APPD Market Report Article


September 4, 2023

Yunus Karim, Head of Research, Indonesia


IDR 2,398,339


Technology dominates as the demand driver

  • A net demand of around 9,000 sqm came from a rising global technology start-up that entered a Grade A office in the Sudirman corridor. Driven by several companies, the technology sector contributed significantly, accounting for 40% of the positive demand in 2Q23.
  • Other than the technology sector, demand also came from various flex-space operators in the second quarter of 2023. One flex-space operator expanded its operations by two whole floors in one building, and two other operators branched out to the newer Grade A buildings.

One project postpones launch to the second half of 2023

  • The completion of Thamrin Nine 2 – Luminary Tower, which would deliver around 40,000 sqm, was postponed to the second half of 2023. Hence, Jakarta Mori Tower remained the only newly-added supply in the first half of 2023.
  • The 2Q23 vacancy rate recorded approximately 37%, slightly lower than the previous quarter due to the positive net demand and no new completions in the second quarter.

Rents continue to decline, but at a slower rate

  • Rents continued to decline by approximately -2.1% q-o-q and -8.2% y-o-y. As of 2Q23, Grade A net effective rents recorded slightly below IDR 200,000 per sqm, per month.
  • While enquiries have started to pick up as most economic activities gradually returned to pre-pandemic levels, the high vacancy rates remained, driving rents to be competitive, especially in the lower-occupancy buildings.

Outlook: Limited positive demand; decline in rents continues

  • Enquiries are likely to remain healthy, but for relatively smaller sizes. Hence, occupancy rates are likely to continue to be under pressure.
  • While positive net demand characterised by flight to quality will likely be seen in the next 12 months, rents are expected to continue declining at a slower rate due to the upcoming supply and limited demand.

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

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