After a full year review, we still opine that Surabaya’s office market will be challenging and strenuous, primarily for landlords. In contrast, tenants will continue to benefit from the market that is favouring tenant accommodation for business space with ample building options, numerous facilities and certainly, a more negotiable rent. A challenge to Surabaya’s office sector is the existing shophouses that offer much lower rents. Office landlords need to continuously educate prospective tenants on the benefits and advantages of occupying a formal office.
The overall apartment market during 2019 was at a slack pace both demand and price side. Either existing or under-construction projects experienced a decline by 1.3% and 5.6% compared to 2018 performance. New apartment projects from reputable developers are still appealing for investors-type of buyers, while sales of others seem to be tough. With a slower economic projection in 2020, apartment market outlook might be attributable to low purchasing power and consumers’ low appetite to buy. Given the headwinds, developers should focus on end-users targeting at first-time home buyers. Furthermore, affordable products which is less than IDR1.5 billion are still acceptable.
The retail market remains competitive, nonetheless occupancy and rent are still acceptable for landlords throughout 2019. Going ahead, landlords are likely to implement technology in analysing customer needs. In response to the changing market and consumer habits, landlords will improve shopping experience and maximise the use of spaces to boost foot traffic. More large-format stores will gradually transition to smaller stores. In addition, we expect to see stronger collaboration between online and bricks-and- mortar retail stores, promoting mutualism to enliven the retail business in the future.
During H2 2019 several events form corporate and government started to fill the hotel agenda. However, the MICE event was not as good as expected, especially held by the government was still below the expected target, most likely because they were waiting for new government policy. Surabaya has seen a relatively stagnant hotel market situation for some years. Triggered by the rapid hotel development and modest volume of room inquiries, the typical business hotel in Surabaya is much dependable on economic situation. Hoteliers are much expecting more events to be held in Surabaya.