researchandforecast jakarta 1q2014

Research & Forecast Report

4Q 2013Jakarta | Office

Jakarta Property Market Report

Research & Forecast Report

1st Quarter 2014

Accelerating success.

2 Research & Forecast Report | 1Q 2014 | Contents | Colliers International

Contents

Office Sector 4

Apartment Sector 14

Retail Sector 24

Industrial Estate Sector 33

3 Research & Forecast Report | 1Q 2014 | Highlights | Colliers International

HighlightsOffice SectorAfter undergoing a gloomy outlook in 4Q 2013, leasing and sales of office space began to pick up momentum in 1Q 2014. Further, average asking base rental rates in the CBD showed a growth of 8.6% that brought the average rent to IDR247,444 / sq m / month. Similarly, asking base rents in US dollar-denominated buildings moved upward slightly by 3.7% q-o-q to USD35.91 / sq m/ month. The average occupancy rate in the CBD stabilized at 96.5%. In terms of strata-title office buildings, average asking prices also increased both in US dollars and in rupiah to USD4,750 / sq m and IDR45.9 million / sq m respectively.

Apartment SectorThe strong sales performance of under-construction apartment projects continued to trigger increases in the average asking price to IDR24.4 million / sq m or a 2.5% increase q-o-q. The CBD fetched the highest average price at IDR 38.3 million / sq m, an increase of 5.8% q-o-q while the average price in South Jakarta was registered at IDR 26.7 million / sq m, which grew by 3.2% from the last quarter. Not only price, but the average gross rental rate of apartments for lease located in the CBD and South Jakarta also trended upward by 3.4% compared to the previous quarter in anticipation of the increase in the operational costs and was recorded at USD26.56 / sq m/month.

Retail SectorLimited new retail supply in DKI Jakarta brought the occupancy rate up 2% to 89.3%. In contrast, the greater Jakarta area outside DKI Jakarta registered a slight decline in occupancy to 82% due to the opening of two new retail centers. In the meantime, the average base rental rate in Jakarta climbed by 3.3% q-o-q to IDR491,675 / sq m / month. Similarly in the greater Jakarta area, the average base rent moved to IDR302,618 / sq m / month, representing a 9.2% increase compared to last quarter.

Industrial Estate SectorSales of industrial land in 1Q 2014 dropped compared to the previous quarter with only 33.78 hectares of land being transacted representing only 7.6% of the total sales recorded in all of last year. Weakening industrial demand and limited industrial land availability were the major issues causing the sluggish industrial land sales. Amid such conditions, two industrial estates in Serang (Modern Cikande and KIEC) and one in Bekasi (Bekasi Fajar) increased prices. Serang recorded the highest increase in land price (15%) to an average of USD132.95 / sq m. Lack of industrial land stock and infrastructure improvements are two main reasons for the price adjustment.

Colliers International

is a leader in global real estate services, defined by our spirit of enterprise. Through a culture of service excellence and collaboration, we integrate the resources of real estate specialists worldwide to accelerate the success of our partners. We represent property investors, developers and occupiers in local and global markets. Our expertise spans all property sectorsoffice, industrial, retail, residential, rural & agribusiness, healthcare & retirement living, hotels & leisure.

By Ferry SalantoAssociate Director | [email protected]

4 Research & Forecast Report | 1Q 2014 | Office | Colliers International

OFFICE SECTORLeased OfficeSupply in the CBDCBD Office Cumulative Supply

Similar to the same period last year, no new office supply entered the market in the CBD as of 1Q 2014. With no new office buildings beginning operations, the cumulative supply was still 4.77 million sq m as of 1Q 2014.

Despite no new supply, construction activity for office buildings in the CBD was seen to continue progressing. Besides the buildings that were mentioned in previous reports, construction for some new office buildings began to appear. At least five leading buildings will potentially become new icons in Jakarta, which include Thamrin Nine (in Jalan Thamrin), Astra Tower and World Trade Centre III (in Jalan Sudirman), PCPD Tower (in the SCBD) and World Capital Tower (in Mega Kuningan). These five future high-rise buildings will be completed in 2017. A high-rise office building is also in planning and will be built at the Ciputra World 1 Complex. However, construction was not in progress as monitored during this quarter. Ciputra, as the developer, is currently starting construction of Ciputra World Office Tower 2, which is part of the existing Ciputra World Jakarta compound and is planned to be operational in 2015. An office building that is also projected to be operational in 2015 and has begun its construction is Satrio Tower. These office buildings will be part of the 700,000 sq m of projected total new supply in 2015.

Source: Colliers International Indonesia - Research

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2008

2009

2010

2011

2012

2013

2014

YTD

2014

F

2015

F

2016

F

2017

F

sq m

Existing Supply Annual Supply


0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2008

2009

2010

2011

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2014

F

2015

F

2016

F

2017

F

sq m


The CBD office market is still waiting for construction of several office buildings that have been announced previously, including Gran Rubina Tower 2 and Thamrin Twenty. Based on numbers, from 2014 to 2017, there will be 32 new office buildings in the CBD with a total space of 2.21 million sq m. Sudirman will become the most active region by contributing 11 projected office buildings (933,141 sq m). On the contrary, future supply in Thamrin will be the smallest with only two office buildings.

Despite having not been legalized, issues about increasing building coverage and plot ratio area became the highly anticipated information for developers. This will be related to strategic areas that are owned by developers, especially in the CBD. This is because those areas can be developed with higher and larger office buildings. For the existing old and mid-rise buildings, this condition will present the option to demolish the old buildings and re-build new ones, maximizing the plot ratio. At least two existing office buildings, located in Sudirman, and one office building in Setiabudi are planned for redevelopment.

0 200,000 400,000 600,000 800,000 1,000,000

2014F

2015F

2016F

2017F

sq m

Sudirman Thamrin Mega Kuningan

Rasuna Said Satrio Gatot Subroto

Future Supply in the CBD Based on Area


Outside CBD Office Cumulative Supply


In line with high demand, additional supply for office buildings will continue to record significant growth in 2015 and 2016. The supply of office buildings in the Outside CBD is projected to grow by 33% over the previous year with total space of around 385,000 sq m in 2015. Office buildings such as The Suites (in Pantai Indah Kapuk, North Jakarta), Menara Sentraya (in Blok M, South Jakarta) and St Moritz office tower (in Puri Indah, West Jakarta) are continuing their construction progress and will begin operations in 2015.

Based on area, South Jakarta is still the main contributor of office supply in the Outside CBD. Of the 1.06 million sq m projected office supply from 2014 to 2017, 67.6% will be in South Jakarta and 75.5% of the 713,390 sq m total future supply in South Jakarta will be in the TB Simatupang area.

Supply in the Outside CBDGedung Aneka Tambang 2, which is located in TB Simatupang (South Jakarta), was the only office building to begin operations in the Outside CBD as of 1Q 2014. This office building for lease brought 16,000 sq m of new additional supply and raised the cumulative supply to 2.29 million sq m.

A total office supply for 2014 is projected to reach over 289,000 sq m a historic high after a significant office supply in 2012. Based on the construction progress, after Gedung Aneka Tambang 2, Wisma 77 Tower 2 and Green Kosmo Mansion will soon be ready to begin operations. Based on marketing scheme, the majority or 63% of the projected annual supply in 2014 will be for strata-title sale.

Future Supply in the Outside CBD Based on Area


0 100,000 200,000 300,000 400,000 500,000

2014F

2015F

2016F

2017F

sq m

Central Jakarta South Jakarta North Jakarta

East Jakarta West Jakarta


As of 1Q 2014, the additional supply in Jakarta was only contributed by Gedung Aneka Tambang 2, which is in TB Simatupang. Despite the rapid growth and availability of infrastructure still being debated, this area is constantly evolving. As of 1Q 2014, 513,086 sq m of total space of offices has been in operation in TB Simatupang. By the end of 2014, TB Simatupang will see an additional supply of 219,637 sq m. This total projected supply in 2014 will be the largest since 1990 and even higher than the additional supply of office space in TB Simatupang from 2010 to 2013. However, we noted that no new office buildings have started construction in TB Simatupang in early 2014. All construction activities are carried out by office buildings that started construction last year.

TB Simatupang Office Cumulative Supply


Supply in TB Simatupang

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

1,000,0001,100,000

2008

2009

2010

2011

2012

2013

2014

YTD

2014

F

2015

F

2016

F

2017

F

sq m


Future Supply in TB Simatupang


0 100,000 200,000 300,000 400,000 500,000

2014F

2015F

2016F

2017F

sq m

Outside CBD exclude TB Simatupang TB Simatupang


New Supply Pipelineprojected completion oFFice Building projectS name location Sga marketing Scheme StatuS development

cBd area

2014 Sinarmas MSIG Sudirman 75,000 For Lease Under Construction

2014 Lippo Kuningan Rasuna Said 30,500 For Lease Under Construction

2014 The Noble House Office Tower Mega Kuningan 45,000 For Lease Under Construction

2014 Gran Rubina Tower 1 Rasuna Said 31,438 For Sale Under Construction

2014 Convergence Rasuna Said 36,367 For Lease & For Sale Under Construction

2015 Ciputra World Jakarta 2 Satrio 70,000 For Lease & For Sale Under Construction

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

2015 AIA Center Sudirman 36,596 For Lease Under Construction

2015 Cemindo Tower Rasuna Said 60,995 For Lease Under Construction

2015 Sahid Sudirman Center Sudirman 138,500 For Lease & For Sale Under Construction

2015 Office Tower @ ST Regis Gatot Subroto 90,511 For Lease Under Construction

2015 Telkom Landmark Tower II Gatot Subroto 65,000 For Lease Under Construction

2015 Satrio Square Satrio 24,600 For Lease Under Construction

2015 Bahana Office Tower Mega Kuningan 50,000 For Lease Under Construction

2015 Satrio Tower Satrio 31,604 For Lease Under Construction

2015 Wisma Mulia 2 Gatot Subroto 80,000 For Lease Under Construction

2015 Lippo Thamrin Office Tower Thamrin 16,500 For Sale In Planning

2016 Mangkuluhur Tower Gatot Subroto 53,000 For Lease & For Sale Under Construction

2016 Menara Palma 2 Rasuna Said 50,000 For Lease Under Construction

2016 Gran Rubina Tower 2 Rasuna Said 32,000 For Sale Under Planning

2016 Centennial Tower Gatot Subroto 100,000 For Sale Under Construction

2016 Icon Tower Sudirman 72,500 For Lease Under Construction

2016 The Tower Gatot Subroto 56,492 For Sale Under Construction

2017 SSI Tower Rasuna Said 100,000 For Lease In Planning

2017 Prosperity Tower @ Distict 8 Sudirman 71,545 For Sale Under Construction

2017 World Capital Tower Mega Kuningan 72,000 For Sale Under Construction

2017 World Trade Center 3 Sudirman 70,000 For Lease Under Construction

2017 Sequis Life Tower 2 Sudirman 80,000 For Lease Under Construction

2017 Treasury Tower @ District 8 Sudirman 139,000 For Sale Under Construction

2017 Chitaland Satrio 100,000 For Lease In Planning

2017 Gayanti City Gatot Subroto 25,000 For Lease In Planning

2017 Astra Tower Sudirman 100,000 For Lease Under Construction

2017 Thamrin Nine Thamrin 45,000 For Sale Under Construction

2017 PCPD Tower Sudirman 100,000 For Lease Under Construction

outSide cBd area (exclude tB Simatupang)

2014 GP Plaza Slipi 12,204 For Sale Under Construction

2014 Wisma 77 Tower 2 S Parman 24,200 For Sale Under Construction

2014 Kirana Two Kelapa Gading 17,563 For Lease & For Sale Under Construction

2015 Menara Sentraya Blok M 52,072 For Sale Under Construction

2015 ST Moritz Office Tower Puri Indah 19,500 For Sale Under Construction

2015 Puri Indah Financial Tower Puri Indah 38,500 For Sale Under Construction

2015 The Suites Pantai Indah Kapuk 13,200 For Sale Under Construction

2015 MNC Tower II Kebon Sirih 20,000 For Lease Under Construction

2015 Jakarta Box Tower Kebun Sirih 36,000 For Lease Under Construction

2015 Soho Capital S Parman 36,000 For Sale Under Construction

continued


70%

75%

80%

85%

90%

95%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

YTD

CBD Outside CBD (excl. TB Simatupang) TB Simatupang


As of 1Q 2014, the occupancy of office buildings in the CBD stabilised at 96.5%. With limited office space available in the CBD, however, vacant spaces above 1,000 sq m were still found at several office buildings. The most significant vacant space, approximately 13,000 sq m, is at an office building located in Sudirman that has been in operation since 1991. Two other office buildings in Sudirman also have vacant space of around 1,000 - 2,000 sq m, while in Thamrin, a building is still offering around 2,000 sq m. Nonetheless, a lot of available vacant space is balanced by an invasion of new tenants, keeping the occupancy rate above 95%.

Relocation activity was identified from one building to another building, both located in the Mega Kuningan area. This telecommunications company, after being acquired by another telecommunications company, has vacated 70% of the total space they occupied and moved to a newer building. This relocation had no impact on the occupancy rate in the CBD. By next year they will move entirely to the new building, followed by an expansion.

Occupancy Rate in the CBD and Outside the CBD


Occupancy

projected completion oFFice Building projectS name location Sga marketing Scheme StatuS development

continuation

2015 Altira Yos Sudarso 40,000 For Sale Under Construction

2015 Maxima Tower Kelapa Gading 8,000 For Lease Under Construction

2015 One Tower Kemayoran 21,400 For Sale In Planning

2016 Lippo Tower Holland Village Cempaka Putih 27,000 For Lease & For Sale Under Construction

2016 Gallery West Kebun Jeruk 29,000 For Sale Under Construction

2016 L'Venue Pasar Minggu 41,597 For Sale Under Planning2016 Sky 18 Tower Pasar Minggu 27,500 For Sale In Planning

2016 Soho Pancoran Pancoran 30,000 For Sale Under Construction2016 T Tower (BJB Tower) Pancoran 24,000 For Sale Under Construction

tB Simatupang

2014 Green Kosmo Mansion Tower TB Simatupang 23,000 For Lease & For Sale Under Construction

2014 The Manhattan Square TB Simatupang 39,375 For Lease & For Sale Under Construction

2014 18 Office Park TB Simatupang 40,000 For Lease & For Sale Under Construction

2014 Plaza Oleos TB Simatupang 39,778 For Lease & For Sale Under Construction

2014 Metropolitan Tower TB Simatupang 44,000 For Lease & For Sale Under Construction

2014 Palma Tower TB Simatupang 20,484 For Lease Under Construction

2014 Graha MRA TB Simatupang 13,000 For Lease Under Construction

2015 South Quarter Tower 1 TB Simatupang 40,778 For Sale Under Construction

2015 South Quarter Tower 2 TB Simatupang 40,778 For Lease Under Construction

2015 AD Premier TB Simatupang 18,900 For Lease Under Construction

2016 The Manhattan Square Tower 2 TB Simatupang 39,375 For Lease In Planning

2016 Naras Tower TB Simatupang 19,000 For Lease In Planning

2016 Beltway Office Park Tower 4 TB Simatupang 25,600 For Lease In Planning

2016 South Quarter Tower 3 TB Simatupang 40,778 For Lease In Planning

2017 The Manhattan Square Tower 3 TB Simatupang 39,375 For Lease In Planning

2017 Signum South Tower TB Simatupang 54,000 For Lease In Planning


Annual Office Supply and Demand in the CBD


Expansion by existing tenants will still be the main factor for occupancy rates to potentially increase in the CBD. An existing tenant from the chemical industry (fertilizers) will add around 2,000 sq m at an office building in Gatot Subroto. In other corridors, a clothing apparel company (Adidas) will extend their space by around 1,000 sq m at an office building in Sudirman.

Future DemandAfter a continuous upward trend since 2012, the occupancy rate in the Outside CBD decreased modestly by less than 1% QoQ to 94.6%. This minor change was mainly driven by the only office building coming this quarter that has secured high a pre-commitment level with some tenants having already started operations as of 1Q 2014.

0

50,000

100,000

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200,000

250,000

300,000

350,000

400,000

450,000

2008

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sq m

Annual Supply Annual Demand

Although the overall occupancy rate in the Outside CBD was down moderately, office buildings in TB Simatupang noted a slight increase. Office buildings in Pondok Indah have lifted the occupancy rate by less than 1% to 96.2% as of 1Q 2014.

Annual Office Supply and Demand in the Outside CBD


-50,000

0

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300,000

2008

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sq m

Annual Supply Annual Demand

Pre-Committed Absorption of Future Office in the CBD


Future office buildings that are expected to begin operations from 2014 to 2017 in the CBD have achieved 32.1% pre-commitment. Pre-commitment has reached 40% as of 1Q 2014.

Pre-commitment levels for office buildings in 2014 - 2017, including those already in operation, are 23.3% lower in the Outside CBD. Pre-commitment at office buildings in 2014 reached 37.4% as of 1Q 2014. The sales of strata-title offices have contributed around 53% of the total pre-committed absorption in 2014.

0 200,000 400,000 600,000 800,000 1,000,000

2014F

2015F

2016F

2017F

sq mAnnual Supply Space Absorbed


Pre-Committed Absorption for Future Office in the Outside CBD


Pre-Committed Absorption for Future Office in TB Simatupang


0 200,000 400,000 600,000 800,000 1,000,000

2014F

2015F

2016F


Asking Base RentalAverage Base Rental in the CBD Based on Grade


USD 0.00

USD 10.00

USD 20.00

USD 30.00

USD 40.00

USD 50.00

USD 60.00

IDR 0

IDR 118,470

IDR 236,940

IDR 355,410

IDR 473,880

IDR 592,350

IDR 710,820

Prem

ium

Grad

e A

Grad

e B

Grad

e C

In early 2014, the office market was forecast to show a slowdown in movement given the lacklustre performance in the last six months of 2013 and in anticipation of the uncertain situation due to the political agenda in Indonesia in 2014. Surprisingly, despite not yet having recovered, the average base rental rates in the CBD showed growth of 8.6% QoQ, which brought the average rental rates to IDR247,444 per sq m per month for office buildings charging in local currency as of 1Q 2014 or growing by 37.9% YoY.

Based on space availability, some office buildings have adjusted their base rental rates by IDR50,000 to 100,000. Office buildings in the Sudirman area continue to contribute to the increase in the rental rates. No Grade A office buildings adjusted their rates as of 1Q 2014; only buildings categorised as Grades B and C adjusted their rental rates due to market prices and space availability.

Office buildings charging in US dollars also recorded an increase of 3.7% QoQ, which is the highest quarterly growth since last year. The main cause of this increase was an adjustment in the asking base rent of an office complex in the SCBD area. Limited vacant space had caused this office complex to adjust their asking base rent by more than double. In addition, some office buildings owned by Mulia Group increased their base rent between USD2.00 and 7.00 psm. These raised the average asking base rent for office buildings charging in US dollars to USD35.91 per sq m per month as of 1Q 2014.

0 200,000 400,000 600,000 800,000 1,000,000

2014F

2015F

2016F

2017F



The average base rental rates for office buildings in rupiah also recorded an increase by 5.3% QoQ in the Outside CBD. Several office buildings increased their base rental rates by an additional IDR20,000 to 40,000 psm. Newly operating office buildings that offer higher rent above the market average also caused the average rental rates to rise. The average asking rental rate is currently IDR161,418 per sq m per month. For rent in US dollars, office buildings in TB Simatupang characterised much of the change. Although less than 1% QoQ, this increase led the average base rent to USD21.25 per sq m per month as of 1Q 2014.

A more significant increase was shown by office buildings charging in rupiah in TB Simatupang, including the Pondok Indah area. As a growing area that continues to become a prioritised location for office tenants, the asking base rent currently is IDR155,833 per sq m per month, up 11.4% QoQ. Albeit lower, the average base rents in US dollars moved upward by 4.3% QoQ, which brought the average base rent to the current USD20.86 per sq m per month.

Average Asking Base Rental in the CBD


USD 0.00

USD 5.00

USD 10.00

USD 15.00

USD 20.00

USD 25.00

USD 30.00

USD 35.00

USD 40.00

IDR 0

IDR 59,235

IDR 118,470

IDR 177,705

IDR 236,940

IDR 296,175

IDR 355,410

IDR 414,645

IDR 473,880

2008

2009

2010

2011

2012

2013

2014

YTD

IDR USD

Average Asking Base Rental in TB Simatupang


USD 0.00

USD 5.00

USD 10.00

USD 15.00

USD 20.00

USD 25.00

IDR 0

IDR 59,235

IDR 118,470

IDR 177,705

IDR 236,940

IDR 296,175

2008

2009

2010

2011

2012

2013

2014

YTD

IDR USD

Strata-title OfficeSupply

Annual Supply and Absorption in the CBD


0

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2007

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sq m

Annual Supply Annual Take-up


The strata-title office buildings in all of Jakarta comprised less than 20% of the cumulative supply as of 1Q 2014. The total space of strata-title office buildings in the CBD is 18.9% of the total supply or 816,829 sq m. After the opening of MD Place last year, offices for sale in the CBD will see Gran Rubina in 2014. There is another office building that is also located within the Rasuna Epicentrum mega-complex in Jalan Rasuna Said, called Convergence Office Tower. But this office building will only sell approximately 30% of the total building space to the public. By projecting an additional 41,438 sq m from this building, the total supply of office space for sale will be 858,267 sq m in 2014.

Quite limited additional supply of strata-title office buildings brought the take-up rate to 99% in 2013 and it will likely remain around that level in 2014. Indeed, the pre-commitment level is high. The pre-commitment level of future strata-title office buildings, which will begin operations in 2014, has reached 60% thus far. Overall, the average pre-commitment level for future strata-title office buildings in the CBD that will begin operations from 2014 to 2017 has reached 62.7%. A high level of demand will have an impact on selling prices. After experiencing a continued increase for the last three years, prices of strata-title offices in the CBD were quite stable in the quarter. The average selling price, based on available space in the CBD, stood at around IDR45.9 million per sq m, while the price at buildings in US dollars was USD4,750 per sq m. These represent average prices of available office spaces for sale that have been in operation since 2010 to 2013, including future office buildings that have already been offered this quarter. Although the average prices look high, there are office spaces in the CBD that are offered at a minimum of IDR39 million per sq m. Prices of office buildings quoting in rupiah range from IDR39 to 55 million per sq m, while prices in US dollars range from USD3,850 to 5,750 per sq m.

Annual Supply and Absorption in the Outside CBD


0

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2007

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sq m

Annual Supply Annual Take-up

With total space of 432,526 sq m or 17.7% of the cumulative supply in the Outside CBD, the take-up rate was seen to increase slowly to 95% as of 1Q 2014. This take-up rate only grew by 0.5% QoQ. Similar to the CBD, pre-commitment sales for strata-title offices in the Outside CBD also recorded a quite significant increase. On average, the pre-commitment sales for strata-title offices that will begin operations from 2014 - 2017 in the Outside CBD have reached 46.3% as of 1Q 2014. In 2014 alone, the take-up rate is 52.7%.

However, the asking prices for office buildings in the Outside CBD were not as aggressive as in the CBD area. The increasing asking prices in the Outside CBD were much influenced by offices for sale in TB Simatupang where they are currently IDR27 million per sq m. The average asking price for office buildings in the Outside CBD, excluding TB Simatupang, was IDR26.4 million per sq m or 3% lower than in TB Simatupang.


Asking Price Based on Area


Asking Price

USD 0

USD 1,000

USD 2,000

USD 3,000

USD 4,000

USD 5,000

IDR 0

IDR 11,847,000

IDR 23,694,000

IDR 35,541,000

IDR 47,388,000

IDR 59,235,000

CBD

(USD

)

CBD

(IDR)

Out

side

CBD

exc

l. TB

Sim

atup

ang

(IDR)

TB S

imat

upan

g (U

SD)

TB S

imat

upan

g (ID

R)

USD 0USD 500USD 1,000USD 1,500USD 2,000USD 2,500USD 3,000USD 3,500USD 4,000USD 4,500USD 5,000

IDR 0IDR 5,923,500IDR 11,847,000IDR 17,770,500

IDR 23,694,000IDR 29,617,500IDR 35,541,000IDR 41,464,500IDR 47,388,000IDR 53,311,500

IDR 59,235,000

2008

2009

2010

2011

2012

2013

2014

YTD

IDR USD


Concluding ThoughtWith the background of a gloomy outlook back in mid-2013, a number of companies were indicating a hold on their expansion plans. Decision-makers are presented with a continued weakening of local currency that is anticipated to worsen the whole economic outlook. The impact of the legislative election in early April this year will amplify the worries among business practitioners.

Notwithstanding the dismal perspective for 2014, surprisingly, quite a few companies that held back on expansion plans in 2013 started to proceed with their plans during the first quarter of 2014, highlighted by a significant number of office space purchases or leases. The increasing confidence level implies that the country still has long-term business prospects. The expectation of future clean and pro-business leaders has inspired positive sentiment among leading developers. They strongly believe that political transition this year will lead to a better Indonesia and will be the momentum for the Indonesian economy to vibrate.

Thus far, the vacancy rate in 2014 is low while demand is expected to become more resilient, which would trigger an increase in office rents.

.

In the main other business areas like TB Simatupang, business execution was relatively slower than in the CBD although inquiries for office locations is quite high. The challenge for this location remains at the infrastructure. Nevertheless, TB Simatupang is still perceived as a location that minimizes commuting distance from home to office. Buildings with back access will benefit most from this situation.

Office rent in the CBD keeps getting more expensive and this presents an opportunity for office buildings in the other non-prime areas. The idea of relocating part of an office division that does not need the exposure of the CBD has just started in the last few years, however some corporations are not ready for this concept although the communications technology has become so sophisticated. The culture in some corporations is not ready, even with video teleconferencing technology. Physical meetings are required frequently and therefore an office location in a non-prime area but still easily accessible to the CBD, like the Tanah Abang area, is becoming quite popular because the rental rates are much lower than in the CBD. Given that, other areas like MT Haryono with close proximity to the CBD will potentially become secondary locations for companies needing a lower rental rate for their non-core divisions.

14 Research & Forecast Report | 1Q 2014 | Apartment | Colliers International

Apartment for Strata-titleSupplyBy the end of 1Q 2014, the cumulative supply of strata-title apartments in Jakarta grew at a moderate pace. The market received 1,246 new units, up by 0.9% QoQ, from the hand-over of several projects like Kemang Village (The Infinity Tower), Pakubuwono Terrace (North Tower), Sherwood Apartment (Wellington Tower) and Woodland Park (Matoa Tower). These 1,246 units, or 7.27% of the total projected 20,889 units that will be completed this year, are scattered in South and North Jakarta. The Infinity Tower is the fifth tower being handed over out of a total of seven towers at Kemang Village Residences. The Pakubuwono Terrace (North Tower) and Woodland Park (Matoa Tower) are brand new projects that are expecting to see more new towers in the next few years. In North Jakarta, Sherwood Residence, located in the Kelapa Gading area, had a new tower completed during the quarter, called Wellington Tower. This project is considered one of the upper-class developments in that area.

Not all apartment projects are completed at the scheduled time. Some experience slow finishing work and are likely to be rescheduled to 2Q or even 3Q 2014.

The outlook for 2014 was predicted to be tough, particularly given the nationwide elections that could impact business decisions. The Central Banks policy to increase its benchmark interest rate and the minimum loan-to-value (LTV) caps for housing loans from 80 to 70%, and 60% for second mortgage loans, and 50% for third mortgage loans has dampened property acquisition. In addition, banks are restricted from extending loans used as down payments for home purchases. These measures are expected to reduce demand on residential properties for investment or speculation, instilling more prudent lending and a common prudential standard among banks.



List of Completed Projecs During 1Q 2014development location region developer no. oF unitS lateSt oFFering price per Sq m

Kemang Village (The Infinity) P. Antasari South Jakarta Lippo Karawaci 175 IDR30 million

Pakubuwono Terrace (Tower North) Kebayoran Lama South Jakarta PT Selaras Mitra Sejati 750 IDR15 million

Sherwood Apartment (Wellington) Kelapa Gading North Jakarta Summarecon 100 IDR22 million

Woodland Park (Matoa tower) Kalibata South Jakarta Group Kalibata 221 IDR16 million

Nevertheless, the abovementioned condition did not stop developers from launching new projects, as was seen in the first quarter of 2014. In fact, there are 14 newly launched projects scattered in four areas of Jakarta including the CBD, East Jakarta, South Jakarta, and West Jakarta. From the total of 5,286 new apartment units, South Jakarta contributes the largest at 41.5%, followed by West Jakarta at 36%, while the CBD area contributes only 22.5% from three apartment projects. These new projects are expected to be completed in the next two or four years. Some projects will have more than two towers that will be built in stages and therefore the completion time will take more than two years. The South Jakarta and West Jakarta areas are expecting to see abundant apartment projects over the next three to four years.

Some of the projects in South Jakarta are located in expatriate community locations, like Pondok Indah and Pangeran Antasari and therefore quote high prices compared to other non-prime locations like Pasar Minggu, Pejaten and Kebayoran Lama. Most of the projects in West Jakarta aim at the mid-low segment, characterised by a large number of units at a project and a relatively affordable price. Some projects in good locations are offered at higher prices. West Jakarta has been seeing many ongoing property developments including offices, apartments, and shopping centres. Underpinned by good infrastructure, like the toll roads connecting the area to the airport, West Jakarta continues to appeal to property investors.


Newly Launched* Apartments During 1Q 2014development location region no. oF unitS expected completion time

aSking price per Sq m

Verde Two (2 Towers) Rasuna Said CBD 304 2016 IDR37 million

Anandamaya Residence (3 Towers) Sudirman CBD 500 2017 IDR50 million

Gayanti City Apartment (Tower I) Gatot Subroto CBD 198 2016 IDR33 million

Domaine (Tower I) Sudirman CBD 186 2017 IDR38 million

Bellevue Place Apartment MT Haryono South Jakarta 128 2016 IDR31 million

Kebayoran Icon Kebayoran Lama South Jakarta 256 2016 IDR19 million

One Otium Antasari South Jakarta 160 2017 IDR30 million

Kartika Residence (3 Towers) Pondok Indah South Jakarta 800 2018 IDR40 million

Foresque Apartment (3 Towers) Pasar Minggu South Jakarta 650 2017 IDR16 million

The Batik @ Pejaten Pejaten South Jakarta 200 2017 IDR15 million

Maqna Residence Meruya West Jakarta 380 2017 IDR17 million

Vittoria Residence (3 Towers) Daan Mogot West Jakarta 1,100 2017 IDR14 million

Wang Residence Kedoya West Jakarta 250 2017 IDR27 million

Veranda Kembangan West Jakarta 174 2016 IDR19 million

Note: * Newly Launched is when a new apartment development has secured development permit and is only officially introduced and offered in the market.


The Distribution of Newly Launched Apartment by Number of Units


Supply of new apartment units during 2014 will be substantial, i.e. 20,889 units, and will continue in 2015 when the market is expected to see another 24,228 units. All in all, the total of apartments projected to come onto the market from 2014 - 2017 will be 62,197 new units, mainly supplied by West Jakarta with 22.4% of the total supply, followed by Central and South Jakarta with 20.4 and 20.2%, respectively.

New Supply Pipeline (2014 - 2017)apartment name location region no. oF unitS

2014

Woodland Park (Matoa tower) (1Q) Kalibata South Jakarta 221

Pakubuwono Terrace (Tower North) (1Q) Kebayoran Lama South Jakarta 750

Sherwood Residence (Wellington) (1Q) Kelapa Gading North Jakarta 100

Kemang Village (The Infinity) (1Q) Antasari South Jakarta 175

Ambassade Residence Tower A Puri Denpasar CBD 234

Raffles Residences Satrio CBD 64

MyHome Apartment at Ciputra World Satrio CBD 136

Setiabudi Sky Garden (tower 1) Rasuna Said CBD 426

Verde Apartment (Tower East) Rasuna Said CBD 114

Pasar Baru Mansion (2 towers) Pasar Baru Central Jakarta 520

Elpis Residence Gunung Sahari Central Jakarta 791

Capitol Park Apartment Salemba Central Jakarta 1,700

The Mansion at Dukuh Golf Residence (Aurora Tower) Kemayoran Central Jakarta 522

The Mansion at Dukuh Golf Residence (BellaVista Tower) Kemayoran Central Jakarta 612

The Green Pramuka (Tower Chrysant) Pramuka Central Jakarta 1,000

The Green Pramuka (Tower Bougenville) Pramuka Central Jakarta 1,000

Sentra Timur Residence II (2 Towers) Pasar Rebo East Jakarta 810

Titanium Square Pulo Gebang East Jakarta 725

The Hive @ Tamansari Cawang East Jakarta 422

Sherwood Residence (Regent) Kelapa Gading North Jakarta 100

Pluit Seaview (Tower Maldives) Pluit North Jakarta 940

Gading Greenhill Pegangsaan Dua North Jakarta 700

Northern Ancol Residence Ancol North Jakarta 800

La Venue - South Tower Pasar Minggu South Jakarta 341

Kemang Village (The Intercon) Antasari South Jakarta 400

The East at Essense Complex Dharmawangsa Dharmawangsa South Jakarta 244

continued

South Jakarta41.5%

West Jakarta36.0%

CBD22.5%


apartment name location region no. oF unitS

continuation

The Aspen at Admiralty Fatmawati South Jakarta 860

Pakubuwono Terrace (Tower South) Kebayoran Lama South Jakarta 720

The Pakubuwono Signature Pakubuwono South Jakarta 188

Senopati Penthouse Senopati South Jakarta 63

LA City Apartment (Tower A) Lenteng Agung South Jakarta 980

La Maison Barito Barito South Jakarta 80

Botanica Apartment (3 Towers) Simprug South Jakarta 626

The Bellevue at Pondok Indah Pondok Indah South Jakarta 40

Green Central Tower Cerberra Gajah Mada West Jakarta 420

The Windsor (Tower I) Puri Indah West Jakarta 176

The Windsor (Tower II) Puri Indah West Jakarta 164

Sky Terrace Lagoon Kalideres West Jakarta 525

Metro Park Residence Kebon Jeruk West Jakarta 1,200

Green Palm Residence @ Puri Kosambi West Jakarta 1,000

2015

East Park Apartment (Tower C) KRT Radjiman East Jakarta 550

The Residence (CWJ 2) Satrio CBD 119

The Orchad Satrio (CWJ 2) Satrio CBD 349

Setiabudi Sky Garden (tower 2) Setiabudi CBD 160

The Suite (W Hotel Tower) Satrio CBD 200

T - Plaza Residence (Tower B) Pejompongan Central Jakarta 500

Menteng Park Cikini Central Jakarta 756

The Grreen Pramuka (Tower Orchid) Pramuka Central Jakarta 1,000

The Grreen Pramuka (Tower Penelope) Pramuka Central Jakarta 1,000

The Green Pramuka (Tower Scarlet) Pramuka Central Jakarta 1,000

Eastonia Jatiwaringin East Jakarta 312

Green Signature Apartment MT. Haryono East Jakarta 800

Bassura City (Tower Flamboyan) Basuki Rahmat East Jakarta 1,000

Bassura City (Tower Edelweiss) Basuki Rahmat East Jakarta 1,000

Bassura City (Tower Dahlia) Basuki Rahmat East Jakarta 1,000

Bassura City (Tower Cattleya) Basuki Rahmat East Jakarta 600

Bassura City (Tower Alamanda) Basuki Rahmat East Jakarta 600

Teluk Intan (Tower Saphire) Teluk Gong North Jakarta 1,100

Tifolia Apartment Perintis Kemerdekaan North Jakarta 500

Pluit Seaview (Tower Belize) Pluit North Jakarta 300

Callia Apartment Perintis Kemerdekaan North Jakarta 560

The Oakwood Sky Garden (2 Towers) Pluit North Jakarta 700

Pluit Seaview (Tower Ibiza) Pluit West Jakarta 500

Pluit Seaview (Tower Bahama) Pluit South Jakarta 650

Green Bay Pluit (Sea View) Pluit North Jakarta 2,072

Kemang Village - The Bloomington Antasari South Jakarta 150

The Royal Olive Residence Tower I Buncit Raya South Jakarta 225

Woodland Park (Cendana Tower) Kalibata South Jakarta 218

Senopati Suites 2 Senopati South Jakarta 81

1 Park Avenue Gandaria South Jakarta 279

Nine Residence Warung Buncit South Jakarta 246

Providence Park Permata Hijau South Jakarta 114

continued



continuation

Kencana Residence Pondok Indah South Jakarta 173

District 8 (Tower Eternity) Senopati South Jakarta 400

District 8 (Tower Infinity) Senopati South Jakarta 280

Izzara Apartment (2 Tower @ 225 unit) TB. Simatupang South Jakarta 450

Lexington Rersidence (Tower 1) Pondok Pinang South Jakarta 270

Lexington Rersidence (Tower 2) Pondok Pinang South Jakarta 270

The Aspen Peak at Admiralty Fatmawati South Jakarta 644

Belmont Residence (Tower Montblanc) Meruya Ilir West Jakarta 350

Gianetti Apartment Kemanggisan West Jakarta 500

St. Moritz (New Presidential Tower) Puri Indah West Jakarta 150

Satu8 Residence Kedoya West Jakarta 174

The Nest Apartment Meruya Utara West Jakarta 1,100

Point 8 (Air Crew Tower) Daan Mogot West Jakarta 546

Gallery West Kebon Jeruk West Jakarta 280

2016

St Moritz (The New Ambassador Suite Tower) Puri Indah West Jakarta 200

The H Residence MT Haryono East Jakarta 383

Sudirman Suites Sudirman CBD 380

Senopati Suites 3 Senopati South Jakarta 54

Signature Park Grande MT Haryono East Jakarta 1,100

Grand Pakubuwono Terrace Kebayoran Lama South Jakarta 435

Sentosa Residence Cempaka Putih Central Jakarta 687

Gold Coast Apartment (Atlantic Tower) Pantai Indah Kapuk North Jakarta 568

Grand Pancoran Pancoran South Jakarta 120

Sudirman Hill Residence Karet Central Jakarta 255

Apartment Pejaten Park Residence Warung Buncit South Jakarta 380

Belmont Residence (TowerAthena) Meruya West Jakarta 165

Four Winds Permata Hijau South Jakarta 122

Capitol Suites Prapatan Raya Central Jakarta 327

Puri Mansion Apartment (Tower A) Puri Kembangan West Jakarta 900

Madison Park Tanjung Duren West Jakarta 1,200

Gayanti City (2 Towers) Gatot Subroto CBD 318

Verde Two (Tower 1) Rasuna Said CBD 152

Verde Two (Tower 2) Rasuna Said CBD 152

Bellevue Place Tebet South Jakarta 128

Kebayoran Icon Kebayoran Lama South Jakarta 256

Veranda Pesanggrahan West Jakarta 174

2017

Regatta London Tower Pantai Mutiara North Jakarta 276

Central 88 (2 Towers) Kemayoran Central Jakarta 612

Holland Village Cempaka Putih Central Jakarta 400

Domaine Sudirman CBD 186

Rosewood Residences Satrio CBD 160

Skyline Residence (2 Towers) DI Panjaitan East Jakarta 481

Kemang Penthouse Kemang South Jakarta 262

The Foresque Pasar Minggu South Jakarta 600

continued


Overall, the take-up rate in Jakarta demonstrated an increasing trend with the exception of the CBD area that posted a moderate decrease compared to the previous quarter. With abundant new projects during the quarter but mediocre absorption, the CBD area saw a downswing in the take-up rate trend, by 4% QoQ. South Jakarta and non-prime areas continued to show an upward trend, due to some on-going projects showing progressive construction activities and offering a relatively affordable price compared to the CBD area. Several newly launched projects in middle- to upper-class locations, such as Menteng, Pejaten, Puri Indah, Kemang and Pondok Indah, applied NUP (nomor unit pemesanan or an offer to book a reserved unit) due to high demand within those areas. This way, developers will disseminate NUP to their loyal customers and other potential buyers who can choose good units (usually located on a preferred floor or with the best view, etc.). Interested buyers will then have to deposit a certain amount of money (ranging from IDR20 to 50 million, depending on the class of the apartment) to get the priority to book the desired units.

The Menteng, Pejaten, Puri Indah, Kemang and Pondok Indah areas are popular residential areas (except for Puri Indah) for Jakartas expatriate community as they are surrounded by supporting facilities like modern malls, international schools, different chains of supermarkets and other service establishments.

There were several promotional programmes offered during the first quarter benefiting the moments like Chinese New Year and Valentine. Other promotional campaigns to entice buyers are nothing special and continue to copy previous promotions like free holidays to Bali, gold rewards, electronic gadgets or furniture to furnish the apartment units.


continuation

Puri Orchad (3 Tower) Kembangan West Jakarta 3,000

The Langham Residences Senopati South Jakarta 57

Anandamaya Residences (3 towers) Sudirman CBD 500

Maqna Residence Meruya West Jakarta 380

Vittoria Residence (3 tower) Daan Mogot West Jakarta 1,100

One Otium Residence Antasari South Jakarta 160

Wang Residence Kedoya West Jakarta 250

The Batik @ Pejaten Pejaten South Jakarta 200


0

5,000

10,000

15,000

20,000

25,000

30,000

2014F 2015F 2016F 2017F

CBD Central Jakarta South Jakarta

North Jakarta East Jakarta West Jakarta

Distribution of Future Annual Apartment Unit Supply by Area


DemandUp until March 2014, sales activity in the Jakarta apartment market remain stable. The take-up rate of existing strata-title apartments in Jakarta reached 94.3%, up by 1% while the pre-sales activities from the on-going projects recorded a 72.6% take-up rate, falling by 1.5% from the previous quarter. The substantial newly launched apartment supply in 1Q 2014 has reduced the take-up figure of pre-sales apartments this quarter, however continued absorption of the new units has maintained a relatively healthy take-up rate. In general, the overall take-up rate for both existing apartments and pre-sales apartments was steady at 86.1%.


Average Take-Up Rate Performance in Different Location (%)

area 1q 2013 4q 2013 1q 2014 qoq change YoY change

CBD 88.2% 97.1% 93.2% -3.9% 5.0%

South Jakarta 87.8% 88.9% 90.0% 1.1% 2.2%

Non-Prime Area 80.3% 83.1% 83.3% 0.2% 3.0%


Asking PriceStrata-title apartment prices continue to trend upward along with the escalation of land prices and the construction progress of the projects. As of 1Q 2014, the average price of strata-title apartments in Jakarta was IDR24.4 million per sq m an increase of 2.45% compared to the previous quarter. Overall, the average asking price in the apartment market in Jakarta has increased by 46% in three years. Particularly in the CBD area, in the same period, apartment prices have appreciated by 75%, while in South Jakarta it was 60%.

Average Asking Price (per sq m) of Apartments in Jakarta


Preferred Payment Method for Apartment Buyer


The combination of a hike in the key interest rate, stricter mortgage regulations and wavering consumer confidence has led to widespread speculation that the property market is headed for a plateau and will affect the slowing demand for apartments. In fact, developers have always found ways to accelerate sales, among them providing flexibility in terms of payment. Various payment schemes were offered by developers to maintain sales activity at a good pace. Such payment schemes enable buyers who have limited access to banking and who are buying a home for the second or third time. Some strategies that are used by developers to lure buyers are:

Flexible down payment scheme. The amount of down payment of 30 to 50% of the total apartment price can be paid by instalment from 12 to 35 times directly to the developers. The remaining payment is paid upon the construction of the project through mortgage (KPA : Kredit Pemilikan Apartemen);

Cash instalment. Conventionally, the duration of instalments is the same as the construction progress of the development, i.e. 24 to 36 instalments;

Long instalment. This payment scheme has a longer duration than cash instalment and can be applied after the construction is done. Similar to cash instalment, buyers have to pay monthly up to 60 times (5 years) directly to the developer. Consequently, the price for this payment method is higher than the normal price, i.e. 15 to 20% more expensive;

Hard cash scheme. Full payment at one time. Typically the developer will give a special discount of around 10 to 15% off the published rate.

Colliers survey of payment methods chosen by apartment buyers was conducted in 40 apartment projects under construction. This revealed that cash instalment payment was opted for by most buyers even in mid-low apartment projects. Only 5 to 20% of buyers of mid-low apartment units use a mortgage facility. Most of the buyers in this segment pay cash instalments. Similarly, in the middle segment, the majority of buyers chose cash instalment payments. However, we still see that in several projects most buyers opted for bank financing instead of cash instalments. In the upper-class segment, again, cash instalments was preferred by most buyers, but interestingly, the portion of those paying hard cash was also quite significant.

Banks are more prudent in financing apartment unit ownership, particularly when the construction progress is slow. In some cases, developers will direct buyers to pay cash instalments, particularly for the off-plan projects. On the other hand, buyers for investment will pay cash instalments during construction, primarily if they are not the first buyer of apartment unit because the new LTV regulations require a higher percentage of down payment for a second purchase. Those with cash capability will find paying by cash instalments less of a hassle.

KPA (mortgage)

16%

Hard Cash21%

Cash Installment

63%

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

IDR 35,000,000

IDR 40,000,000

IDR 45,000,000

1Q20

11

2Q20

11

3Q20

11

4Q20

11

1Q20

12

2Q20

12

3Q20

12

4Q20

12

1Q20

13

2Q20

13

3Q20

13

4Q20

13

1Q20

14

CBD South Jakarta Non-Prime Area Average


Apartment for LeaseSupplyThere was eventually one serviced apartment project completed in 1Q 2014 after a dormant situation for the last four consecutive quarters. The only apartment for lease this quarter is Fraser Residence Menteng, featuring 128 serviced apartments comprised of studio to duplex penthouse units. The opening of Fraser Residence Menteng brought the total supply of Jakartas apartments for lease to 8,334 units, comprising 57% serviced apartments and 43% non-serviced apartments.

Fraser Residence Menteng is part of Frasers global network of serviced residences and is the second development by Fraser after Fraser Residence Sudirman, which opened in June 2011. In the next two years, the group is on course to manage two more developments in Jakarta, including Fraser Place Setiabudi (2015) and Fraser Suites Kuningan (2016).

In fact, Frasers Hospitality and Ascott Limited are two worldwide serviced apartment operators that are very active in Jakarta. Frasers Hospitality will have four properties in operation in the CBD area, while Ascott Limited will have a total of five properties scattered around the CBD and South Jakarta in the next two years. Ascott Limited operates the four-star equivalent Somerset Serviced Residence and five-star equivalent Ascott The Residence brands. Fraser Hospitality operates Fraser Place and Residences in the same categories. All four products are found in city or business locations and have fully equipped kitchens (or kitchenettes), laundry and reception facilities.

Overall, the CBD area fetched the highest average asking price of IDR38 million psm as well as the highest increment of 5.8% QoQ. Land scarcity in the CBD area was the main driving force for apartment prices in this area to accelerate quickly. The newly launched projects in the CBD area, which mostly provide better building quality, use more imported materials, and offer a private residential concept are offered at a minimum of IDR33 million per sq m to a maximum of IDR60 million per sqm. The under-construction projects are quoted from IDR42 to 65 million psm. This high offering price occurred because all new projects located in the CBD area are classified as upper to luxury class apartments. In other areas, like South Jakarta, which still have adequate vacant land to be developed, a moderate growth of 3.2% in prices occurred, which brought the average price for the region to IDR26.7 million per sq m. The key triggers for the price increase were some factors like the commencement of several good projects in well-established locations, such as Kemang, Permata Hijau, and Pondok Indah as well as continuing progress of the under-construction projects. Apart from those premium areas in South Jakarta, there are some new apartment projects in areas like Mampang, Kebayoran Lama, and Pasar Minggu that introduced prices below the average market, ranging from IDR17 to 20 million per sq m and targeting the mid-low to mid-upper segment. In the interim, non-prime areas including West Jakarta, North Jakarta, East Jakarta and Central Jakarta, recorded an increase of 2.8% to IDR18.8 million per sq m. There are some factors that led to the increase in prices, like the good sales performance showed by ongoing projects and the added value that the apartment projects offer like good building materials and more facilities different from other developments.


Average Asking Price in Different Sub-Markets (in IDR)

area 1q 2013 4q 2013 1q 2014YoY

change

qoq

change

CBD 32,619,752 36,174,524 38,282,223 17% 5.8%

South Jakarta 22,455,876 25,854,554 26,687,843 19% 3.2%

Non-Prime Area 16,350,089 18,298,766 18,819,110 15% 2.8%


List of Apartments Operated by Frasers Hospitality and Ascott Limitedname oF development Year oF operation operator location tYpe

The Ascott Residence 1995 Ascott Limited Jl. Kebon Kacang Serviced Apartment

Somerset Grand Citra 1996 Ascott Limited Jl. Prof Dr Satrio Serviced Apartment

Countrywoods Residence 1996 Ascott Limited Jl. WR Supratman, Ciputat Serviced Apartment

Somerset Berlian 2006 Ascott Limited Jl. Permata Berlian 3 Serviced Apartment

Fraser Residence Sudirman 2011 Frasers Hospitality Jl. Setiabudi Raya No. 9 Serviced Apartment

Citadines Rasuna Jakarta 2013 Ascott Limited Jl. H.R. Rasuna Said Kav.20 Condotel

Fraser Residence Menteng 2014 Frasers Hospitality Jl. Menteng Raya Serviced Apartment

Ascott Kuningan Jakarta 2014 Ascott Limited Jl. Prof Dr Satrio Serviced Apartment

Fraser Place at Setiabudi Sky Garden 2015 Frasers Hospitality Jl. Karbela Selatan Serviced Apartment

Somerset Kencana Jakarta 2015 Ascott Limited Jl. KHM Syafi'I Hadzami Condotel

Fraser Suites at Ciputra World Jakarta 2 2016 Frasers Hospitality Jl. Prof Dr Satrio Serviced Apartment

22

In addition to those international operators, there are some active local serviced apartment operators like Aditya Mansion, Sultan Residence, Pondok Indah Golf, and Kemang Oktroi. There will be one serviced apartment project in Cilandak - South Jakarta, which is expected to open in 4Q 2014.

This project, called TBS Linera Serviced Apartments, has yet to decide the number of units to be released to the market. The owner of this project is a local operator who has experience in developing townhouses as well as housing complexes for expatriates.


List of Apartments Developments in the Futurename oF development Year oF operation location region no. oF unitS

TBS Linera Apartment Service 2014 Jl. Intan No. 25 Cilandak Barat South Jakarta TBA *

Ascott Kuningan Jakarta 2014 Jl. Prof Dr Satrio CBD 170

Fraser Place at Setiabudi Sky Garden 2015 Jl. Karbela Selatan CBD 150

One Park Avenue 2015 Jl. KHM Syafi'I Hadzami Sout Jakarta 60

La Maison Barito Serviced Apartment 2015 Jl. Barito Sout Jakarta 80

Oakwood at District 8 Senopati 2016 Senopati Sout Jakarta 180

Fraser Suites at Ciputra World Jakarta 2 2016 Jl. Prof. Dr. Satrio CBD 200

Note: *TBA: to be announced

OccupancyIn general, the apartment for lease market in Jakarta saw a minor drop in the occupancy rate from 76.6 to 75.8% this quarter. The occupancy level for non-serviced apartments was steady from the previous quarter at 78.4%, while the serviced apartment projects eased moderately from 72.7% last quarter to 70.5% as some projects reported that a number of their existing expatriate tenants had completed their employment contracts and had to leave the country.


Occupancy Level of Non-Serviced Apartments (%)area 4q 2013 1q 2014 qoq change

CBD 82.37% 84.07% 1.70%

South Jakarta 79.02% 78.05% -0.96%

Non-Prime Area 75.99% 75.86% -0.13%


Occupancy Level of Serviced Apartments (%)area 4q 2013 1q 2014 qoq change

CBD 79.00% 78.84% -0.16%

South Jakarta 77.01% 76.12% -0.89%

Non-Prime Area 56.44% 51.88% -4.56%

Research & Forecast Report | 1Q 2014 | Apartment | Colliers International

mining) are considering purchasing a certain amount of strata-title apartment units for their expatriate base (generally the engineer level). Instead of renting serviced apartments, owning the strata-title apartment units will be more beneficial for the company as the asset value is expected to grow.

Rental RatesOverall, the asking rental rate of apartments for lease increased during the early part of 1Q 2014 in anticipation of the increase in utility tariffs, especially electricity. The increase in the rental rate was mainly experienced by the preeminent serviced apartments in the CBD, such as Shangri-La, Frasers, Ritz-Carlton, and the Ascott Groups apartments, with an average increase between US$100 and 300 per unit per month. As mentioned earlier, several apartments for lease, especially serviced apartments, have anticipated adjusting their asking rental rates upward in response to inflation and to the increase in the regional minimum wage.

Source: Ministry of Manpower & Transmigration

Number of Expatriates Working in Indonesia2011 2012 2013

#Expatriates 77,307 72,427 68,957

Overall, there are some factors affecting the softening of demand in the serviced or non-serviced apartment market. One is the decree of the Ministry of Manpower and Transmigration (Number 4, Year 2012) controlling the number of foreign workers in 19 specific job positions. The number of expatriates working in Indonesia has declined in the last three years. Another factor is the amount of new stock at strata-title apartment projects located in premium areas and suitable to expatriates requirements. This is expected to exert pressure on the occupancy level of apartments for lease. Based on our survey of the marketing teams of some serviced apartments, quite a few multinational companies (e.g. pharmacies, oil and gas, and


Average Asking Rental Rate in Different Areasrental rate

per Sq m per month change

area 4q 2013 1q 2014 qoq YoY

CBD including South Jakarta

US$26.56 US$27.58 3.85% 12.99%

Non-Prime Areas US$15.49 US$15.64 0.76% 6.08%


Concluding ThoughtThe increase in the interest rates, as well as stricter mortgage regulations, has undoubtedly had an impact on the apartment market that had been benefitting from the cheap credit over the last few years. In fact, in the first quarter of 2014, some developers were confident enough to launch their new projects targeting mostly the middle-upper segment.

The demand for strata-title apartments over the past three years has been quite resilient as Jakartans have taken to inner-city living. Despite the dismal outlook of Jakartas apartment market projected early in 2014, developers formulated ways to get around the obstacles, such as providing flexible terms of payment. Such measures effectively maintain the level of apartment absorption because buyers are motivated to buy off-plan projects in anticipation of greater capital gains. Notwithstanding the continued apartment transactions, the market needs more occupancy to stay healthy. The ideal situation is when the units are bought by occupiers or by investors when the leasing market is healthy.

The steep price increases that we have seen over the last three years are likely to soften as the market digests the new economic reality but the long-term trend into high-rise living is very much here to stay, and with the prices still very low by regional standards, there remains plenty of upside in the years ahead.

Meanwhile, the apartment for lease market is expected to maintain a stable occupancy rate. Despite positive inquiries from corporate expansion, tighter competition for upper-class strata-title apartments within premium areas would make the occupancy in apartments for lease market remain steady.

Average Rental Rates of Apartment for Lease


The overall increase in the rental rate was mainly underpinned by prominent serviced apartments in the CBD (including South Jakarta) that posted an average rent of USD33.20 per sqm per month. In the same areas, the non-serviced apartments quoted cheaper rates at an average of USD17.70 per sqm per month. Serviced apartments located in the non-prime areas reached USD26.60 per sq m per month, while the non-serviced apartments charged lower at USD12.70 per sq m per month.

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

1Q20

11

2Q20

11

3Q20

11

4Q20

11

1Q20

12

2Q20

12

3Q20

12

4Q20

12

1Q20

13

2Q20

13

3Q20

13

4Q20

13

1Q 2

014

CBD Non CBD

24

SupplyJakartaJakarta Retail Cumulative Supply Based on Marketing Scheme


Research & Forecast Report | 1Q 2014 | Retail | Colliers International

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2008

2009

2010

2011

2012

2013

2014

YT

D

2014

F

2015

F

2016

F

for Lease for Sale

After the start of operations of Baywalk Mall, which is located within the Green Bay Pluit Complex, Jakarta saw little new retail space provided from the extension projects at Mall Puri Indah (around 3,000 sq m) and Mall Kelapa Gading (around 6,000 sq m). These extended spaces are designed as F&B areas. With the small addition, the Jakarta retail cumulative supply moved upward to 4.32 million sq m as of 1Q 2014. Of this, 2.86 million sq m or 66.3% was marketed for lease.

Historically, after growing by 10% and bringing huge supply to the market in 2009, the annual growth of supply of retail space in Jakarta began weakening. From 2010 to 2013, the average growth was only 3.6% per year. In 2014, the growth of supply for shopping centres in Jakarta will continue declining. Although St Moritz is a huge mall expected to enter the market, overall, the total additional supply is only 138,200 sq m. Comparing year-on-year (YoY), the cumulative supply will only grow by 3.2%.

Based on construction progress, seemingly St Moritz will be ready in late 2014. Two shopping centres belonging to Agung Podomoro Land (APL), Central Park Extension and Shopping Mall at Pancoran are also pursuing progress to reach their completion. Those shopping centres, together with Pantai Indah Kapuk Mall and Pulo Gadung extension, are expected to enter the market in 2015.

RETAIL SECTOR

25

Again, a moratorium issue is expected to direct future shopping centre developments to other areas besides Central and South Jakarta including the Central Business District (CBD). Development of shopping centres within townships continue. AEON Mall Indonesia has become one of the developers trying to take advantage of this opportunity. Last year, AEON confirmed the development of their second mall in Indonesia. This mall, which will be located within Jakarta Garden City in East Jakarta, is scheduled to begin operations in early 2016 and provide approximately 90,000 sq m of leasable area. With additional retail space from AEON Mall Jakarta Garden City, the total supply for future shopping centres in Jakarta is projected to be 462,200 sq m from 2014 to 2016. These projected numbers will also bring the cumulative supply for shopping centres in Jakarta close to 5 million sq m in 2016.

Additionally, in North Jakarta, which is actually known as a trading area, a big developer (Agung Sedayu) will also develop a shopping centre in Pantai Indah Kapuk. Attracting a number of visitors from the surrounding areas is expected to become the way to avoid competition with other existing shopping centres, especially those located around Pluit.

Jakarta Retail Future Supply - Based on Region



New Supply Pipeline in JakartaShopping centerS location region nla (Sq m) StatuS

2014

St. Moritz Puri Indah West Jakarta 129,200 Under Construction

2015

Central Park Mall Extension Slipi West Jakarta 40,000 Under Construction

Pantai Indah Kapuk Mall Pantai Indah Kapuk North Jakarta 30,000 Under Construction

Shopping Mall @Pancoran Pancoran South Jakarta 8,000 Under Construction

Pulo Gadung Trade Center extension Pulo Gadung East Jakarta 10,000 In Planning

2016

Mal Puri Indah 2 Puri Indah West Jakarta 75,000 In Planning

Holland Village Mall Cempaka Putih Central Jakarta 40,000 In Planning

Grand Cipulir Cipulir South Jakarta 40,000 In Planning

AEON Mall Garden City Cakung East Jakarta 90,000 In Planning


0 50,000 100,000 150,000 200,000 250,000 300,000

CBD

Central Jakarta

South Jakarta

North Jakarta

East Jakarta

West Jakarta

2014F 2015F 2016F

26

Greater Jakarta Area (BoDeTaBek - Bogor, Depok, Tangerang, Bekasi)Greater Jakarta Retail Cumulative Supply Based on Marketing Scheme


Greater Jakarta Retail Cumulative Supply Based on Regions



0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2008

2009

2010

2011

2012

2013

2014

YT

D

2014

F

2015

F

2016

F

2017

F

for Lease for Sale

A new shopping centre, Bintaro Jaya Xchange Mall, began operations in Tangerang in 1Q 2014. The mall, which is known as BXc Mall, combines the family and lifestyle mall concept. This mall is part of a mixed-use project that in addition to the lifestyle centre mall, also provides an office tower, apartments and convention hall on 25 ha of land. Located on the side of Bintaro Pondok Indah toll road, this mall brought 45,000 sq m of new supply into the market and brought the cumulative supply to 2.24 million sq m in BoDeTaBek.

As reported earlier, huge supply entered the Outside Jakarta market and recorded significant growth of 13.9% YoY in 2013.

0 50,000 100,000 150,000 200,000 250,000 300,000

Bogor

Depok

Tangerang

Bekasi

2014F 2015F 2016F 2017F

Despite continuing, the growth of supply in BoDeTaBek during 2014 is forecast to be lower than the previous year. After BXc Mall, the market expects to see two shopping centres that will begin operations during 2014, i.e. AEON Mall BSD City and Cinere Bellevue Suites Mall.

AEON Mall BSD City, a joint venture project between Sinarmas Land and AEON Mall, is expected to begin operations by the end of 2014. Seemingly, this mall be completed by its projected date. As an indication, the malls construction that started at the end of 2013 still shows progress in line with the initial plan.

AEON MALL Indonesia is projected to be the most active mall developer in BoDeTaBek from 2014 to 2017. In addition to BSD and Deltamas (Bekasi), AEON Mall is also planning to develop another shopping centre in Cibinong (Bogor).

New Supply Pipeline in Greater JakartaShopping centerS location region nla (Sq m) StatuS

2014

Cinere Bellevue Suites Mall Cinere Depok 28,000 Under Construction

AEON Mall BSD City Serpong Tangerang 75,000 Under Construction

2015

AEON Mall Deltamas Deltamas Bekasi 21,000 In Planning

Cimandala City Mall Cimandala Bogor 60,000 In Planning

Plaza Indonesia Jababeka Bekasi 20,000 In Planning

continued

27

Shopping centerS location region nla (Sq m) StatuS

continuation

2016

Bekasi Trade Center 2 Bulak Kapal Bekasi 56,000 Under Planning

Living World Jababeka Jababeka Cikarang 18,000 Under Planning

Grand Dadap Mall Dadap Tangerang 20,000 Under Construction

AEON Mall Bogor Cibinong Bogor 20,000 Under Planning


Comparison of Annual Retail Supply in Jakarta and BoDeTaBek During 2008 - 2017


Annual Supply, Demand and Occupancy in 2008 - 2014 YTD



0

100,000

200,000

300,000

400,000

500,000

600,000

2008

2009

2010

2011

2012

2013

2014

YT

D

2014

F

2015

F

2016

F

2017

F

Jakarta BoDeTaBek

DemandJakartaSluggish growth of retail supply began to have a positive effect on demand in Jakarta. The occupancy rate in Jakarta rose by almost 2% QoQ. The growth of occupancy was the highest since 2012 and delivered an average occupancy rate of 89.3% for shopping centres in Jakarta in 1Q 2014.

The occupancy rate of upper-class malls recorded the highest growth of 1.8% QoQ. Lotte Shopping Avenue, which has been in operation since last year, became the main generator to maintain the occupancy rate for this group of shopping centres that remained above 90%. Some stores are preparing to open at the mall, which is continuing to improve access for visitors.

The performance of upper-class malls has surpassed 90% for the last three years. This trend showed that, besides the ability to maintain tenants, location and type of visitor are factors that make upper-class malls the choice for both premium local brands and foreign tenants.

The occupancy rate for lower-class shopping centres (middle and middle-low) was relatively stable at 86 - 87%.

Shopping centres in North Jakarta and the central business district (CBD) recorded the highest growth of 3% QoQ. In the CBD, entering its second year of operation, Lotte Shopping Avenue made a significant improvement by having the least number of stores remaining that have not opened. As mentioned above, this mall became a major generator to lift the average occupancy rate for shopping centres within the CBD to 92.6% as of 1Q 2014. This average occupancy rate rose by 3.5% QoQ.

The average occupancy rate for shopping centres in North Jakarta was also growing. Although this area achieved the lowest rate compared to others, performance of shopping centres in North Jakarta grew by 2.8% QoQ and brought the occupancy to 84.5 % as of 1Q 2014.

Performance of new shopping centres also caused the average occupancy in East Jakarta to rise. Cipinang Indah Mall, which has been in operation since 2013, has helped the average occupancy rate of shopping centres in East Jakarta rise by 1.9% QoQ to 87.6% as of 1Q 2014.

70%

75%

80%

85%

90%

95%

100%

0

100,000

200,000

300,000

400,000

500,000

2008

2009

2010

2011

2012

2013

2014

YT

D

Annual Supply Annual Demand Occupancy

28

Other areas such as South, Central and West Jakarta also grew, but modestly. The occupancy growth for these areas was only below 1%. West Jakarta, which recorded the second highest occupancy of 92.4% after the CBD, only maintained the same figure QoQ. Well-known malls like Mal Taman Anggrek, Central Park Mall and Mal Ciputra are still the main attractions for potential tenants. The most significant transaction occurred at Mal Taman Anggrek with the opening of JYSK. JYSK Group has its origins in Scandinavia; the first store opened in Denmark in 1979. JYSK will open for the first time in Indonesia to meet the needs of households with a classy interior in a European style. The store will be of the same size as a Danish JYSK store, with a sales area of around 1,200 sq m.

Spaces occupied at Mal Ciputra also continued to increase from January to March 2014. Two of those tenants, Samwon and Starbucks, come from the food and beverage industry. These retailers occupied 130 and 200 sq m at the mall, which maintains occupancy above 90%, continuously. Starbucks is an existing tenant that relocated within the mall to take a bigger space.

Another area that also recorded growth of less than 1% is South Jakarta, including the CBD and Central Jakarta.

Large Retailers Open in 2014retailerS line oF productS opened at Space taken (Sq m) opening in

JYSK Home Products Mall Taman Anggrek 1,400 February

XXI Entertainment Cipinang Indah Mall 2,000 January

Electronic City Home Furnishing Cipinang Indah Mall 1,038 March

Time Zone Entertainment Cipinang Indah Mall 1,038 May



Amount of Space Absorbed in Newly Operating and Future Shopping Centers in Jakarta (2013 - 2016)


Occupancy Rates of Shopping Centers for Lease (Mall) and Strata-title Centers (Trade Centers)


0 50,000 100,000 150,000 200,000 250,000 300,000

2016F

2015F

2014F

2013

Absorbed Supply

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014YTD

for Lease for Sale

Tenants in Newly Operated and Future Shopping Centers in Jakarta During 2013 - 2015Shopping center completion anchor tenant mini anchor

Lotte Shopping Avenue 2013 Lotte Department Store Ranch Market, Uniqlo

Cipinang Indah 2013 Carrefour XXI, Electronic City, Ace Hardware, Time Zone

Baywalk Mall 2013 Ace Hardware, Cinema XXI, Farmers Market, Electronic Solution, Informa, Time Zone, Toys Kingdom, Home Solution, Golds Gym

ST Moritz 2014 Debenhams, Parkson, Matahari, Hypermart

Electronic City, Cinema XXI, Ranch Market, Sea World Indonesia

Pantai Indah Kapuk Mall 2015 Blitz Megaplex, Ranch Market, Golds Gym

Central Park Mall extension 2015 Central


29 Research & Forecast Report | 1Q 2014 | Retail | Colliers International

BoDeTaBekAnnual Supply, Demand and Occupancy in 2008 - 2014 YTD


70%

75%

80%

85%

90%

95%

100%

-100,000

0

100,000

200,000

300,000

400,000

500,000

2008

2009

2010

2011

2012

2013

2014

YT

D

Annual Supply Annual Demand Occupancy

As retail performance in Jakarta started to grow, the opposite condition was occurring in BoDeTaBek, which showed poorer performance than in the previous quarter. Operation of two shopping centres, Cibinong City Mall and Bintaro XChange Mall, caused the average occupancy rate to fall by 1.1% to 82.0% as of 1Q 2014.

The average occupancy rate for shopping centres in Depok still leads by 89.3%. Depok Mall and Margo City became the main contributors to the overall occupancy in this area. Depok Mall, which evolved into a lifestyle and entertainment mall, continues improving by adding new tenants that suit their concept. Currently, this mall is in negotiations to present a cinema.

Further, Bogor and Tangerang achieved 81-82% occupancy rate. Some committed tenants at Cibinong City Mall and Bintaro XChange were not yet in operation; and this was a reason the average occupancy rate in both regions declined in 1Q 2014. In Tangerang, after successfully opening three outlets in Jakarta previously, Uniqlo began to expand outside Jakarta by presenting their fourth outlet at Summarecon Mal Serpong. This outlet occupies nearly 2,500 sq m and is planned to open in April 2014.

Bekasi was flooded by abundant retail supply throughout 2013. However, in line with operation of some committed tenants, the average occupancy rate for shopping centres in Bekasi gradually rose and recorded 2% growth QoQ as at 1Q 2014 and brought the average occupancy rate for shopping centres in Bekasi to 78.9%.

Large Retailers Open in 2014retailerS line oF productS opened at Space taken (Sq m) opening in

Uniqlo Fashion & Accessories Summarecon Mall Serpong 2,400 April


Amount of Space Absorbed in Newly Operating and Future Shopping Centers in BoDeTaBek (2013 - 2016)


0 50,000 100,000 150,000 200,000 250,000 300,000 350,000

2016F

2015F

2014F

2013

Absorbed Supply

30

Average Asking Rental Rates

Tenant List in Newly Operated and Future Shopping Centers in BoDeTaBek During 2012 - 2014retailerS name completion anchor tenant mini anchor

Shopping Center Completion Anchor Tenant Mini Anchor

Bekasi Junction 2013 Lotte Mart 21 Cineplex

Grand Metropolitan 2013 Centro Farmers Market, Toys Kingdom, Funworld

Summarecon Mall Bekasi 2013 Star Department Store, Cinema XXI The Premiere, The Food Hall, Ace Hardware, Best Denki

Cibinong City Mall 2013 Matahari Dept Store, Carrefour Funworld, Hari Hari, Ace Hardware, Cinema XXI, Informa

Mal Ciputra Citra Gran 2013 Matahari, Hypermart Gramedia, Farmers Market

Cimone City Mall 2013 Lotte Mart Gunung Agung

Grand Galaxy 2013 Ace Hardware, Blitz Megaplex, Lotus, Farmers Market

Bintaro XChange 2014 Centro Farmers Market Best Denki Gold Gym Rockstar Gym, Bx Rink, XXI

Cinere Bellevue Suites 2014 Hypermart Paper Clip, Time Zone, Best Denki, Cinema XXI, Celebrity Fit-ness, Rock Star Gym

AEON Mall BSD City 2014

Grand Dadap Mall 2016 Giant Home Solution, Electronic Solution, Fun World


Average Asking Base Rental Rates in Jakarta



IDR 0

IDR 100,000

IDR 200,000

IDR 300,000

IDR 400,000

IDR 500,000

IDR 600,000

IDR 700,000

IDR 800,000

IDR 900,000

1Q 2010 1Q 2011 1Q 2012 1Q 2013 4Q 2013 1Q 2014

All Class Upper Class

The election to be held in 2014 is expected to boost consumption as well as increase the money flow in society. Therefore, retail sales in Indonesia are projected to grow. Bank Indonesia also noted that the growth of retail sales was supported by financing facilities that helped consumers to purchase goods. Improving weather, which is expected to expedite distribution, is another factor that can encourage sales.

With sales projected to grow, mall owners are confident in adjusting their asking rental rates in 2014. This trend began in 1Q 2014 when the average rent for shopping centres was IDR491,675 per sq m per month. The average rental rate rose by 3.3% QoQ and 5.0% YoY. Although this was not as high as from 2012 to 2013, the increase can be considered as the onset of an upward trend in rental rates at shopping centers in Jakarta.

Upper-class shopping centres continue to be a major contributor to the overall increase. Growth of 4.9% QoQ has raised the average rental rate to IDR792,065 per sq m per month in 1Q 2014.

Significant growth was also seen at middle-low class shopping centres. With growth of 3.4% QoQ, this class of shopping centre had an average rental rate of IDR253,013 per sq m per month. Despite also growing, middle-class shopping centres rose relatively steadily by less than 1% quarterly since 2013. This growth brought the average rental rate for middle-class shopping centres to IDR360,744 per sq m per month in 1Q 2014.

31

Average Asking Base Rental and Occupancy Rates Based on Area in Jakarta


Average Asking Base Rental Rates in Jakarta*

*CBD includes parts of South and Central Jakarta


Average Asking Base Rental Rates

Source:

researchandforecast jakarta 1q2014

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