Office Market Conditions

Before and During

Pandemic
 Office Market Conditions
Question No. 1
Before 2019 (before Corona), what was the most active company industry? If possible, please mention
specific company name that demand space (new entry or expansion).

Answer No. 1
Most Active Company
➢ Banking,
➢ Oil and Gas industry,
➢ Insurance,
➢ Mining,
➢ Manufacture,
➢ Consumer Product,
➢ Management and Accounting Firm,
➢ Law Firm,
➢ Information & Technology,
➢ Trading and Commodities,
➢ Securities,
➢ Telecommunication,
➢ Media,
➢ Co-working spaces.

Most Active Company Distribution (based on Spaces Occupied) before Pandemic

46.9%

12.6% 11.0%
7.9% 8.4%
3.1% 2.8% 2.4% 1.8% 1.7% 1.3%
ComTech

Automotive

Others
Property, Real Estate
Professional Services

Media
Flexible Workspace

Pharmacy

Manufacture

Logistics
Chemical, Mining, Oil

& Construction
& Gas

Source: Colliers Indonesia – Research & Office Services

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 2
 10 Largest Transaction Before Covid-19

Year Office Building Sub-market Tenant Name Industry Size (Sqm)

2018 Cyber 2 Tower Rasuna Said PT Danone Indonesia Consumer Goods 11,763.00

2016 BRI II Sudirman PT Huawei Tech Investment Communication 9,292.50

2016 BRI II Sudirman PT Huawei Tech Investment Communication 9,292.50

2015 Generali Tower Rasuna Said PT. Asuransi Jiwa Generali Insurance 8,465.00

2011 Tempo Scan Rasuna Said Satya Mandiri Persada Aviation 7,592.48

2012 Tempo Scan Tower Rasuna Said PT Satya Mandiri Persada Aviation 7,592.48

2018 Pacific Century Place Sudirman Lembaga Penjamin Simpanan Government 5,459.54

2010 The Plaza Thamrin Minamas Gemilang Energy 5,147.67

2015 BRI II Sudirman PT. Huawei Tech Investment Communication 4,165.00

2016 BRI II Sudirman PT Huawei Tech Investment Communication 4,156.00

2013 BRI 2 Sudirman GE International Electrical 4,142.50

2019 Menara Mandiri 2 Sudirman PT Heinz ABC Indonesia F&B 3,321.65

Source: Colliers Indonesia – Office Services

Question No. 2
Before 2019 (before Corona), how was each type of industry (resource, retail, manufacture, IT, finance,
logistic, education, real estate, commodity, infrastructure, service) needs? For example, trend of expansion
or reduction, leasing terms request, area, etc.

Answer No. 2
➢ Before 2019, most companies tended to expand as the business was growing.
➢ Generally, they grew about 5%-10% per year based on occupied floor area. We did not see any companies
reduce space due to slow business.
➢ Leasing terms in general stayed the same for three or five years and companies generally renewed and
expanded in the same building.
➢ If they relocated, it was due to not being able to expand in the same building.
➢ The presence of co-working spaces helped many companies expand in the short term on a project basis
(6-12 months).

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 3
 Most Type of Lease (based on Spaces Occupied) before Pandemic
Lease Renewal
Expansion 8%
1%

Lease
91%

Note:
Lease = New Lease. New tenant come in
Expansion = Existing tenant expand their spaces at existing building
Lease Renewal = Tenant extend their lease period at same building
Source: Colliers Indonesia – Research & Office Services

Question No. 3
After 2020 (after Corona), what was the most active company industry? If possible please mention specific
company name, that demand space (new entry or expansion).

Answer No. 3
Large Transaction during Pandemic

Spaces Occupied
Tenant Office Building
(sq m)
Pasaraya Blok M
Tokopedia (merged into GoTo) 40,000 – 50,000
Tokopedia Tower at Ciputra World (Satrio)

Bukalapak Metropolitan Tower 8,000

Dana Capital Place (gatot Subroto) 5,000

Lazada 5,000 sqm at Capital Place (Gatot Subroto)

Lazada, Blibli, JD.ID Blibli 6,000 sqm at Barito Tower 2, 5,000 – 15,000
JDID, 15,000 sqm at Plaza Kuningan (Rasuna Said)
Zalora, 1,000 sqm at Capital Place (Gatot Subroto)
Zalora, Garena 1,000 – 12,000
Garena 12,000 sqm at PCP (SCBD)

Ovo Millenium Center City (Sudirman) 12,000

Digital Banking (ex: Bank Jago) BTPN Tower (Mega Kuningan) 5,000

continued

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 4
 Spaces Occupied
Tenant Office Building
(sq m)

continuation

Grab Gama Tower (Rasuna Said) 10,000

Consumer Product (ex: Danone) Danone at RDTX Place (satrio) 12,000

State Owned Company (ex:

Menara PNM (Rasuna Said) 17,000
PNM)
PCP (SCBD)
Shopee Pakuwon Tower, 50,000
Menara Sopo Del (Mega Kuningan)
Dapentel Building
Fintech Company (ex: Credivo)
Dipo Tower 7,000 sqm
Source: Colliers Indonesia – Research & Office Services

Most Active Company Distribution (based on Spaces Occupied) during Pandemic

72.0%

9.4% 6.3% 7.0%

3.7% 1.4% 0.2% 0.0% 0.0% 0.0% 0.0%
ComTech

Others
Chemical, Mining, Oil &

Property, Real Estate &

Automotive
Professional Services

Flexible Workspace

Media

Pharmacy

Manufacture

Logistics
Construction
Gas

Source: Colliers Indonesia – Research & Office Services

Question No. 4
After 2020 (during Corona), how was each type of industry (resource, retail, manufacture, IT, finance, logistic,
education, real estate, commodity, infrastructure, service) needs? For example, trend of expansion or
reduction, leasing terms request, area, etc.

Answer No. 4
➢ Some industries such as Banking Industry, Insurance, Telecommunication, Oil and Gas, Services
Companies, Real Estate, Infrastructure, reduced occupied spaces by 15%-30% in general.
➢ Co-working spaces operators have re-evaluated their business model by closed-down some of their
branches.

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 5
 ➢ Companies that are still expanding during Covid and continued to expand are Information & Technology
(IT) related companies including e-commerce and financial technology, consumer products, logistics, and
education.

Most Type of Lease (based on Spaces Occupied) during Pandemic

Relocation
26.9%

Lease
58.9%
Lease Renewal
13.6%

Expansion
0.6%

Source: Colliers Indonesia – Research & Office Services

Question No. 5
Is there any biases for office grade (premium, grade A, grade B & C) based on the company scale or tenant
industry? What kind of company scale/industry that wants Premium grade? What kind of company
scale/industry that wants grade A? what kind of company scale/industry that wants grade B & C?

Answer No. 5

Premium & Grade A Grade B & C

➢ Financial institution, ➢ Logistic,

➢ Services, ➢ Shipping,
➢ Law firm, ➢ Manufacturing,
➢ Accounting firm ➢ Construction & Engineering,
➢ Business processing,
➢ Outsourcing
➢ Back office of large financial institution
Source: Colliers Indonesia – Research & Office Services

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 6
 Type Industry Business Type Example

➢ DNVGL
Companies that provide services such as law,
Services ➢ Jasa Layanan Operasi,
administration, tax consultants, communications
➢ VFS Global
➢ Transcosmos Indonesia,
Companies that provide Customer Service, Customer
Outsourcing ➢ Mitracom Ekasarana,
Care and distributes labour for clients.
➢ Global Mandiri Bersama

Question No. 6
Was there any tenant that degraded from grade A to grade BC? On the other hand, was there any tenant
that upgraded from grade B & C to grade A?

Answer No. 6
➢ Many companies upgraded from Grade B or C to Grade A or even Premium because of the market
opportunity for tenants
➢ This condition happened a lot in the CBD due to oversupply.

Question No. 7
When will the office market conditions bottomed out from the downtrend?

Answer No. 7
➢ We predict the office market will bottom out in 4Q 2023, as there will be considerable new supply in the
Jakarta CBD in 2022-2023, such as Thamrin Nine (Autograph Tower and Luminaire Tower), Rajawali Tower,
Menara BRI and MORI Tower. Conversely, demand for office space is still limited.
➢ The correlation between GDP growth and demand for office space has been proven. Therefore, GDP
growth will play an important role in determining if the office market has reached the bottom level will
begin to climb.
➢ We had a negative GDP growth of 2% in 2020 and only 3.9% in 2021. Nevertheless, we forecast GDP
growth to be 5%-6% in 2022 and onwards.
➢ However, the bottoming out period will be challenging, due to large supply coming to the market in Q4
2024 in the form of Indonesia-1, which has just been taken over by Media Group.

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 7
 Most Active Company Distribution (based on Spaces Occupied) during Pandemic

Rent Occupancy

IDR500,000 100%
IDR450,000 90%
IDR400,000 80%
IDR350,000 70%
IDR300,000 60%
IDR250,000 50%
IDR200,000 40%
IDR150,000 30%
IDR100,000 20%
IDR50,000 10%
IDR0 0%

2013
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2014

2015

2016

2017

2018

2019

2020

2021
Source: Colliers Indonesia – Research

Question No. 8
What is the reason behind bottoming out period?

Answer No. 8
➢ The main reason for bottoming out is that supply in the CBD area will stop temporarily in 2023 until the
end of 2024, at which time Indonesia-1 will come on to the market with 140,000 sq m semi gross.
➢ At this time, GDP growth should have been running at the average of more than 5% per year, which
means demand for new office space will increase every year, which eventually leading to an increase in
the occupancy rate.
➢ We forecast that developers will not now undertake the risk of new projects without pre-committed
tenants.

Question No. 9
In the Indonesian office market, will the rental fee rise even when the occupancy rate is low?

Answer No. 9
➢ In Indonesia, the rental rate will not rise until the occupancy rate surpasses 70%. When occupancy rate
reached the higher rate, rents will continue to increase.
➢ Generally speaking, landlords are aware that a building needs to reach an occupancy of around 70% to
cover the full operating cost of the building.
➢ We believe this concept applies in any country.

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 8
 Question No. 10
Do you have information about the rent floor space by each type of company industry and its actual space in
the past?

Answer No. 10
Average Rent 2010-2021 by Type of Industry (IDR/sq m/month)

IDR300,000

IDR250,000

IDR200,000
average
IDR150,000

IDR100,000

IDR50,000

IDR0
Communication &

Chemical, Mining, Oil &

Automotive

Others
Manufacture
Property Real Estate &

Media

Pharmacy

Logistics

Professional Services

Flexible Workspace
Technology
Construction

Gas

Source: Colliers Indonesia – Research

Question No. 11
Do you have information about land bank and its size which can be developed a new office building along
Thamrin, Sudirman and Rasuna Said?

Answer No. 11

Sub-Market Location Size Area (sq m)

Thamrin Next to Indonesia-1 22,000

Rasuna Said Former Australian Embassy 7,960

Sudirman Sentra BDNI. next to Le Meridien Hotel 26,000

Rasuna Said Close to Royal Kuningan Hotel 11,000

Sudirman Next to Summitmas Tower 39,000

Senopati Next to Office 8 of District 8 20,000

Source: Colliers Indonesia – Office Services

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 9
 Question No. 12
Could you provide us the average rental rate and OCC of Premium, Grade A and Grade B & C from 2000 to
2021? (it means that the data is going back as far as possible)

Answer No. 12

Base Rent

2000 2001 2002 2003 2004 2005 2006 2007 2008

Premium NA NA NA NA 115,326 131,638 129,047 144,502 175,634

Grade A NA NA NA NA 74,707 90,025 85,150 117,613 131,341

Grade B NA NA NA NA 70,405 78,057 78,435 87,447 92,959

Grade C NA NA NA NA NA NA NA NA NA

2009 2010 2011 2012 2013 2014 2015 2016 2017

Premium 146,899 172,444 204,202 422,929 584,092 557,553 459,110 445,463 449,283

Grade A 123,125 122,420 155,731 245,262 274,158 284,584 335,524 315,282 280,854

Grade B 80,182 84,036 99,827 191,747 203,872 230,139 301,489 244,669 234,746

Grade C NA NA NA 163,395 232,001 228,463 246,203 205,422 177,343

2018 2019 2020 2021

Premium 358,684 346,634 340,652 344,677

Grade A 292,119 298,796 260,591 254,107

Grade B 229,726 228,385 209,901 193,054

Grade C 179,605 173,265 171,696 162,654

Source: Colliers Indonesia – Research

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 10
 Occupancy

2000 2001 2002 2003 2004 2005 2006 2007 2008

Premium NA NA NA NA 72.8% 84.9% 85.7% 90.4% 92.6%

Grade A NA NA NA NA 87.0% 91.0% 90.4% 87.1% 88.9%

Grade B NA NA NA NA 86.0% 93.6% 91.3% 94.8% 91.7%

Grade C NA NA NA NA NA NA NA NA NA

2009 2010 2011 2012 2013 2014 2015 2016 2017

Premium 92.7% 91.0% 95.5% 96.6% 96.8% 94.4% 89.4% 87.9% 82.7%

Grade A 86.2% 87.5% 93.2% 98.5% 96.8% 96.1% 84.7% 79.5% 78.3%

Grade B 92.5% 92.2% 95.0% 97.4% 95.3% 97.1% 94.7% 91.6% 91.7%

Grade C NA NA NA 94.7% 98.0% 93.1% 90.7% 88.0% 86.7%

2018 2019 2020 2021

Premium 74.7% 81.6% 78.1% 79.9%

Grade A 80.1% 82.4% 79.7% 79.1%

Grade B 89.1% 87.7% 84.3% 78.4%

Grade C 84.2% 83.0% 83.0% 73.9%

Source: Colliers Indonesia – Research

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 11
 Average Base Rent by Building Grade (IDR/sq m/month)

Premium Grade A Grade B Grade C

IDR700,000

IDR600,000

IDR500,000

IDR400,000

IDR300,000

IDR200,000

IDR100,000

IDR0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021
Source: Colliers Indonesia – Research

Occupancy by Building Grade

Premium Grade A Grade B Grade C

100%

95%

90%

85%

80%

75%

70%
2010
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: Colliers Indonesia – Research

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 12
 Question No. 13
In our discussion, you told that in general when OCC hits 70%, office owners will stop discounting rental rate
and Besides because in general OCC 70% means a break-even point (BEP) in terms of building operations
right? On the other hands, do you know OCC that an owner starts negotiate higher rental rate with a tenant
in general? (For example, 80% or something)

Answer No. 13
➢ Most landlords will aim to get the occupancy rate to 70% as quickly as possible so that the building can be
self-financing from an operation perspective.
➢ Then, the rental rate should be able to gradually increase, with a premium achieved for the last 10%-15%.

Question No. 14
Do you think there is the correlation between GDP growth and office demand? If yes, do you have any data
that shows the correlation?

Answer No. 14
➢ Agree. Kindly find chart & table below to see the details.
➢ We got the value R=0.7. There is a strong correlation between annual demand and GDP growth. Due to
extraordinary conditions impacted by pandemic, we excluded 2020 and 2021 calculations. Because it can
damage the overall calculation.

Correlation between Demand and GDP Growth

Annual Demand (Fix) GDP Linear (GDP)

500,000 7%

450,000 y = 0.0015x + 0.0619

R² = 0.7047 6%
400,000

350,000 5%
300,000
4%
250,000

200,000
3%
150,000

100,000 2%

50,000
1%
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-50,000 0%

Source: Colliers Indonesia – Research and World Bank

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic 13
 About Colliers
Colliers is a leading diversified professional services and investment management company. With
operations in 62 countries, our 17,000 enterprising professionals work collaboratively to provide expert
real estate and investment advice to clients. For more than 27 years, our experienced leadership with
significant inside ownership has delivered compound annual investment returns of 20% for
shareholders. With annual revenues of $4.3 billion and $77 billion of assets under management,
Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our
investors and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn

Hankyu Hanshin Properties Corp. – Office Market Conditions Before and During Pandemic