Chinese tea brands and luxury perfumeries drive F&B and lifestyle expansion in prime retail locations

• First quarter demand showed mixed activity as the closure of a department store anchor tenant at MKG 1 contributed to the vacancy rate increasing to 4.2%. However, leasing momentum continued with new market entrants across F&B and luxury retail segments.
• Chinese tea brands Yuzhou Tea, Auntea Jenny and Naisnow entered the market with their first Indonesian stores. The luxury perfume segment also expanded significantly with new boutiques including Byredo, Loewe Perfumes, Penhaligon’s and D’Orsay.

The first quarter saw no additions to prime shopping malls

• No new prime shopping malls opened in Q1 2026, while vacancy rates edged up to 4.2% due to tenant closures. Despite tighter conditions, retailers continued selecting alternative spaces such as islands and booths to maintain visibility.
• The prime mall pipeline remains constrained, with only two projects scheduled: Kota Kasablanka Extension (56,000 sqm), expected in 2029, and Gandaria City Extension (12,000 sqm), targeted for 2030.

Rental prices rise, driven by upper-grade shopping centres

• Prime mall rental rates increased 1.09% quarter-on-quarter in Q1 2026, with upper-grade properties leading the growth. The upward trajectory reflects sustained tenant demand in established prime locations despite the slight increase in vacancy rates.
• No retail investment transactions were recorded in Jakarta during the first quarter. International brands continue partnering with established retail groups to leverage bargaining power for favourable lease terms and rental negotiations.

Outlook: Supply limitations persist throughout 2026 as tenant demand shows modest growth across prime locations

• International brand expansion is expected to continue through 2026, with F&B operators anticipated to lead leasing momentum. Ongoing demand from food and beverage concepts is expected to maintain competition for quality space in Jakarta’s prime shopping centres.
• Landlords are adopting measured pricing strategies, evaluating tenant performance and market dynamics before making rate adjustments. The constrained supply pipeline is likely to support steady occupancy across established prime retail destinations throughout the year.