Current uncertain conditions impacted by the COVID-19 outbreak create a hurdle for developers. Other than a slower pace in building construction progress, we recorded a smaller number of transactions compared to previous years.
Many companies continue to carry out a “Work from Home” policy. Several tenants will likely ask for an office space reduction in their next contract renewal. Landlords are expected to be open to negotiations in order to achieve a win-win solution and provide flexibility both in office space and leasing terms.
Securing committed tenants will become an increasingly crucial factor for landlords before commencing construction.
Apartment & Expat Housing
A key defining event of 2020 was the COVID-19 outbreak. The infamous "circuit breaker" measures affected the apartment market hugely, as the marketing galleries were shut, physical viewings were disallowed and construction works (and hence uncompleted projects) were delayed. This year (2021) is likely to remain a buyer's market and we look ahead with cautious optimism. Apartment demand is likely to remain somewhat the same in 2021 and also the prices are expected to be relatively stable. Further, amid the economic uncertainties, seller and developers will take a sensible approach and price in accord with the market.
Tenants, especially those who have several outlets, are currently focused on cost efficiencies, one of which is closing underperforming outlets. Landlords have also delayed increasing service charges and have provided some rent incentives.
Restrictions on mall operating hours has impacted the mall recovery process. Innovative and creative promotion strategies and sales methods, especially maximizing social media use, are needed by both retailers and landlords to stay afloat.
Despite the vibrant prospects of the future, 2020 was indeed an overwhelming year for the industrial market. Transaction volume was only 54% of the total transaction of 2019. This also leads to a situation that favours tenants with offering price decline by 4.1% YOY and most likely a more negotiable price for advanced buyers.
We think industrial developers should accommodate and more become negotiable when dealing with big potential tenants who may attract others. Other than that, industrial landlords should be able to identify future needs that mainly come from technology-based companies including e-commerce and data centre, logistics, automotive and other resilient sectors like food, health products and consumer goods.
Jakarta, as the capital of the country as well as one of Indonesia's business centres, is representative of how the country is handling COVID-19 because with the situation not improving, a lot of activities, especially business-related ones, have been delayed.
In connection with the emergence of a new variant of the COVID-19 virus, which is said to be transmitted more quickly, the Ministry of Foreign Affairs will close the door to foreigners for 14 days as of 1 January 2021. The only exception will be for foreign officials at the ministerial level and above, and they must follow the strict COVID-19 prevention protocols. This will be an ongoing challenge for the hotel industry.