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New electricity rates may affect retail rental property
The recent increase in electricity rates will affect retail rental property more than other property sectors such as offices and residences, property consulting company Jones Lang LaSalle says
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he recent increase in electricity rates will affect retail rental property more than other property sectors such as offices and residences, property consulting company Jones Lang LaSalle says.
“Service charges for rental retail property, such as shopping malls, will increase significantly,” the
company’s research director, Anton Sitorus, told reporters on Wednesday.
Previously the government had said rates would increase by 10 percent on average, but businesses
have complained that certain rates in fact increased by between 30 and 80 percent.
Jones Lang LaSalle national market director Angela Wibawa said the new power rates would force rental retail property owners to review their service charges.
“Property owners will have many options to deal with the new power rates. They may offer service charges that exclude power,” she said, adding that tenants might wish to pay their electricity bills themselves.
Anton said the option to allow tenants to pay higher service charges would only be possible for new shopping malls.
Jones Lang LaSalle also disclosed its findings that in the second quarter demand for retail rental property was less than for offices or residences. Retail sector businesses tended to be more careful in expanding despite signs of recovery from the global economic crisis.
However, Anton said the absorption of retail rental property in the second quarter this year had increased by 65 percent, or 31,000 square meters, compared to the first quarter.
Meanwhile, Jones Lang LaSalle also found that office building leases had increased significantly in the second quarter, enjoying an 80 percent occupancy in the Central Business District (CBD).
“A total of 53,000 square meters [sqm] of spaces are now occupied, compared to the first quarter’s 30,000 sqm, showing a 60 percent growth in demand,” Anton said.
He added that by the end of 2010, up to 200,000 sqm of rented office would be occupied, double the figure in 2009.
Anton estimated in the next two years demand for rented office space in the CBD would fully recover because of slower supply and higher demand.
“By that time landlords may increase office rent, probably following the latest inflation rate,” he said, adding that the higher occupancy rates would likely be driven by the emergence of foreign and local firms seeking opportunities in Indonesia in the wake of the global economic crisis.
