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New buildings still pushing up vacancy rates within Jakarta

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More office space will be available in Jakarta this year with several new buildings entering the market. THE JAKARTA POST

New buildings still pushing up vacancy rates within Jakarta

More office space will be available in Jakarta, Indonesia, this year as several new buildings enter the market, a recent survey by real estate consulting firm Savills Indonesia said.

The company’s research and consultancy head Anton Sitorus predicted that office vacancy would increase this year to slightly above 25 per cent from a rate of 24 per cent in 2018 and last year, as around 650,000sqm of new space would become available in both the central business district (CBD) and the non-CBD area.

The company also predicted that around 1.6 million square metres of office space will enter the market between this year and 2023, mostly in Grade A and Grade B buildings.

“But we are sure that after 2020, office vacancy will not increase,” Anton said in Jakarta last week, adding that there will be less new office building supplies in 2021 onward.

Most of the offices in the CBD are Grade A offices (39 per cent of the total), which is also the grade with the most unoccupied space with a vacancy rate of about 30 per cent.

Anton said that the CBD area had seen an abundance of office space supply last year with 262,400sqm of working space completed, bringing the total office space to around 6.6 million square metres.

The added area partly came from the completion of five new buildings, namely Sequis Tower, Sudirman 7.8, Millennium Centennial, Social Security Tower and Menara Binakarsa.

“We expect the new office space to attract old renters to move from their current offices,” Anton said.

He went on to say that emerging start-ups and co-working spaces would contribute positively to the rise in office occupancy as potential tenants.

The country’s stable economic growth and the dovish monetary policy adopted by the country’s central bank, Bank Indonesia (BI), as well as the more stable rupiah exchange rate against the US dollar partly contributed to the recovery in the property sector such as the office space market.

The government sees economic growth at 5.3 per cent this year, higher than the estimated rate of five per cent last year.

BI, which trimmed the benchmark interest rate four times last year, from six per cent in June to five per cent in October, is expected to hold the current rate for the next few months as the government expects annual inflation to stay at about three per cent.

Meanwhile, the rupiah exchange rate against the US dollar, which hovered around 14,000 per dollar last year, showed an upward trend in recent weeks to reach 13,900.

Property consultant Jones Lang LaSalle Indonesia said the space occupied by co-working spaces and serviced offices in the CBD increased by six per cent to about 170,000sqm in the second quarter of last year from about 160,000sqm in the first quarter.

Meanwhile, the shopping mall occupancy in the capital rose to 90 per cent last year, up from 88 per cent at the end of 2018, despite the opening of three new malls last year.

The total space of shopping malls now stood at 3.1 million square metres, and Anton said that number was still low.

“If we compare Jakarta to other cities, it actually lacks shopping malls,” he said, adding that the capital’s 10 million population also needed malls to be equally distributed.

Meanwhile, in the apartment market, Savills revealed that West Jakarta and South Jakarta saw the greatest number of unit completions, with 42 per cent and 30 per cent of the capital’s 19,100 units being completed in the areas, respectively.

The company estimated that there will be 26,600 new apartments this year which will add to 49,200 units to be completed by 2023.

Apartment sales have declined since 2015, with only 2,100 units sold last year compared to 11,000 units five years ago.

Anton said: “It is because apartments in Jakarta are expensive. In our opinion, developers should adjust the property price and not wait until people can afford to buy it.”

The price of apartments was 26.6 million rupiah ($1,952) per square metre last year, far higher than the average price in Bogor, Depok, Tangerang and Bekasi at around 15.9 million rupiah per square metre.

THE JAKARTA POST/ASIA NEWS NETWORK

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