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MarketBeat Jakarta, Indonesia Retail Snapshot - Q4 2011

Apr 06, 2012
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MARKETBEAT
RETAIL SNAPSHOT
JAKARTA, INDONESIA
A Cushman & Wakefield Research Publication

Q4 2011

ECONOMY
Indonesia's economy has continued to strengthen in 2011 and its full year GDP growth is expected to reach 6.5% (from 6.0% in 2010). Other general economic indicators also showed very positive trends during the year, with inflation within government targets and a relatively stable currency exchange rate. Annual inflation for 2011 is expected to be below 5%, lower than the 6.96% recorded in 2010. The Rupiah exchange rate remained relatively stable at around Rp.9,000 per US$1.00, an appreciation of 0.2% over the full year. The stock market also continued its positive performance through the first ten months as evidenced by the composite index which closed at 3,791, an increase of 2.4% over that period.

improvement of 0.3% (quarter-on-quarter), or 1.6% (year-onyear), taking overall occupancy to 67.0% in this sub-sector, considerably below the rental malls. The quarterly net take-up was 33,400 sq.m. or 25.7% higher than the third quarter's figure. But with limited new supply completed during the year, annual net take-up of retail space was recorded at only 94,000 sq.m., equating to only 44.8% of the 2010 total demand (of 210,100 sq.m.). ECONOMIC INDICATORS
2010 GDP Growth CPI Growth Central Bank-Rate 6.0% 7.0% 6.5% 2011 6.5% 4.5% 6.0% 2012F 6.3- 6.7% 5.3% 6.0%

OVERVIEW LEASING ACTIVITIES
With only a limited number of new retail centers completed in 2011, the cumulative supply of retail space in Jakarta grew by only 1.6% during the year. This, combined with higher growth in cumulative demand (of 3.4% in 2011) resulted in an increase in the overall occupancy rate by 1.4% by the end of December. It was a very active leasing market throughout the year, especially in the under-construction centers. These pre-commitments did not however, impact on the 2011 annual take-up figures, as this will only be reflected following the completion of the centers and the opening of the stores. During the fourth quarter, several new international fashion brands opened their first stores in Jakarta, including Staccato and Mango Touch in Pondok Indah Mall, and New Look in Central Park. New openings by anchors and larger tenants were seen in the newly completed Kuningan City, including LotteMart, Best Denki, Cinema XXI and the Kawan Lama Group.

Source: Government data (BPS, BI, Ministry of Finance), 2011

SIGNIFICANT 4Q11 LEASE TRANSACTIONS
PROPERTY Kuningan City Epicentrum Walk Plaza Senayan Mal Taman Anggrek Mal Taman Anggrek Emporium Pluit Mall LOCATION CBD Jakarta CBD Jakarta South Jakarta West Jakarta West Jakarta North Jakarta TENANT LotteMart Otel Lobby Remboelan Waraku Holdings Muji Ace Hardware SIZE (SQM) 10,600 1,000 500 2,300 700 850

SIGNIFICANT 4Q11 CONSTRUCTION COMPLETION
PROPERTY Qioz+ (Kalibata City Square) Tebet Green Kuningan City LOCATION South Jakarta South Jakarta CBD Jakarta SIZE (SQM) 2,600 4,000 55,000 TYPE Strata-Title Lease Lease

DEMAND
As at the end of December 2011, the average occupancy rate of the Jakarta retail market had increased by 1.4% year-on-year and stood at 81.0%, leaving approximately 676,000 square meters (sq.m.) of vacant retail space. On a quarterly comparison, the completion of one prominent retail center in mid-December (which did not achieve immediate high physical occupancy), caused a slight decrease in the occupancy level by 0.7%, over the third quarter's figure. Consequently, by sub-sector the occupancy rate of the existing rental retail centers in Jakarta decreased by 1.4% quarter-onquarter, but it did see an overall increase of 1.2% year-on-year to reach 87.5% by the end of the year. With almost no additional supply, occupancy within the strata-title centers saw an

SIGNIFICANT PROJECTS UNDER CONSTRUCTION
PROPERTY Ciputra World Kemang Village Kota Kasablanka Grand Paragon Ancol Beach City LOCATION CBD Jakarta South Jakarta South Jakarta West Jakarta North Jakarta SIZE (SQM) 77,000 55,000 110,000 40,000 24,000 COMPLETION DATE 2012 2012 2012 2012 2012

SUPPLY
Due to delayed completions of some retail centers that were planned to open by the end of the year, only two supporting retail facilities and 1 retail center were completed during the fourth quarter of 2011. These new retail centers added some 61,600 sq.m. of new retail space to the Jakarta retail supply. For the full year, total new retail space completed in Jakarta was only 75,200 sq.m., the lowest additional retail supply in the last 10 years. As at December 2011, the total Jakarta retail supply was recorded at 3,559,600 sq.m. (+1.6% year-on-year), comprising 2,435,700 sq.m. (or 68.4%) within retail centers for lease and 1,123,900 sq.m. (31.6%) in strata-title centers. The Jakarta CBD contributes the largest portion of supply at 793,800 sq.m. (or 22.3% of the total), followed by North Jakarta at 747,000 sq.m. (21.0%). South and West Jakarta follow at 666,600 sq.m. (18.7%) and 616,400 sq.m. (17.3%) of space respectively, whilst Central and East Jakarta made up the remainder at 439,900 sq.m. (12.4%) and 295,900 sq.m. (8.3%). After the low supply levels in 2011, some 336,800 sq.m. of retail space is expected to enter the market through to the end of 2012. Almost all (98.4%) of this future supply will comprise centers for lease, with only 1.6% of additional strata-title space. Should these proposed new centers meet their completion schedules, total supply within Jakarta will reach 3,896,400 sq.m.

occupancy is forecast to decrease slightly to 79.5% by the end of the year, in advance of tenants completing their fitting-out and commencing trading within those new centers. With strong competition in the retail market expected to continue, rentals and service charges are likely to remain relatively unchanged. SUPPLY, DEMAND, OCCUPANCY RATE
4,000,000 3,500,000
upply and Demand (sm) Cummulative S

100.0% 87.5%

3,000,000
2,500,000 2,000,000 1,500,000
2,178,416 3,080,097 2,382,455 3,396,843 2,579,518 3,504,608 2,883,614
2,525,721 1,968,885 2,783,299 2,789,574 3,559,649

75.0%
62.5% 50.0% 37.5% 25.0% 12.5% 0.0% 2006 2007 2008 2009 2010 2011
Occupancy Rate Cumulative Supply Cumulative Demand

1,000,000 500,000 -

PRIME RETAIL BASE RENTS ­ MALLS
LOCATION LOCAL CURRENCY (RP/SQM/MONTH) 4Q10 Overall Jakarta - Primary Location - Secondary Location 3Q11 4Q11 615,600 854,000 516,300 EURO/SQM/ US$/SQ.FT. YR /YR 610.8 847.3 512.3 76.0 105.4 63.7 12-MONTH OUTLOOK

RENTAL GROWTH
Some retail centers slightly increased their concessionary exchange rates or service charges during the review quarter. As at December 2011, average base rentals for specialty shop units on the ground floor in premium locations were recorded at Rp.615,600 per square meters per month (/sq.m./mo), an increase of 0.1% (quarter-on-quarter) or 3.0% (year-on-year). The average service charge was Rp.95,700, an increase of 3.6% (quarter-on-quarter) or 5.3% (year-on-year). Service charges range between US$10.00 and US$14.50 /sq.m./mo (Rp.75,000 to Rp.130,500). The concessionary exchange rates range between Rp.7,000 and Rp.9,000 per US$1.00.

597,900 615,000 834,000 854,000 499,600 515,400

DEFINITIONS: The primary retail location is defined as major retail precinct that includes Kota, Pasar Baru, Blok M and CBD area (capturing the area of Sudirman, Thamrin, Rasuna Said and corridor of Jl. KH. Mas Mansyur ­ Jl. Prof. Dr. Satrio). The secondary retail location covers other than the above retail areas in Jakarta.

OUTLOOK
In 2012, 70.5% of new retail supply will be dominated by one-stop retail centers within mixed-use developments. Supporting retail facilities and strata-title centers will only contribute 27.9% and 1.6%, respectively. With projected additional supply of 336,800 sq.m., cumulative supply is forecast to grow 9.5% by the end of 2012. In line with improving general consumer buying power, as reflected by higher GDP growth and other positive macro-economic indicators, leasing activity is expected to remain buoyant in 2012. New retailers, both local and international, are expected to continue entering into leasing pre-commitments, especially in the under-construction centers. Occupation in new centers completed next year is expected to improve cumulative demand growth by 7.4%, with projected net take-up of 213,200 sq.m. in 2012. As such,
For further information, please contact Research & Advisory Department PT. Cushman and Wakefield Indonesia Indonesia Stock Exchange Building Tw.2, 15/F, Jakarta, Indonesia +62-21 ­ 2550 - 9500 www.cushmanwakefield.com

JAKARTA RETAIL SUPPLY BY DISTRICT 4Q11
CBD 22.3% Central 12.4%

North 21.0% West 17.3% East 8.3% South 18.7%

This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ©2012 Cushman & Wakefield, Inc. All rights reserved.

Occupancy Rate