Cautious optimism for Jakarta’s real estateFebruary 18, 2022 / By
Indonesia’s economic growth rebounded to 3.7% in 2021 from the 2020 recession. However, the pandemic continued to impact most Indonesian real estate markets in 2021.
Office leasing activities were limited throughout the year. Several new shopping mall projects were completed resulting in a spike in net absorption of retail space. Meanwhile, condominium sales remained subdued, causing developers to highly cautious about launching new projects.
Following the trend from 2020, modern logistics warehouses and landed residential properties continued to be resilient amid the pandemic.
Confidence to be stronger than last year
There are some factors to be cautiously optimistic as we progress into 2022. Most economists projected a robust economic outlook with solid growth. The increase in vaccinations is expected to improve business confidence and allow a sustained economic reopening. Infrastructure remains to be one of the government’s priorities. Also, the Greater Jakarta Light Rail Transit (LRT) is targeted to be operational this year. Nevertheless, it is still important to note that the uncertainty caused by the pandemic persists.
Since a considerable amount of office supply is expected to complete in 2022, occupancy rate and rental will remain under pressure. However, we see activities improving in the last quarter of 2021, driven by a flight to quality. Going forward, leasing demand will still be driven by relocation to upgrade and cost-saving opportunities. Office occupiers will continue to rethink their real estate strategies, prioritising their employees’ health and wellness; hence, better quality buildings are expected to perform better. In addition, demand for green building and sustainability will arise.
Limited shopping mall supply in the pipeline will support a healthy occupancy rate. We anticipate a spike in net take-up, driven by expected completions when the situation normalises. The main demand drivers will continue to be from the F&B sector, followed by fast fashion, beauty and health.
Although the condominium market has been slow, condominium projects located within mixed-use developments with proximity to public transportation will likely receive a better response from the market. Meanwhile, as the government has extended the tax incentives for another nine months, it is expected to support landed residential sales in 2022, encouraging township developers to continue launching new products.
Nonetheless, modern logistics warehouse investors and developers are expected to stay active to capture the healthy demand driven by 3PLs and e-commerce firms. Data centres will also continue to increase due to cloud computing and remote working, alongside the rising digital economy.
Like last year, JLL’s Jakarta research team received enquiries mainly regarding landed housing and logistics studies at the beginning of 2022. This trend indicates Indonesia continues to attract investors who benefit from its socio-economic potential and improving infrastructure. We look forward to a more resilient Jakarta real estate market in 2022!
More on 'Office' in 'Indonesia'
- A look back at the 2022 Jakarta property marketDecember 16, 2022
- Uncover the flex-space office market in Jakarta’s SCBD areaMay 31, 2022
- Is Jakarta’s office supply ready for sustainability?September 21, 2021
- Jakarta’s real estate outlook for 2021March 15, 2021
- Social restrictions’ impact on Greater Jakarta real estateJune 1, 2020