TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
New buildings continue to push up vacancy rates
Vacant skyline: A view of office buildings in Kuningan, South Jakarta, in December 2019
Change Size
V
acant skyline: A view of office buildings in Kuningan, South Jakarta, in December 2019. More office space will be available in Jakarta this year with several new buildings entering the market, according to a recent survey by real estate consulting firm Savills Indonesia. (JP/Dionnasius Aditya)
More office space will be available in Jakarta this year as several new buildings enter the market, according to a recent survey by real estate consulting firm Savills Indonesia.
The company’s research and consultancy head, Anton Sitorus, predicted that office vacancy would increase in 2020 to slightly above 25 percent from a rate of 24 percent in 2018 and 2019, as around 650,000 square meters of new space would become available in both the central business district (CBD) and the non-CBD area.
The company also predicted that around 1.6 million sq m of office space will enter the market between 2020 and 2023, mostly in Grade A and Grade B buildings.
“But we are sure that after 2020, office vacancy will not increase,” Anton said in Jakarta on Wednesday, adding that there will be less new office building supplies in 2021 onward.
Most of the offices in the CBD are Grade A offices (39 percent of the total), which is also the grade with the most unoccupied space with a vacancy rate of about 30 percent.
Anton said that the CBD area had seen an abundance of office space supply last year with 262,400 sq m of working space completed, bringing the total office space to around 6.6 million sq m.
The added area partly came from the completion of five new buildings, namely Sequis Tower, Sudirman 7.8, Millennium Centennial, Social Security Tower and Menara Binakarsa.
“We expect the new office space to attract old renters to move from their current offices,” Anton said.
He went on to say that emerging start-ups and coworking spaces would contribute positively to the rise in office occupancy as potential tenants.
The country’s stable economic growth and the dovish monetary policy adopted by the country’s central bank, Bank Indonesia (BI), as well as the more stable rupiah exchange rate against the US dollar partly contributed to the recovery in the property sector such as the office space market.
The government sees economic growth at 5.3 percent this year, higher than the estimated rate of 5 percent in 2019. BI, which trimmed the benchmark interest rate four times in 2019, from 6 percent in June to 5 percent in October, is expected to hold the current rate for the next few months as the government expects annual inflation to stay at about 3 percent.
Meanwhile, the rupiah exchange rate against the US dollar, which hovered around 14,000 per dollar in 2019, showed an upward trend in recent weeks to reach 13,900.
According to property consultant Jones Lang LaSalle Indonesia, the space occupied by coworking spaces and serviced offices in the CBD increased by 6 percent to about 170,000 sq m in the second quarter of last year from about 160,000 sq m in the first quarter.
Meanwhile, the shopping mall occupancy in the capital rose to 90 percent last year, up from 88 percent at the end of 2018, despite the opening of three new malls last year.
The total space of shopping malls now stood at 3.1 million sq m, and Anton said that number was still low.
“If we compare Jakarta to other cities, it actually lacks shopping malls,” he said, adding that the capital’s 10 million population also needed malls to be equally distributed.
Meanwhile, in the apartment market, Savills revealed that West Jakarta and South Jakarta saw the greatest number of unit completions, with 42 percent and 30 percent of the capital’s 19,100 units being completed in the areas, respectively.
The company estimated that there will be 26,600 new apartments in 2020 which will add to 49,200 units to be completed by 2023.
Apartment sales have declined since 2015, with only 2,100 units sold last year compared to 11,000 units five years ago.
“It is because apartments in Jakarta are expensive,” Anton said. “In our opinion, developers should adjust the property price and not wait until people can afford to buy it.”
The price of apartments was Rp 26.6 million (US$1,952) per square meter last year, far higher than the average price in Bogor, Depok, Tangerang and Bekasi at around Rp 15.9 million per sq m.
