DEMAND
Demand continued to rebound in 2023, driven by corporate consolidation and a flight to quality. Net absorption of Grade A office space is forecast to reach 180,000 sqm in 2023. Net absorption is expected to slow down in 2024 as tenants will be in “wait and see” attitude and hold major decisions, in anticipation of the general election result. Occupancy, however, is expected to slightly improve with the absence of new office supply in 2024.
RENT GROWTH
Despite the ongoing positive net absorption and improvement in occupancy, landlords will still likely be very cautious in increasing their base rental. Gross rental rates are projected to slightly increase, mostly due to the increment of serviced charge component. Rental growth is expected to increase further in 2025 shall the general election go well which will lead to improved economic forecast.
JAKARTA RITEL 2024
SUPPLY
Only one new project was completed in 2023, adding 5,000 sqm (+0.1%) of space to the Jakarta retail market. Two major projects initially scheduled to open in 2023 will be deferred to 2024 and will add approximately 100,000 sqm (+2.1%) to Jakarta retail space.
Developers are moving away from the strata-title mall concept due to the perceived importance of retail experience. Some malls are redesigning to better cater the preferences of younger generation. Supporting retail facilities within mixed-use developments, including offices and apartments, are gaining popularity, aligning with the trend of integrating retail facilities to support Transit- Oriented Developments (TOD).
DEMAND
The positive net absorption of retail space is expected to continue, but average vacancy rate will increase (+1.7%) due to the higher addition of new supply than the space absorption in 2024. The overall occupancy rate was maintained at 77.2% at the end of third quarter of 2023 (0.0% QoQ). As the recovery stage continues, international brands are showing interest to establish their presence with expansions plan in mind.
While the F&B segment continues to be the most active, sports/fashion, lifestyle, and entertainment brands are currently undergoing robust expansions, a trend that is expected to persist into the next year. Retailers are exploring omni-channel opportunities to adapt to the resurgence of consumer interest in traditional physical retail.
RENT GROWTH
Whilst post-pandemic market recovery has been observed, rental rates remained relatively stable at Rp808,500/sqm/month as retailers remain cautious on the anticipated economic uncertainties in the upcoming political year. The service charge is projected to experience a slight increase in early 2024. Landlords will continue to make efforts to retain current tenants while proactively exploring opportunities for expansion.
