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View all search resultsDevelopers eye second-tier cities for expansion
Following the Jakarta administrationâs moratorium on shopping mall construction, property developers are eyeing several fast-growing cities outside the capital for business expansion
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No need to go elsewhere: Visitors enjoy the atmosphere of the Central Park shopping mall section of the Podomoro City superblock in West Jakarta. Property developers are eyeing cities outside the capital for expansion following the Jakarta administrationâs moratorium on shopping mall development.(JP/Ricky Yudhistira) (JP/Ricky Yudhistira)
F
ollowing the Jakarta administration's moratorium on shopping mall construction, property developers are eyeing several fast-growing cities outside the capital for business expansion.
Agung Podomoro Land (APL), for example, is preparing Rp 5 trillion (US$422 million) in capital expenditure (capex) mostly to finance its superblock projects in second-tier cities.
The publicly-listed developer has several projects in the offing that include Plaza Balikpapan in East Kalimantan and superblock Podomoro City Deli Medan in North Sumatra.
APL president director Indra Wijaya said the company was committed to expanding outside Jakarta even before the moratorium was announced by former Jakarta governor Fauzi Bowo in 2011. The administration's policy only further proves the necessity to explore other fast-growing cities.
'We already run about seven malls in Jakarta, and I think that's enough considering the capital is becoming more condensed. We are now looking to expand in second-tier cities, which actually offer more potential with higher economic growth comparing to Jakarta,' he said.
Indra added that the APL, which developed the Podomoro City superblock with its Central Park shopping mall in Tanjung Duren, West Jakarta, was also looking to develop another superblock in Makassar, South Sulawesi.
He refused to give further details of the investment plan, simply adding that construction on the Makassar project would start early next year at the latest.
Inactive Jakarta Governor Joko 'Jokowi' Widodo, who is now running for president, decided late last year to enforce the moratorium in a bid to ease traffic in the capital. Jakarta currently has more than 170 malls.
The moratorium has greatly affected retailer growth in Jakarta. A recent study from property consultant Cushman and Wakefield revealed that with only one specialized lifestyle center completed in the first quarter of this year, retailer net takeup in the capital in between January and March went down 55.3 percent year-on-year (y-o-y) to 8,500 square meters.
No need to go elsewhere: Visitors enjoy the atmosphere of the Central Park shopping mall section of the Podomoro City superblock in West Jakarta. Property developers are eyeing cities outside the capital for expansion following the Jakarta administration's moratorium on shopping mall development.(JP/Ricky Yudhistira)
The study added that the Jakarta's retail market will experience slower growth throughout the year following the moratorium and development of retail centers is projected to spread toward the suburbs in Greater Jakarta.
Another property developer, Summarecon, for instance, says that it would focus on its newly developed 80,000-square meter Sentra Bekasi in West Java, which finished last year.
Just like Summarecon's previous shopping mall projects Sentra Gading Serpong in Banten and Sentra Kelapa Gading in North Jakarta, Sentra Bekasi is located in the developer's township Summarecon Bekasi.
In addition to the Bekasi shopping center, Summarecon president director Johannes Mardjuki said, the developer is also looking to develop a similar mall-equipped township in Bandung, West Java, on a 200-hectare plot of land. The construction and the pre-sales are expected to start late this year.
'We choose Bandung because it has a lot of potential with big population and high purchasing power,' Johannes said.
Cushman and Wakefield's study also highlighted that while the moratorium has restricted developers from operating new malls in the capital and bringing tougher competition to existing retailers, the policy might be beneficial for developers in terms of bargaining power for rental rates and lease terms ' as Jakarta will remain the expansion target for international retailers due to its big and promising market.
