APPD Market Report Article
JakartaAugust 26, 2022
Yunus Karim, Head of Research, Jakarta
Grade A negative net demand recorded in 2Q22
- Grade A negative net absorption was recorded in 2Q22 at approximately -5,000 sqm. Several leases were still identified despite being downsized, on average, due to ongoing market pressure and changing workplace strategy.
- Companies in the automotive, energy and healthcare sectors were recorded to lease space in 2Q22.
Four consecutive quarters of no new supply as of 2Q22
- There were no new Grade A office building completions in the quarter. The situation in 2Q22 marks one year without new supply additions in the Jakarta CBD.
- Four projects are still expecting to become fully operational by the end of 2022: Rajawali Place, Mori Building, Thamrin Nine Tower 1 (Autograph) and Tower 2 (Luminary).
Rents continue falling due to accommodative landlords
- Rents continued falling, by around -2.4% q-o-q. Considering the observed tenant-favourable market, landlords of lower-occupancy buildings were still willing to offer competitive rents.
- Rents decreased by approximately 9.6% y-o-y. Due to limited occupier demand and the downsizing trend, rents are expected to fall further.
Outlook: Market pressures are likely to continue
- Flight-to-quality remains the central theme. However, area requirements might be smaller since the downsizing trend continued. Enquiries for green buildings may arise from MNCs to support their corporate sustainability goals.
- Due to the upcoming new supply and limited demand, market pressures are likely to continue; the falling rents are expected to continue in the next half of 2022.