Still Challenging, Yet Promising Outlook
The office sector is still facing challenges throughout the remainder of 2021, but the pace of rental decline seems to be slowing.
Net absorption is still negative, occupancy rates have dwindled, and rents remain under pressure. Despite this, optimism has improved as we move towards 2022, particularly given a more positive outlook for economic growth.
Vaccination rates are being used as one of the indicators to assess the levels of Covid-19 curbs across Indonesia in a bid to speed up inoculation programmes while allowing people to go about their daily routines with the easing of public activity restrictions (PPKM). The PPKM level was downgraded and more transaction-related activities can be held in marketing galleries and show units.
Arguably, the biggest business lesson from Covid-19 is that modern-day retail success is synonymous with flexibility and adaptability. Reflecting on the malls that decided to re-open, differentiation or special themes will become strategies used by landlords and retailers to survive mass store closures and demand challenges from customers.
The pandemic has led to changes in lifestyles which are altering behaviours as a result of an increased dependence on technology. Today, technology is also illustrating the development of industries in support of lifestyles and corporate requirements. The automotive industry has gained traction again but this time to more tech-savvy products like electric vehicles (EVs). We anticipate more EV manufacturers will consider Indonesia as their production base and further expect an expansion in data centres in several locations, mainly within industrial estates.
The increasing number of Covid19 cases in Indonesia has forced the government to implement emergency Community Activity Restrictions (PPKM). As a result, Bali had to postpone welcoming foreign tourists to suppress the spread of cases. This also resulted in a decline in hotel performance in Bali.