Quarterly | Office | Jakarta | 5 April 2023

The upcoming periods pose to be another

year filled with challenges

Insights & recommendations

Despite the prevailing trends that show extensive efficiency, most businesses remain cautious and
indecisive, with many even contemplating minor reductions in labour and workspace. Whilst some tenants
have implemented regulations to return to full-time office work, others have adopted a hybrid working
model. Nevertheless, there is a positive outlook on the horizon with the anticipation that the economy will
continue to strengthen, serving as a catalyst to overcome the prolonged uncertainty brought on by the
pandemic.
As indicated in the index of a newly released report, Jakarta has witnessed a significant upsurge in traffic
congestion. Consequently, commuting has become a primary concern for many employees upon the
resumption of in-office work. Thus, office buildings that are situated in proximity or are integrated with
more convenient modes of mass transportation are poised to become increasingly popular. Despite this,
the CBD remains the primary destination for tenants seeking to relocate or expand. Meanwhile, office
buildings located outside the CBD are striving to attract and accommodate more tenants. Competitive
rental rates will continue to be a significant factor amidst increasing competition, especially with the advent
of a larger influx of new supplies in 2023.

2023–2025
Q1 2023 Full Year 2023 Annual Avg.

The trend towards efficient use of space is

expected to persist, with tenants being
increasingly cautious when renewing contracts.
Furthermore, there is likely to be a higher demand 11,860 sq m -56,479 sq m -8,025 sq m
Demand
for smaller office spaces.

Currently, the cumulative supply is projected to

increase by around 2% per year from 2023 to
Supply 2025. However, there is a possibility that some
274,227 sq m 463,096 sq m 220,264 sq m
new projects will commence in the latter half of
2024 to 2025, provided absorption rates improve.

1
 Annual Avg Growth
QOQ/ YOY/ 2023–2025/
End Q1 End 2023 End 2025

Newly operating buildings with superior 1.73% 2.09% 3.48%

specifications are expected to significantly impact
the computation of average rent. It is anticipated IDR210,395 IDR211,141 IDR248,870
Rent
that rent will increase by around 5% annually from
2023 to 2025.

It is anticipated that vacancy rate will rise by 3.0- 1.72 3.55 0.59
3.5 basis points in 2023 as compared to 2022.
However, the limited supply of office spaces will
Vacancy lead to a decrease in vacancy rates in 2024-2025. 28% 29.87% 28.1%

The strata-title market is expected to be 2.02% 0.63% 4.56%

substantially affected by the limited new launches,
thereby increasing the dependence on available
Selling price IDR48.39mio IDR48.86mio IDR49.60mio
spaces in the secondary market. Nevertheless, it is
anticipated that the average selling price will only
witness moderate growth from 2023 to 2025.
Source: Colliers. Note: IDR15,242 = 1 USD.

The market already features Annual supply

projects that have experienced CBD Outside the CBD

550,000
delays
440,000
The pandemic has significantly impacted completion
times, resulting in delayed projects and a relatively 330,000
restrained supply in 2021-2022. Although the
construction of some projects has been finalised, 220,000
owners have decided to delay their full operation until
the necessary certifications are obtained and after 110,000
securing more committed tenants. As a result, most of
these projects are expected to be completed in 2023. 0
2023E

2024E

2025E
2016

2017

2018

2019

2020

2021

2022

In the CBD, notable additions to the office inventory

include Jakarta Mori Tower, Rajawali Place (within the
St. Regis complex), and Autograph Tower (within the
Source: Colliers
Thamrin Nine complex), which collectively added
around 264,000 sq m of new office spaces, bringing
the total registered area to 7.3 million sq m in Q1
2023.
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 It is anticipated that there will be a further influx of
additional supplies towards the end of 2023, with
contributions expected from projects such as
Luminary Tower (within Thamrin Nine complex) and T
Tower. As a result, the cumulative office space supply
in the CBD is projected to increase to 7.4 million sq m
by the end of 2023, representing a 5% increase
compared to that in 2022.
In areas outside the CBD, the total supply of office
spaces was recorded at 3.82 million sq m in Q1 2023.
Four upcoming projects are expected to be completed
this year, adding around 115,000 sq m of new office
spaces to the market. All in all, Jakarta is set to have
about 460,000 sq m of total office space in 2023. With
such a high volume of supply, it is highly likely that the
Jakarta office market will face yet another challenging
year.
To eliminate unutilised office
space, cut costs and prevent
unnecessary spending
The pandemic has undeniably accelerated the
adoption of new work models, such as working hybrid
and even fully remote. Even with the lifting of activity
restrictions, most companies have already downsized
and may not be able to immediately revert as before.
The adoption of workplace strategies during lease
renewal has increased the availability of office spaces
in Jakarta. The current workplace strategy is more
focused on optimising office space based on the
number of people who will be present, thus leading to
more efficient use. This is also seen as a way for
tenants to implement cost-saving measures, whilst
waiting for business conditions to return to normal.
Occupancy rate
CBD Outside the CBD
100%
90%
80%
70%
60%
50%
2023E
2024E
2025E
2016
2017
2018
2019
2020
2021
2022
Source: Colliers
Conversely, the forthcoming massive influx of
additional office spaces is expected to contribute to
the already high number of vacant spaces in Jakarta’s
CBD and its outskirts. Despite the commitments made
by various companies, including law firms, logistics
and shipping companies, chemical and
telecommunication industries, the current level of
demand is still insufficient to balance the increasing
supply of available office spaces.
The banking industry holds a paradoxical position in
the current office building market. Whilst some banks
have been reducing their office space, others have
been expanding their operations. Likewise,
pharmaceuticals, forex, textiles, logistics, social media,
and mining companies are showing interests in
acquiring office spaces, albeit in relatively small areas.
This trend provides a hopeful outlook that demand
for office space will eventually rebound, either
through new lease contracts, relocations, or
expansions.
The majority of office space lessees who relocate or
expand tend to favour pre-fitted (ready-to-use) spaces,
either partially or in their entirety, as a means of
mitigating the initial capital expenditures. Such
lessees typically endeavour to secure a favourable
transaction in the market, with an extended fit-out
period frequently being sought in order to capitalise
on the rent-free period during that stage.
Nevertheless, the trend toward downsizing persists,
including the sub-leasing of previously occupied
space. The bulk of such sub-leasing tenants tend to be
IT or e-commerce firms with established brand names.
Initially, these entities tended to occupy relatively
large workspaces, but the financial ramifications of
the pandemic have prompted them to sub-lease a
significant proportion of their leased area in a bid to
curtail operational expenses
The anticipated economic recovery in Indonesia is
likely to face challenges from the ongoing global
conflicts. This uncertainty is expected to impact the
business climate in the country. As a result, both the
government and private sector will remain cautious
and proactive in their approach to boost business
confidence, which could lead to increased demand for
office space. However, the completion of new office
buildings will be a crucial factor in determining the
average occupancy rates in 2023. In Q1 2023, the
average occupancy rate in the CBD was 72.0%, a drop
of 3% compared to Q4 2022. Meanwhile, outside the
CBD, occupancy rates remained stable at 72%. The
upcoming large supply of new office spaces is likely to
push down occupancy rate to 70% by the end of 2023,
both in and outside the CBD.
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 With no anticipated increase in supply, it is expected
that occupancy rates will rise in 2024. Furthermore,
office space absorption is expected to continue to
grow due to the stable economic outlook and
improved business climate. Nevertheless, it is worth
noting that 2024 is an election year in Indonesia,
which is likely to slow down business activities, as
firms wait for more stable conditions to make
strategic moves.
When considering building grade, premium buildings
have maintained an average occupancy rate of 80%,
despite the pandemic. However, due to a significant
increase in supply, the average occupancy rate of
premium buildings decreased in Q1 2023. Despite this,
premium buildings with the best quality and location
are expected to recover their occupancy rates
relatively quickly. On the other hand, grade A
buildings have recorded an average occupancy rate of
75%-76% since 2022.
New office space has affected
rent calculation, but a substantial
gap persists between asking and
transacted prices
newly available spaces in the current market,
landlords are compelled to remain flexible and
accommodating to retain tenants. On the other hand,
tenants are presented with opportunities to secure
desirable rental terms, office locations, and lease
periods.
In Q1 2023, the average rent for newly operational
buildings in the CBD was calculated to be IDR246,030
per sq m, reflecting a modest 3% increase from Q4
2022. Despite this modest increase, the demand for
office space is anticipated to strengthen in
comparison to the past two years. This is likely to
boost landlord confidence in raising base rents,
particularly for office buildings that maintain relatively
high occupancy rates. In terms of building grade, the
average asking rent for grade A buildings, including
premium options, was registered at IDR294,772,
signifying a 4% increase from Q4 2022. Conversely,
grade B and C office buildings are continuously
adjusting rental rates in response to the competitive
packages offered by premium and grade A buildings.
Beyond the confines of the CBD, the average rental
price in Q1 2023 was recorded at IDR174,759,
displaying a relatively stable QOQ trend. Although the
remainder of 2023 will witness the completion of
some new office buildings in this area, the average
rent is expected to remain relatively constant.

Asking base rent

CBD Outside the CBD Despite the stable prices, there is

IDR400,000
a lack of impetus for investment
IDR320,000 Selling price

IDR240,000 CBD Outside the CBD

75
IDR160,000

60
IDR80,000
in IDR mio

45
IDR0
2023E

2024E

2025E
2016

2017

2018

2019

2020

2021

2022

30

15
Source: Colliers

0
In 2023, landlords are placing greater emphasis on
2023E

2024E

2025E
2016

2017

2018

2019

2020

2021

2022

achieving high occupancy rates rather than raising

rental prices, particularly for larger vacant spaces in
competitive rental packages. As a result, some newly Source: Colliers
operating office buildings in the CBD are offering
competitive base rents to ensure a sufficient
commitment to occupancy levels. With a surplus of

4
In 2022, the average selling price, particularly within Our analysis has pinpointed various factors that are
the CBD, experienced a significant decline. set to impact Jakarta's office market over the course
Nevertheless, to acquire fresh cash to revive business of 2023. Foreign corporations will keep a close watch
operations and avoid service charge, some unit on global economic developments, which will sway
owners released their spaces in the secondary market their decision-making policies. Conversely, domestic
at relatively high prices, primarily those with an area entities, including state-owned enterprises (BUMN),
of less than 500 sq m. Meanwhile, landlords remain will possess greater resilience than their foreign
optimistic about a market rebound and are, therefore, counterparts, given their relative immunity to global
inclined to set relatively high selling prices for spaces economic factors. The office market is anticipated to
in newly constructed buildings or those still under place emphasis on those industries exhibiting active
construction. This contributed to the average selling growth with potential for expansion, including those
price of available spaces in the CBD, reaching IDR 56.1 engaged in natural resource extraction, such as nickel
million in Q1 2023. Nonetheless, when compared to and bauxite mining, among others.
the 2021-2022 period, the current average selling
It is expected that the forthcoming election agenda is
price appears to remain unchanged. This indicates
unlikely to have a substantial impact on the
that owners and developers are still pricing their
operations of the office rental market, specifically
spaces at a level that potential buyers can practically
concerning its prospects for expansion, relocation,
afford. Moreover, prospective buyers seeking lower
and renewal in the near term. Rather, the election's
initial prices are also showing interest in available
agenda is more likely to affect the general investment
spaces in buildings under construction. Some
landscape, especially in the strata-title office market.
companies, such as internet service providers and
Most entrepreneurs and investors are predicted to
mining firms, already committed to purchasing such
exercise prudence and bide their time, awaiting a
spaces.
stable political climate and security factors before
In Q1 2023, the average selling price outside of the committing to any investment decisions.
CBD was recorded at IDR 32.2 million, which remained
relatively stable when compared to that in Q4 2022.
The limited number of newly launched spaces is
expected to increase take-up rates beyond the CBD.
Strata-titled office buildings located in areas adjacent
to the CBD and TB Simatupang are becoming an
attractive option for potential buyers due to their
lower selling prices.

Appendix
Under construction projects

SGA Marketing
Project Name Location Developer
(sq m) Scheme

CBD

2023

T Tower Gatot Subroto BPD Jabar 24,000 For Lease & Sale

Thamrin Nine (Luminary

Thamrin Putra Gaya Wahana 51,000 For Lease
Tower)

continued

5
 SGA Marketing
Project Name Location Developer
(sq m) Scheme

continuation

2025

Indonesia-1 North Tower Thamrin Media Group 79,486 For Lease

Indonesia-1 South Tower Thamrin Media Group 72,814 For Sale

Outside the CBD

2023

TB Simatupang,
Sanggala Tower Sapta Tunggal Mulia 9,900 For Lease & Sale
South Jakarta

TB Simatupang,
The Sima Grage Trimitra Usaha 59,169 For Lease & Sale
South Jakarta

Fatmawati, South
One Belpark Office Harmas Jalesveva 17,800 For Lease
Jakarta

Cempaka Putih,
Lippo Tower Holland Village Lippo Karawaci 27,000 For Lease & Sale
Central Jakarta

2024

Sun & Moon (The Owner Dharmawangsa,

Dharma Tatemono 35,678 For Sale
Suite Dharmawangsa) South Jakarta

Menara Jakarta Office Kemayoran, Central

Agung Sedayu 90,000 For Lease & Sale
Tower Jakarta

Pantai Indah Kapuk,

ADR Office Griya Inti Perkasa 48,000 For Lease
North Jakarta

Source: Colliers

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 For further information, please contact:
Ferry Salanto Eko Arfianto
Senior Associate Director | Senior Manager | Research |
Research | Jakarta Jakarta
62(21) 3043 6730 62(21) 3043 6726
Ferry.Salanto@colliers.com Eko.Arfianto@colliers.com

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