Marketbeat Reports, Q4 2023

Cushman & Wakefield MarketBeat reports analyze quarterly economic and commercial real estate activity including supply, demand and pricing trends at the market and submarket levels.

CBD Office Q4 2023

Supply: One New Project Entered The Market

One project was completed during the fourth quarter of 2023, namely Luminary Tower (56,500 sqm) in Thamrin, bringing the total stock of Jakarta CBD office to about 7.4 million sqm by the end of December 2023. No new project is expected to enter the market in 2024 as projects that are currently at advance development stage are still put on hold.

Demand: Occupancy Continued to Improve

Despite the slower transaction activities compared to in the previous quarters, a positive net take- up of 66,300 sqm was recorded in overall CBD office market during the fourth quarter of 2023, bringing the total absorption for the full year of 2023 to 236,900 sqm.

This annual net take-up indicated a continuous sign of recovery of the market post pandemic. Majority of net take-up occurred in Grade A offices, whilst Grade C office still experienced negative take-up during year 2023. By the end of December 2023, the average occupancy rate of the CBD office market increased by 1.7% YoY to 73.0%.

Pricing: Serviced Charge Started to Increase

Despite the continued positive trend of net take-up and improvement in overall occupancy, rental remained relatively stable due to the ongoing high competition in the ‘emerging market’.

By the end of December 2023, the average base Rupiah rent stood at Rp.160,100 per sqm per month, representing a slight increase of 0.2% YoY. In US Dollar terms, base rental rate also increased slightly by 0.9% YoY. Meanwhile, service charges increased at higher rate by 1.3% YoY, standing at Rp.92,600 per sqm per month.

The robust economy of Indonesia, with the assumed successful general election in 2024, is expected to maintain demand within positive territory. Vacancy is expected to slightly improve with the absence of new supply in 2024.

Gross rental rates are projected to slightly increase, mostly as a result of the increment of service charge component. Despite the ongoing improvement in occupancy, landlords will remain very cautious to increase their base rent.

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