Condominium, Rental Apartment and Industrial Marketbeat Reports
Cushman & Wakefield MarketBeat reports analyze quarterly economic and commercial real estate activity including supply, demand and pricing trends at the market and submarket levels.
Condominium Q1 2021
SUPPLY: Low Newly Launched Projects
Approximately 6,192 condominium units from 6 projects were completed in the first quarter of 2021, bringing the total completed supply to 321,649 units which was an increase of 101% compared to in the same quarter in 2020 (YoY).
Government has initiated another stimulus to waive value- added taxes on ready to live or ready stock residential with value up to IDR 5 billions for transactions during March 2021 to August 2021, to boost the sales and many projects are expected to be handed over during 2nd & 3rd quarter this year. The roll-out of the vaccination program is expected to also further accelerate construction progress of the projects.
On the other hand, only 2 projects were launched to the market during the reviewed quarter, namely Savyavasa (Tower 1-3) and The Veranda (Jimbaran). Both were Upper segment condominiums in South Jakarta Area and will contribute additional 430 units and 172 units of supply respectively and bring the total proposed Condominium supply to 161,276 units.
Some upcoming projects have been introduced to the market and offering pre-registration of interest to test the market. Proposed supply is expected to remain modest until the second semester of 2021.
DEMAND: Has Yet Recovered
A net take-up of 228 units was recorded in the first quarter of 2021, 94% lower than the 3,797 units absorbed in the first quarter of 2020 (YoY). Even though people were seen starting to buy again, there were also a lot transaction cancellations. The sales rate stood at 93.4%, a slight increase of 0.4% compared to that in the same quarter of last year, while the pre-sales rate decreased by 0.5% from 61.7% by the end of 2020 to 61.2%.
With the waiver of VAT from government and slow supply, overall sales rate is expected to increase for the rest of the year. Average vacancy within the Condominium sector decreased slightly to 50.6% as newly completed units were still being handed over gradually.
PRICING: Slow Movement of Price
Greater Jakarta’s average price growth in the first quarter of 2021 was recorded at 0.2% QoQ, to reach Rp. 43,300,000 per sqm. The slow growth indicates that the market has yet to recover from COVID-19 effects. Discount, promotion and down payment subsidy from developers continued to be seen in the market to boost transaction, while secondary price were also observed very
competitive. The average selling price is expected to grow modestly as growth of demand, especially in the under-construction projects may yet to be seen throughout 2021.
Rental Apartment Q1 2021
SUPPLY: No New Serviced Apartment Supply
No new Purpose-Built Rental Apartment and Serviced Apartment projects were identified during Q1 2021. Several under construction Serviced Apartment projects have been delayed due to the continuing COVID-19 pandemic. About 5 identified Serviced Apartment projects (Somerset Kencana, Somerset Sudirman, Citadines Gatot Subroto, Citadines Sudirman, and Ascott Menteng) with total supply of 832 units are expected to enter the market by end of 2021.
DEMAND: Short-Stay Demand Remained Stable
Despite remains relatively limited due mainly to the continuing inbound travel restrictions to Indonesia, some new demand in the Purpose-Built Rental Apartment sub-sector were identified during the review quarter. Some contract-based expatriates, who initially planned to stay only for few months, extended their contracts into longer term as their companies started to continue operation in Indonesia.
Renewal of the expired lease contracts were also identified during the quarter with occupancy was recorded at 59.8%, a 0.4% increment compared to the last quarter’s figure.
In Serviced Apartment sub-sector, demand inquiries remained stable during Q1 2021. Occupancy rate was recorded at 47.5%, a slight 0.1% increase compared to that in the last quarter. If the gradual openings of the economy and businesses in Jakarta continue, demand from short-stay guests (mostly locals) for weekend “staycations” is expected to lead to better occupancy of this sub-sector in the coming quarters.
On the other side, the Condominium-for-lease sub-sector experienced occupancy decline of 1.9% QoQ, to 52.2%, due to the addition units from the newly completed condominium projects during the review quarter. This figure reflected a 4.6% occupancy decrease compared to in the same period of 2020.
PRICING: Rents Remained Under Pressure
Despite the fluctuation of the Rupiah against US Dollar during the review quarter, average rental rate of Purpose-built Rental Apartments remained relatively unchanged at Rp. 241,550 per sqm per month.
Rental rate discounts were offered by Serviced Apartment projects to attract new demand (especially from the short-stay guests). Average rental rate of Serviced Apartment sub-sector was recorded at Rp 356,576, a 3.7% decrease from the last quarter’s figure.
The decline in Condominium-for-lease occupancy however, caused the average rental rate of the overall rental apartment market to drop by 1.9% QoQ to Rp. 148,025 per sqm per month, as individual unit owners were prepared to accept much lower rates in the face of the ongoing pandemic. Overall, the average rental rate for rental apartment sector is projected to remain relatively stable in 2021.
Industrial Q1 2021
SUPPLY: No New Land Opening nor Expansion
Since the beginning of the year, there is no new land opening nor expansion of industrial developments in the Greater Jakarta area. Availability of industrial land in favorable locations in Bekasi area has become more limited. Developers take position of observing the market and government policy on industrial developments, including the impacts of COVID-19 pandemic on the market.
Industrial land development is expected to develop according to the progress of the infrastructure development. Industrial land stock in the Greater Jakarta remains at 15,495 sqm, with developers focusing more on selling of the remaining supply.
The total supply of warehouses for lease in the Greater Jakarta area stood still at about 1.8 million sqm with no additional supply. Until the end of 2021, another 144,000 sqm of new warehouse supply is projected to enter the market.
DEMAND: Limited Transactions Since New Year
Sales transactions remained limited and demand may not recover as soon as it is expected. A slow start of the market was observed with only 23.6 hectares land transaction in the Greater Jakarta area, decreased by about 56.6% YoY. Bekasi and Karawang area absorbed about 80% of demand during the review quarter, with the balance occurred in Tangerang and Serang. 36% of the net demand came from data center whilst other sectors such as chemical and automotive absorbed the balance.
Despite the relatively low take up during the first quarter 2021, developers remain optimistic and expect the gradual improvement of the market in the next quarters, particularly with the smooth roll-out of the vaccination program which is expected to improve the overall economic activities.
Likewise, warehouses in the Greater Jakarta area showed a decreasing occupancy to 82.4%, from 86.4% in the previous quarter, as companies took conservative position on their warehouse leasing decision. However, demand for warehouses from logistics related firms including e-commerce remained, with other industrial sectors such as automotive and consumer goods also supporting the warehouse occupancy during the review quarter.
PRICING: Land Prices Stood at the Same Level
Industrial land prices remained relatively unchanged during the review quarter, as developers hold land price at the same level in response to the slow demand, which is expected to continue until the next quarters. Average industrial land price stood at Rp.2,543,000 per sqm, The average
asking rental rate for warehouses in the Greater Jakarta area was recorded at Rp.72,000 per sqm / month.
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