R

etailers in Jakarta will find themselves competing for space in the next few years as the number of shopping malls will not meet growth in the retail business, a recent survey indicates.

Currently rents are stable, but will go up in a few years, according to estimates.

The survey by property consultants Jones Lang LaSalles shows existing store space in malls across Jakarta at 2.4 million square meters. Head of research Anton Sitorus said demand for space in the first quarter has been positive, with retailers absorbing 26,000 square meters of space. Occupancy rates in malls has touched 93 percent.

'The occupancy rate has been rising since 2009 matching the increases number of shoppers,' he said.

The rise in demand has yet to manifest itself in an increase in rents because mall managers are still focused on bringing in more retailers and shoppers. Rents in malls have increased gently, touching Rp 492,000 (US$50.67) per square meter per month at the most exclusive locales.

'Service charges however, are high at 5-6 percent because operational costs of malls have increased along with utility fees,' he added.

This sedate rise in rents will not last long, especially if supply falls behind demand. The study estimates only another 500,000 square meters will come on the market up to 2015.

This increase is simply the expansion of existing shopping centers, such as Puri Indah, West Jakarta, instead of the construction of large, new ones.

'This is the policy of Jakarta Governor Joko Widodo,' Anton said.

Joko 'Jokowi' Widodo has declared a moratorium on issuing new shopping mall permits this year.

Vivin Harsanto, LaSalles retail and consulting head, said that the restricted supply in store space combined with the swelling demand from domestic and foreign retailers aggressively expanding in the domestic market would provoke a rise in rents.

'The rise will be analogous to what has happened in the office space segment. When the occupancy rate of offices in Jakarta hit 95 percent, rent fees soared by 36.5 percent,' she said.

The limited supply of retail space will not deter retailers, especially foreign retailers, from expanding their reach.

According to Vivin, an alternative for retailers is to establish themselves in populous, suburban vicinities such as Bumi Serpong Damai (BSD), Bekasi, Cibubur and Sentul.

'Retailers, especially foreign ones, can establish their flagship stores in suburban spots and build their flagships in such a way that the flagships become destination points,' she said.

Major Japanese retailer and mall operator, AEON MALL, is teaming up with real estate developer, PT Sinar Mas Land, to construct their flagship mall in Indonesia in BSD City, a suburban estate run by
PT Sinar Mas Land.

Hero Supermarkets are also preparing to openS wedish furniture franchis IKEA in the suburban housing estate, Alam Sutra, Tangerang.