COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

Eko Arfianto
Senior Manager | Research | Jakarta
+6221 3043 6726

DEMAND EXPECTED TO PICK UP IN H2 2019

Eko.Arfianto@colliers.com

2018–2021
Summary & Q4 2018 Full Year 2019 Annual Average
Recommendations Enquiries in 2019 should continue to come from
flexible workspace operators, and the insurance
We expect a correction in and fintech industries. Meanwhile, future
-12,899sq m 239,377sq m 250,915sq m
Jakarta’s rents in 2019, as some Demand demand will likely come from overseas
upcoming office buildings begin universities.
to reduce their base rents to Jakarta is scheduled to see 1.4 million sq m of
encourage occupancy. supply in 2019-2021. By the end of 2019, the
We recommend building owners total office supply in Jakarta should reach 10
59,547sq m 662,163sq m 255,250sq m
be meticulous in managing million sq m, of which about 66% is located in
Supply the CBD.
incentives and rental discounts to
have the best opportunity to Annual Average
secure tenants. QOQ / YOY / Growth 2018–21 /
End Q4 End 2019 End 2021
The agility spaces model will
likely become a win-win solution The vacancy rate in the CBD will likely decline by 0.1% 1.4% -0.3%
for both landlords and tenants as about 3.5% in 2019-2021. Outside the CBD
it provides flexibility. With this Vacancy
vacancy will likely decrease by 3.0% by 2021. 16.6% 18.0% 16.5%
model, landlords are changing
the previous model of offering The asking rent in the CBD might improve by 2% -4.8% 0.9% 0%
their entire building for lease and in 2019 and should further grow by 5% through
2021. However, the transacted rent will possibly
instead only allocate about 60% IDR238,266 IDR240,427 IDR246,891
Rent decline by up to 20% from the asking rent.
of the space for direct leasing to
end-users, while allowing the With typical buyers of office space currently
dominated by end-users, transaction volume 3% 2.8% 3.1%
remainder to be managed by
flexible workspace operators, or Price should grow modestly, thus prices should still be
by the landlords themselves. relatively stable until 2020. Fewer spaces in IDR47,145,240 IDR48,456,347 IDR48,811,287
2021 might push prices upward.
Source: Colliers International. Note: rents are per sq meter per month and prices are per square meter; USD1 to IDR14,481 as of end-Q42018; 1 sq m = 10.76 sq ft

1
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

THE PRESSURE ON SUPPLY SHOULD Supply should further increase by 15.8% by the end of 2021. Over the next
three years, almost 57% of the total future supply outside the CBD is
schedule in South Jakarta.
EASE IN 2020
Jakarta annual office supply
Jakarta cumulative office supply
600,000
8,000,000
500,000
7,000,000
6,000,000 400,000

sq m
5,000,000 300,000
sq m

4,000,000
200,000
3,000,000
2,000,000 100,000

1,000,000 0

2019E

2020E

2021E
2010

2011

2012

2013

2014

2015

2016

2017

2018
0

2019E

2020E

2021E
2010

2011

2012

2013

2014

2015

2016

2017

2018
CBD For Lease For Sale Outside the CBD For Lease
CBD Existing Supply Annual Supply Outside the CBD Existing Supply
Source: Colliers International
Source: Colliers International

LEASING ENQUIRIES BEGIN TO

Central Business District (CBD)
The total new office space in 2018 was 481,000 sq meters. Sopo Del Tower B
SPROUT AND WILL LIKELY
is the eighth office building that began operation in Q4, bringing the total
office space supply in the CBD to 6.45 million sq meters. We anticipate MATERIALISE IN H2 2019
around 350,000 sq meters of additional office space, for a total of 6.8 million
The number of leasing enquiries was quite intense at the end of 2018, as
sq meters. From 2020 to 2021, there are eight office buildings planned with
companies have already completed their budgets for 2019, including plans
around 550,000 sq meters of space.
to expand or relocate their businesses. Such circumstance might translate to
Outside the CBD increased leasing activity in 2019.
Zuria and MNC Tower began operations in Q4 2018, contributing 35,247 sq Central Business District (CBD)
meters. With the addition of seven office buildings in 2018, the total supply
The general market slowdown has put landlords in very competitive
outside the CBD is registered at 3.24 million sq meters.
situation where it is very challenging to get new tenants.

2
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

In Q4 2018, occupancy rates fell. In our previous forecast for 2018, Occupancy rates in Jakarta
occupancy in the CBD was projected to fall below 80%, however, with three
large buildings delayed, occupancy at the end of 2018 was 81.9%. 100%

We expect the MRT to add value to office buildings in the CBD, particularly in 90%
Jalan Sudirman, which is the main thoroughfare. Office space in Jalan
Sudirman might be absorbed first, followed by other locations in the CBD. 80%
The office market might still encounter challenges in 2019, and we project a
modest occupancy increase of 1%, given a moderate quantity of supply and 70%
continued expansion of flexible workspace operators and other tenants from
the financial sector. Meanwhile, pre-committed occupancy for office 60%
buildings for lease that began operation in 2018-2019 has reached almost
45%. 50%

2019E

2020E

2021E
2010

2011

2012

2013

2014

2015

2016

2017

2018
Currently, landlords offer incentives such as free rent, fit-out allowances,
holdover rights and termination contracts to attract committed tenants.
From our observation, landlords tend to consider the tenants’ brand before CBD Outside the CBD
engaging in negotiations. We think the tenant market situation will last and
Source: Colliers International
when it comes, building owners would already anticipate the condition,
particularly when the amount of demand has already approached the
quantity of supply. RENTAL TARIFF HIT BOTTOM AT
Outside the CBD
Occupancy was in a gradual upward trend from 2017 to Q3 2018, but the
THE YEAR-END
relatively poor performance of the two newly operating buildings added Central Business District (CBD)
more pressure to the overall occupancy rate, which fell modestly to 84.9% in
Since the peak in 2014, rent have dwindled and bottomed at IDR284,247 at
Q4 2018. The continuing supply will likely further bring down occupancy by
the end of 2018. This was a 12% drop so far compared with that in Q1 2018.
3.5% in 2019. We think that the current level of demand could not
Given the ongoing tenant market situation, half of the total office buildings
adequately lift the already oversupplied market.
that began operation from 2017 onward are currently offering rents below
the average market price. A considerable drop of around 20% (compared to
TB Simatupang, the most prominent commercial location outside the CBD,
2017) was noticeable in premium class buildings, which is now at
only saw 5,000 sq meters of additional space over the past two years, and
IDR358,684.
this has raised occupancy by around 4% you to 81.4% at the end of 2018.
Nonetheless, we are of the view that the large supply flow in 2019 would Outside the CBD
bring occupancy down by 4% in 2019.
Some office buildings reduced their rent by around 30%, and this caused
average rent to drop by 14.4% yoy to IDR192,284 in Q4 2018.

3
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

Average asking rents (/sq m/month) Outside the CBD

IDR400,000 In 2018, there were several strata-title office buildings outside the CBD
that reduced their asking prices by about 15%, compared to 2017. The
IDR350,000
general prices for new strata-title buildings range from IDR28 million to
IDR300,000 IDR38 million, whilst the average asking price was registered at IDR35.8
IDR250,000 million in 2018, which is relatively stable compared with that in 2017.
IDR200,000
IDR150,000
Average Asking Prices (/sq m)
IDR100,000 IDR70,000,000
IDR50,000
IDR60,000,000
IDR0
IDR50,000,000

2019E

2020E

2021E
2010

2011

2012

2013

2014

2015

2016

2017

2018
IDR40,000,000

CBD Outside The CBD IDR30,000,000

IDR20,000,000
Source: Colliers International
IDR10,000,000
IDR0
PRICE HAS BEEN QUITE STABLE

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019E

2020E

2021E
Central Business District (CBD) CBD Outside CBD
The average asking price of office spaces in the CBD is now recorded at
IDR58.2 million, up by 4.2% yoy. Prices of several strata-title office buildings Source: Colliers International
in the CBD increased by 17.5% yoy basically due to limited new stocks in
2018.
Four strata-title office buildings are scheduled for completion in the next
three years. By the end of 2018, the committed take-up rate for these office
buildings was recorded at around 75%. Despite achieving a relatively high
commitment level, landlords, especially of new office buildings, will likely
maintain their asking prices and this could raise the average price
moderately by around 2.5% in 2019.

4
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

APPENDIX

Office Spaces Offered for Lease

Central Business District (CBD)
New Pipeline

Office building project name Location SGA (sq m) Marketing scheme Progress development

2019

Sequis Tower Sudirman 78,000 For Lease Under Construction

Sudirman 7.8 Tower 1 Sudirman 52,000 For Strata Under Construction

World Capital Tower Mega Kuningan 72,000 For Strata Under Construction

Lippo Thamrin Office Tower Thamrin 16,500 For Strata Under Construction

T Tower Gatot Subroto 24,000 For Lease & Sale Under Construction

Millenium Centennial Tower Sudirman 93,588 For Lease Under Construction

Graha Makmur Gatot Subroto 10,345 For Lease Under Construction

2020

Thamrin Nine Thamrin 97,500 For Lease Under Construction

Social Security Tower Rasuna Said 23,500 For Lease Under Construction

Graha Binakarsa (redevelopment) Rasuna Said 20,000 For Lease Under Construction

continued

5
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

Office building project name Location SGA (sq m) Marketing scheme Progress development

continuation

2021

Chitaland Satrio 90,000 Lease Under Construction

Daswin Tower Rasuna Said 100,000 Lease Under Construction

Indonesia Satu North Tower Thamrin 43,000 Lease Under Construction

Indonesia Satu South Tower Thamrin 88,500 Lease Under Construction

Jakarta Office Tower by MORI Sudirman 90,000 Lease Under Construction

Source: Colliers International

Supply distribution in the CBD CBD Occupancy Rates by Building Grade

2017 Q3 2018 2018 QOQ YOY

Satrio

Gatot Subroto Premium 76.0% 74.9% 74.7% -0.2% -1.3%

Mega Kuningan Grade A 78.5% 80.4% 80.1% -0.3% 1.6%

Rasuna Said Grade B 91.7% 91.5% 89.1% -2.4% -2.6%

Sudirman Grade C 86.7% 85.6% 84.2% -1.4% -2.5%

Source: Colliers International

Thamrin

0 700,000 1,400,000 2,100,000 2,800,000 3,500,000

Cumulative Supply 2018 Future Supply 2019 - 2021

Source: Colliers International

6
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

CBD Occupancy Rates by Sub-Market CBD Average Asking Rents by Building Grade

2017 Q3 2018 2018 QOQ YOY 2017 Q3 2018 2018 QOQ YOY

Thamrin 91.3% 92.4% 90.3% -2.1% -1.0% Premium 449,283 385,725 358,684 -7.0% -20.2%

Sudirman 85.3% 81.4% 80.3% -1.1% -5.0% Grade A 280,854 297,842 292,119 -1.9% 4.0%

Rasuna Said 86.2% 90.0% 90.5% 0.5% 4.3% Grade B 234,746 230,079 229,726 -0.2% -2.1%

Mega Kuningan 71.5% 72.0% 68.7% -3.3% -2.8% Grade C 177,343 181,836 179,605 -1.2% 1.3%

Gatot Subroto 77.1% 79.3% 79.0% -0.3% 1.9% Source: Colliers International

Satrio 68.1% 81.3% 81.4% 0.1% 13.3% CBD Average Asking Rents by Sub-Market
Source: Colliers International
2017 Q3 2018 2018 QOQ YOY
Pre-committed absorption in the CBD
Thamrin 291,535 285,020 289,620 1.6% -0.7%

Sudirman 310,964 312,822 301,459 -3.6% -3.1%

2018
Rasuna Said 246,696 237,504 229,844 -3.2% -6.8%
2019E Mega Kuningan 252,665 255,266 248,202 -2.8% -1.8%

2020E Gatot Subroto 338,600 325,769 305,573 -6.2% -9.8%

Satrio 234,679 244,177 214,918 -12.0% -8.4%

2021E
Source: Colliers International

0 100,000 200,000 300,000 400,000 500,000

Space absorbed (sq m) Space unabsorbed (sq m)

Source: Colliers International

7
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

Asking prices in the CBD

IDR120,000,000

IDR100,000,000

IDR80,000,000

IDR60,000,000

IDR40,000,000

IDR20,000,000

IDR0
Thamrin Sudirman Mega Satrio Gatot
Kuningan Subroto
Source: Colliers International

Outside the Central Business District (CBD)

New Pipeline

Office building project name Location Area SGA (sq m) Marketing scheme Progress development

2019

Arcade Business Center Pantai Indah Kapuk North Jakarta 22,000 For Lease Under Construction

Wisma Kartika Grogol Central Jakarta 11,770 For Lease Under Construction

One Belpark Office Pondok Labu South Jakarta 17,800 For Lease Under Construction

Soho Pancoran Panncoran South Jakarta 30,000 For Sale Under Construction

Pakuwon Tower Casablanca South Jakarta 80,000 For Lease & Sale Under Construction

continued

8
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

Office building project name Location Area SGA (sq m) Marketing scheme Progress development

continuation

Agung Sedayu Office Tower Pantai Indah Kapuk North Jakarta 50,000 For Lease Under Construction

Arkadia Tower G TB Simatupang South Jakarta 44,991 For Lease Under Construction

The Sima TB Simatupang South Jakarta 59,169 For Lease & Sale Under Construction

2020

Jakarta Box Tower Kebon Sirih Central Jakarta 36,000 For Lease Under Construction

Citra Tower 1 Kemayoran Central Jakarta 40,000 For Lease & Sale Under Construction

One Tower Kemayoran Central Jakarta 21,400 For Sale Under Construction

Menara Tendean Tendean South Jakarta 26,599 For Lease Under Construction

2021

Wisma Barito Pacific 2 Slipi West Jakarta 26,000 For Lease & Sale Under Construction

Ciputra International Office Tower 2 Kembangan West Jakarta 15,000 For Lease In Planning

South Gate Office Tower Tanjung Barat South Jakarta 30,000 For Lease In Planning
Source: Colliers International

9
COLLIERS QUARTERLY OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019

Supply distribution in outside the CBD CBD Average Asking Rents by Sub-Market

2017 Q3 2018 2018 QOQ YOY

TB Simatupang
Central Jakarta 140,426 150,591 150,406 -0.1% 7.1%
South Jakarta*
South Jakarta * 237,960 213,514 211,381 -0.9% -11.1%
West Jakarta
TB Simatupang 243,270 223,803 216,260 -3.3% -11.1%
East Jakarta
North Jakarta 223,938 211,556 195,431 -7.6% -12.7%
North Jakarta
East Jakarta 77,667 77,667 77,667 0.0% 0.0%
Central Jakarta
West Jakarta 198,163 186,638 163,223 -12.5% -17.6%
0 300,000 600,000 900,000 1,200,000
*exclude TB Simatupang
Cumulative Supply 2018 Future Supply 2019 - 2021 Source: Colliers International

*exclude TB Simatupang
Source: Colliers International Pre-committed absorption in outside the CBD

Occupancy Rates in outside the CBD

2018

2017 Q3 2018 2018 QOQ YOY

2019E
Central Jakarta 91.7% 91.4% 90.7% -0.7% -1.0%

South Jakarta* 87.9% 89.5% 89.1% -0.4% 1.2% 2020E

TB Simatupang 72.2% 80.8% 81.4% 0.6% 9.2%

2021E
North Jakarta 81.7% 77.2% 75.8% -1.4% -5.9%

East Jakarta 100.0% 100.0% 100.0% 0.0% 0.0% 0 100,000 200,000 300,000 400,000

Space absorbed (sq m) Spaces unabsorbed (sq m)

West Jakarta 82.0% 82.4% 82.6% 0.2% 0.6%
Source: Colliers International Source: Colliers International

10
 OFFICE | JAKARTA | RESEARCH | Q4 2018 | 9 JANUARY 2019
Primary Authors: For further information, please contact:
Eko Arfianto Ferry Salanto
Senior Manager | Research | Indonesia Senior Associate Director| Research | Indonesia
+62 21 3043 6726 +62 21 3043 6730
Eko.Arfianto@colliers.com Ferry.Salanto@colliers.com

About Colliers International Group Inc.

Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is a top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 13,000 professionals.
Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture
and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services
platform, has more than $25 billion of assets under management from the world’s most respected institutional real estate investors.
Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice to accelerate the success of its clients. Colliers has been ranked among the top 100 global outsourcing firms by the
International Association of Outsourcing Professionals for 13 consecutive years, more than any other real estate services firm. Colliers is ranked the number one property manager in the world by Commercial Property
Executive for two years in a row.
Colliers is led by an experienced leadership team with significant equity ownership and a proven record of delivering more than 20% annualized returns for shareholders, over more than 20 years.
For the latest news from Colliers, visit our website or follow us on

Copyright © 2019 Colliers International

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any
inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

11