Outlook 2023 Indonesia

INDONESIA

JAKARTA KEY MESSAGES

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 Two new projects: Mori Tower and Autograph Tower will enter the Jakarta CBD Office market in 2023.  After 2023, new supply is forecast to decline to an average of 50,000 sqm per year.

 Net absorption is expected to slow down in 2023 as tenants will be in cautious in their decisions on their office premises, in anticipation of the predicted global slowdown.  Vacancy is expected to remain high with the completion of large office projects in 2023 which may exceed demand. ​

 Rents are expected to remain under pressure in 2023 due to the tough competition in a relatively ‘thin market’.  Some landlords will likely continue offering very ‘generous’ discounts of their published rental rates to attract new tenants into their buildings.

 The robust economy of Indonesia and smooth political

campaign process in 2023 towards general election in 2024 will maintain office demand within positive territory.

NEW SUPPLY (SQM) JAKARTA

NEW SUPPLY

200,000

 About 136,000 sqm of new office space from two projects is expected to enter the Jakarta CBD market in 2023.  Those two projects, Mori Tower and Luminary Tower, expect to complete in the first quarter of 2023. Currently, they have a combined pre-commitment level of below 50%.  Beyond 2023, supply is more uncertain with several shovel-ready projects yet to begin construction.

FORECAST

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

JAKARTA

DEMAND & VACANCY

NET ABSORPTION (SQM) AND VACANCY RATE (%)

FORECAST

300,000

35.0%

 Demand rebounded strongly in 2022, driven by corporate consolidation and a flight to quality. Net absorption of Grade A office space is forecast to reach 150,000 sqm in 2022.  Net absorption is expected to slow in 2023 as tenants will be cautious and hold off on major decisions in anticipation of the predicted global economic slowdown.  Vacancy is expected to remain high with the completion of large office projects in 2023 which may exceed forecast demand.

30.0%

250,000

25.0%

200,000

20.0%

150,000

15.0%

100,000

10.0%

50,000

5.0%

0.0%

0

2020

2021

2022F 2023F 2024F 2025F 2026F Net Absorption Vacancy Rate

Source: Cushman & Wakefield

JAKARTA

RENT GROWTH

RENT (IDR/SQM/MO) AND RENT GROWTH (% PER ANNUM)

FORECAST

350,000

10.0%

 Despite ongoing positive net absorption, rents are expected to remain under pressure in 2023 due to the tough competition in a relatively ‘thin market’.  Some landlords will likely continue offering very ‘generous’ discounts to their published rates to attract new tenants into their buildings.  Rental growth is expected to return to positive territory starting in 2024 following the improved economic forecast.

8.0%

340,000

6.0%

330,000

4.0%

320,000

2.0%

310,000

0.0%

300,000

-2.0%

290,000

-4.0%

280,000

-6.0%

270,000

-8.0%

260,000

-10.0%

2020

2021

2022F 2023F 2024F 2025F 2026F

IDR/SQM/MO

Rent growth (%)

Source: Cushman & Wakefield

CONTACTS

STRATEGIC CONSULTING: Arief Rahardjo Head of Strategic Consulting, Indonesia arief.rahardjo@cushwake.com

TENANT REPRESENTATION: Fenny Sukardi Head of Tenant Representation, Indonesia fenny.sukardi@cushwake.com CAPITAL MARKETS : Mina Ondang Head of Capital Markets, Indonesia mina.ondang@cushwake.com

LEASING: Nonny Subeno

Head of Office Leasing, Indonesia nonny.subeno@cushwake.com

Asia Pacific Dr Dominic Brown Head of Insight & Analysis, Asia Pacific dominic.brown@cushwake.com

Disclaimer. The information in this material is general in nature and has been created by Cushman & Wakefield for information purposes only. It is not intended to be a complete description of the markets or developments to which it refers. The material uses information obtained from a variety of sources which Cushman & Wakefield believe to be reliable however, it has not verified all or any information and does not represent, warrant or guarantee its accuracy, adequacy or completeness. Any forecasts or other forward looking statements contained in this material may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct and are beyond the control of Cushman & Wakefield. Cushman & Wakefield is not responsible for any loss suffered as a result of or in relation to the use of this material. To the extent permitted by law, Cushman & Wakefield excludes any liability, including any liability for negligence, for any loss, including indirect or consequential damages arising from or in relation to the use of this material. All expressions of opinion included in this material are subject to change. © 2022 Cushman & Wakefield. All rights reserved.