APPD Market Report Article

Jakarta

May 31, 2022

0.7%

IDR 6,541,155

Rents
Stable

F&B and home appliance brands are the most active tenants

  • Jakarta’s prime malls continued to adjust tenant mixes to accommodate more attractive occupier types. Restaurants and family-friendly entertainment facilities continued expanding, as children’s playgrounds are allowed to operate at 70% capacity. One of the newly opened children’s playgrounds is Edokko, founded by a Japanese company, which opened its first playground in Lippo Mall Puri.
  • In addition to F&B and entertainment tenants, home appliance brands were also growing. For example, in Plaza Indonesia there were three newly opened home appliance stores. However, there were still some store closures such as Sephora and METRO Department Store in Mal Taman Anggrek.

No new prime retail supply enters in 1Q22

  • No new prime malls were completed in 1Q22, meaning overall occupancy levels remained stable. Total supply in 2022 is expected to be around 28,000 sqm, including Senayan Park after it was pushed back from last year.
  • With no new completions, stock is extremely limited with low vacancy rates. The lack of availability has restrained net absorption and normally spikes in take-up are observed in quarters where new malls are delivered, as new completions offer tenants an opportunity to expand. One new completion (AEON Mall Tanjung Barat) entered the market in 4Q21, but no new projects were completed in 1Q22.

Prime mall rents remain stable

  • A lack of new retail supply and sustained low vacancy rates have historically supported moderate rental growth. Yet, the average rent remained flat in 1Q22. As the pandemic situation is ameliorating, it is expected that prime mall rents will gradually increase.
  • Most of the prime mall landlords have brought their rents back to normal levels; however, due to the pandemic, some landlords were still providing tenants with rental relief on a case-by-case basis. The rent that a particular retailer is able to negotiate depends on a number of factors, one of which is the foot traffic in the mall.

Outlook: The future supply pipeline is likely to remain extremely thin

  • Only one new mall is in the near-term supply pipeline – a lifestyle mall in the CBD area; namely, Senayan Park. This project is structurally complete and has already obtained a healthy pre-commitment, however, it has yet to hold an official grand opening due to the pandemic.
  • Given the lack of new supply, vacancy rates are likely to remain low – even with relatively low levels of net absorption. It is expected that net absorption will be supply-driven; hence, there will be spikes in net take-up whenever new malls enter the market. In terms of rents, it is likely that 2022 will see a single-digit annual growth.

Note: Jakarta Retail refers to Jakarta's overall prime retail market.

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