Industrial, office take-ups grow significantly

Absorption of office space and industrial lots has grown significantly in the third quarter of this year on the back of robust business expansion in the capital city and surrounding areas, according to recent surveys.

Colliers International’s research manager Ferry Salanto said that high demand for office buildings in the Jakarta Central Business District (CBD) had pushed up rental prices to a historic high during this period.

The average base-rental price of offices in the CBD area reached the highest in the market history for both dollar and rupiah denominated buildings at Rp 111,523 (US$12.60) per square meter (sqm), a 1.6 percent increase from the second quarter, and $19.95 per sqm, a 3.4 percent hike from the previous quarter.

“Limited supply has also increased the occupancy rate to 92.9 percent this quarter,” he told The Jakarta Post on Friday on the phone.

Ferry said office take-ups in the CBD area were encouraged by expansion as well as office relocations of firms in various sectors, including insurance and banking, mining, agriculture and pharmaceuticals.

“Office take-up still has potential growth into the fourth quarter as many firms — local as well as multinationals — are expanding, driving up the demand,” he said.

Ferry estimated that rental rates would likely rise by 1 to 2 percent in the last quarter of this year, while the occupancy rate would increase by up to 5 percent.

Meanwhile, Jones Lang LaSalle-Procon country head Todd Lauchlan shared a similar view, saying that net absorption of CBD offices in the third quarter was 97,077 sqm, bringing the total CBD office take-up to 340,581 sqm, a 182 percent increase from the same period in 2010.

“The absorption rate is the highest in the last decade, which indicates that the CBD-office market will possibly experience a boom similar to before the 1997 crisis, marked by occupancy rates of more than 90 percent and fast-growing rental prices,” he said in a statement.

Ferry said that rapid business expansion also pushed up demand for industrial estate, bringing about total sales of land in industrial estates until the third quarter of 897 hectares, 65 percent higher than that in the same period last year and a historic high.

“We still expect that total sales in 2011 will be higher with the possibility of reaching more than 1,000 hectares, as quite a few industrial estates predict more sales before year-end.

“Sustainable land sales have also caused rents to further increase in the quarter by an average of 7.2 percent quarter on quarter, with the Bekasi and Karawang areas recording the most significant increase from $102,88 to $142.32, or 38.3 percent, $68.95 to $91.05, or 32.1 percent respectively,” he said

LaSalle-Procon’s capital-market head Hasman Rusli said demand for industrial land and facilities rose sharply due to aggressive expansion moves from local and multinational manufacturing firms, especially in the automotive, pharmaceutical and consumer goods sectors.

“Up to September, industrial lot sales have totaled 681 hectares, surging by 107 percent from the same period last year,” he said, estimating that the trend would continue in line with investors’ optimism about Indonesia’s stable economic growth.

During this year’s first semester, investment in Indonesia reached Rp 115.6 trillion, of which Rp 82.6 trillion was generated from foreign direct investment, while the country’s economy grew 6.5 percent.