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Property: Office spaces good business in Jakarta
The high demand for office space in CBD areas in Jakarta has prompted several major property developers to implement office-building projects to take advantage of the opportunities
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The high demand for office space in CBD areas in Jakarta has prompted several major property developers to implement office-building projects to take advantage of the opportunities.
Despite the slowing-down of the property sector, office space in the central business district (CBD) remains a lucrative business in Jakarta, with several office-building projects under construction to meet the rising demand.
Sources from property players say that most office buildings in the capital have an occupancy rate of above 90 percent.
'A lot of local and multinational companies as well as individual investors are interested in buying or renting office space. But the supply of office space is insufficient,' said PT Alam Sutera Realty corporate secretary Hendra Kurniawan as quoted by kompas.com.
According to him, businessmen eager to venture into office space still have plenty of opportunities to do so in Indonesia as the current supply of office space cannot meet the high demand, especially in the Gatot Subroto and S. Parman areas in South Jakarta.
Hendra's statements are supported by various research results which have shown the growth of office space in Jakarta's CBD.
Research by Jones Lang LaSalle (JLL) shows that the market absorption of office space in Jakarta's CBD continues to grow at a rate of 33 percent. Currently, the market has absorbed some 21,500 square meters of office space.
Meanwhile, outside the CBD, some 20,000 square meters of office space have been absorbed by the market.
With the positive market absorption, the occupancy rate of office space in Jakarta's CBD stands at approximately 94 percent and 90 percent for areas outside the CBD.
Office space in Jakarta not only shows an increase in occupancy rates, but also in rental rates. Grade A office buildings, for instance, have an average monthly rent of US$30 per square meter, while grade B buildings have an average monthly rent of $27 per square meter, and last but not least, grade C buildings have an average monthly rent of $19 per square meter.
Research from UK property consultant DTZ has shown that the average rental rate of office space in Jakarta has increased by some 9 percent in the first half of this year.
Thanks to this growth, the consultant has placed Jakarta on top of its list of the world's high-performing cities in terms of office-building business, outdoing Shanghai and Mumbai, even New York and San Francisco.
According to property consultant Colliers International, until the last quarter of this year, the CBD has continued to be the highest contributor to Jakarta's office-space market. Its contribution to the office-space market accounts for 67.2 percent of all office space in Jakarta.
Thanks to this positive trend, it has been predicted that the supply of office space in Jakarta, particularly in its CBD, will continue to grow in the future.
Colliers International has predicted in its latest research study that the supply of office space in Jakarta will reach approximately 7.5 million square meters at the end of this year, increasing by 6.5 percent from 2013. The supply of office space in Jakarta has been projected by the consultant to grow rapidly by an average of 10.2 percent rate annually.
A supply of 187,805 square meters will be added to the CBD office-space market by the end of this year. The total supply of office space throughout this year, including office space already operating, will reach 218,305 square meters.
Colliers recorded that total office space in the CBD will reach 2.27 million square meters from 2015 to 2018. Next year, the CBD will have some 619.199 square meters of additional office space, or approximately 30 percent of the total additional supply from 2015 to 2018.
Based on the development status of 40 new office buildings of 2,460,000 square meters located in the CBD from 2014 to 2018, 30 of them, encompassing 1.95 million square meters, are still undergoing construction, with almost 80 percent of the construction expected to be finished at the second quarter of this year.
The Sudirman area is still the biggest contributor to the supply of office space in the CBD. The Satrio and Mega Kuningan areas, however, do not show significant growth in terms of office-space supply. The Satrio and Mega Kuningan areas are projected to have 137 and 100 percent growth of office-space supply from 2014 to 2018, respectively.
Aside from the Satrio and Mega Kuningan areas, Gatot Subroto will also become one of the leaders of the city's office-space market with a growth rate of 77 percent. Meanwhile, Sudirman will contribute 47 percent, Rasuna Said 32 percent and Thamrin 11 percent.
New projects
Driven by the lucrative market for office space in Jakarta, many developers have constructed their office buildings in the area.
For example, Lippo Kuningan office building, whose construction was completed in the second quarter of 2014, has added 30,500 square meters to Jakarta's office space.
Meanwhile, PT Alam Sutera Realty is also building its own office space.
'We have decided to seize the opportunity to build an office building called the Tower on Jl. Gatot Subroto. Well before the building was constructed, some 50 percent of its space has already been sold,' Hendra said.
So far, the buyers are personal investors who plan to sell the office space on the secondary market. The space at the Tower office building is sold at a range of Rp 40 million ($3,295) to Rp 47 million per square meter.
'Our sales figures will continue to grow as we are finalizing the development of the building's upper stories. From our previous experience, our sales figures accelerate as our building gets taller. We suppose the same thing will apply for the Tower,' he said.
Many developers are also venturing into the Cempaka Putih area in Central Jakarta to build office space there.
'Currently, there is a lot of new office-space projects in Cempaka Putih and its adjacent areas. The projects are Pulomas Center Park, Sentosa Residence Jakarta, Pulomas City and many others,' Colliers International research associate director Ferry Salanto was quoted by kompas.com as saying. (JP)
