Is Jakarta’s office supply ready for sustainability?

September 21, 2021 / By  

JLL’s recent report, “Sustainable real estate: From ambitions to actions”, finds sustainability as the third most important consideration for occupiers after location and rent when leasing a property” in Asia Pacific.  Most occupiers (80%) agree that they would proactively prioritise location searches for buildings that help reduce their carbon emissions in the future. Hence, demand for green and sustainable spaces will increasingly rise in the coming years.

Is Jakarta’s office market ready to capture the potential demand?

Indonesia has issued regulations for green buildings, some of which are set up by local governments. Jakarta is the first city in the country to issue specific regulations for green buildings in 2012. These regulations apply to new and existing buildings of certain types and sizes. However, the supply of green office buildings is still limited in Jakarta.

Figure 1: Jakarta Existing Green Office Buildings (based on sqm)

Source: JLL Indonesia Research, 1H21

In 1H21, we recorded the Jakarta commercial office supply at around 360 buildings, totalling 9.8 million sqm – 6.8 million sqm in the CBD area and 3 million sqm in non-CBD. Of the total area under office supply, less than 20% has obtained green certifications and is mainly based in the CBD area. Half of the green office supply for CBD is located in the Sudirman area, followed by the Kuningan and Gatot Subroto areas.

The measurement of green office buildings in Jakarta is most commonly defined by LEED institution from the United States, the BCA Green Mark Scheme from Singapore, and the Greenship standard established under the authority of the national certification body of the Green Building Council Indonesia (GBCI) – a member of World Green Building Council.

Figure 2: Jakarta Existing Green Office Buildings by Grade (based on sqm)

Source: JLL Indonesia Research, 1H21

Despite Grade B buildings accounting for approximately 50% of Jakarta office supply, most green buildings are Grade A. Grade A buildings constitute around 85% of the total green office building supply. In fact, 43% of Grade A office supply in Jakarta comprises green buildings, as compared withonly 5% for Grade B & C buildings.

Figure 3: Jakarta Green Office Buildings by Year of Completion

Source: JLL Indonesia Research, 1H21

Green office buildings in Jakarta have been completed predominantly from 2016 onwards when more new completions with green certifications entered the market. As Jakarta saw a vast supply, almost 60% of the total completions from 2016 obtained green certifications. Hence, the supply has increased significantly by nearly three times as recorded in 1H21 compared to pre-2016.

What’s next?

We started to see occupiers, especially multinational companies, setting sustainability as one of the main requirements when looking for office spaces in Jakarta. In the future, as demand is expected to improve post-pandemic, we anticipate seeing more such enquiries while flight-to-quality remains the main theme.

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