50 6.753

Notes:1 2Q 2011 2 january - September 2011 3 September 2011

Source: Statistics Indonesia, Finance Department, Bank IndonesiahighlightsoffIce sectorresearch saw that base rental rates in the CBD for this quarter is the highest in the market history for both US dollar and rupiah denominated buildings, 29% higher than 1997 crisis. average asking base rental rates for all classes of office buildings were recorded at rp111,523 / sq m / month (9.5% change Y-o-Y) for rupiah denominated buildings and US$19.95 / sq m / month (21.4% change Y-o-Y) for US Dollar denominated buildings. the primary reason that landlords are asking for higher rents is the fact that it is currently very challenging to find good quality office space, and tenants are increasingly competing with each other to secure the office space. accordingly, occupancy levels have also move forward modestly to 92.9% this quarter.

apartment sectora substantial number of apartment units (3,363) were completed during the 3Q 2011, which brought the overall apartment units in jakarta to 102,265, a 16.6% Y-o-Y increase. the average price for the jakarta area edged higher by 6.9% Y-o-Y to rp12.52 million / sq m due to price adjustments made by under construction projects particularly in the CBD area. the average price in the CBD moved by a gentle 6.5% Y-o-Y to rp17.36 million / sq m. the cumulative take-up rate dwindled slightly this quarter during the holiday season to 75.3% from last quarter’s 76.4%.

retaIl sectorOut of the total 88,963 sq m of retail space to be completed between now and end of 2011, 74% has been committed. Of the space that will be completed in 2012 (215,156 sq m) 69% has been absorbed by various tenants. Even 26% of the 161,345 sq m of retail space to be completed in 2013 has been committed. Likewise, in the surrounding cities of jakarta, of a total retail space of around 136,300 sq m projected to be completed in 2012, around 42% has been taken up. Despite insignificant changes in average asking rental rates and occupancy rates in this quarter, we believe that the retail market rental rates will strengthen next year as retail space inventory grows moderately.

IndustrIal estate sectorto date, sales of industrial land in 2011 are at an historic high. total land sales up to 3Q 2011 have already outstripped total land sales in all of 2010 (65% higher), reaching around 897 Ha. We still expect total sales for the rest of 2011 will be brisk, based on reports from most of industrial estates. Sustainable land sales have also caused prices to further increase in the quarter by an average of 7.2% in the last quarter alone, with Bekasi and karawang areas recorded the most significant increase by from US$102.88 to US$142.32 (38.3%) and US$68.95 to US$91.05 (32.1) Q-o-Q, respectively.

Office

cumulatIve supply wIthIn cbd area based on locatIon

Colliers International Indonesia - research

JaKarta offIce supplythe speed and quantum of the jakarta office market has been sluggish during the quarter. Plaza alstom located in jalan tB Simatupang was the only office space being released during the quarter and this small building (5,775 sq m) brought the cumulative supply in jakarta to 6.17 million sq m. the total office space in the CBD area accounts for around 70% of the total office space in the CBD area.

Only around 244,117 sq m of office space is scheduled to be available during 2011. the surge in supply will be particularly strong during 2012 – 2013 with the delivery of around 1.07 million sq m. the majority of new office construction in 2013 is yet to commence and may still be subject to change. Overall the wave in new supply will largely occur over the next two years.

cbd areaProjections for the coming year indicate that there will be four office projects expected to become available this year in the CBD area where two have already been operating. the two buildings, tempo Scan tower in jalan rasuna Said and 18 Park in the Sudirman CBD (SCBD), have committed to be ready for operation this year (4Q 2011). the 18 Park alone is physically ready for occupation although it has not been officially launched while tempo Scan tower is continuing with the construction work. total office space completed during 2011 amounted to 117,699 sq m. this number is only around one-quarter of the total projected supply in 2012. It is interesting to note that of the total office space that will be available from 2011 - 2013 (around 750,000 sq m), only 37% is located in the Sudirman corridor. jalan jenderal Sudirman has been the major contributor of office space in the CBD but now has limited land to be developed for commercial purposes. In the future, large numbers of new office buildings will be concentrated in the kasablanka-Satrio-Mas Mansyur corridors.

JaKarta annual offIce supply


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p. 2 | collIers InternatIonal

research & fOrecast repOrt | 3q 2011 | OffIce | jakarta

Without any new strata-title buildings being completed in 2011, the future two-year supply projections showed that around 54% of the total space is offered for strata-title sale. Good absorption rates of office space for sale have triggered the development of strata-title office buildings.

cumulatIve supply wIthIn outsIde cbd area based on regIon


future offIce supply based on status


cbd outsIde cbd

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outsIde cbd areaIn this area only the tB Simatupang corridor provided one new office building during the quarter from the opening of Plaza alstom. Overall, the total office supply outside the CBD remained relatively the same at 1.86 million sq m of which around 87% is offered for lease. More and more new buildings will be concentrated in the southern part of jakarta particularly along the tB Simatupang corridor and in part of Pondok Indah area. around 70% of the total office space projected to come in 2012 - 2013 will be located in tB Simatupang and Pondok Indah. these two areas have become commercial locations surrounded by upper-class residential compounds preferred by expatriates. there are also some vacant land lots with the potential to be developed along the corridor of tB Simatupang.

future supplyalthough slowing down this quarter, it is expected that in 4Q 2011 more office space will be completed, totaling around 93,000 sq m. In the CBD area, tempo Scan tower has, as of the end of September, completed 90% of the total construction work and will most likely be ready for operations in the last quarter of 2011. Similarly, two office buildings outside the CBD, i.e. Menara Satu in kelapa Gading and Menara 165 in tB Simatupang will be ready for operations in the next quarter.

Construction activity is seen on buildings scheduled to be completed in 2012 and in our view these buildings are committed to deliver on schedule. this includes under-construction buildings like Multivision tower, Ciputra World Office tower, Office 8, World trade Centre 2, aXa tower, Perkantoran Setiabudi, the City Centre (tower One) and Eighty8.

More office buildings are to be built outside the CBD and we anticipate that around 16 new office buildings are planned to be developed over 2012 - 2013 totaling 437,423 sq m.

Despite growing relatively little, West jakarta has the potential to be extended as a commercial area particularly because of the growing

number of up-market residential compounds, the proximity to the CBD and good accessibility to the airport.

Of these, seven projects have commenced construction including Wisma Pondok Indah 3, Soverign Plaza, Chitatex tower, Grand Soho Slipi and Menara Satu. two office towers projected to be in operation in 2013 have also showed construction progress, i.e. alamanda tower in tB Simatupang and Green tebet in Mt Haryono, East jakarta.

During the reviewed quarter, three office towers were introduced including Dipo Business Centre located in Slipi, West jakarta, jewel tower located around Pantai Indah kapuk, North jakarta and one building in Simatupang which will be developed by Green kosmo Mansion.


future offIce buIldIngs

proJected completIon

yearbuIldIng name locatIon

sga (sQ m)

marKetIng scheme status*

cbd area4Q 2011 18 Park SCBD 23,136 Strata-title and For Lease Under Construction4Q 2011 tempo Scan tower Hr rasuna Said 43,063 For Lease Under Construction1Q 2012 Multivision tower Hr rasuna Said 22,000 Strata-title Under Construction1Q 2012 Office 8 Senopati 48,000 Strata-title Under Construction2Q 2012 Ciputra Office tower Satrio 64,000 For Lease Under Construction2Q 2012 World trade Centre 2 Sudirman 57,000 For Lease Under Construction2Q 2012 aXa tower Satrio 60,995 Strata-title and For Lease Under Construction4Q 2012 Eighty8 Casablanca 56,500 Strata-title Under Construction4Q 2012 the City Centre tower One kH Mas Mansyur 84,000 Strata-title Under Construction4Q 2012 Office at Setiabudi Setiabudi 11,000 Strata-title Under Construction1Q 2013 Menara Prima 2 Mega kuningan 40,000 For Lease Under Construction4Q 2013 Chase tower Sudirman 60,000 For Lease Under Planning4Q 2013 Life tower Hr rasuna Said 30,500 For Lease Under Planning4Q 2013 International Financial Center 2 Sudirman 40,000 For Lease Under Planning4Q 2013 Office tower @ex Wisma Benhil Sudirman 28,500 Strata-title Under Planning4Q 2013 rifa 2 Satrio 30,000 Strata-title Under Planning

outsIde cbd4Q 2011 Menara 165 tB Simatupang 26,864 Strata-title Under Construction1Q 2012 Menara Satu kelapa Gading 18,770 Strata-title and For Lease Under Construction2Q 2012 Grand Soho Slipi Slipi 52,000 Strata-title Under Construction2Q 2012 Sovereign Plaza tB Simatupang 16,020 Strata-title and For Lease Under Construction4Q 2012 Wisma Pondok Indah 3 Sultan Iskandar Muda 36,106 For Lease Under Construction4Q 2012 Chitatex tower tB Simatupang 28,000 For Lease Under Construction4Q 2012 jewel tower a Pantai Indah kapuk 8,000 Strata-title Under Planning1Q 2013 alamanda tower tB Simatupang 33,000 Strata-title Under Planning2Q 2013 Galery West kebon jeruk 22,800 Strata-title and For Lease Under Planning2Q 2013 DIPO Bussiness Centre Slipi 19,600 Strata-title Under Planning2Q 2013 talavera Suite tB Simatupang 16,250 For Lease Under Planning4Q 2013 Graha Elnusa 2 tB Simatupang 40,000 For Lease Under Planning4Q 2013 18 Office Park tB Simatupang 36,627 Strata-title Under Planning4Q 2013 Naras tower tB Simatupang 20,000 For Lease Under Planning4Q 2013 Signum tower tB Simatupang 58,500 For Lease Under Planning4Q 2013 Green kosmo Mansion tB Simatupang 23,000 Strata-title Under Planning4Q 2013 Green tebet Mt Haryono 8,750 For Lease Under Planning

Colliers International Indonesia - research*) Under Construction: where construction activity is in progress, including either foundation or superstructure. Under Planning: no contruction activities on site but all permits have been approved by the fovernment.



JaKarta hIstorIcal occupancy


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2007 2008 2009 2010 3Q 2011


demandthe jakarta office market showed steady occupancy performance with occupancy levels reaching 92% during 3Q 2011. this illustrates that of the total 6.17 million sq m of office space, around 493,000 was left vacant and this was largely scattered throughout many office buildings in jakarta. Sound economic performance has stimulated quite a few businesses to expand and therefore more office space is needed.

cbd areaHistorically, the office occupancy level within the CBD for the last six years has been stable and hovered at around 90% and this has continued into the reviewed quarter where occupancy levels were recorded at 92.9%. the increase in occupancy was again driven by the growing business of existing tenants which required larger space as well as relocations to newer space because tenants need better and bigger space. With some relocation cases we notice movement from outside of the CBD area to the CBD. reasons behind this were a need for exposure to the CBD. In certain cases, tenants left the premises because the building owner plans to use the entire space. transactions occurring this quarter were mainly composed of relatively small deals. Several significant transactions during 3Q 2011 were mainly in some under-construction buildings, but these will only change the overall occupancy levels once the buildings are completed.

Several deals registered during the quarter came from a contracting company occupying one floor of an office building in the SCBD area, and in the same building, a cigarette company expanding by taking half a floor. Other smaller deals during the quarter were from an educational institution, telecommunications companies, a law-related company and a finance-related company including insurance, trading, etc.

the quarter had not only good news about space absorption; some tenants also had

difficulty in maintaining their current space due to operating cost considerations, like the telecommunications industry which moved to a shop house outside the CBD. We also noted some vacant space left by It, advertising, law firms and insurance companies in the Sudirman. Meanwhile, vacant space along Gatot Subroto was a result of the moving of two government offices i.e. (the tax office and a subsidiary of a telecommunications company) from commercial offices to their own buildings

outsIde cbd areaSimilar to the CBD, a slight increase of less than 1% in the occupancy rate was also recorded outside the CBD area. again the expansion activities combined with space reductions maintained the occupancy level at 89.6% this quarter. One sizeable transaction recorded this quarter occurred in a building located in jalan tB Simatupang due to the expansion of a service mining company. In the west area, one local conglomerate in the natural resources industry also expanded their offices.

the telecommunications business was also quite active outside the CBD, taking up around 400 sq m of office space in Central jakarta and other businesses, like a shipping company were seen to take space in Central jakarta. Meanwhile, we have recorded transactions in

the less active area of East jakarta from telecommunications, legal and trading companies. Office deals were not only dominated by profit-oriented companies. For example an institution under the Ministry of Culture and tourism took office space in Blok M area. Space reductions and terminations also added to the number of transactions outside the CBD and this caused the overall occupancy during the quarter to stabilise. One office building located in jalan Gajah Mada experienced the most space reduction, losing an insurance company which moved to a newer building in jalan Sudirman (CBD) and a church moving out of the building. Similarly an office building in kebon Sirih area also saw go an international education agency which occupied a sizeable space together with an institution under the Ministry of Communication and Information technology. In East jakarta, a local appraisal company moved out and an office owner in jalan tB Simatupang reduced their own space and offered it for lease. a state-owned gas supply company has also reportedly left their space located along jalan S. Parman, West jakarta. Vacated space was not only caused by the movement of tenants or space reduction but also because of the refurbishment of buildings which for example impacted one building in the Barito, South jakarta.


occupancy rates In JaKarta


space avaIlable and commItted In 2011 - 2013 wIthIn cbd area


space avaIlable and commItted In 2011 - 2013 wIthIn outsIde cbd area


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pre-commItment levelWe still expect that the overall occupancy level for next year will be healthy not only because of positive economic projections but also because of the commitment level for office space in under-construction buildings. For example, tempo Scan tower and 18 Park both projected to finish in 4Q 2011 have achieved high pre-commitment levels. High commitment levels were also experienced by several buildings projected to be operating in 2012 including WtC 2, aXa tower and Ciputra World Office. Most of them have secured prominent tenants which will likely be the anchor tenants of those buildings. Pre-commitment tenants for buildings in 2012 include an insurance company, a bank and an oil company. their business expansion and the need for better space and location have made them active in searching for new buildings.

areas outside the CBD like kelapa Gading were preferred office locations. Commercial activities within kelapa Gading have grown quite substantially and triggered the need for decent office locations instead of traditional office premises like shop houses which were the embryo of office demand. Menara Satu in kelapa Gading is reported to have only 25% of its space available for lease after successful sales of the strata-title portions. Likewise, other buildings in jalan tB Simatupang and Pondok Indah area also secured some tenants before the buildings were in operation.


average asKIng rental rates of offIces In JaKarta

wIthIn cbd area wIthIn outsIde cbd area

Before the date of preparing this report, the rupiah value against the US dollar had been strengthening for quite some time. the rupiah had been stabilised at around rp8,500 per US dollar and this has motivated some US Dollar donominated buildings to convert to local currency. according to our records, around five buildings have decided to adopt local currency for the rent.

outsIde cbd areaOne new good quality office building located in jalan S Parman which was completed last quarter introduced a new rental scheme this quarter. the building was made for strata-title sales and now is also offered for lease. While asking rental rates beyond the average market, this quarter’s average asking rental rates rose substantially to rp90,519 per sq m per month

or up by almost 10% QoQ. Furthermore, developers outside the CBD were also aware of the current “landlord market” which affords them a better position in the market. Meanwhile the average asking rental rates in US dollars has been quite stable during the reviewed quarter. the average rental rates in this area stood at US$13.17 per sq m per month. two mid-rise office buildings in jalan tB Simatupang slightly increased their rents.

Currently, the average rental rates for office buildings in Pondok Indah and jalan tB Simatupang area is only rp20,000 (or around US$2.30) different for rupiah denominated buildings compared to the average rental rates in the CBD.

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asKIng rental rates, servIce charge and prIces

cbd areaContinuing the previous trend, lower vacancy or less available space moved average rental rates upward. this quarter, average asking rental rates for buildings quoting local currency (rupiah) were recorded at rp111,523/sq m/month. this figure is higher by 1.6% QoQ and 9.5% YoY. Each main thoroughfare in the CBD has contributed to the escalation of the rental rates except for the Mega kuningan area.

rent adjustments were mostly found along jalan rasuna Said where six office buildings raised their rents ranging from rp5,000 to rp40,000 per sq m per month. Most buildings basically conveyed a similar reason for the adjustment i.e. the surrounding competition. However, we also found a landlord who was against the mainstream raising around 50% of the rental rates after being abandoned by their tenant. again, the purpose of the increase was to conform to surrounding buildings.

along jalan Sudirman a few buildings also raised the rental rates between rp10,000 and rp30,000/sq m/month. One office building, after being acquired by a new owner, recorded the highest adjustment to equalise with the surroundings.

Meanwhile in jalan Satrio, thamrin and Gatot Subroto, each has two office buildings which raised rental rates ranging from rp5,000 to rp15,000/sq m/month. Some of these buildings are seen to enjoy high occupancy levels.

In the US dollar denominated buildings, average rental rates were moved upwards moderately to reach US$20.14/sq m/month (last quarter figure was US$19.30/sq m/month). Most of the upturn in the rental rates was triggered by new buildings with high occupancy rates and thus, although they keep introducing new rental rates, tenants will take the space. Buildings with strategic locations, sophisticated technology and good material quality will normally charge higher rents once they achieve good absorption rates. During the quarter, only a few premium buildings located in jalan Sudirman and jalan thamrin raised rates by between 15% and 20%. as mentioned above, excellent occupancy performance and continued inquiries for good quality office space has enhanced the confidence of building owners to ask higher rates.


servIce chargeSimilar to the previous quarter, increasing operational cost was the basis for developers adjusting service charge tariffs. For several quarters, service charge tariffs have not been adjusted all at once and therefore we always record the increase in the service charge every quarter.

During the quarter, several office buildings began to implement a service charge. around five buildings in Sudirman and five office buildings in rasuna Said introduced new service charges. We also noted that several buildings in Gatot Subroto, Mega kuningan and

thamrin have adjusted their service charges. Overall, all adjustments being made this quarter moved the average service charges to rp54,590/sq m/month in the CBD, slightly higher than the previous quarter. For US$ denominated buildings, the average service charge increased from US$6.03 to US$6.24/sq m/month. Meanwhile the average outside the CBD is rp40,162/sq m/month or up by 2.2%.


prIcesthe sustained sales of office space has made it difficult to find good quality offices for sale. In fact none of the new office buildings scheduled this year is a strata-title building. Strata-title office space in the CBD remained at 615,232 sq m with a take-up rate of 97.9%. Such conditions caused an inflated selling price which was recorded during the quarter at an average of rp21.38 million per sq m. this is 5.7% higher than in the previous quarter or an increase of 21.7% YoY and with continued inquiries, we expect this price will still climb. as an initial indication, with additional future supply of around 238,097 sq m being constructed, it has already reached a 55% commitment level. Oil

and gas companies, financial institutions including insurance, law firms and contractors have been the purchasers of strata-title offices. Likewise, the continued absorption was also seen outside the CBD and set the take-up rate at 82.9%. again the market seems to be vibrant, proven by good absorption experienced by three incoming buildings like Menara 165, Menara Satu and Soverign Plaza. a leading private bank and oil and gas companies were some of the purchasers outside the CBD area. Prices of strata-title offices within this area are at an average of rp17.14 million per sq m.


average servIce charges for offIce buIldIng In JaKarta


prIce of strata-tItle for offIce buIldIng In JaKarta


outlooKthe combination of steady supply and continued space absorption has gradually moved the occupancy rate upward during 2011. Nevertheless, the market is anticipating a significant amount of office space next year. We expect that occupancy rates will slow down a little but still remain at a healthy level. It is now a real challenge to find office space in good quality office buildings. tenants have to compete with each other to win a desired space particularly in good locations. Developers of newly-built buildings with low vacancy are gaining more confidence in introducing new rental rates. Because good quality office buildings are mainly offered in US dollars, average rental rates in US dollars continued to climb. Similarly, average rental rates in local currency also showed positive growth and such growth is expected to continue next year due to continued inquiries for office space.

Most of the future buildings scheduled for operation in 2012 have secured high commitment levels and this will help maintain the overall occupancy level for that year.

On the sales front, strata-title office buildings continue to perform well as a result of growing agriculture and natural resources-based businesses who constitute the major buyer profile for offices for sale. Over the next two years, more office buildings will be offering strata-title offices.


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apartmentapartment for strata-tItle sale

supplya substantial influx of 3,363 apartment units during 3Q 2011 was added to the inventory of the jakarta apartment market, an increase of 3.7% QoQ which brought the overall strata-title apartment stock to 94,207 units. Of the total completed apartment units during the quarter, 2,250 were located in west jakarta and these were mostly composed of large apartment developments. Green Park View (tower F) was developed after the first tower (tower E) of 600 units had recorded successful sales in 2010. Similarly, kebagusan City (tower C) was the continuation of tower a sold in 2009.


lIst of strata-tItle apartments operate durIng 3Q 2011

apartment regIon #unIt marKet segment1@Cik Ditiro Central jakarta 111 UpperCosmo terrace Central jakarta 414 Middle-UpGreen Park View (tower F) West jakarta 1,000 Lowroyal Mediterania Garden residence (tower Lavender) West jakarta 900 Middle-UpCentral Park residence (tower amandine) West jakarta 350 Upperkebagusan City (tower C) South jakarta 588 Middle-Low


For the last two years, the apartment supply in west and south jakarta has reasonably grown as a residential location compared to other areas. this situation occurred not only because of good infrastructure in those areas but also because they have been supported by various

facilities such as malls, schools, supermarkets and other commercial facilities.

Overall, there is no big change in the composition of apartment distribution, with around 19.8% of the total supply located in the CBD. Elsewhere,


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west jakarta, north jakarta, and south jakarta represent the top three most favoured locations for apartment projects, as land is relatively affordable (for middle-class apartment projects) and vacant land in certain locations is still available compared to central jakarta.

demandthe overall take-up rates between july and September slowed modestly to 75.3%, down from 76.4% in the previous quarter. Meanwhile the take-up rates in the CBD continued to be the highest at 84.2% compared to the performance outside the CBD (excluding South jakarta) which only managed to reach 72.3%.

CBD 19.77%

Central jakarta13.31%

South jakarta15.58%

North jakarta20.66%

East jakarta4.45%

West jakarta26.23%


cumulatIve supply of strata-tItle apartment based on regIon

apartment supply of strata-tItle by regIon In JaKarta

research & fOrecast repOrt | 3q 2011 | apartment | jakarta

amid the relatively downward trend in the take-up rates, a few projects reported good sales like MyHome apartments and Denpasar residence, both located in the CBD. Similarly, projects like residence 8 at Senopati and Senopati Suites in south jakarta have achieved good sales according to the developers.

the pre-sale rates of under-construction apartment projects declined by 1.3% QoQ during

the reviewed quarter, reaching 61.9%. the number of pre-sold apartment units totalled 23,777. the ramadhan fasting and Idul Fitri holiday season seemed to soften apartment sales during the quarter as well as did a spate of new apartments in 3Q 2011.

It is interesting to note that under-construction apartment developments in east jakarta registered the highest take-up rates, probably

because there are not many options for apartment projects in this area and because the on-going projects are offered at affordable prices. In our market assessment, there are a lot of large-scale projects being built in west, north and even south jakarta which create serious competition among the apartment projects. thus far, only projects with better advantages have been able to dominate the market.

prIcePrice adjustments were generally made by new projects or under construction projects. the overall average asking price for all classes of apartments was recorded at rp12.52 million / sq m, a slight increase of 2.1% over the previous quarter and a 7.0% increase YoY. the CBD registered a high price increase with QoQ prices rising by 3.67%, to an average of rp17.36 million / sq m.

Higher average asking prices for strata-title apartments were also influenced by the domination of middle- to upper-class apartments which are scattered around jakarta. For example, in the CBD, there are four middle- to upper-class apartments being marketed which include MyHome apartments within the superblock of Ciputra World jakarta; Denpasar residence at kuningan City commercial compound; the Grove at rasuna Epicentrum superblocks; and Casa Grande residence at kota kasablanka. all four of these apartment projects are part of the superblock component. In south jakarta, many projects such as residence 8, Senopati Suites, One Park residence and kemang Village are located in premium residential areas. Meanwhile, outside the CBD, specifically in west jakarta, the launching of two upper-class projects, the Windsor and St Moritz are also affected the overall asking price to increase.

according to the market assessment which Colliers conducted, there are two profiles of apartment buyer, i.e. local owner occupiers and local investors. the majority of local owner occupiers are generally newly married couples who are seeking a good location and lifestyle from where they can easily access their workplace. Meanwhile, local investors are typically established buyers seeking quality apartment developments with more space to meet the requirements of expatriates.

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Prices of apartments in particular in the CBD area is expected to further increase primarily because land in that area is becoming scarce. this has caused apartment prices in places like jalan Satrio to inflate quite significantly, around 70 to 75% within two years. Initially, apartment units were offered at around rp13 to rp14

million / sq m but now, with good sales performance, offering prices have jumped to rp23 to rp24 million / sq m. two ongoing mixed-use projects located along jalan Satrio, i.e. kuningan City and Ciputra World jakarta are examples of the conditions above.


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h ja

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arta

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arta

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average prIce/sQ m of strata-tItle apartment

range of apartment prIce In several maIn corrIdors In the cbd


cumulatIve supply of apartment for lease (servIced and unservIced)


supplyafter the opening of Fraser residence Sudirman last quarter, there were no new apartments for lease during 3Q 2011. the current inventory of apartment units comprises 4,547 units of serviced apartments and 3,511 units of un-serviced apartments. the market of apartments for lease only saw the rebranding of serviced apartments located in jalan Wahid Hasyim, central jakarta from its previous name Citadines Quartier to Morrissey Serviced apartment. New apartment supply is expected to be available in the last quarter of 2012 and 2013. there will be two additional apartment towers from Plaza Senayan, which is scheduled to accomplishtopping-off stage this September. the operation of this apartment will increase the total of un-serviced apartments by 6% in late 2012. Meanwhile, two future serviced apartment developments from ascott Group,

demandthe overall occupancy rates of apartments for lease experienced a minor decrease in 3Q 2011 to an average 74.0%, down from the previous 76.2%. Overall leasing activities for serviced and un-serviced apartments, which are dominated by expatriates, were relatively soft over the reviewed quarter. according to several apartment projects in our survey, there were a number of lease expirations due to the expired employment contracts of expatriates on short-term service. Meanwhile, a number of Middle East expatriates were reported to have left the country particularly during the fasting month of ramadhan and the Idul Fitri holiday.

the occupancy rate in the CBD was registered at 82.7%. this suggested that the leasing market in the CBD is still resilient compared to other areas like south jakarta which experienced a minor drop of 1.7% to reach an average of 76.4% this quarter. Similar to south jakarta, apartments outside the CBD area underwent a decline in occupancy by 6.6% QoQ to 65.8%. With all of the figures mentioned, apartments for lease (serviced and un-serviced) in jakarta totalled 1,766 vacant units during the quarter.

Short-term leases, i.e. daily and weekly, remained favourable in the serviced apartment market. recently several un-serviced apartments, such as apartment Senopati,

apartment for lease (servIced and unservIced)

Citadines rasuna and ascott Serviced residences at Ciputra World jakarta, will bring the total supply of serviced apartments to 4,870

by the end of 2013.

occupancy of apartment for lease In certaIn locatIons

areaservIced Q-o-Q

changes

unservIced Q-o-Q changes2Q 3Q 2Q 3Q

CBD 80.3% 82.6% 2.3% 83.7% 83.0% -0.7%

Southern jakarta 79.5% 76.6% -2.9% 77.2% 76.2% -1.0%

Outside CBD 56.9% 53.4% -3.5% 73.6% 68.9% -4.7%


performance of apartment for lease In dIfferent locatIons

area total supply unIts occupIed vacant unIts occupancy (%)CBD 3,447 2,829 618 82.72%

Southern jakarta 2,956 2,297 659 76.37%

Outside CBD 1,655 1,166 489 65.83%

total 8,058 6,292 1,766


0

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2007 2008 2009 2010 1Q 2011 2Q 2011 3Q 2011 2011F 2012F 2013F

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Luxury kemang, and Pondok Pejaten Indah introduced flexible short-term leases. In general, the lease term is one year and must be paid in advance. Many apartments are available on short-term leases like three or six months and can be paid on a monthly basis. they typically target business travellers or short term workers.

From the survey conducted, we noted that most landlords were optimistic that occupancy would bounce back over the next quarter because quite a few residents have committed to coming back to the premises after the holiday.



outlooKthe apartment supply will keep entering the market because there are a number of projects in the pipeline expected to enter the market over the next two years. In the next quarter, we noted that some projects with a large number of units (i.e. more than 400) are ready to enter the market. the highest contribution of new supply is predicted to come from the middle- to upper-price segment apartments at about 36% of the total supply, followed by low-price and middle-low price segments at about 31.9% and 24.47% respectively. Meanwhile, the upper-price segment has the lowest contribution at about 7.73%.

the positive economic outlook will likely trigger demand in the residential sector which accordingly will cause prices to climb. Prices of condominiums generally move upwards along with the construction progress. Nevertheless, tight competition in the middle market of ongoing projects will push developers to offer attractive prices and terms of payment, such as longer down-payment period and payment terms. Some developers will also continue offering rental guarantees for investors who plan to lease their units.

rental ratesWhile demand showed a slightly downward trend, the average asking rental rate of apartments for lease was relatively stable during the quarter. Generally, most apartments for lease (serviced and un-serviced) maintained rental rates at the current levels and they are largely asking for rent in US dollars. Nevertheless with stronger local currency value against the US dollar, the operating cost which is spent in local currency is getting burdensome and therefore it is very likely that landlords are planning to increase their rental tariffs in US dollars.

a few apartments were reported to have adjusted their rental rates upwards since they were able to maintain high occupancy from the beginning of this quarter. thus, it was noted that average rental rates shifted up gently to an average of US$13.80/sq m/month. the CBD area showed the highest rents with average asking rental rates of US$17.74/sq m/month, while the in the south jakarta area they were at US$12.47/sq m/ month.


unservIced servIced

average rental rates of apartment for lease


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range of rental rates of apartment for lease In certaIn locatIon

In terms of rental tariffs per apartment, units of un-serviced apartments were offered at as low as US$280/unit/month to as high as US$5,000/

unit/month. Meanwhile, the rental cost for serviced apartment units ranged from US$750/unit/month to US$5,713/unit/month.

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retailsupply

JabodetabeKDuring 3Q 2011, two retail centres officially operated in jaBoDetaBek area (stands for jakarta, Bogor, Depok, tangerang and Bekasi) i.e. kalibata City Square and tangerang City. kalibata City Square is located in South jakarta and is prepared to serve the major apartment developments while tangerang City, known as tangcity Mall was developed as a community retail centre for the surrounding area. the operations of the two have brought the cumulative retail supply in jaBoDetaBek area to 5.85 million sq m of which 68.2% is located in jakarta.

JaKartaLast quarter was a dormant period for the retail market in jakarta with no new additional retail space being introduced and only in this quarter a 12,000 sq m of retail center is operated by kalibata City Square. On the lower floor of a megablock residential complex in kalibata, this centre has brought the overall supply of retail space in jakarta to 3.97 millionsq m, a 4.4% YoY growth in supply. a total of 180,669 sq m of retail space has entered the market and by the end of the year another 88,963 sq m is expected. In jakarta, strata-title development has become less popular after unsustainable performance was shown by most of the strata-title retail centres. total strata-title retail space in jakarta stood at 1.31 million sq m. No additional strata-title supply is expected to enter the market up to the end of 2011. Overall, 67.1% of the total retail space in jakarta is offered for lease.

annual supply of retaIl spaces In JabodetabeK area


annual supply of retaIl spaces In JaKarta based on marKetIng scheme


tangerang City is offered for strata-title sale and is integrated within a commercial compound consisting of hotel and apartments. the opening of tangerang City which provides around 50,000 sq m of space brought the cumulative supply to 1.87 million sq m representing a QoQ growth of 2.8% or 8.3% YoY. Of the total figure, around 58.6% of retail space is offered for lease. Most of the approximately 1.3 million sq

m of retail space in Debotabek area is located in tangerang and Bekasi Supply in Bogor totals 305,454 sq m followed by Depok with 257,845 sq m. the retail market in the Debotabek area is very much supported by the growing residential areas, and the improvement of the infrastructure connecting these cities to downtown jakarta has given them potential for future retail expansion.

surroundIng the cIty of JaKarta (debotabeK - depoK, bogor, tangerang and beKasI)

0

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 3Q 2011

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jakarta DEBOtaBEk

050,000

100,000150,000200,000250,000300,000350,000400,000450,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 3Q 2011

2011F 2012F 2013F

For Lease Strata-title


research & fOrecast repOrt | 3q 2011 | retaIl | jakarta

annual supply of retaIl spaces In debotabeK based on marKetIng scheme


future supplyUntil the end of 2011 only around 89,000 sq m will be added as new supply in jakarta. In total, supply for the full year along 2011 in jakarta will be around 103,600 sq m which is less than half of the total supply of 212,156 sq m in 2012. the completion of some projects in jalan Satrio will be the major contributor of supply in 2012. Other smaller retail space will be contributed by a lifestyle mall in Pondok Indah called area 51 and Green tebet in jalan Mt Haryono. another retail concept is Pulomas Xventure, where a retail centre will be developed in phase one of Pulomas Greenland in East jakarta. this

centre incorporates a natural jungle concept with a saleable area of around 30,000 sq m on a 4-hectare plot of land. the retail corridors will be furnished with a garden without air-conditioning inside the mall.

In the Debotabek area, the market anticipates a total of 136,300 sq m of retail space in 2012 at four retail centres, 85.3% of which will be offered for lease. tangerang remained the major contributor for most of the space in the Debotabek area particularly because of rapid housing developments and infrastructure. after

the opening of Living World, in alam Sutera, tangerang, two malls within the same area will be launched i.e. Mall of alam Sutera and a lifestyle mall, the Breeze, owned by Duta Pertiwi Group. additional retail space will also come from the expansion of Summarecon Mall Serpong II which is expected to continue the success of its first phase. Sumarecon group is expanding its development of new retail centres. they have announced that the latest, Summarecon Mall Bekasi in Bekasi, will be completed by the end of 2012.

future retaIl space

In dIfferent regIons In JaKarta In debotabeK

0

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2011F 2012F 2013F

Sq m

CBD Central jakarta South jakarta

North jakarta East jakarta West jakarta

0

40,000

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160,000

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2011F 2012F 2013F total

Sq m

Depok Bogor tangerang Bekasi

Colliers International Indonesia - research Colliers International Indonesia - research

0

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 3Q 2011

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lIst of future retaIl centers

retaIl center locatIon nla (sQ m) proJected completIon status

JaKartakuningan City Satrio, South jakarta 77,363 4Q 2011 Under Constructionarea 51 Pondok Indah, South jakarta 8,000 4Q 2011 Under ConstructionGreen tebet Mt Haryono, South jakarta 3,600 4Q 2011 Under Constructionkemang Village Pangeran antasari, South jakarta 78,000 1Q 2012 Under ConstructionMenteng Square Proklamasi, Central jakarta 4,475 1Q 2012 Under Constructionkota kasablanka kasablanka, South jakarta 74,629 2Q 2012 Under ConstructionCiputra World jakarta Satrio South jakarta 70,000 4Q 2012 Under ConstructionCipinang Indah Mall Cipinang, East jakarta 30,000 4Q 2013 Under PlanningGreen Bay Pluit Pluit, North jakarta 45,000 4Q 2013 Under PlanningSt Moritz Puri Indah, West jakarta 57,200 4Q 2013 Under PlanningPulomas X-Venture Pulomas, East jakarta 25,200 4Q 2013 Under PlanningMall at the City Center kH Mas Mansyur, Central jakarta 60,000 4Q 2014 Under Planning

bodetabeKPlaza Dua raja Bogor 20,000 1Q 2012 Under ConstructionShopping Mall alam Sutera alam Sutera, tangerang 80,000 2Q 2012 Under Constructionthe Breeze Sinar Mas Land BSD, tangerang 24,300 3Q 2012 Under PlanningSummarecon Mall Serpong II Serpong, tangerang 14,000 4Q 2012 Under PlanningSummarecon Bekasi Phase I Bekasi 50,000 1Q 2013 Under PlanningCimandala City Mall Bogor 60,000 4Q 2013 Under PlanningCimandala City trade Center Bogor 50,000 4Q 2013 Under PlanningMal Harapan Indah Bekasi 44,420 4Q 2013 Under PlanningBekasi junction Bekasi 14,000 4Q 2013 Under PlanningBekasi trade Center 2 Bekasi 30,000 4Q 2013 Under PlanningMetropolitan Grand Mall Bekasi 30,000 4Q 2013 Under PlanningBintaro Lifestyle Center Bintaro, tangerang 15,000 4Q 2014 Under Planning


occupancy ratesthe occupancy rates of all retail centres (for lease and strata-title) in jakarta as of 3Q 2011 reached 85.7%. With limited supply in Surabaya and the steady performance of most retail centres, the occupancy rates have shown an upward trend since early 2011. Occupancy rates in the CBD area recorded a higher 88.4%.

Meanwhile in the Debotabek area, the overall occupancy rates continue to record an upward trend and this quarter stood at 84.1% which is moderately higher than in the previous quarter.

In general, the performance of occupancy rates in jakarta was very much underpinned by the

sustainable performance of retail space for lease. as of 3Q 2011, the occupancy rate of the average retail space for lease was at 93.0%, an increase of 1.0% QoQ. Similarly, the occupancy rate of retail space for lease in the Debotabek area is higher than the overall occupancy and was recorded at 89.9% or 4.8% higher QoQ.



occupancy rates of retaIl centres In JaKarta and debotabeK


demand

JaKarta

Many of the retail centres located in South jakarta had higher demand than in any other regions. Only retail centres in East jakarta showed sluggish performance during the quarter. Gradually, new retail centres are beginning to demonstrate an upward trend. Several branded retailers in the fashion industry officially opened at retail centres located in Gandaria, South jakarta, such as Charles & keith, Colorbox, Contempo, Crocs, Hammer, Hush Puppies, Marie Claire, Nautica and Payless. these complement the existing anchor tenants like Metro Department Store, Lotte Mart, Informa Home Furnishing, ace Hardware, Eat & Eat Food Court, Cinema XXI, Electronic Solution, Celebrity Fitness, amazone Entertainment Centre, Gramedia, Paperclip stationery store and toys kingdom. In another location of South jakarta, two retail centres located in the commercial areas of Blok M (Blok M Square) and rasuna Epicentrum superblock (Epicentrum Walk) keep attracting new tenants. a number of gadget and fashion retailers opened at retail centres around Blok M which is marketed both for sale and for lease. In rasuna Epicentrum a

shopping arcade has positioned itself as a lifestyle and entertainment centre with some new stalls of branded F&B. In the southern part of jakarta, Cilandak Mall reports that they will replace the existing major tenants in 2012 with some restaurants as a strategy to improve the performance of the mall.

a newly operating centre this quarter, kalibata City Square has previously committed to several brands including D’Cost, Solaria and Lombok resto. Other retailers will continue to open soon in kalibata City Square including Century, Guardian and some optics such as Optik tunggal, Optik Seis and Lily kasoem. In West jakarta, space transactions were also active particularly along the corridor of jalan S. Parman. Sentra Ponsel officially opened at Slipi jaya Plaza. In the same street, Mall taman anggrek is reported to have made a deal with Do it Best Pongs Indonesia, a retailer specialising in home-improvements, as exclusive partner of Do it Best USa in Indonesia. the other branded tenants, Muji and Waraku Holdings will also open later.

Central Park Mall continued to absorb new tenants including fashion, beauty, health and personal care, and dining and gourmet retailers. Fashion retailers are represented by armani jeans, Boss Orange, Hugo Boss, Francesco Biasia and Ferragamo, while in the beauty, health and personal care sectors are Bodyline and Nail Shop. In the near term several retailers will continue to come including Leaf and La Biere.

Increasing performance is also shown by retail centres in the surrounding areas of kelapa Gading and Pluit in North jakarta. the Mall of Indonesia will have new stores including tokyo Dog and Elizabeth and in Pluit junction, ktV karaoke will occupy vacant space in the mall. In Emporium Pluit, a tenant from F&B, Pancaious Cakes opened. In North jakarta, two strata-title centres, i.e. koja trade Mall and Mangga Dua Square tried to accelerate their performance by renting to gadget stores to lure more crowds to the centre.

to refresh the attractiveness of the centre, an older retail centre, Sarinah in Central jakarta replaced a restaurant with Hoka Hoka Bento. In the same corridor (jalan thamrin), Plaza e’X welcomed several new tenants such as Gaudi, Homemade Bread, amante, Solo, Nut, Waffely Good, Ciro and Salt n’ Pepper. Plaza Indonesia shopping mall which is connected to Plaza e’X has recruited retailers Pac Martha tilaar, Urban kitchen Food Courts (reopened) and Din tai Fung. In the near future, this mall will be occupied by tenants like Balenciaga, BCBG Maxazria, Place time and the Playground.

across from Plaza Indonesia, another premium mall, Grand Indonesia also added new F&B tenants, ramen 38 and kado while Nail plans to open in around November 2011.

Plaza Senayan brought new tenants such as Coest, Mondial, Dynasty Paradise, adidas and amante Express. In the future several branded retailers are already standing in line including Virtue, Standard Denim, E - Store, amante and Laperla.

a retail centre, Plaza atrium, located in the Senen area, will replace the ex-warehouse outlets to become a gadget centre selling mobile phones, etc.

apart from the positive space absorption in the quarter, a mall located in the Semanggi area terminated several F&B outlets in order to create a better tenancy mix for the mall. Similarly one retail centre in jalan Gajah Mada has seen the cessation of operations of several F&B outlets and will replace them with a more famous restaurant. Not only that, the space occupied by gadget stores will be replaced by Matahari Group.

70%

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2005 2006 2007 2008 2009 2010 3Q 2011

jakarta DEBOtaBEk



Despite all of the absorption mentioned above, several retail centres kept the occupancy rates to stabilise because of their poor performance. One retail space in East jakarta has been inactive for several periods while one in West jakarta has remained empty after being vacated by a bookstore.

debotabeK

(Supermal karawaci)

With an increasing number of residential areas and educational institutions, tangerang particularly the southern part, has become an interesting place for retail to grow including accessories, jewellery, beauty and health clinics, gadgets and computers. Pamulang Square has confirmed that this is what occurred at their mall. In alam Sutera, the newly opened centre, Living World Mall has secured tenants like Han Gang korean Food, Sushi Mise, Steak 21, Canton Boy, Sate khas Senayan, ajisen ramen andkopitiam. these F& B retailers are accompanied by some big tenants such as Informa, ace Hardware, toys kingdom and XXI which opened earlier.

another new retail centre opened in 3Q 2011 is tangerang City. the mall accommodates several tenants like johnny andrean Salon, Optik Seis, Optik tunggal, Lily kasoem and Century. Some F&B retailers have also indicated their plans to open like Hoka Hoka Bento, Bakso Lapangan tembak, Solaria, rice Bowl, j. Co, a&W, Dunkin’ Donuts, Bread talks and kFC. Complementing Carrefour as the anchor tenants are Fun World, Fun Ok karaoke and Gramedia.

In Bekasi, Bekasi Cyber Park is reported to have opened Blitz Megaplex with nine theatres in 3Q 2011. On the other hand, space left by a fitness centre will be occupied by a restaurant. Still in the same region, one operating retail project in Bulak kapal had the rainbow karaoke, M2 salon and a bakery in the centre and Bekasi Square will have Gubuk Bambu restaurant followed by the Warung kampung restaurant.

In Depok, Margo City with remaining vacant space on the top level will soon be occupied by several new tenants including D’Pax, Les Femmes, Office 1, Ocean Line, Fiesta Steak, ace Hardware, Sincere Music, toys kingdom and Wellcomm Premium Store.

future demandSeveral tenants have reported securing retail space in the under-construction shopping centres. In jakarta, area 51 will bring new culinary facilities to attract the visitors. area 51 is built to cater to younger demographics as a home for good restaurants, including Pepper Lunch, Yoshinoya, Meat Bar, kopitiam, Ichiban Sushi, Y&Y Steak Depo, Starbucks, Cold Stone, Barley’s Beer and auntie anne. Some larger restaurants such as Hanamasa, Pandan Village, Fat Burger, teritori and Smooch Yoghurt will also have a presence.

around Mt Haryono, tebet Green, a retail centre under construction and scheduled for completion by the end of 2011, has brought in Burger king, Starbucks, Warung Leko, Domino’s Pizza, Steak 21, Sapo Oriental and Sago kitchen.

another huge, retail centre projected to be completed in 2013 in West jakarta, St Moritz, has confirmed its selected major tenants will include Matahari, Hypermart, Electronic City and Cinema XXI, ranch Market and Sea World Indonesia together with F&B retailers like tony roma’s, kiyadon Sushi, the Coffee Bean and j. Co.

another retail centre still in the planning stages in East jakarta has reported securing a commitment from leading bookstore Gramedia while one under construction in Cipinang has confirmed securing a hypermarket which will occupy more than 5,000 sq m.

rental rates of typIcal floorthere have been hardly any significant increases in average asking rental rates in jakarta. Currently, the average rental rates are at rp350,617 / sq m / month only higher by less than 1% QoQ. an adjustment in the rental rates was reported by two retail centres located in Central jakarta and two retail centres located in North and West jakarta. In fact, the overall rental rates remained the same compared to the previous quarter. the changes were only because of the availability of different retail space location which is offered during the quarter at higher rates compared to the retail location which was offered at lower rates in the previous quarter. Similar trends have also occurred in the cities surrounding jakarta (Debotabek). the entry of new malls had no significant impact on the overall average rental rates. therefore, as of 3Q 2011, rental rates were at rp254,004 / sq m / month, increasing slightly by 2% QoQ.

servIce chargeOperating costs and worker wages continue to be a consideration for retail centres in raising their service charges. In jakarta, as of 3Q 2011, at least five retail centres introduced new service charges ranging from rp4,000 to rp14,000 / sq m / month. the overall service charges for malls in jakarta was recorded at rp73,440 / sq m / month, up by 4.1% compared to the previous quarter.

average asKIng rental rates In JaKarta and debotabeK

rp0rp50,000

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jakarta DEBOtaBEk




average servIce charge In JaKarta and debotabeK


rp0

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outlooKthe government of jakarta is exhorted to stop issuing new permits) for the construction of retail centres due to the rapid growth of the retail supply. the moratorium will limit the number of permits for retail centres having an area of more than 5,000 sq m. However, the retail centres currently being built or those that have already been granted a permit are still allowed to continue. In our view, this would be the opportunity for small scale retail centres, widely known as shopping arcades to grow. this typical shopping centre is mostly aimed at supporting the surrounding commercial compounds or the neighbourhood. Generally such shopping arcades would be composed of F&B and other retailers that support any other common activities (lifestyle or entertainment) within the neighbourhood. the moratorium

would also help existing landlords review their asking rents because in the future retail space might be limited. Nevertheless, the opportunity for retailers to grow is still very great because Indonesia is more than just jakarta. Leading korean retailer, Lotte is making Indonesia a target market to open 100 stores by 2018. they have opened around 24 stores since their first in 2008. another retailer, Hero Supermarket also plans to open 100 new stores over the next few years in response to new competitors entering the scene. those mentioned above are apart from other expansion plans by several local players which also see the local market as a big opportunity.



Industrial estatesupplySustainable absorption has made it difficult to find good locations for industrial use, for example in Bekasi, where land is becoming scarce. this situation is also the same for certain industrial estates in karawang, where land availability has become the issue for further land sales. Similarly, most of the old industrial estates in tangerang also report that they have limited land available for sale.

One industrial estate revealed that the main problem it faces is that the speed of sales cannot counterbalance the speed of land expansion. to prepare serviceable industrial land takes some time and includes land clearing; providing infrastructure for electricity, waste, water and gas; and street and other supporting facilities within the industrial estate. the recent weather has also made it difficult to meet the time target in preparing industrial land.

although several industrial developers have indicated they would proceed with their expansion plans, none were ready during the quarter. One developer in karawang has prepared for the second phase, which involves around 188 hectares of land. Meanwhile, one industrial estate in Cikarang stated that it is now working on expanding the industrial land of around 300 hectares. another industrial estate in Cikarang indicated that an expansion plan for 200 hectares would be conducted, but gave no definite time for completion.

the overall stock of serviceable industrial land remained at 8,666 hectares in the six regions (jakarta, Bekasi, tangerang, Bogor, karawang and Serang).

demandLand absorption up to 3Q 2011 substantially outstripped total land sales in 2010 (more than 165% of the total sales in 2010). Within three consecutive quarters, total land sold during the year was registered at 897.04 hectares, compared to 543 hectares recorded in 2010. this again continues to change the performance indicators in the industrial market such as land prices and take-up rates. there is only three months left of 2011 and we still expect that sales will continue. In short, this is the highest

dIstrIbutIon of IndustrIal land In sIX regIons


sales absorption in the history of the industrial market. total sales for this quarter only was 169% of the total sales during 2Q 2011, made up of a transaction of around 330.78 hectares.

land sales recorded up to 3Q 2011 In each IndustrIal estate


During the quarter, automotive and related industries continued as the demand generator for industrial land sales. Up to 3Q 2011, transactions by automotive industries were around 45.1% of total sales, accounting for a total of 365.52 hectares. Similar to the previous quarter, Bekasi and the karawang continue to

capture automotive and related industries transactions, with the automotive industries occupying the top spot in these two regions. With their presence, other supporting industries like vendors and auto parts manufacturers has been following, and this industry will continue to grow quite substantially.

jakarta10%

Bogor2%

Bekasi26%

tangerang5%

karawang36%

Serang21%

0 50 100 150 200 250

MilleniumkBNCCIE

kota Bukit Indah (Indotaisei)kujang Industrial Estate

MM2100 Industrial townModern Cikande

krakatau Industrial Estate CilegonkI Mitrakarawang

kota Bukit IndahGreenland (kota Delta Mas)

Bekasi FajarkIIC

jababekaDelta SiliconSuryacipta

hectares


research & fOrecast repOrt | 3q 2011 | IndustrIal estate | jakarta

IndustrIal land sales recorded In 4Q 2010 annual IndustrIal land sales cumulatIve supply, demand and taKe up rates

Colliers International Indonesia - researchColliers International Indonesia - research

type of actIve IndustrIes up to 3Q 2011


Bekasi recorded the largest transactions amount during the quarter, with five industrial estates registering a considerable transaction volume. Greenland at kota Deltamas registered slightly lower sales of 36.6 hectares compared to last quarter with sales to three japanese automotive industries. another industrial estate recording a large transaction big volume is Bekasi Fajar, which reported the sale of a total of 45.5 hectares, comprising the sale to Denso Indonesia (28 hectares) and the food industry (10 hectares), with the remaining being smaller transactions that included chemical, metal, cable and electronic industries. a significant jump in sales this quarter was recorded by jababeka, which in this quarter recorded 76.9 hectares of land transactions, up from 10 hectares sold in the previous quarter. Sales in jababeka during 3Q 2011 were mostly from automotive, consumer goods, plastic and metal manufacturing, pharmaceutical and other smaller transactions from electronics, plastic manufacturing and workshop, and service and trading. Despite recording a small number of land transactions, MM2100 continued to register sales from a data service provider company (3.3 hectares), cool storage (part of the food industry), paint and machinery. total sales in MM2100 during 3Q 2011 accounted for 6.48 hectares. Delta Silicon again mustered a number of small transactions totalling around 30.81 hectares. Looking at their buyers’ profile, most transactions were made by warehouse and logistics companies, some manufacturers and the plastics industry. as in previous quarters, there were more acquisitions of small land parcels from small developers. this type of developer generally buys land from Delta Silicon, builds a factory building and sells it.

Like the automotive industry, consumer goods and food industries are other active sectors looking for industrial land. During 3Q 2011, several consumer goods and food industries chose Bekasi (more than 30 hectares in land transactions) and in Bogor (leasing 1.2 hectares of land and industrial buildings).

We did not see any transaction in tangerang, as many operating industrial estates have reported that they have no available land for sale and because bigger industries do not consider this area as an industrial location because the infrastructure for industrial purposes is not as good as that developed in Bekasi or karawang. according to our records, industrial estates

such as Cikupasmas and taman tekno BSD have reported that they do not have land for sale. Other industrial estates such as Pasar kemis and Millennium have only limited ready-to-use land to be sold.

Modern Cikande and krakatau Industrial Estate Cilegon (kIEC) are the only industrial estates with consistent sales. Modern Cikande sold a total of 6.3 hectares of land to two chemical industries, including 6 hectares for the expansion of existing tenants. another active industrial estate is kIEC, which continued to record sales from eight companies steel fabrication companies from korea totalling 12 hectares.

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Cumulative Supply (ha) Cumulative Demand (ha) take-up rate (%)

automotive45.0%

Food & Beverage

1.9%

ConsumerGoods7.7%

Plastics3.2%

Printing0.1%

Pharmaceutical3.3%

Steel-related2.0%

Electronics0.0%

Chemicals2.3%

Manufacturing1.0%

Logistics/Warehouse

6.8%

Packaging0.8%

Metal1.2%

Heavy Equipment

1.2%

Machinery0.9%

Clothing0.8%

textiles0.7%

Molding1.3%

tyres7.4% Developer

1.5%

Others10.7%



greater JaKarta IndustrIal land prIces


total land transactions in Bekasi were registered at 196.29 hectares, representing around 59% of total sales during the quarter.

In the third quarter, total land transacted in karawang was 81% higher than in the previous quarter and accounted for 114.81 hectares. Similar to the last quarter, almost all operating industrial estate within karawang registered transactions during 3Q 2011, except for kujang Industrial Estate, representing 35% of total sales during the quarter. kIIC again sold more than the other industrial estates, with total sales of 54.2 hectares. Sales within kIIC were from various industries including automotive parts, paint, boiler and other industries. One big transaction in kIIC of around 31 hectares has yet to be announced because at this stage the information is undisclosed. Of the total transactions recorded in kIIC, all was concluded by various industries from japan and all are new tenants. total sales in Suryacipta Industrial Estate moved upward compared to the sales last quarter, totalling around 20.7 hectares this quarter. Notable transactions in Suryacipta were mostly from two automotive component industries (16.7 hectares), followed by pharmaceutical (4 hectares). this quarter, kI Mitrakarawang witnessed a transaction from an automotive related industry of around 20 hectares. Other sales transactions were by kawai, taking 1.1 hectares of land in kota Bukit Indah (Indotaisei). In the neighbourhood, kota Bukit Indah (Besland Pertiwi), which specialises in leasing industrial building and land, reported the lease of around 1 hectare of land and factory units. Further, it is selling land totalling around 17 hectares for their existing clients (two japanese companies).

the leasing market has recorded one small leasing transaction from CCIE for 1.2 hectares and a building that sits on 2 hectares of land from a consumer goods company, which needs a warehouse for distribution purposes. kBN has been specialising in leasing industrial land and buildings and, up to this quarter, only renewed leasing contracts with their existing tenants.

as mentioned earlier, kujang Industrial Estate in karawang, which focuses on leasing land, has reported that it has had no transactions during the quarter.

IndustrIal land prIcesLand prices were again being reviewed this quarter. Before coming to that discussion, there is one important aspect that needs to be explained to understand this report. all prices of industrial land are presented in US dollars. By the end of this quarter, we witnessed the US dollar value strengthen against the rupiah and, therefore, for some regions that sell using the

rupiah, the graph indicates a downward trend; in fact, the rupiah price remains unchanged.

In tangerang, due to land scarcity, two industrial estates introduced new prices. the QoQ change was recorded this quarter as 4%, and increased by 26.8% YoY.

In karawang, four industrial estates continued to introduce new rates and the average change QoQ was the highest among other regions at 32.1%. the YoY figure is even higher, with our records indicating it is 97.2% higher.

the price in Bekasi climbed with three industrial estate registering an increase this quarter. the price change was 38.3% higher compared to the last quarter, but the YoY percentage is already 88.5% higher.there were no price changes in Serang or Bogor because the industrial estates within these regions made adjustment in the early part of the year. However, one industrial estate in Serang has indicated that it is going to adjust the current price by 20% next year.

Information that we have is that two industrial estates in Bekasi are anticipating an increase in the land price due to sustained enquiries for industrial land. Similarly, one industrial estate in karawang is planning to adjust the current price by 25% next quarter in response to the limited land stock available for sale.

IndustrIal buIldIng and rental rateskota Bukit Indah (Besland Pertiwi) has introduced new rental rates for both land and buildings. Land rent for this quarter was offered at US$0.60/sq m/month from the previous US$0.50/sq m/month, while building rent is set at US$4.00/sq m/month, up from US$3.50/sq m/month last quarter. Likewise, kujang Industrial Estate introduced a new rate for buildings, from the previous US$3.00/sq m/month to US$3.50/sq m/month. the rental price in Bogor remained the same as the previous quarter.

IndustrIal maIntenance costIn general, maintenance costs were unchanged and remained as they were in the previous quarter. Only kujang Industrial Estate increased the maintenance cost from rp350/sq m/month to rp400/sq m/month. One industrial estate in karawang is planning to adjust the maintenance cost tariff in 4Q 2011, from US$0.05/sq m/month to US$0.06/sq m/month.

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Bogor tangerang karawang Bekasi Serang



collIers InternatIonal IndonesIa:

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Copyright 2011 Colliers International

the information contained herein has been obtained from sources deemed reliable. While every reasonable effort has bee made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inac-curacies. readers are encouraged to consult their pro-fessional advisors prior to acting on any of the material contained in this report.

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Michael Broomell Managing Director

World trade Centre 10th & 14th floorjalan jenderal Sudirman kav. 29 - 31jakarta 12920Indonesiatel 62 21 521 1400 ext 131faX 62 21 521 1411

Ferry Salantoassociate Director, research

World trade Centre 10th & 14th floorjalan jenderal Sudirman kav. 29 - 31jakarta 12920Indonesiatel 62 21 521 1400 ext 134faX 62 21 521 1411

IndustrIal land prIces and maIntenance costs*

regionLand Price (sq m) Maintenance Cost (/sq m/month)

Lowest Highest average Lowest Highest averageBogor US$ 50.00 US$ 170.50 US$ 110.20 US$ 0.07 US$ 0.09 US$ 0.08tangerang US$ 79.60 US$ 170.50 US$ 117.70 US$ 0.04 US$ 0.11 US$ 0.06karawang US$ 80.00 US$ 120.00 US$ 91.10 US$ 0.05 US$ 0.06 US$ 0.05Bekasi US$ 110.00 US$ 170.50 US$ 142.30 US$ 0.06 US$ 0.07 US$ 0.06Serang US$ 56.80 US$ 96.50 US$ 76.7 US$ 0.03 US$ 0.05 US$ 0.04

Colliers International Indonesia - research*1US$ = rp 8,500

greater JaKarta IndustrIal maIntenance costs


outlooKall predictions in the early part of the year have now been proven, including the volume of land transactions and the prices of land. Up to the reviewed quarter, total land sales and land price suggest that the industrial market are is now at peak performance and should the economic projection run in line with the target, such numbers would escalate next year, particularly the land price.

Most industrial estate developers have been enthusiastic about performance this year, and many of them believe that this trend would continue in the short-term. We expect that more transactions would occur in the remainder of the year, particularly because investors are anticipating price increases over the next year.

active industries looking for land will from the automotive and auto related industries, food, chemical, steel, consumer goods and pharmaceutical. Currently, one global automotive producer is now actively looking for sizeable land for its factory.

It is also revealed that a number of companies from japan are targeting Indonesia for their factory relocations because it is currently difficult to expand in japan due to the shortage of energy.

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colliers market report 3q 2011

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