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Office market eyes strong growth next year
Thursday, October 18, 2012 | Admin

The Jakarta office market, both in Central Business District (CBD) and non-CBD areas, is expected to further see solid growth in demand next year as both local and multinational companies will need more office space to support business expansion.

“The growing economy and increases in business activity have contributed to an increase in the demand for office space,” said Angela Wibawa, project leasing officer at Jones Lang Lasalle. She added that the demand did not only come from national but also from multinational companies.

“The most active and dominant sectors include banking, insurance, securities, along with telecommunication companies. Combined with enquiries from oil and gas, mining, pharmaceutical and related companies, these types of tenants represent roughly 75 percent of the overall demand [in the market].”

Indonesia is currently among the top destinations for foreign direct investment (FDI) after prominent ratings agencies Fitch Ratings and Moody’s Investors Service awarded the country investment-grade status. FDI realization in Indonesia reached Rp 56.1 trillion (US$5.9 billion) in the second quarter this year, the highest in the country’s history.

According to the real estate firm’s research, new office supply in Jakarta will reach 220,000 square meters in 2013: 120,000 square meters and 100,000 square meters, in CBD and non-CBD areas, respectively, with around a 90 percent occupancy rate for both areas.

The high rate was supported by advanced commitments companies made with developers, she said.

In addition, during the third quarter of 2012, the net take-up rate for CBD area offices increased by 6.5 percent on a quarterly basis to approximately 91,150 square meters. Grade B offices saw the highest amount of growth with 52 percent, or equal to 47,170 square meters, followed by Grade A offices with a 41 percent increase and Grade C with the slowest growth at 2.1 percent.

The firm categorized Grade A offices as those where rents stood at Rp 205,000 per square meter, while Grade B and C offices were those that rented for Rp 102,000 and Rp 72,500, respectively.

Cumulatively, net take up in the first nine months totaled approximately 250,000 square meters and the figure is expected to reach 400,000 square meters by the end of this year.

Average rents increased by 7.8 percent quarter-on-quarter to Rp 118,200 per square meter. Since the beginning of 2012, rents have grown by 25.3 percent, up from 18 percent during the same period last year.

The CBD market currently consists of some 4.2 million square meters, with an occupancy rate near 90 percent.

Meanwhile, non-CBD offices saw quarterly net take-up rates increase by 22.9 percent to 60,790 square meters, with the highest growth coming from Grade B offices at 81 percent.

Cumulatively, net take-up during January–September totaled 150,520 square meters.

Average rents in the South Jakarta area increased by 16 percent from January, compared to averages between 3 and 7 percent in other regions. The TB Simatupang area achieved the highest growth with a 23 percent increase, Angela said.

Looking at the country’s economic performance today, Jones Lang Lasalle research director Anton Sitorus said that the firm did not see growth slowing in the Jakarta office market until the year 2015.

The firm forecast that Jakarta will add 2.2 million square meters of new supply over the next three years.

 

Source: Nurfika Osman, The Jakarta Post

 

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