APPD Market Report Article
JakartaDecember 1, 2021
Vacancy rate slightly decreased
- Technology companies were the driving force behind deals in the office market in the quarter, with education-technology companies being the biggest contributor. Most of these deals also involved relocations and upgrading to Grade A buildings. Several other tenants were still active in the market, seeking relatively smaller office space.
- A positive net demand was recorded at around 23,000 sqm with the overall Grade A vacancy rate slightly decreasing to 34%. One flex-space operator was active in opening two new centres in the CBD area.
No new completions in the quarter
- No new Grade A buildings were completed in the quarter and overall occupancy levels remained low at around 66%.
- Only one Grade A building is expected to be completed in the remainder of 2021; namely, Autograph Tower (previously Thamrin Nine Tower 1). Meanwhile, Indonesia 1 is being pushed back from 2022 to 2023.
Rents continue to come down
- In 3Q21, rents remained under pressure and a decline of 2.2% q-o-q was recorded for Grade A buildings. Rents are already extremely affordable in Jakarta and landlords are still willing to provide competitive rents to entice tenants.
- Affordable rents are key to capturing demand. Rents have been falling since mid-2015 on the back of rising vacancy rates and increased supply. Due to limited demand and downsizing trend, rents will most likely drop further.
Outlook: Market pressures are likely to remain
- Rents are likely to continue to drop further in 2021 as market pressures remain due to the pandemic. Another building with a total of 94,000 sqm is expected to be completed by end-2021, causing occupancy rates to remain under pressure.
- With vacancy rates in unprecedented territory, it is likely that a significant number of landlords will continue to face vacancy pressures due to weakened demand and continued downsizing trends.