“Because next year is an election year, investors and developers may not spend too much on developing new property. We might gradually see investment return to normal after 2019,” Savills research and consultancy head, Anton Sitorus, told The Jakarta Post on Wednesday.

According to the Central Statistics Agency, Indonesia’s economy expanded 5.07 percent in 2017, below the 5.2 percent target, while the 2018 target was 5.4 percent.

“We saw that the economy didn’t get worse but slowly expanded, which was reflected in business activity, including property,” Anton said.

By the first quarter of 2018, Savills recorded a vacancy rate of 22 percent for office space in the central business district (CBD) area in Jakarta, with the new supply of space at 97,000 square meters and a net uptake of 21,000 sqm, with rent at Rp 205,000 (US$14.96) per sqm per month.

Total supply stood at 6.05 million sqm dominated by Grade A offices at 38 percent, Grade B at 31 percent, Premium Grade at 21 percent and Grade C at 10 percent

Savills forecast that the vacancy rate may rise to 28 percent, but then supply and demand will slowly stabilize, as well as rent. The presidential election in 2019 is expected to greatly affect the business and investment climate, while emerging technology companies are potential tenants looking for prestigious office locations.

“For office spaces, right now there might be pressure until next year. There is a lot of supply but demand has yet to catch up,” Anton said.

For office space outside the CBD area, the firm forecast that the trend may follow the situation in the CBD area, noting that 2014-2015 was the high point of the property market and currently it is in a low period that is waiting for a rebound.

The net uptake for office space outside the CBD area is at 37,000 sqm with rent at Rp 127,000 by the first quarter. Total supply is at 2.7 million sqm with no new supply yet, with the vacancy rate at 22.8 percent.

The firm also notes that despite changing consumer behavior in retail shopping, demand for retail spaces such as malls is stable.

Savills recorded net uptake at 10,000 sqm at Rp 354,000 sqm per month. The expansion of SOHO Pancoran adds 8,000 sqm of mall space with total supply at around 3.1 million sqm by the first quarter.

The vacancy rate of mall space is at 12.7 percent with rent at Rp 354,000 per sqm per month.

“In several malls, we may see vacant or unused spaces, but retailers are focusing on how to increase the quality of services to keep traffic high,” Anton said.

The firm forecast that the vacancy rate of mall spaces will be at 11 to 12 percent and the supply and demand of spaces may reach equilibrium by 2020.

For living space, despite low sales, demand for apartments in Jakarta is high, while supply is lower than other Southeast Asian capitals in proportion to the population.

“Declining sales is a result of the current business and market conditions, in the meantime land is limited so developers are constrained, while in the outskirts of Jakarta prices are lower,” Anton said.

Buyers are mostly end-users, especially young families, while investors are waiting for the economic rebound before buying apartment spaces.

By the first quarter, total sales of apartment spaces were 800 units with 480 units newly launched, adding to the total of 141,000 apartments, with a projected 67,000 new apartments by 2021. The average price per sq m only increased 0.5 percent, and for upper middle class units, the price is around Rp 25 million per sqm (ami)

Popular

Java airports grounded by low demand, poor planning

Japan to export used destroyers to Philippines to deter China

Indonesia gains approval to build haj village near Grand Mosque in Mecca