Skip to main content Skip to footer

Property Market Report | Q1 2020 Jakarta All Sector

Download Report
GenericCity02Hero1536x1040

Office

Both absorption and rent are still in a downward trend, and the situation is expected to continue up to the end of 2020. Tenants who are already in a good position will continue to be active in rental negotiations and demands for incentives such as free parking and opportunity to lock-in space occupied in long-term leases, especially for office buildings attached to an MRT station. At the same time, landlords are currently in a position to avoid complicated negotiations in lease agreements, avoiding potential tenants moving to other buildings.

The current outbreak will create further opportunities for office occupiers to test the feasibility and may encourage companies to be more willing to accelerate the adoption of flexible and home working policies in the future. We suggest that landlords prioritise filling their vacancies because this will create more room to adjust rent in line with rising occupancy.

 

Apartment

Potential buyers became cautious on the investment front due to weakening business prospects as the worsening economic environment (GDP is forecast to grow by only 3% in 2020) may deter buying decisions. Measures implemented by policymakers to support the economy will take time to flow through. As such, the implications to the apartment market will be most evident over a longer period of time rather than being immediately apparent. While businesses or individuals may be affected by the outbreak, their demand for apartments is likely to be delayed rather than disappear. Investors are advised to adopt a “wait-and-see” approach until the situation improves, which could potentially be in H2 2020. Nonetheless, underlying demand in the middle-low segment should remain solid and, with pent- up demand accumulating, the market could potentially revive.

 

Retail

In the light of COVID-19, most retailers become more conservative in expansion plans. Some will close their stores temporarily to get their finances back in shape. Developers might be willing to give a rent-free period, which will be paid back by the retailers later.

New shopping centre projects entering the market might struggle to lease out their space, rents will most likely be under pressure. However, several new and existing malls will still quote high asking rents, but would provide competitive discounts to encourage committed tenants.

Real estate parties including landlords, retailers, banks and other stakeholders should discuss amongst themselves to try to look for a joint solution of the problem. Large retailers should also be flexible towards landlords by respecting their lease commitments, in order not to aggravate the current condition.

 

Hotel

After the official announcement of COVID-19 cases in Indonesia, hospitality industries were hit hard when hotel occupancy fell sharply. Occupancy level was reported to have fallen below the regular low seasons. Even prior to the announcement, the February ADR performance had already dropped 6.8% month-to-month. We anticipate this will continue to deteriorate in March until the outbreak can be contained.

Amidst the hardship, hoteliers have taken some preventative measures to cope with the situation. Some hotels have already ceased operations because the recent low occupancy cannot cover operating costs. Operating hotels should consider efficiency by closing some cafés, restaurants or wellness facilities inside the hotel or only running several floors and offering room only (without breakfast).


Report_Image_AllSector

Property Market Report | Q1 2020 Jakarta All Sector

Download Report
Related Experts

Ferry Salanto

Senior Associate Director

Research

Jakarta

As Head Research Department, Ferry is in charge in providing property market knowledge for internal purposes and for clients. The scope of sectors covered in the quarterly market report comprises office, apartment, retail, hotel and industrial estate.

In regional tasks, the Heads of Research of each country work together in providing regional market reports covering the Asia Pacific region and globally. Currently Research Department is not only operating as a cost-centre department, as he and his team have been assigned by the Central Bank to provide monthly market information.

On the consulting front, the task involves providing a wide range of advisory services to our clients. Working closely with Consulting Department, we help clientsby preparing feasibility studies to determine whether their property projectsare viable from both financial or marketing aspects. 

View expert