APPD Market Report Article


September 4, 2023

Yunus Karim, Head of Research, Indonesia


IDR 6,768,220


Entertainment tenants actively expanding in 2Q23

  • F&B and entertainment tenants continued to expand in malls across the city. One of the most active entertainment tenants in the quarter is Playtopia, a children’s playground that expanded to at least three Prime malls in Jakarta. Another big opening was by Rambla, a new department store concept, which opened in Mall Kelapa Gading 2, replacing the old department store, Star.
  • As consumer preferences are tending more towards experiential retail, interactive art exhibitions are becoming increasingly popular in Jakarta malls, and several tenants have also implemented the concept of an interactive experience in their stores. Meanwhile, some bookstore companies have closed most, if not all, of their physical stores in Indonesia, such as Toko Gunung Agung and Books&Beyond.

No new Prime mall completions

  • The unofficial moratorium on new mall development in Jakarta remains in place, and no completions have been recorded year-to-date. This only affects locations within the DKI Jakarta city limits, while the sprawling townships to the west, east and south of the city still offer expansion opportunities.
  • Vacancy rates remained in the single digits in Jakarta’s Prime malls. The limited supply should take some pressure off existing malls during this time. Small- to medium-sized vacant spaces have started to fill up while landlords continued to review their tenant mixes and increase their F&B and entertainment tenant proportions.

Rents continue on a moderate upward trajectory

  • A lack of retail supply and sustained low vacancy rates have historically supported moderate rent growth, and Prime mall rents increased slightly q-o-q in 2Q23. Low, single-digit annual rent growth is fairly typical in Jakarta.
  • The rent that a particular retailer is able to negotiate depends on several factors, which include the quality of the mall, the floor (typically, the ground floor is the most expensive) and whether the tenant is affiliated with one of the large retail groups, as these groups are typically able to negotiate favourable rental terms.

Outlook: Rents likely to continue to be supported by limited supply

  • With no information to the contrary, we expect a continuation of the moratorium in Jakarta in the short- to medium-term. Given the lack of expansion opportunities in the market, we expect net absorption levels to remain relatively low for the remainder of the year. However, with no new supply expected, vacancy rates will likely fall further.
  • As such, landlords will likely remain positioned to push rents upward as F&B, entertainment and fast fashion tenants continue to seek expansion opportunities. We anticipate rents to increase by around 3% for the whole year, and while investors are expected to remain interested, opportunities are likely to be limited to within the city limits.

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

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