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RI sees rising demand for retail space
Shopping and leisure: Jakartans not only go to a mall like the one above for shopping but also for leisure
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span class="inline inline-center">Shopping and leisure: Jakartans not only go to a mall like the one above for shopping but also for leisure. As more middle-and upper-class retailers intend to expand their business, more retail space in shopping centers or malls is needed. JP/Nurhayati
Increased purchasing power thanks to Indonesia's improving economy has led to more people going shopping, prompting retailers to seek more shopping centers to accommodate their expanded business.
Indonesia is experiencing rising demand for retail space as more retailers expand their businesses, with the construction of new shopping centers most noticeable outside the capital city.
Data from real estate advisor Colliers International Indonesia has shown around 21 retail sites covering 710,000 square meters including malls and trade centers will open in the Bogor, Depok, Tangerang and Bekasi (Bodetabek) area.
Of the total new retail space in the Bodetabek, 48 percent is located in Bekasi, 31 percent in Tangerang, 15 percent in Bogor and 6 percent in Depok.
The growth in retail space is estimated at 5 percent per year, according to the real estate advisor.
Nanda Widya, president director of PT Metropolitan Land, developer of four shopping centers in Bekasi and Cileungsi, said its Bogor retail development has great business potential.
Mall Metropolitan Cileungsi which is now under construction, is the first business center in the Cileungsi estate in Bogor. 'The mall is expected to meet the demand for a suburban shopping center in Cileungsi,' he told Investor Daily.
Nanda said four shopping centers ' Cibubur Junction, Plaza Cibubur 1 and 2, Mal Ciputra Cibubur and Cibubur City Center ' in Transvogie lane that connects Cibubur in East Jakarta and Cileungsi are already in operation.
According to Nanda, a regional retail center should have complete facilities, including shopping malls, in addition to education, sports and health centers.
'The larger the population that a region has, the higher the demand for shopping centers. It is better to build shopping centers in the regions as it can dissuade more people from going to other cities, such as to Jakarta. Thus, it can reduce the movement of people from outside Jakarta for shopping and reduce traffic congestion,' he said.
Ihya Nasution, center director of Mitra Gemilang Mahacipta, said regular visitors to shopping centers are residents of nearby housing complexes. 'So despite the slow property market, demand for retail space is high, which has prompted developers to build and operate shopping centers as quickly as possible,' he said.
'There are about 50 complexes in the estate, with the number of shoppers totaling around 1 million with the assumption that one house is inhabited by four family members,' he said.
'Local people are regular visitors to the shopping malls developed in the estate. Each mall has its own market segment, making each mall attractive to consumers and shoppers,' Nanda added.
'So, shopping centers will grow in parallel with the growth of population because the existence of shopping centers will largely depend on the density of population,' said Ferry Salanto, associate director of Colliers International Indonesia.
To date, the number of shopping centers in Indonesia has reached 275. 'The number is expected to increase to 290 when as many as 15 new shopping centers start to operate in 2014,' he said.
Aside from Bodetabek, the demand for retail space is also seen in other regions, including in Balikpapan, East Kalimantan.
According to Ferry, the current inflation does not affect the middle- and upper-income groups' purchasing power. Thanks to Indonesia's improving economy, they can increase their revenue. They not only spend their money on meeting their basic needs but also lifestyle choices.
The rising demand for regional retailers, especially in East Kalimantan, has contributed considerably to the rise of retail business in the region. However, due to the limited supply, demand cannot be fulfilled.
'Many middle- and large-scale retailers have complained about their difficulty finding space for their expansion. They are compelled to queue in waiting lists of shopping centers in which they are interested. Consequently, they are compelled to limit their sales targets,' Handaka added.
Apart from that, socioeconomic conditions in the region have enabled the flourishing of shopping centers. 'In East Kalimantan, many large-scale national and multinational companies are now operating, either in the mining sector or services and trade. They provide job opportunities for locals and pay them high salaries,' he said, adding that locals were also highly consumer-oriented.
'There is an increasing demand for retail space, which is in parallel with retailers' business expansion, especially mid- and up-scale retailers,' said Handaka Santosa, the head of the Indonesian Shopping Centers Operators Association (APPB). (JP)
