Minggu, 03/04/2011

Jakarta’s Office Market Supply Back to Normal in 2012

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Jakarta’s Office Market Supply Back to Normal in 2012

OFFICE SPACE SUPPLY in Jakarta is estimated to decline in 2012 from this year’s level. No doubt this will push up rental tariffs and sale prices. But, the supply shortage will not last long because a number of new office building projects will be completed in the 2012-2013 period. Bagus Adikusuma, Office Service Director of Colliers International, said that Jakarta’s office space supply of this year will amount to only 60,000-70,000 sq meters, while in fact demand is running so high. “As a result, rental and sale prices will rise, albeit slightly,” he said. Bagus said that the relatively smaller supply of office space in Jakarta this year is mainly due to delay of new office building projects as a result of the global economic crisis.

Bagus explained that the majority of office buildings in the capital are still under construction at the moment. They include 18 buildings at Jl. Sudirman Business District (SCBD), Allianz Tower and Tempo Scan Tower on Jl. Rasuna Said, and K-Link Tower on Jl. Gatot Subroto. The construction work of all these buildings is scheduled for completion this year.

Some buildings are scheduled to start operation in 2012 including Ciputra Office Tower and AXA Tower, which is a part of the Kuningan City superblock that is being built by Agung Podomoro Group on Jl. Prof. DR Satrio; Multivision Tower on Jl. HR Rasuna Said; Office 8 on Jl. Senopati; Setiabudi Office Block on Jl. HR Rasuna Said; World Trade Centre on Jl. Jenderal Sudirman; and The City Centre on Jl. KH Mas Mansyur.

Meanwhile, another building, Menara Prima 2 Mega in South Jakarta’s Kuningan area, is scheduled to enter the property market in 2012 and at the moment it is still in the planning phase. Outside CBD, some buildings are under construction and are scheduled to start operation this year, including Graha Kramat on Jl. Kramat; Central Park Office Tower on Jl. S. Parman; Menara Citicon on Jl. S. Parman; Menara Satu in Kelapa Gading; MT Haryono Square on Jl. MT Haryono; and Plaza Simatupang on Jl. TB Simatupang. Several new office buildings are still under construction and are scheduled to enter the market in 2012, including Menara 165 on Jl. TB Simatupang; Wisma Pondok Indah 3 on Jl. Iskandar Muda; Sovereign Plaza on Jl. TB Simatupang; Alamanda Tower on Jl. TB Simatupang; Chitatex Tower on Jl. TB Simatupang; and Telavera Suite on Jl. TB Simatupang. In 2013, very possibly new office space will derive from Green Tebet Office Tower on Jl. MT Haryono, which is under construction at the moment; and Graha Elnusa and Manhattan Tower 2 on Jl. TB Simatupang.

CBD Jakarta is expected to be dominated by strata-title office buildings. Hendra Hartono, CEO of Leads Property, said that total supply of strate-title office space in the coming two years is estimated at about 233,000 sqm, or almost half of the total area of 558,000 sqm that will enter CBD Jakarta in 2012. The 558,000 sqm is almost half of the total supply of strata-title space at CBD Jakarta in the past 10 years, or after the 1998 Asian crisis up to date. Hendra added that demand is estimated to rise in the coming years, by 8%-10% annually, mainly from local companies, in line with stronger buying power thanks to the country’s rising economic growth. “Most local investors run long-term businesses and maintain permanent operation in Indonesia. They do not want to pay office rents every year, which is why they decide to buy office space here,” Hendra noted.

Meanwhile, gross rents are predicted to rise 11% annually, while annual rental income is estimated to increase 8%-10% annually. Tommy Bastamy, Senior Vice President of for Resarch and Consultancy of Coldwel Banker Indonesia, agrees, saying that office space market is so promising at this time due to rising demand following business expansions and the opening of new businesses in the capital. According to Tommy, demand for strata title space is going up with last year’s total absorption reaching 61,800 sqm. “In 2010, transactions of strata-title office space were dominated by projects that are being built and newly completed ones,” he said.

Overall, office occupancy rates in 2010 looked positive, compared with the 2009 levels that showed falling trends. The results of the latest research conducted by Cushman and Wakefield showed that rising demand due to increasing business activities had pushed up rental prices in several countries. Last year, the best recovery occurred in the Asia Pacific where rent prices rose 8% annually. Hong Kong – the world’s most expensive market – and Beijing experienced drastic growth in office space rents, by 51% and 48%, respectively.

John Siu, Executive Director of Cushman & Wakefield Hong Kong, said that with tenants entering tough competition to obtain space in Hong Kong’s limited supply, rental prices for rank A space are estimated to rise 20%-25% in the coming 12 months. “Some multinationals are reviewing their business strategies and may consider to relocate their operational offices to other countries with lower rent prices like Singapore and China so that they can cut their regular operational costs,” he said.

David Cheadle, Managing Director of Cushman and Wakefield Indonesia, said that rising demand from companies for office space will increase office rental prices at Jakarta CBD by an estimated 10%-15% in the coming 12 months. “Office tenants at quality buildings are facing tough competition to expand their businesses. It is important for each of them to evaluate and plan their need for office face,” Cheadle said. (DHP)