New completions lead to a spike in demand

• Demand improved by the end of 2022 compared to the first half of the year, with sustained demand from third-party logistics, FMCG and manufacturing companies, while new requirements from e-commerce firms slowed down.
• Net absorption in the second half of 2022 was about 127,700 sqm, and the end-of-year total net absorption was about 140,500 sqm, due to several new completions located at Bekasi and Cikarang in 4Q22.

Vacancy rate edges up from 6.9% to 7.9% due to new completions

• Six projects totalling 161,208 sqm entered the market by the second half of 2022, including ESR’s first project in Indonesia, which is located in the Cikarang area. Most of the projects were delivered with pre-committed tenants.
• After relatively subdued supply additions in the first half of 2022, new supply in 2H22 was reasonably solid. Currently, around 180,700 sqm is available across the market.

Rent growth varies across submarkets

• Generally, net rents were relatively stable at 0.03% h-o-h growth in 2022, and an annual growth of 0.37% y-o-y. Cikarang, the most competitive submarket in Greater Jakarta, has been experiencing pressure on rental increments, due to new completions.
• Landlords might have to be more flexible with tenants, providing incentives such as a grace period, free-rent period and attractive incremental schemes to attract tenants.

Outlook: A record year in new supply is expected in 2023

• Amid macroeconomic headwinds in 2023, rents could be maintained due to new supply entering the market, particularly in the Cikarang area. Healthy demand is still expected from third-party logistics, FMCG companies and end-users.
• A large number of projects are scheduled to be delivered by 2023, and this could exert upward pressure on vacancy in several submarkets. Meanwhile, locations with limited supply are expected to maintain high occupancy.