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‘We are dying’: Mall openings, new leases grind to halt
The retail property market recorded no shopping center openings or leasing activity in Jakarta in April and May as malls across the country temporarily closed to curb the spread of COVID-19
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he retail property market recorded no shopping center openings or leasing activity in Jakarta in April and May as malls across the country temporarily closed to curb the spread of COVID-19.
Data compiled by the Indonesian Shopping Center Association (APPBI) shows that 190 shopping malls in the country have temporarily closed.
Stefanus Ridwan, the chairman of the association, said on Tuesday that some shopping malls had negotiated one-month rent deferrals with tenants. Some also offered large discounts on rent or service charges.
“We are dying, much less able to survive,” said Stefanus, who also serves as president director of publicly listed real estate developer PT Pakuwon Jati. “We had hoped to make a profit during Idul Fitri, but in these conditions, we did not.”
The government has planned to gradually reopen the economy under health protocols to establish a “new normal” amid the continued rise of confirmed COVID-19 cases in Indonesia. President Joko “Jokowi” Widodo visited Summarecon Mall in Bekasi, West Java, on Tuesday to take a look at the mall’s preparations for its upcoming reopening.
Arief Rahardjo, director of research and strategic consulting at real estate services firm Cushman & Wakefield, said COVID-19 restrictions in Jakarta, which were extended to June 4, had forced newly developed shopping centers to delay their openings longer.
The market expected to see 205,000 square meters of new development this year, according to a quarterly report released on April 20 by Cushman & Wakefield. But Arief expected no new openings of shopping centers in the second quarter.
“If the pandemic does not abate soon, the occupancy rate of shopping centers in Jakarta is projected to decline,” Arief told the Post on Wednesday. “This is because there are no tenants opening new stores in shopping centers, and many tenants that were failing because of COVID-19 have been forced to close their stores.”
Cushman & Wakefield noted at least seven key lease transactions in the first quarter of the year — excluding lease renewals.
The largest transaction in terms of area was by movie theater chain FLIX Cinema with 7,500 sqm of space at the Mall of Indonesia, followed by clothing retail company H&M with 6,000 sqm of space at the Kelapa Gading Mall, both in North Jakarta.
“Many tenants are temporarily suspending their business expansions and postponing their fit-out work,” said Arief.
Prior to the social restrictions in Jakarta, the national epicenter of the coronavirus pandemic, the occupancy rate of shopping centers remained relatively stable at 80.8 percent in the January to March period, a decline of 0.3 percentage points from the previous quarter.
Wendy Haryanto, executive director of the Jakarta Property Institute (JPI), a non-profit organization advising developers, said on May 15 that owners of retail property needed an exemption from the minimum utility bill to cut costs in order to survive the pandemic.
For example, Grand Indonesia, a 17.5-hectare shopping center in Central Jakarta, may have to face a minimum monthly utility bill of Rp 4 billion (US$270,440), even though its electricity consumption is estimated to be well below that value as lights remain off and stores remain empty.
“This is very difficult,” Wendy said in an online talk on May 15. “Eliminating the minimum utility bill for the property is a must.”
Naomi Santosa, head of property and asset management at real estate services firm Jones Lang LaSalle (JLL), expected shopping centers to see shorter customer visits – between 2 and 3 hours a day – because they would come primarily for basic shopping needs in the early days of post-restriction policies.
“So people may not hang out with their friends for an entire day,” Naomi said in an online talk on May 15. “I do not see that happening at this particular time.”
