APPD Market Report Article


November 28, 2022

Yunus Karim, Head of Research, Jakarta


IDR 6,637,662


F&B and fashion tenants continue to expand

  • Prime shopping malls in strategic locations, such as the Thamrin, Senayan and the SCBD area, continued to enjoy healthy foot traffic with the easing of social restrictions that allowed shopping centres to operate at 100% capacity. Jakarta’s notorious traffic congestion is such that malls are viewed as one-stop entertainment complexes and destinations in themselves.
  • F&B and fashion occupiers tend to outperform the market and continued to be the most active retail segments in 3Q22. In addition to F&B and fashion brands, family-friendly entertainment facilities also continued expanding in a newly opened mall now that children’s playgrounds are allowed to operate at 100% capacity.

No new prime malls deliver in 3Q22

  • The moratorium on standalone retail development remains in place and no new projects were completed in 3Q22. As such, occupancy levels have remained consistently healthy. Total supply in 2022 is expected to be around 28,000 sqm, including Senayan Park after it was pushed back from 2021.
  • The supply-driven demand in Jakarta is such that, despite a spike in net absorption only occurring when there is a new completion, vacancy rates have remained in the single digits for some time. With most prime malls fully or nearly fully occupied, options are limited for tenants that wish to expand.

Rents continue to increase

  • Rents have grown less than 1% q-o-q on average over the last few quarters. With the pandemic situation improving and malls enjoying healthy foot traffic, rents are unlikely to turn negative. Rents crept up by around 0.8% q-o-q in 3Q22 and year-to-date growth came in at around 1.8%.
  • Landlords of top performing malls have brought their rents back to normal levels, with some even hiking up their rents. If the pandemic situation continues to improve, single-digit annual growth is expected for full-year 2022 and subsequent years.

Outlook: Limited supply expected; rents likely to edge up

  • With only one new addition to supply expected in the whole of 2022, vacancy rates are likely to compress marginally, even with relatively low levels of net absorption. Moderate rent increases are possible in 4Q22, supported by a lack of supply and the expected improvement of the pandemic situation.
  • F&B as well as fashion and entertainment tenants are anticipated to continue seeking expansion space. Investors should remain interested in the shopping mall market, nevertheless, sales of existing assets are likely to be very limited, based on historical trends.

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

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