Healthy demand remains consistent throughout 4Q23

• Shopping malls have actively adjusted their tenant mix to cater to evolving consumer demands, offering a wide range of retail options. Department stores and grocery stores have also undergone renovations to align with current trends and meet customer preferences. These initiatives aim to enhance the shopping experience, making it more appealing to customers.
• There was a notable increase in new tenants from the F&B industry, with several international restaurants entering the market. At the same time, the entertainment sector continued to expand, with a focus on offering more amenities for young adults. These new entertainment tenants provide diverse activities, such as photo booths, indoor activities and even karaoke options.

No new shopping malls reach completion in 2023

• Despite the surge in mall visitors as pandemic social restrictions were lifted in early 2023, new shopping mall developments in Jakarta were consistently hindered. Consequently, the availability of new shopping mall supply remained unchanged.
• With a lack of new supply, Prime shopping malls experienced consistently low vacancy rates throughout 2023. As a result, many of these malls, which actively adapt their tenant mix to meet changing market demands, reached near-full occupancy. However, there may still be opportunities for smaller to medium-sized spaces, providing availability for new entrants seeking to establish a presence.

Prime mall rents steadily increasing

• Rents increased by around 1.1% in 4Q23, indicating a positive trajectory over the past few months. Meanwhile, Prime rents recorded a y-o-y increase of 3.1%, showing a relatively steady growth compared to the previous year’s growth of 2.9%.
• The upward trend in Prime mall rents is expected to continue, mainly driven by a lack of supply in the retail market and low vacancy rates. In particular, Prime malls located in desirable areas and those that consistently review their tenancy mix are likely to command higher rates.

Outlook: New mall completion anticipated for 2024

• While the outlook indicates that future supply is expected to be scarce, there is anticipation for the completion of a new mall in the heart of Jakarta. Known as Agora, this mall is situated within the Thamrin Nine mixed-use complex. It is projected to enter the market in the first half of 2024.
• Sustained growth in the F&B and entertainment sectors is expected in 2024. The increasing number of F&B establishments and diverse entertainment offerings in shopping malls create an attractive environment for consumers.