colliers market report 3q 2012

jakarta rEaL EStatE research & forecast report

www.colliers.co.id

3Q 2012 i the knowledge

Property Sector Overviewoffice sectoras of September 2012, the average asking rental rates rose significantly by 46% (USD) and 35% (IDr) y-o-y. Buildings with US dollar tariffs were at an average of US$29.33/sq m/month while in rupiah stood at IDr150,330/sq m/month. this continued increase in price was mainly driven by the scarcity of good quality office space with only around 4% vacancies in the CBD. On the strata-title front, average asking prices for both US dollar and rupiah rents have gone up by around 17% y-o-y to US$2,933/sq m and IDr25.7 million/sq m, respectively.

apartment sectorIn one year, the average apartment price, particularly for unsold units in the CBD, has climbed substantially by 24.5% y-o-y from IDr23.1 to 28.8 million/sq m/month. as of September 2012, the total apartment supply in jakarta has reached 119,345 units while the annual supply for the whole of 2012 will be 22,456 units representing 17.5% of the total cumulative supply up to the end of 2012. another 28,932 new apartment units are expected to invigorate the market over the next two years. Meanwhile, absorption rates rose quite a bit from 76.2 to 81.3% in the same period last year.

retail sectorthe retail market continues to perform well, albeit moderately, with average asking rental rates for premium class shopping center rising 10% y-o-y to IDr846,042/sq m/month. We anticipate a further increase in the asking rental rates, given that the amount of retail space in the future will be quite limited. Of the total 252,081 sq m of space in 2012, 93% has been booked. In 2013, there will be 226,400 sq m of retail space but 72% has been pre-committed before it is ready for occupation. Similarly, of a total of 49,000 sq m projected to fill the 2014 market, 46% has been reserved by several tenants.

industrial estate sectorBekasi recorded the highest increase in land prices, 7%, during the quarter. Furthermore, land prices in Bekasi were the highest compared to other regions, at an average of US$187.72/sq m. In one year, karawang saw the highest increase in price, 46%, and is now offered at an average of US$133.04/sq m while prices in Serang were up by 37% y-o-y at US$105.20/sq m. Land prices are anticipated to climb next year because the upcoming industrial land scheduled for 2013 is already reserved by pre-commitment sales, and only a few lots will be available for sale. thus, we still expect new industrial land to be difficult to find next year.

office sectorSupply

jakarta office cumulatiVe supplY

Colliers International Indonesia - research

two office towers are officially in operation in jakarta, i.e. World trade Center II, located in jalan jenderal Sudirman (CBD) and Sovereign Plaza, located in jalan tB Simatupang (South jakarta). World trade Center II, at around 57,000 sq m, has been assessed for the Green Mark, making it one of the first certified environmentally sustainable buildings in jakarta. another 16,020 sq m of office space was contributed by Sovereign Plaza of which most is offered as strata-title office space. these two buildings constitute the cumulative 6.55 million sq m supply of office space in jakarta as of 3Q 2012. thus far, about 53% of the total projected 378,131 sq m of office space in the CBD for 2012 has been completed, while in the outside CBD area, 53% of a total of 233,556 sq m is already on the market. there still remains 287,718 sq m of office projects under construction for the remainder of 2012. the dynamic market has caused supply projections for 2013 - 2014 to change from our previous estimation. Future supply includes projects under construction and projects being announced by the developers. the latter is relatively subject to change depending on three main factors including financing issues of the project, permits and the availability of specific contractors (like piling

contractors), which could alter the schedules of project completion. In our previous report, it was stated that projects in the pipeline during 2013 and 2014 (including projects under construction and new projects being announced) totalled 1.4 million sq m. as we consistently update the development and planning progress, this quarter we report that there will be around 1.05 million sq m of office projects in 2013 - 2014 which are scheduled to meet their completion targets, including projects being announced.

all office projects under construction and scheduled for completion in 2013 in all of the jakarta area total 150,781 sq m distributed around the CBD (26%) and tB Simatupang (40%) with the remainder in the outside CBD and tB Simatupang area. the total office projects in 2013 are comprised of six developments and on average have gone through 50% of the structural work. Meanwhile, of the total 23 office projects for 2014, the construction of 18 projects is underway, higher than our projections from last quarter. these under-construction office projects total 732,802 sq m, while projects being announced for completion in 2014 but not having started construction, total 178,182 sq m.

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

10,000,000

1995

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F

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F

sq m

Existing Supply annual Supply

p. 2 | colliers international

jakarta | 3q 2012 | oFFiCe

composition of cbd office supplY based on grade


cbd as mentioned earlier, World trade Center II became the newest office space in the CBD bringing the total office supply to 4.56 million sq m. For 2012, the completion of WtC II brings the total of office space completed year-to-date to around 200,000 sq m. total supply projections for the full year of 2012 is around 378,000 sq m and the remaining projects under construction will most likely be delivered as scheduled. according to our records, the total annual supply for 2012 was one of the highest in the history of office supply which represents 8.7% of the total existing supply of 2011.

In 2013, only Menara Prima 2 will be completed. In the previous report. By contrast, supply projections for 2014 - 2015 will be substantial in number. In 2014 alone, eight towers with almost 500,000 sq m are expected to become new supply. From our observations, six projects have been under construction (413,538 sq m) while the remaining are still in planning but announced to be completed in 2014. as of 3Q 2012, rasuna tower, after having structural redesign is commencing construction together with Wisma Mulia 2, Life tower and Sahid Sudirman Center. Similarly, the first tower of Gran rubina (offered as strata-title offices), which will adopt an eco-smart development concept, is officially in the ground-breaking stage as of the middle of September. One other project, Chase tower, has started construction work on site.

In-planning office towers projected to finish in 2014 include the Noble House located in the Mega kuningan area. this tower has been doing soil tests and is likely ready for construction. the other project is the second tower (tower two) at the City Center Complex located in the Mas Mansyur area as the continuation of tower One which officially operates. these two towers will contribute 84,204 sq m. thus, once these two projects confirm the construction, the total space of under-construction office buildings in 2014 will be 497,742 sq m, the highest annual supply for the last ten years.

In 2015, six new office towers are projected to be built and will bring an annual supply of 353,901 sq m into the business district area. One of those towers is called International Financial Center 2 (IFC 2), located in the main Sudirman corridor which will add around 50,000 sq m of space. to date, IFC 2 is the only building projected to be completed in 2015 that has started construction. Meanwhile, three buildings have indicated their completion dates in 2015 including District 8, Ciputra World jakarta 2 and Office tower at St. regis. another two buildings which will probably become new supply in 2015 are Mangkuluhur and a tower at Sampoerna Strategic Square.

apart from the list, World Capital tower, located in the primary ring of Mega kuningan also was introduced during the quarter. this tower is aimed at global financial landmark in jakarta.

Premium, 335,918 sq m

Grade a, 1,755,423 sq m

Grade B, 1,513,140 sq m

Grade C, 953,767 sq m

colliers international | p. 3


composition of outside cbd office supplY based on grade


During 2013 - 2015 it is projected that there will be 488,045 sq m of new office space in the outside CBD area. this is only based on buildings under construction scheduled for that period. Of the total space mentioned above, 51% will be supplied by the tB Simatupang sub-market. apart from this, other buildings have also announced their completion dates for that period but have not started construction activities yet. this includes 227,793 sq m of office space and should this figure be confirmed, the total office supply over the next three years will grow significantly to 715,838 sq m. there are a total of 26 office buildings (including the under-construction buildings and buildings announced but not under construction), and the average size per building is around 27,500 sq m, smaller than that of future buildings (in the same period) in the CBD which have an average size of 59,400 sq m.

all five buildings scheduled for completion in 2013 are in the under-construction stage, totalling 110,781 sq m. Similarly to the CBD, a substantial amount of office space will be available in 2014 when 319,264 sq m will be available. there will be an additional 93,978 sq m from the projects being announced for completion in 2014 but which have not yet started construction. two projects which will contribute around 58,000 sq m and are scheduled for 2015 are under construction. this includes office towers in Puri Indah West jakarta, Puri Indah Financial tower and St Moritz Office tower. the remaining projects being announced for completion in 2015 but which have not commenced construction include four buildings totalling 133,815 sq m.

outside cbd With the completion of Sovereign Plaza this quarter, the total operating office space during 2012 year-to-date is 122,896 sq m. this market is anticipating a further increase in the next three months of 110,660 sq m. From our survey, two office towers under construction, i.e. PHE tower in tB Simatupang and Eighty8 tower a within the kota kasablanka Complex, will likely be on schedule next quarter as they are now catching up with minor work to finish construction. Similarly, Blue Green Office Boutique at Puri kembangan, West jakarta is also in the finishing stages of construction.

In the outside the CBD area, the office space for sale (strata-title offices) started to appear in 2007. In the last four years, demand for strata-title offices has been relatively flat and supply grew accordingly. By the end of 2011, the stock of strata-title offices in the outside CBD area was at 244,399 sq m which represented 13% of the total office supply in the outside CBD. Significant growth was noticeable in 2012 when supply as of 3Q 2012 was registered at 86,790 sq m; it will grow further by another 56,000 sq m as Eighty8 at kota kasablanka is scheduled to officially begin operations in the next quarter.

Grade a, 64,099 sq m

Grade B, 567,639 sq m

Grade C, 1,363,278 sq m



tb simatupang and surrounding area this section is not confined to the boundaries of tB Simatupang but also includes areas surrounding tB Simatupang like Pondok Indah since they have similar characteristics. thus far, the total operating office space up to 3Q 2012 has been recorded at 394,670 sq m. In 2012 alone, after the opening of Wisma Pondok Indah 3 in the second quarter, Sovereign Plaza officially added 16,020 sq m of new office space. two towers are being finished and will likely be part of the supply in the next quarter; these include PHE tower, previously known as Chitatex tower, and a small building called trihamas Syariah Building.

the future supply in the tB Simatupang and surrounding areas will be quite substantial over the next three years. three office buildings

which are under construction will add 60,181 sq m of office space in 2013, including alamanda tower, Green kosmo Mansion and Oleos 2. a big jump will occur in 2014 when 186,925 sq m of under construction offices are projected to come on line. this excludes one project of 40,778 sq m which was announced but has not started construction. Should this project be completed as scheduled, this will be the highest ever annual office supply in the tB Simatupang sub-market.

For this sub-market, further increases in office supply will be seen in 2015 and even in 2016. three office towers are projected to be available in 2015 but all projects are still in planning. Likewise, of the four office towers planned for 2016, none show any construction activity.

outside cbd office supplY during 1995 - 2014


cbd office supplY during 1995 - 2014


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

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2007

2008

2009

2010

2011

2012

2013

2014

For Lease (Operate) For Lease (U/C) For Sale (Operate) For Sale (U/C) For Sale (U/P)

*) U/C: Under Construction U/P: Under Planning

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1995

1996

1997

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1999

2000

2001

2002

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2008

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2011

2012

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2014

For Lease For Lease (U/C) For Sale For Sale (U/C) For Lease (U/P) For Sale (U/P)

*) U/C: Under Construction U/P: Under Planning



new supplY pipeline

projected completion

timebuilding name location sga

(sQ m) marketing scheme deVelopment status*

cbd area4Q 2012 DBS tower Satrio 64,000 For Lease and For Strata-title Under Construction

4Q 2012 18 Park tower a Sudirman 4,814 For Lease Under Construction

4Q 2012 18 Park tower B Sudirman 4,814 For Lease Under Construction

4Q 2012 18 Park tower C Sudirman 4,814 For Lease Under Construction

4Q 2012 18 Park tower E Sudirman 4,814 For Lease Under Construction

4Q 2012 tower One at the City Center kH Mas Mansyur 84,000 For Lease and For Strata-title Under Construction

4Q 2012 Perkantoran Setiabudi Setiabudi 11,000 For Lease and For Strata-title Under Construction

2Q 2013 Menara Prima 2 Mega kuningan 40,000 For Lease Under Construction

1Q 2014 Life tower rasuna Said 30,500 For Lease Under Construction

2Q 2014 Gran rubina tower 1 rasuna Said 31,438 For Strata-title Under Construction

4Q 2014 Chase tower Sudirman 75,000 For Lease Under Construction

4Q 2014 Sahid Sudirman Center Sudirman 126,600 For Strata-title Under Construction

4Q 2014 rasuna tower rasuna Said 80,000 For Lease Under Construction

4Q 2014 Wisma Mulia 2 Gatot Subroto 70,000 For Lease Under Construction

4Q 2014 the Noble House Mega kuningan 45,000 For Lease and For Strata-title In Planning

4Q 2014 tower two at the City Center kH Mas Mansyur 39,204 For Strata-title In Planning

2Q 2015 International Financial Center 2 Sudirman 50,000 For Lease Under Construction

2Q 2015 Ciputra World jakarta 2 Satrio 60,000 For Lease and For Strata-title In Planning

4Q 2015 District 8 Sudirman 71,545 For Strata-title In Planning

!Q 2015 Office tower at St regis Gatot Subroto 90,000 For Strata-title In Planning

4Q 2015 Mangkuluhur tower B Gatot Subroto 39,356 For Lease In Planning

4Q 2015 tower 1 at Sampoerna Strategic Square Sudirman 43,000 For Strata-title In Planning

1Q 2016 Graha Surya Internusa 2 rasuna Said 40,000 For Lease In Planning

1Q 2016 tower three at the City Center kH Mas Mansyur 34,000 For Lease In Planning

1Q 2016 Menara Palma 2 rasuna Said 50,000 For Lease In Planning

1Q 2016 Gran rubina tower 2 rasuna Said 70,000 For Lease In Planning

1Q 2016 World Capital tower Mega kuningan 90,000 For Strata-title In Planning

2Q 2016 tower 2 at Sampoerna Strategic Square Sudirman 118,000 For Lease In Planning

outside cbd area (exclude tb simatupang)4Q 2012 Blue Green Office Boutique Meruya 20,000 For Lease Under Construction

4Q 2012 Eighty8 tower a kasablanka 56,500 For Lease and For Strata-title Under Construction

2Q 2013 Eighty8 tower B kasablanka 31,000 For Lease Under Construction

4Q 2013 DIPO Business Park Slipi 19,600 For Strata-title Under Construction

2Q 2014 GP Plaza Slipi 12,204 For Strata-title Under Construction

2Q 2014 Menara Sentraya Blok M 52,072 For Lease and For Strata-title Under Construction

2Q 2014 kirana two kelapa Gading 17,563 For Lease and For Strata-title Under Construction

2Q 2014 Gallery West kebon jeruk 29,000 For Strata-title In Planning

2Q 2014 Wisma 77 tower 2 Slipi 24,200 For Strata-title In Planning

3Q 2014 the Suites Pantai Indah kapuk 23,000 For Strata-title Under Construction4Q 2014 Sky 18 tower kalibata 27,500 For Strata-title Under Construction1Q 2015 St Moritz Office tower Puri Indah 19,500 For Strata-title Under Construction

1Q 2015 Puri Financial tower Puri Indah 38,500 For Strata-title Under Construction

1Q 2015 L’Venue Pasar Minggu 41,597 For Strata-title In Planning



Colliers International Indonesia - research*) Under Construction: where construction activity is in progress, including either foundation or superstructure. Under Planning: no contruction activities on site but all permits have been approved by the Government.

projected completion

timebuilding name sga

(sQ m) marketing scheme deVelopment status*

tb simatupang4Q 2012 PHE tower 28,000 For Lease Under Construction

4Q 2012 trihamas Syariah Building 6,160 For Lease Under Construction

2Q 2013 alamanda tower 33,000 For Lease and For Strata-title Under Construction

2Q 2013 Oleos 2 4,181 For Lease Under Construction

4Q 2013 Green kosmo Mansion (GkM) tower 23,000 For Strata-title Under Construction

1Q 2014 the Manhattan Square 39,375 For Lease and For Strata-title Under Construction

1Q 2014 Beltway Office Park tower 3 9,600 For Lease Under Construction

1Q 2014 Gedung aneka tambang tower 2 16,000 For Lease Under Construction

1Q 2014 aD Premier 18,900 For Lease Under Construction

2Q 2014 18 Office Park (Cityland tower) 40,000 For Strata-title Under Construction

2Q 2014 talavera Suite 17,172 For Lease Under Construction

4Q 2014 Plaza Oleos 39,778 For Lease and For Strata-title Under Construction

4Q 2014 South Quarter tower 1 40,778 For Lease In Planning

2Q 2015 South Quarter tower 2 40,778 For Lease In Planning

4Q 2015 the Manhattan Square tower 2 33,440 For Lease and For Strata-title In Planning

1Q 2015 Signum North tower 18,000 For Lease In Planning

1Q 2016 Signum South tower 54,000 For Lease In Planning

1Q 2016 South Quarter tower 3 40,778 For Strata-title In Planning

1Q 2016 the Manhattan square tower 3 39,375 For Lease and For Strata-title In Planning

Demandcbd Leasing activity remained stable during the reviewed quarter. a number of mid-size companies who were considering consolidation and looking for more cost-effective solutions prefer expansion. During 3Q 2012, some office towers located along jalan Gatot Subroto reported leasing transactions completed by their existing tenants, i.e. mining consultants and information technology. Meanwhile, various financial services firms such as insurance, banking and trading continued to be active occupiers in the jalan Sudirman corridor. a medium size deal of around 1,200 sq m was recorded when a financial services company officially took space at an office tower located around jalan Satrio.

Several major leasing deals were concluded in 3Q 2012 involving transactions of above 5,000 sq m. We have listed a number of major deals but these have not affected the occupancy figures because moving activities have not started in the period. One major transaction of above 5,000 sq m was between a tV production house and the East in the Mega kuningan area. two transactions with similar sizes of around 1,200 sq m each occurred in two different buildings, i.e. a trading company took space at Menara Mulia and a financing company at a building situated in the rasuna Said-Satrio area. Other smaller transactions of below 1,000 sq m that we have noted during the quarter were from a regional bank in South kalimantan, government, telecommunications, mining and cosmetics, etc.



Not all of the story is about space absorption and there were several situations where tenants had to move out of the premises. a financial services company moved out of a building in Sudirman due to permit issues, leaving around 700 sq m of space vacant. Meanwhile, some business entities have also experienced declining performance coupled with increasing occupancy costs which caused them to vacate

their premises. another vacancy situation occurred when tenants had to relocate to other premises, as was experienced by a local bank located in jalan rasuna Said.

Despite all of that, the market has created a balance in supply and demand. Occupancy in the CBD only rose modestly compared to the previous quarter, standing at 96%.

outside the cbd again, South jakarta continues to contribute to the overall occupancy performance of the office market in the outside CBD area. the occupancy rate in this area rose mildly to 93.3% mainly driven by expansion activities during the quarter. the tB Simatupang area, as the main office location in the outside CBD area, registered office occupancy at 97.6%. Other notable transactions took place during the quarter but have not yet been recorded as occupancy. this involved a large transaction concluded by one leading insurance company which will occupy several floors in a new office in the kasabanka area. a smaller but substantial

transaction was completed by a leading telecommunications industry from China which took around 3,000 sq m of office space. Meanwhile mid-size transactions of between 1,000 and 2,000 sq m took place in several buildings involving various kinds of tenants. three office transactions ranging from 1,000 - 1,800 sq m occurred in Menara 165, involving two mining companies and one oil contractor for a leading oil company. a serviced office provider took two different locations at a new office in kasablanca of around 1,300 sq m and at an office tower in tB Simatupang area (1,200 sq m).


net annual take-up in the cbd during 2000 - 2015 (projected)


net annual take-up in the outside cbd during 2000 - 2015 (projected)

0

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F

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F

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F

2015

F

sq m

0

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F

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sq m



rental rates, Service Charge and Prices Despite being lower than in the previous quarter, the average rental rates still continue to increase. In the CBD, rental rates moved upward by a moderate 4.5% QoQ compared to 7.2% recorded in the last quarter. the average asking rental rate in rupiah was registered at IDr150,330/sq m/month while in US dollars, it was US$29.33/sq m/month. Several buildings are monitored to adjust their asking rental rates in the range of IDr10,000 to 25,000 per sq m per month. a few buildings with higher occupancy increased the rent in the range of IDr30,000 to 50,000. In US dollars, the average

increase ranged from US$3.00 to 5.00 per sq m per month while for buildings with low vacancy, the increase could reach as high as US$10.00. as of September this year, average rental rates in both US dollars and rupiah has gone up by 18 and 38% YoY. Based on grade, currently, office buildings which are categorised as Grade a and Premium charged rental rates in the range of US$30.00 to 55.00/sq m/month which reflects an upward adjustment mainly due to the entrance of WtC II, which is in this class.

pre-committed demand Overall pre-committed demand for office buildings in the pipeline remained subdued and only a few transactions were observed during this quarter. Nevertheless, the new commitments occurring during the quarter have brought the available new office space during 2012 - 2013 to only around 102,169 sq m representing 24% of the total supply during that period.

as mentioned earlier, 2014 will be a challenging year for the office market in the CBD where a large amount of office space will pour onto the market. However, given the positive outlook for the Indonesian economy from Goldman Sachs and Mckinsey & Company that Indonesia will become one of the largest emerging markets, the prospects for the country look good. In our analysis, we found a strong correlation between the historical growth of Indonesia’s GDP value and the growth in office absorption. Given the GDP projected by the government over the next

three years, we estimate that office absorption in 2013 - 2014 will stabilise at the same level as our projections for 2012. Furthermore, 2013 will see a limited amount of new office space which will help new space becoming available in 2014 to perform better. Meanwhile, the level of tenants committed to office space from 2012 to 2014 registered a moderate increase this quarter in the outside the CBD area. Besides the adjustment made for upcoming office projects, an increased commitment level for future office space was experienced particularly by buildings located in the tB Simatupang area including the Manhattan Square, Beltway Office tower 3, Gedung aneka tambang 2 and Plaza Oleos. this is expected to motivate more tenants to opt for that location and this should maintain the occupancy rate at a healthy level.

aVerage asking rental rates in the cbd during 1995 - 2012Ytd


$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

IDr 0

IDr 47,500

IDr 95,000

IDr 142,500

IDr 190,000

IDr 237,500

IDr 285,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

YtD

rp US$



aVerage asking rental rates based on grade


serVice charge the service charges tariff was stable during the reviewed quarter. Within the CBD, the service charge was IDr56,274/sq m/month for rupiah denominated buildings and US$6.31/sq m/month for buildings with US dollar tariffs. a relative flat figure for services charges was shown by office buildings in the outside CBD. During 3Q 2012, the average service charge was recorded at IDr42,504/sq m/month and

US$5.21/sq m/month. Nevertheless, the developers and building management have anticipated an increasing electrical tariff for next year. as of the date of the survey, there is no further confirmation of the percentage of increase, however, a number of developers have stated that they will adjust their service charges sometime next year.

strata-title office space for saleContinued absorption of strata-title office space combined with limited office space has maintained the high take-up rate. In the CBD, with no new supply during the quarter, take-up rates have gone up to 98% (of the total 721,829 sq m of strata-title office supply). there will be two strata-title offices for sale which are projected to begin operations by the end of 2012. the pre-commitment level is high for the upcoming strata-title buildings which will provide around 85,000 sq m of new space. there will be no buildings offered with strata-titles in 2013 and the market will only see a jump in supply in 2014 when around 200,000 sq m of office space will be ready for occupation.

Sovereign Plaza in tB Simatupang area was reported as having no more space to offer for sale before it was officially opened. another upcoming building, i.e. Eighty8, within the kota

kasablanka Complex, which will be in operation next quarter, has limited space to offer. Similarly, office projects aimed for completion in 2013 like alamanda tower, DIPO Business Park and Green kosmo have achieved more than 50% pre-committed take-up in 3Q 2012. Furthermore, some buildings projected to come on line in 2014 have recorded pre-sales prior to their operation. Due to good absorption and limited supply, prices moved upward. In the CBD with various qualities and locations, strata-title office prices ranged from US$2,000 to 4,000/ sq m/month while for buildings in rupiah, the prices were between IDr20 and 40 million/sq m. In the outside CBD, office space for sale is offered at IDr21 million/sq m on average but a higher price was found in an office tower located around Blok M, South jakarta with prices ranging from IDr30 to 35 million/sq m.

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

IDr 0

IDr 47,500

IDr 95,000

IDr 142,500

IDr 190,000

IDr 237,500

IDr 285,000

IDr 332,500

IDr 380,000

Premium Grade a Grade B Grade C

IDr USD



Strata-title offices started emerging in the tB Simatupang and surrounding areas with more recent developments like Menara 165 and Sovereign Plaza demonstrating high absorption rates. Next year, two office towers will become new supply including Green kosmo Mansion and alamanda tower which are in the construction stage. More and more strata-title buildings will continue to appear, particularly in 2014, when a number of strata-title spaces will

come from projects like Manhattan Square, Plaza Oleos and 18 Office Park.

Prices keep moving upward particularly because new office projects under construction keep adjusting their offering prices in line with their sales performance. to date, the average price of strata-title offices in tB Simatupang was registered at IDr20.1 million/sq m.

With vacancy levels below 5% in the CBD, space available is very limited and therefore competition among tenants to win a preferred office location is high. tenants delaying their decisions will lose the opportunity to secure quality office space. this has been a common situation for several periods and will likely continue over the next year particularly when the number of upcoming office spaces in 2013 is very limited. With space limited and demand increasing, rental rates are expected to inevitably rise over the next period. Not only in the main business area, other sub-markets outside the CBD will also benefit from the booming office market, and certain tenants will opt for non-CBD locations due to traffic and more affordable rental rates.

In a long-term perspective, Indonesia is expected to fully leverage today’s positive economic trends and to offer businesses and investors a lucrative market opportunity. a global economic institution believes that Indonesia will become one of the emerging markets together with countries like South korea, turkey and Mexico. Should this momentum be maintained, sectors like property will enjoy growth because the growth in GDP strongly correlates with office absorption. thus, we estimate that annual office absorption for 2013 and 2014 would at least be staying at the same level as in 2011 and 2012.

Outlook

aVerage asking price of strata-title office in jakarta during 1995 - 2012Ytd


$0

$526

$1,052

$1,578

$2,104

$2,630

$3,156

IDr 0

IDr 5,000,000

IDr 10,000,000

IDr 15,000,000

IDr 20,000,000

IDr 25,000,000

IDr 30,000,000

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2012

YtD

CBD (IDr) Outside (IDr) CBD (USD)




For the last two quarters, the number of the quarterly supply has always been more than 4,000 units, but this quarter, the number of new apartment units completed was less, i.e. 3,417 units. Some upcoming apartment projects delayed their hand-over schedules to catch up with finishing work as was the case at the ambassade (tower a) and tamansari Semanggi (tower a), which have 234 and 600 units, respectively. New supply for the quarter came from seven projects: the Wave (Coral tower),

Denpasar residence (Ubud tower), One Park residence, City Garden residence, Puri Park View (tower B), Gading Nias residence (Grand Emerald) and regatta (rio de janeiro tower). all of these projects boosted the cumulative supply of strata-title apartments to 111,361 units. From a total projected 22,267 units which will be completed in 2012, more than 60% or 13,858 units have been completed by the end of September 2012.

all brisk economic indicators and a stable political outlook were two of the factors motivating developers to continue with development plans. Several apartment projects were launched including the Oakwood Sky Garden, Callia apartment, Pluit Seaview (Ibiza tower), Nine residence and Satu 8 residence. the Oakwood Sky Garden, Callia apartment and Pluit Seaview are located in North jakarta and are extensions of existing projects. Nine residence and Satu 8 residence are completely new projects, located in South jakarta and West jakarta, respectively. Over the next two to three years, West jakarta and North jakarta will see abundant new completion projects, typically with massive

units and targeting the middle-low income segment. Massive projects are basically offering small units in order to make prices affordable for this demographic. the units of these apartment buildings typically range from 20 sq m for studio apartments to 70 sq m for a three-bedroom apartment.

If all of the upcoming under-construction projects are delivered as scheduled, there will be an additional 8,625 units in the last quarter of 2012; most of them are in the finishing stages. this figure suggests that the annual supply of jakarta’s apartment market in 2012 would be 22,483 units, 41% higher than the supply in 2011.

Supplyapartment sector

apartments For Strata-title Sale

list of completed project in 3Q 2012

apartment name location regionasking price

(idr/sQ m)#units

the Wave (Coral tower) rasuna Said CBD 23 mio 324

Denpasar residence (Ubud tower) Satrio CBD 25 mio 550

One Park residences (3 towers) Gandaria South jakarta 24 mio 379

City Garden residence Cengkareng West jakarta 7 mio 600

Puri Park View (tower B) Pesanggrahan West jakarta 8 mio 707

Gading Nias residence (Grand

Emerald)

Pegangsaan

Dua

North jakarta 8 mio 747

regatta (rio de janeiro tower) Pantai Mutiara North jakarta 22 mio 110


jakarta | 3q 2012 | apartment

the CBD area will continue to see more new apartment developments provided that there is enough land to be developed. the location of the CBD is the most attractive for apartments particularly when traffic is such a problem. In fact, land availability is scarce in this location and accordingly has triggered a significant

escalation of land prices. therefore, only upper-class apartment projects are economically feasible for the CBD area. For other classes of apartments, other locations will be chosen particularly when there is proximity to easily accessed public facilities, such as transport, malls, schools / universities and workplaces.

referring to the graph above, the trend of apartment locations has been changing from the CBD to outside the CBD area for the last two years. the greatest proportion of increase in jakarta’s apartment market is in South jakarta followed by the West jakarta area. West jakarta is developing mainly because of a growing middle-class and growing commercial area, while South jakarta has been the preferred location for most expatriates, offering good ambience for residences. Better infrastructure and accessibility to the downtown were among the considerations in choosing these locations.

Looking at future development, there are fourty-one projects of strata-title apartments, totalling approximately 26,193 units, scheduled for completion between 2013 and 2014. the largest supply, based on the number of projects, remains in the South jakarta area with 37% of the total projects, followed by West jakarta with followed by West jakarta and North jakarta with 17%. But, by the number of units, North jakarta will contribute 32.6% of total supply, followed by South jakarta and West jakarta with 22.6 and 13.5%, respectively.

as per 2010 as per 3Q 2012


CBD 22.71%

Central jakarta15.03%

South jakarta13.25%

North jakarta21.74%

East jakarta4.87%

West jakarta22.41% CBD

18.95%

Central jakarta12.70%South

jakarta17.97%

North jakarta19.12%

East jakarta5.37%

West jakarta25.89%


list of newlY launched project in 3Q 2012

apartment name location region #unitsthe Oakwood Sky Garden Perintis kemerdekaan North jakarta 700

Callia apartment Perintis kemerdekaan North jakarta 560

Pluit Seaview (tower Ibiza) Pluit North jakarta 550

Nine residence Warung Buncit South jakarta 246

Satu 8 residence kedoya West jakarta 88

the change in apartment supplY composition






new supplY pipeline

apartment name location area #unit

2013Belmont residence (tower Montblanc) Meruya Ilir West jakarta 350Westmark apartment tanjung Duren West jakarta 550kebagusan City (tower B) kebagusan South jakarta 588GP Plaza Gatot Subroto CBD 320Pasar Baru Mansion (2 towers) Pintu air Central jakarta 520Sunter Icon Sunter North jakarta 600kemang Village (the tiffany) Pangeran antasari South jakarta 240kemang Village (the Infinity) Pangeran antasari South jakarta 175the South of Essence Dharmawangsa Dharmawangsa South jakarta 244residence at Dharmawangsa Dharmawangsa South jakarta 89Green Central tower Cerberra Gajah Mada West jakarta 420St. Moritz (New royal Suite) Puri Indah West jakarta 150Sentra timur residence tahap II Cakung East jakarta 1,000Green Bay Pluit Pluit North jakarta 3,200Green Lake Sunter Sunter North jakarta 2,400dGreen Pramuka (tower Faggio) jend. a. Yani Central jakarta 1,400dGreen Pramuka (tower Pino) jend. a. Yani Central jakarta 1,500the Windsor (tower a and B) Puri Indah West jakarta 340Pakubuwono terrace (tower I) Pakubuwono South jakarta 750the H residence Mt Haryono East jakarta 505

2014the Pakubuwono Signature Pakubuwono South jakarta 188Sudirman Suites Sudirman CBD 414the Grove Suites rasuna Said CBD 416La Venue - South tower Pancoran South jakarta 341Metro Park residence kebon jeruk West jakarta 1,200kemang Village (the Metropolitan) Pangeran antasari South jakarta 150kemang Village (the Intercontinental) Pangeran antasari South jakarta 400the aspen at admiralty Fatmawati South jakarta 860Pakubuwono terrace (tower II) Pakubuwono South jakarta 720Casablanca East residence (tower Dallas) Pahlawan revolusi East jakarta 188Sherwood apartment (2 towers) kelapa Gading North jakarta 200Pluit Seaview (tower Maldives) kelapa Gading North jakarta 940Sky terrace Lagoon Pluit West jakarta 525La City apartment (tower a) Lenteng agung South jakarta 456Setiabudi Sky Garden (tower 1) rasuna Said CBD 426La Maison Barito (tower 1) Barito South jakarta 80Botanica apartment (3 towers) Simprug South jakarta 626the Hive @tamansari DI. Panjaitan East jakarta 422Signature Park Grande Mt Haryono East jakarta 1,100tifolia apartment Perintis kemerdekaan North jakarta 500

actiVe apartment deVelopers


agung Podomoro29%

agung Sedayu9%

Duta anggada4%

Gapura Prima4%

Intiland4%

Lippo karawaci13%

Pikko Group8%

Other29%



agung abadi2%

agung Podomoro29%

agung Sedayu4%

asia Graha2%Bahama Development

6%Bakrieland

8%Ciputra

Development2%

Duta regency2%

Farpoint realty4%

Gapura Prima2%

Hutama karya realtindo

2%

Intiland8%

Lippo karawaci6%

Pakkodian2%

Wika realty4%

Others16%

agung Podomoro25%

antilope Maju Indah5%

Bakrieland8%

Bina Puri Lestari3%

Bumi Perkasa Permai5%

Ciputra Development3%

Cowell3%

Duta Paramindo5%

Gapura Prima8%

Hutama karya3%

Lippo karawaci8%

Prakarsa Semesta alam3%

Selaras Mitra Sejati3%

Senopati aryani Prima3% Springhill Golf

5%

titanium Property5%

Others10%

in 2011

in 2012

in 2013



DemandDuring this quarter, the overall absorption rate of apartments inched up to 81.3% from 79.9% in the previous quarter. this take-up figure represents the performance of existing apartment units and future apartment units which are already offered to the market. Unlike in the previous year, the Islamic holiday during this quarter has less of an impact on the sales performance. During the period some intensive exhibitions were held, advertisements were vigorous and “buyer get buyer” incentives whereby buyers referring another buyer will get a 2.5% discount price were quite common. We have noted some apartment projects whose sales increased during the fasting month mainly due to the concepts they offer, location and pricing strategy. Other marketing approaches

to boost sales during the relatively quiet months like ramadhan (fasting month) are giving a discount of 10%, longer cash instalments and special promotional gimmicks for that particular month.

the take-up rates in different submarkets vary while the CBD achieved the highest at 88% this quarter while the other favourite location, South jakarta, was at 81% and other areas outside the CBD and South jakarta non-CBD area reached 80%. Exhibitions, advertisements and attractive marketing promotions such as big discounts, “buyer get buyer” programmes and longer instalments (special for ramadan) being driving factors for accelerating sales.

take-up changes of all existing and under construction units

region 2Q 2012 3Q 2012 q-o-qCBD 85.6% 88.0%

South jakarta 79.7% 81.1%

Outside CBD 78.6% 80.0%


pre-sales of on-going projectsMeanwhile, sales of ongoing projects were relatively high. Pre-sales rates in all areas of jakarta including the CBD, South jakarta, and non-CBD area showed an upward trend. the pre-sales rate for the CBD area compared to the previous quarter saw the highest increase, reaching 73.6% in 3Q 2012. South jakarta also recorded an increase in the pre-sales rate, primarily at new projects in good locations

such as Senopati with projects like Senopati Suites 2; Permata Hijau with the Providence Park project; Simprug with the Botanica project; and Pondok Indah with the kencana residence project. South jakarta had a 65.7% take-up rate, up by 1.5% compared to the previous quarter. Meanwhile, due to the large supply, the pre-sales rate of the outside CBD area posted a negligible increase, which stood at 64.9%.

take-up changes of under construction units

region 2Q 2012 3Q 2012 q-o-qCBD 70.3% 73.6%

South jakarta 64.2% 65.7%

Outside CBD 64.7% 64.9%




the average asking price of jakarta’s apartments witnessed a smoothly inclining trend this quarter. the upward adjustment in price is largely driven by the sales performance of the under-construction projects. another

factor which triggered the price rise is the higher prices at the newly-launched projects which provide higher specifications like quality materials, more greenery, etc.

Price

aVerage asking prices for apartments in jakarta


as depicted in the graph, asking prices for apartments in the CBD area recorded the highest increase followed by South jakarta and other areas outside South jakarta and the CBD. With a limited number of projects being launched and limited stock of available units, as well as consistent progress of construction activity, the CBD area managed to maintain a higher price increase than the others. On the other hand, the increase in prices in the South jakarta area was mainly triggered by the influx of several good projects launched at premium locations, such as Senopati, Permata Hijau, Pondok Indah, Simprug and Gandaria. Meanwhile, apartment prices in the non-CBD

area were maintained at relatively the same level. Overall, the average asking price of apartments in jakarta increased very modestly by 0.7% QoQ to IDr19.12 million/sq m for the whole area and all classes of apartment. the average price of apartments in the CBD increased by 4.7% compared to the previous quarter to IDr28.80 million/sq m, while South jakarta area saw IDr19.44 million/sq m, increasing by 3.1% from the previous quarter. the other areas maintained an average price of IDr15.23 million/sq m, or increased by only 1.2% compared to the previous quarter.

IDr 5,000,000

IDr 10,000,000

IDr 15,000,000

IDr 20,000,000

IDr 25,000,000

IDr 30,000,000

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q2012 2Q2012 3Q2012

CBD South jakarta Non CBD average

take-up commitment in newlY built and under construction apartments


0 5,000 10,000 15,000 20,000 25,000

2014

2013

2012

Supply absorbed



aVerage asking price in different regions

regionaVerage asking price in idr/sQ m

3Q 2011 2Q 2012 3Q 2012 q-o-q y-o-yCBD 23,132,333 27,509,319 28,802,963 4.7% 24.5%South jakarta 16,837,968 18,852,720 19,436,445 3.1% 15.4%Outside CBD 15,031,862 15,055,464 15,234,553 1.2% 1.35%average 17,321,495 18,997,903 19,125,463 0.7% 10.4%




apartment For Lease (Serviced and Non-serviced)

the total cumulative supply for both serviced and non-serviced apartments in jakarta remained unchanged, since no new supply appeared during 3Q 2012. additional supply will be Plaza Senayan apartment, a non-serviced apartment consisting of two towers with 217 units which will be operating next month. the Plaza Senayan apartment towers

C and D is yet to operate but efforts of pre-opening activity have taken place, like introductions to their existing tenants and seeking new tenants. With no supply being seen this quarter, the total number of apartments for lease (both serviced and non-serviced) in jakarta stood at 7,984 units.


Supply

list of future apartment for lease projects

apartment name location regionconstruction

progress#units

Plaza Senayan (tower C & D) Senayan CBD 99% 217ascott kuningan Satrio CBD 70% 186Frasers residence Menteng Menteng Menteng 40% tBa

lease apartment in jakarta based on region


as seen in the graph, the majority of apartments for lease were concentrated in two regions, namely the CBD and South jakarta. these are favourite locations for expatriates and business travellers not only because of their accessibility to workplaces downtown or in the tB Simatupang area but because of proximity to other places of interest to expatriates. the existence of apartment projects in South jakarta helps complement the landed residential market for expatriates, particularly as an alternative when expat housing is not available.

In the future, we will see only a limited supply of apartments for lease. three projects are in the pipeline including Plaza Senayan which will be coming at the end of this year. two other projects are ascott kuningan, located in Satrio and Frasers residence in Menteng, Central jakarta. these projects are expected to be finished in 2013 and are already under construction.

CBD 42.60%

Central jakarta9.18%

South jakarta37.02%

North jakarta5.51%

East jakarta0.06%

West jakarta5.62%

tBa: to Be announced



the overall occupancy rate of apartments for lease in jakarta experienced a slight decrease particularly due to the decreasing trend in occupancy of serviced apartments. Quite a few short-term tenants postponed their arrival during the Islamic holiday season and some

have ended their employment contracts, which generally were the key factors that led to the slowdown in occupancy. Overall, the occupancy rates of apartments for lease (serviced and non-serviced) declined mildly to 79.1% QoQ.

Demand

occupancY changes of apartment for lease

occupancY 2Q 2012 3Q 2012 q-o-qServiced 79.05% 78.54% 0.51%Non-Serviced 80.60% 79.44% 1.16%


With the figures presented in the table, the number of vacant serviced apartments in

jakarta was 1,037 units, while there were only 614 vacant non-serviced apartments.

occupancY changes of serViced apartments based on region

region 2Q 2012 3Q 2012 q-o-q VacantCBD 84.67% 84.07% 0.60% 372South jakarta 84.54% 83.93% 0.61% 169Non CBD 60.46% 60.24% 0.22% 495


occupancY changes of non-serViced apartments based on region

region 2Q 2012 3Q 2012 q-o-q VacantCBD 86.79% 88.03% 1.24% 127South jakarta 83.96% 79.23% 4.73% 395Non CBD 75.90% 76.02% 0.12% 92


regular tenants for apartments for lease were still mainly asian expatriates, such as Chinese, japanese and South koreans. From the industrial perspective, oil and gas, construction,

banking and financial sectors, manufacturing companies, and also embassies contributed the demand for apartments for lease in jakarta.



the rental rates for serviced and non-serviced apartments in jakarta were relatively stable. Minor adjustments occurred during the quarter mainly due to the weakening of the rupiah against the US dollar. During 3Q 2012, the CBD area led the market with average asking rental rates of US$ 23.72 / sq m / month, moderately down by less than 1% compared to the previous quarter, while the outside area including South

jakarta, registered an asking rental rate of US$14.74 / sq m / month. Basically, rental prices remained unchanged. a minor adjustment occurred mainly because some old projects are still charging rent in rupiah and to give the overall market condition, the denomination is converted to US dollars which caused a minor volatility in rental tariffs.

rental rates


aVerage rental rates of apartment for lease

region 2Q 2012 3Q 2012 Q-o-QCBD $23.87 $23.72 0.63%Non CBD $14.89 $14.74 1.01%

aVerage rental rates of apartment for lease (serViced)


aVerage rental rates of apartment for lease (non serViced)


$10.00$12.00$14.00$16.00$18.00$20.00$22.00$24.00$26.00$28.00$30.00

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012

Ave

rage

Ren

tal R

ate/

sq m

/mon

th

CBD Non CBD

$10.00$12.00$14.00$16.00$18.00$20.00$22.00$24.00$26.00$28.00$30.00

1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012

Ave

rage

Ren

tal R

ate/

sq m

/mon

th

CBD Non CBD



the central bank issued new rules requiring down payments for new home and vehicle loans to avoid a property bubble and minimise credit risks. the minimum down payment is 30% for mortgage loans coming into force in the early part of 3Q 2012. For the apartment sector it will be less significant to the growth of demand. First, because only a few apartment buyers are using mortgages (around 10 to 15%), while the majority are using cash instalments paid during the construction period, or hard cash. Secondly, some developers are anticipating this regulation by allowing buyers

to pay the 30% down payment over a six-month period.

In general, the apartment market continued to demonstrate strengthening performance. Developers remain confident on the back of positive buyer sentiment, reflected by increasing sales growth and steady increases in asking prices. New projects in the pipeline are seemingly adhering to their completion schedules to maintain buyer confidence and to take advantage of the momentum of a bullish market.

Outlook



retail SectorSupply the third quarter saw additional retail space from the completion of a huge retail centre called kota kasablanka which provides around 100,000 sq m of retail space. thereafter, as of the end of September 2012, a retail centre located within a mixed-use commercial complex in kemang has also contributed new supply. Originally, the mall was known as Exion Mall at kemang Village, but close to the grand opening, the developer chose a new name and officially called it Lippo Mall kemang. this new mall brought the total retail space in jakarta to 4.19 million sq m. as of 3Q 2012, the total annual supply year-to-date was 164,981 sq m and the market is expecting to see around 87,100 sq m of additional supply by the end of this year. From the field survey, the construction progress of upcoming retail centres is likely to meet the expected completion schedule. One of them is a large-scale mall within the Ciputra World jakarta commercial compound which was introduced as Lotte Shopping avenue. another upcoming project is Pondok Indah Street gallery

which is speeding up construction to open soon. With the completion of these two projects, the jakarta retail market will see the total supply of retail space reach 4.3 million sq m by the end of 2012.

the retail supply in jakarta is expected to continue growing. It is projected that there will be around 220,000 sq m of new additional retail space in 2013. In the following year, Bakrieland Development plans to build a lifestyle mall in Sentra timur, East jakarta together with the expected completion of PIk Mall.

after experiencing significant growth in supply from 2002 to 2009, there have been a limited number of developers building strata-title retail centres. One of the reasons is the low performance of many strata-title retail centres. Of the total 4.19 million sq m of prevailing retail space in jakarta, around 69% is retail space for lease at malls. It was also seen that all of the existing and upcoming malls to open during 2012 to 2014 will be offered for lease.

jakarta

jakarta retail cumulatiVe supplY


0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

sq m

Existing Supply annual Supply Under Construction Under Planning


jakarta | 3q 2012 | retail

jakarta new supplY pipeline

shopping centres name location regionnla

(sQ m)deVelopment status

2012 Lotte Shopping avenue Satrio South jakarta 78,000 Under ConstructionPondok Indah Mall Street Gallery Pondok Indah South jakarta 9,100 Under Construction

2013Cipinang Indah Mall Cipinang East jakarta 20,000 Under ConstructionPulomas X’Venture Pulomas East jakarta 25,200 Under Constructionthe Baywalk Mall Pluit North jakarta 52,000 Under ConstructionSt. Moritz Mall Puri Indah West jakarta 129,200 Under Construction

2014Sentra timur Walk Sentra timur East jakarta 19,000 Under PlanningPIk Mall Pantai Indah kapuk North jakarta 30,000 Under Planning

2015Podomoro City Expansion Slipi West jakarta 40,000 Under PlanningShopping Mall at Pancoran Pancoran South jakarta 15,000 Under Planning


In the BoDetaBek area, after having no retail centres open in the previous quarter, Mall Bale kota in tangerang provided some new supply. Mall Bale kota, located in the main road of tangerang city, contributed around 25,000 sq m of retail space bringing the total to 1.96 million sq m as of 3Q 2012. In addition, the retail market is expecting a large mall development, i.e. a shopping mall at alam Sutera which is projected to open in the next quarter.

afterwards, the supply is projected to grow from 2013 to 2014 when at least 11 retail centres will open. Nine of these are classified as new mall construction while the rest are the extension and renovation of existing malls. In 2013, besides the extension of Plaza Cibubur, five retail centres will bring around 168,285 sq m of additional new stock. these malls, which are under construction, are shopping centres between 20,000 and 50,000 sq m. By the end of 2013, strata-title retail space will comprise 36% of the total retail space in the BoDetaBek

area, particularly after the completion of Bekasi junction.

In 3Q 2012, four new projects were announced as future retail centres. Besides the second phase of Lippo Cikarang Citywalk, a small-scale retail centre which is in planning, the other three retail centres have broken ground and are expected be completed in 2014. these malls are the Breeze, Bintaro Xchange and Summarecon Mall Bekasi. In the meantime Urbana Cinere, which has been under construction since early 2012, is currently known as Cinere Bellevue Suites. the total annual supply projected in 2014 is 140,300 sq m and will bring the cumulative supply to 2.40 million sq m.

apart from the development of new malls, existing malls are also expanding. a mall located around karawaci, tangerang is planning to add around 30,000 sq m of leasable space. as of 3Q 2012, the project is still in planning.

bodetabek



bodetabek new supplY pipeline

shopping centres name location regionnla

(sQ m)deVelopment status

2012 Shopping Mall at alam Sutera alam Sutera tangerang 68,000 Under Construction

2013Grand Galaxy City Mall Bekasi Bekasi 23,000 Under ConstructionBekasi junction Bekasi Bekasi 42,000 Under ConstructionGrand Metropolitan Mall kalimalang Bekasi 47,285 Under ConstructionCibinong City Mall Cibinong Bogor 30,000 Under ConstructionMall Ciputra Citra Gran Cibubur Bekasi 26,000 Under ConstructionPlaza Cibubur Extension Cibubur Depok 2,000 Under Construction

2014Bintaro Xchange Bintaro tangerang 45,000 Under ConstructionLippo Cikarang Citywalk Phase II Cikarang Bekasi 8,000 Under PlanningSummarecon Bekasi Phase 1 Bekasi Bekasi 35,000 Under ConstructionCinere Belleuve Suite Cinere Deopk 28,000 Under Constructionthe Breeze Sinar Mas Land Serpong tangerang 24,300 Under Construction

2015Bekasi trade Center 2 Bekasi Bekasi 30,000 Under PlanningMal Harapan Indah Bekasi Bekasi 44,420 Under Planning


bodetabek retail cumulatiVe supplY


0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Existing Supply annual Supply Under Construction Under Planning



Demand the occupancy rate during the quarter experienced a minor drop from 89.5 to 88.0%. In this quarter some shopping centres are consolidating and reviewing operations in order to enhance their performance. Some of the efforts being made include major refurbishment and a remix of tenancy composition although this may result in lower occupancy. One example is a mall located in the Pluit area which

is preparing a new strategy in anticipation of a new budget hotel within the compound by inviting some branded restaurants like I-ta Suki, Crown Palace and Shanghai Sky as well as entertainment venues such as Inul Vizta karaoke. another negative factor is the closure of several gadget and computer shops in a shopping centre located in Lebak Bulus, South jakarta.

aVerage occupancY rates in jakarta and bodetabek


0%10%20%30%40%50%60%70%80%90%

100%

2005 2006 2007 2008 2009 2010 2011 2012YtD

jakarta BoDetaBek

almost all segments of shopping centres experienced a minor drop in occupancy. Occupancy rates for middle- to upper-class malls moved downward slightly to 92.5% in this quarter, not because of slowing performance of prevailing malls but due to the influx of new malls which operate with a lower occupancy compared to the overall market. Likewise, the occupancy of middle-class retail centres was 86%, slightly lower than the previous figure. relatively stable performance of 83% was seen at middle- to low-class shopping centres.

Nonetheless, in general, leasing activities were still active primarily in newly operating retail

centres. Large-scale shopping centres like Central Park Mall, Shopping Mall Gandaria, kuningan City and the latest, kota kasablanka and Lippo Mall kemang have secured more than 95% pre-commitment occupancy in 3Q 2012. kota kasablanka and Lippo Mall kemang have been around 75%, occupied by operating tenants but have been secured 95% pre-commitment occupancy. Currently Lippo Mall kemang has several major tenants like Debenhams, Hypermart, ace Hardware, Best Denki, Cinema XXI and Fitness First Platinum. Meanwhile, at kota kasablanka, Carrefour and Cinema XXI joined SOGO which opened previously when the mall was launched.



anchor tenants committed in seVeral shopping centres in jakarta

Year of operation

shopping centres name status department store hYperstore

2009 Central Park Operate SOGO Carrefour2011 kuningan City Operate na Lotte Mart2012 kota kasablanka Operate SOGO Carrefour2012 Lippo Mall Operate Debenhams Hypermart2012 Lotte Shopping avenue Under Construction Lotte na2013 St. Moritz Under Construction Debenhams Hypermart

ParksonMatahari


number of department store distribution within shopping centres in jakarta


Matahari45%

SOGO20%

Metro14%

Debenhams14%

Centro7%

number of hYperstore distribution within shopping centres in jakarta


Carrefour47%

Hypermart28%

Giant16%

Lotte Mart9%



Despite the slowing performance of global hypermarkets in some European countries, the Indonesian retailers association forecasts that the hypermarket business in Indonesia will continue its upward trend since the Indonesian economy looks stable and resilient. In addition, the retail market in Indonesia is expected to maintain this growth because the purchasing power of the middle class is increasing.

Slightly better performance was seen by retail centres in the Bodetabek area. recording a modest increase QoQ, the overall occupancy was able to reach 86.6% in 3Q 2012. retail centres recorded a mild increase in numbers of tenants mainly in tangerang, Depok and Bekasi. Overall occupancy in Depok was 87.2% reflecting slight growth over the quarter. the operation of Mall Bale kota in tangerang has

had less impact on the overall occupancy in this area where occupancy was stable at around 80%. Mall Bale kota operates with Hypermart and other smaller tenants which keep the overall occupancy in tangerang stable. another mall, located in tangerang, is Supermal karawaci which maintains its position as a middle- to upper-class mall and hence, some relocation activities are in progress to find a better tenancy composition. as part of the plan to extend the leasable area, the mall has contracted with Carrefour High End (selling upper-class merchandise) and toys r Us to occupy the space. In Bekasi, a similar trend also occurred as occupancy registered relatively steady growth and hovered at 79.3%. Likewise, occupancy in Bogor stabilised at 89.9%. the high occupancy for the overall retail market in Bogor was mainly due to limited supply.

aVerage occupancY rates in jakarta and bodetabek


0%10%20%30%40%50%60%70%80%90%

100%

2007 2008 2009 2010 2011 2012YtD

Middle Upper Middle Middle Low

list tenant in new malls to operate in 2012

shopping centres name location region retailers

jakartakota kasablanka kasablanka South jakarta SOGO, ace Hardware, Cinema XXI, Electronic & Home Solution, Carrefour, Marks &

Spencer

Lippo Mall kemang South jakarta Debenhams, marks & Spencer, Hypermart, ace Hardware, Fitness First Platinum, Cinema

XXI, Best Denki, Chipmunks Playland and Cafe

bodetabekCimanggis Square Cimanggis Depok Hypermart, Matahari, time Zone

Mall Balekota tangerang tangerang Hypermart, Electronic Solution, ace Hardware, Gramedia, Informa, Cinema XXI, Matahari,

toys kingdom, amazone




future demandan encouraging combination of factors for the growth of retail business occurred in Indonesia, including an expanding middle class, steadily growing economy and declining debt-to-GDP ratios which are expected to entice retailers to open in Indonesia. Mitra adi Perkasa, franchiser of global brands in Indonesia, brought new brands such as Desigual and Crabtree & Evelyn to aim at the middle-class demographic. jakarta is an urban, metropolitan area and not limited to the boundaries of the city but includes other cities in the surroundings which together comprise a total population of almost 28 million people. this huge potential continues to attract overseas retailers to come to this country. Meanwhile, according to a National Bank in Consumer Banking 2012 survey, around 42% of middle-class respondents spent for food and beverages. It is obvious that food and beverage retailers and fashion retailers make up the majority of typical tenants in a shopping centre. Within the quarter, some new local brand restaurants were also opened, including tuan

rumah and tjap toean, as well as fashion retailers Bling (part of the Metrox Group).

In the middle- to upper-class segment, Central retail Corporation (CrC), part of the thailand-based Central Group of Companies, recently announced the launch of its first branch of Central Department Store in Grand Indonesia Shopping town. the Central Department Store is planning to open a store which will take four floors or around 21,000 sq m and is scheduled to open in 2014. as part of their expansion plans in Indonesia, Central Department Store will open a store in the upcoming extended space of a shopping centre in West jakarta. Several other big overseas retailers are eyeing Indonesia closely as their next investment destination. Some have confirmed the commencement of operations in Indonesia in 2014 while others are still testing the waters before making a decision.

.

pre-commitment leVel during 2012 - 2014


jakarta bodetabek

0 100,000 200,000 300,000

2012F

2013F

2014F

sq m

absorbed Supply

0 100,000 200,000 300,000

2012F

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2014F

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absorbed Supply



rental rates and Service Charge rental rates

aVerage asking rental rates in jakarta and bodetabek area for tYpical floor

IDr 0

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2005 2006 2007 2008 2009 2010 2011 2012YtD


list of committed tenants in the future retail centers

shopping centres name location region retailers

jakartaCipinang Indah Mall Cipinang East jakarta Carrefour

the Baywalk @Green Bay Pluit Pluit North jakarta ace Hardware, Cinema XXI, Farmers Market, Electronic Solution, Bandar Djakarta,

Informa, time Zone, toys kingdom, Burger king, Optik Seis, Pendopo, Bike Colony, Home

Solution, White Hunter, Han Gang, Domino Pizza, roppan, Breadtalk, jCo Donuts, johnny

andrean Salon, Baleno, Samuel & kevin, american Giant, Mattress, lady americana

St . Moritz Puri Indah West jakarta Debenhams, Zara, Marks & Spencer, kidz Station, Starbucks, Burger king, Domino’s

Pizza, Matahari, Hypermart, Electronic City, Cinema XXI, ranch Market, Sea World Indo-

nesia, tony roma’s, kiyadon Sushi, the Coffee Bean and j.Co, Parkson

Pantai Indah kapuk Mall Pantai Indah kapuk North jakarta ace Hardware, Best Denki, Gold Gym, Food Hall

bodetabekBekasi junction Bekasi Bekasi Lotte Mart

Grand Metropolitan Mall Bekasi Bekasi Centro, Farmers Market, toys kingdom, FunWorld, Sate khas Senayan, Optik Melawai

Mal Ciputra Citra Gran Bekasi Bekasi Matahari, Hypermart, Gramedia, Starbucks, Bengawan Solo

Bintaro Xchange Bintaro tangerang Farmers Market, Best Denki, rockStar Gym, Frigo Ice Skating





the trend of rental rates in jakarta and the greater jakarta (jabodetabek) area remained stable as of 3Q 2012 compared to the previous quarter (QoQ). there are no shopping centres in jakarta reporting price adjustments during the quarter; however the overall adjustment was mainly due to an influx of new malls whose rental rates are above the market average. the rental rate was 6.3% higher than the previous quarter which brought the average asking rental rates for typical retail floor space to IDr437,085/sq m/month. apart from that, the average asking rental rates in this report are quoted in rupiah and therefore for several upper-class shopping malls using US dollars the value should be converted to the prevailing exchange rate which is higher than in the previous quarter. If we refer to the rental rates graph, the figure in September 2012 is 15.3% higher than the figure at the end of 2011. the adjustment occurring in 2012 year-to-date is mainly driven by three factors. First is the rent adjustment

made by newly-launched projects. rental rates in the initial stage have been changing in accordance with the increasing occupancy performance, Second is the renovation and new tenancy composition made by relatively old shopping centres in order to charge higher occupancy cost. third is the pegged rate adjustment and exchange rates (the weakening of the rupiah against the US dollar) which impacted the retail centres quoting US dollar rents. rental rates for upper-class malls have gone up steeply compared to other segments mainly because of the first factor mentioned above. Currently the rental rates for middle- to upper-class retail space was between IDr600,000 and 1,200,000/sq m/month. Meanwhile, the middle-class retail space was offered at around IDr340,000/sq m/month while the middle- to low-class space was offered at IDr230,000/sq m/month.

aVerage asking rental rates in jakarta and bodetabek area based on class

IDr 0

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2005 2006 2007 2008 2009 2010 2011 2012YtD



In the greater jakarta area (Bodetabek), rental rates were seen to remain stable at IDr251,995/sq m/month. a mall located in tangerang is

anticipating an asking rent adjustment of 5% in 2013.

serVice chargethere was no difference in the service charges during the quarter. the maintenance tariff hovered at IDr80,987/sq m/month in jakarta while in the BoDetaBek area service charges are on the average of IDr60,561/sq m/month.

In 2013, it is expected that there will be some malls increasing their maintenance costs in anticipation of the government’s plan to increase electricity tariffs next year.



While European countries faced economic turmoil, developing countries like Indonesia forged ahead. With improving consumer confidence and increasing spending, global retailers continued their expansion into this market. For the past few years, overseas retailers like Carrefour, Lotte, Sogo and other smaller retailers like 7-Eleven and Circle-k saw their businesses expanding in this market. the moratorium on the construction of shopping malls and commercial centres bigger than 5,000 sq m will remain in effect until the end of 2012. the under-construction shopping centres

had mostly been granted permits before the moratorium was issued. Nevertheless, exceptions will be given for new malls in the jl. Dr. Satrio area, South jakarta and East jakarta. With a limited number of projects over the next two years, the moratorium will have a positive impact by maintaining the balance between supply and demand and it will also give mall operators time to evaluate their strategies. Currently, shopping centres are more concerned with enhancing their asset value by doing refurbishments or creating a more interesting tenancy mix to justify new rental rates.

Outlook



Supply Up to 3Q 2012, land availability remained the major issue for the industrial market. During the quarter, none of the expansion plans of operating industrial estates were readily available for the construction of industrial buildings. almost all industrial estates with expansion plans reported that new land would only be available during 2013.

In the Bekasi area, two prominent industrial estates are speeding up the construction progress for the land expansion. One industrial estate is now focusing on developing around 150 hectares (gross) of land, where half of this is projected to be available in the middle of 2013, while the remainder will only be ready for industrial building construction in late 2013 or

mid-2014. another potential industrial plot to be developed occupies around 29 hectares (gross) in one active estate in Bekasi, which is projected to be ready in mid-2013.

One industrial estate in Bekasi is also rushing for the preparation of new industrial land as part of their commitment to pre-committed buyers. In other industrial estates in the same area, the next phase of expansion is also being prepared, but this is also probably going to be ready sometime in 2013.

Overall, the industrial land stock as of 3Q 2012 remained unchanged and will likely increase in 2013.

distribution of industrial land in six regions


jakarta10%

Bogor2%

Bekasi26%

tangerang5%

karawang36%

Serang21%

Industrial Estate Sector

total industrial land absorption decreased significantly compared to the previous quarter, accounting for only 30% compared to figures seen in 2Q 2012. However, the total transactions occurring this quarter were not only coming from the real transaction of 53 hectares but also from the pre-committed transactions over the land under preparation, which will be handed over sometime next year when it is ready to be developed. the total pre-committed transaction that occurred this quarter were for 109.2 hectares and, therefore, the total industrial land being transacted during 3Q 2012 was 162.37 hectares. this is slightly lower than total

transactions completed in the previous quarter. Pre-committed transactions are now becoming quite popular amidst land scarcity and mostly occur between land owners and existing tenants, particularly when they trust each other. Of most pre-committed transactions during the quarter, a significant number were carried out by existing tenants in need of business expansion. Land plots are reserved before they are ready (after cut and fill works, placing roads and other infrastructure), paid at the current market price and handed over to buyers after the land is ready for development.

Demand


jakarta | 3q 2012 | industrial estate


annual industrial land sales

Of the 53 hectares of real transactions in 3Q 2012, the highest land transaction was done by Delta Silicon with a total of 25 hectares of land sold. this includes the sale of around 12 hectares to F&B tenants (which plan to expand their operations), six hectares of automotive company transactions and miscellaneous other transaction to other industrialists including developers who build standard warehouse buildings for sale or for lease. the Delta Silicon has been recording consistent sales due to the availability of land. Modern Cikande in Serang sold in the second rank but registered much lower sales than Delta Silicon. Of the total land sold, the biggest plot was concluded by a gypsum board manufacturer company out of France accounting for six hectares, while the other smaller transactions were completed by the building material industry and steel-related companies. total land sold during the quarter in Modern Cikande was 6.8 hectares. Similarly, in sales volume, Suryacipta in karawang recorded a total of 6.4 hectares comprising three transactions – two automotive companies from japan (totalling more than 70% of total transactions) and a casting company from korea. New tenants made all of these of transactions. Meanwhile, kIIC in karawang sold two plots: one five-hectare plot to a chain-related company from japan and another smaller plot (1,000 sq m) to an existing tenant undergoing expansion. these two transactions in kIIC are probably going to account for the last of the company’s saleable industrial land before the launch of its next phase. Currently, kIIC is

focusing mainly on leasing transaction to maintain their remaining land assets for recurring income. Such measures are also applicable in some industrial estates. One estate in Serang is trying to prioritise leasing enquiries rather than sell land due to the limited available of land and their intention to hold on to remaining assets.

kIEC, which is affiliated with the biggest state enterprise producing steel, continued to sell land to two steel-related companies (one is a local company and one is an australian-based company). this transaction involved five hectares of land. Meanwhile, jababeka reported registering a total of 2.45 hectares of land composed from relatively small transactions such as trading, food, pharmaceuticals, packaging, metal, automotive and chemical. Meanwhile, MM2100 sold the last land parcel they have (totalling around one hectare) to a data-storage and cool-storage company. MM2100 is now concentrating on developing more industrial land as part of its extension plans.

On the leasing front, only kota Bukit Indah (Besland Pertiwi) is an active estate. along the quarter, one leasing transaction registered over 1.4 hectares of land for the expansion of existing japan-based automotives. In the first stage, around 3,000 sq m of building space was developed to fulfil the needs of this japanese client.

0

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ares




land sales recorded during 3Q 2012 in each industrial estate

cumulatiVe supplY, demand and take-up rates


pre-commitment salesSeveral pre-commitment transactions were recorded during the quarter, although the handover process will be largely completed in 2013. amidst the land scarcity, tenants (mainly existing tenants) are competing to get new land for their expansion plans by paying in advance before the land is completely developed as ready-to-use industrial plots. this is now a common phenomenon in the industrial market in order to secure land for future business expansion and to peg prices at the current value.

a good example is Greenland International Industrial Center, located in kota Delta Mas, Bekasi, where transactions materialised in

advance of next year’s handover. this quarter, around 21.2 hectares of land were sold to five japan-based buyers in the automotive and logistics industries.

Other pre-commitment sales also occurred in one industrial estate in Bekasi. While the location for ready-to-use industrial land was being prepared, around 43 hectares of land were sold to an automotive industry and warehouse operator. Meanwhile, another industrial estate in the same area also recorded 50 hectares’ worth of land transactions during the quarter to their existing tenants.

0 10 20 30 40 50 60 70 80 90

MM2100 (Bekasi)

kota Bukit Indah (karawang)

jababeka

kIEC (Serang)

kIIC (karawang)

Suryacipta (karawang)

Modern Cikande (Serang)

Delta Silicon (Bekasi)

hectares

0%10%20%30%40%50%60%70%80%90%100%

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

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Cumulative Supply (ha) Cumulative Demand (ha) take-up rate (%)



tYpe of actiVe industries during 2012Ytd


as discussed earlier, the most active industrial estates are located in Bekasi and karawang, and almost all of them introduced new price increases during the quarter. In karawang, the average asking price increase by 4.3% q-o-q, while more dramatic increases occurred in Bekasi by a factor of 7.2% q-o-q. Prices in Bekasi have risen as high as US$200 in certain industrial locations. Prices in both Bekasi and karawang have steadily risen in line with the diminishing readily available land stock in these areas.

In Bekasi, the q-o-q price has adjusted by IDr 50,000 to IDr100,000 for industrial estates quoting rupiah denominations, while those charging in US dollars asked for roughly US$10.00 more per sq m. Meanwhile, almost all active industrial estates in karawang charge in US dollars. During the quarter, karawang witnessed a US$10.00 per sq m price increase.

Industrial Land Prices

automotive54.4%

Food & Beverage

4.8%

Plastics1.3%

Pharmaceutical1.0%

Steel-related3.9%

Oil & Gas5.2%

Manufacturing3.3%

Logistics/Warehouse

3.9%

Metal0.4%

textiles2.0%

Building Material3.9%

Developer6.4%

Others5.5%

greater jakarta industrial land prices


$0$20$40$60$80

$100$120$140$160$180$200

2006 2007 2008 2009 2010 2011 2012YtD

US$

/sq

m

Bogor tangerang karawang Bekasi Serang



colliers international indonesia:

World trade Centre 10th & 14th floorjalan jenderal Sudirman kav. 29 - 31jakarta 12920Indonesiatel 62 21 521 1400fax 62 21 521 1411

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Copyright 2012 Colliers International

the information contained herein has been obtained from sources deemed reliable. While every reasonable effort has bee made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inac-curacies. readers are encouraged to consult their pro-fessional advisors prior to acting on any of the material contained in this report.

www.colliers.co.id

accelerating success.

Michael Broomell Managing Director

World trade Centre 10th & 14th floorjalan jenderal Sudirman kav. 29 - 31jakarta 12920Indonesiatel 62 21 521 1400 ext 131fax 62 21 521 1411

Ferry Salantoassociate Director, research

World trade Centre 10th & 14th floorjalan jenderal Sudirman kav. 29 - 31jakarta 12920Indonesiatel 62 21 521 1400 ext 134fax 62 21 521 1411

industrial maintenance costNothing changed for service charge tariffs, but one industrial estate is anticipating an increase in 2013 to counterbalance the climbing

operational costs. Meanwhile, one industrial estate in Bekasi maintained the service charge tariff but increased the water tariff by 20%.

greater jakarta industrial maintenance cost


industrial land prices and maintenance costs*

region Land Price (sq m) Maintenance Costs (/sq m/month)

Lowest Highest average Lowest Highest averageBogor US$ 100.00 US$ 157.80 US$ 128.90 US$ 0.07 US$ 0.08 US$ 0.07tangerang US$ 80.00 US$ 151.80 US$ 115.90 US$ 0.04 US$ 0.11 US$ 0.06karawang US$ 105.20 US$ 160.00 US$ 133.00 US$ 0.05 US$ 0.06 US$ 0.06Bekasi US$ 152.50 US$ 252.50 US$ 187.70 US$ 0.06 US$ 0.07 US$ 0.06Serang US$ 105.20 US$ 105.20 US$ 105.2 US$ 0.03 US$ 0.05 US$ 0.04

Colliers International Indonesia - research*1US$ = rp 9,500

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

2006 2007 2008 2009 2010 2011 2012YtD

US$

/sq

m/m

onth

Bogor tangerang karawang Bekasi Serang

total sales during 2012 are expected to be lower than total sales volume in 2011. Up until 3Q 2012, total year-to-date sales represented only 34% of total sales in 2012. For the remaining three months in the year, it is not expected to catch up to last year’s performance. the brisk economy and continued enquiries for industrial land are not enough to underpin sales performance. the main problem lies in the shortage of land, which is not anticipated long before the boom in the industrial market.

Year 2013 will be a one of supply, since several industrial estates are rushing for construction with the expectation to deliver next year. Nevertheless, most of the upcoming industrial

land scheduled for next year is already reserved by pre-commitment sales, and only a few will be available for sale. thus, we still expect new industrial land to be difficult to find next year. therefore, we still anticipate escalating prices next year.

For several years, the automotive industry has dominated as the major driver for industrial land absorption and will still continue to do so next year. Given the huge population and growing middle class, Indonesia will continue to be an appealing market for a variety of products. therefore, we still believe that the industrial buyer profile will remain the same.

Outlook


colliers market report 3q 2012

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