APPD Market Report Article

Jakarta

August 26, 2022

Yunus Karim, Head of Research, Jakarta

-9.6%

IDR 2,613,212

Rents
Falling

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.

Note: Jakarta Office refers to Jakarta's CBD Grade A office market.

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