SOUTHEAST ASIA OUTLOOK 2025

Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact

Key Property Data

PIPELINE SUPPLY OVER CURRENT INVENTORY RATIO (%)

RENTS Q4 2024 (RP PSQM) 2025 FORECAST

VACANCY Q4 2024 (%) 2025 FORECAST

CURRENT INVENTORY (MILLION SQM)

PIPELINE SUPPLY (MILLION SQM)

CAPITAL VALUE OUTLOOK 2025

OFFICE (CBD GRADE A)

303,000

24.0

5.2

62.5

1.2%

RETAIL (JAKARTA)*

1.0 m*

22.3 ^

4.8 ^

92.6

1.9%

WAREHOUSE/ LOGISTICS (GREATER JAKARTA) LANDED RESIDENTIAL (GREATER JAKARTA)

79,000**

19.9

2.9

380

13%

12.6 m***

25.5****

443,810 units

12,896 units

2.9%

Source: Cushman & Wakefield Research *Retail centers in Jakarta for premium Ground Floor rents, units in million rupiah ^ Q4 2024 Retail vacancy and Inventory of overall Jakarta retail market, both primary and secondary area ** Reflects both conventional warehouses and modern warehouses in Greater Jakarta area. *** Average land price per sqm, units in million rupiah ****Cumulative vacancy rate of landed residential units in townships larger than 30 Ha, Greater Jakarta area

INDONESIA MARKET SNAPSHOT

Occupier Market Commentary and Recommendations Office: Vacancy is expected to improve further with the continuous absence of new office supply in 2025. Rental growth is expected to increase further following the period of expected political stability, against the backdrop of a recovering office demand and economic forecast.

Warehouse/Logistics: In 2025, the warehouse vacancy rate is expected to remain relatively unchanged from the previous year due to high new supply and market competition. The supply of new warehouses is expected to increase by 380,000 m² in 2025. Residential: The supply of landed housing in 2025 is projected to remain stable, supported by the government’s decision not to implement a planned 12% VAT increase and to continue 100% VAT subsidy for homes priced under Rp 5 billion in the first half of the year. Developers will focus on Middle and Lower-Middle segment developments driven by rising purchasing power and first-home demand, and various programs for low-income households.

Retail: With large retail projects covering 92,600 m² are expected to be completed by the end of 2025, overall occupancy rates may slightly decline due to the increased supply. Rental rates and service charges are projected to remain stable, with a modest 0.4% increase in service charges anticipated in 2025.

Economy As one of the largest economies in Southeast Asia, Indonesia is projected to achieve GDP Growth of about 5.1%, driven by robust domestic consumption and strategic export diversification. With over 70% of its population under 40 and increasing investment in technology and infrastructure, Indonesia is set to make significant strides in economic growth. Macroeconomic stability is a cornerstone of Indonesia’s economic growth: inflation rate contained at around 3% and fiscal deficits reduced to 2.7% of GDP. Overall economic conditions look conducive for steady property demand in 2025, though the performance of each market segment would still be affected by their unique trends (ie hybrid work) in 2025.

Investment Opportunities And Recommendations Anticipating the near completion of MRT Jakarta phase 2A in 2027, year 2025 could be a right timing for developers and landlords to start development planning for commercial and residential properties along the Thamrin – Kota corridor such as supporting retail, condominium and small offices. In January 2025, Bank Indonesia lowered the benchmark interest rate to 5.75%, which is expected to impact mortgage lending rates offered by banks. This move is one of the factors driving developers’ optimism in releasing new housing supply, as mortgages remain the most preferred payment method, especially for landed housing. In 2025, the industrial and logistic sector in Indonesia is projected to grow through new government policies focusing on five priority sectors: leading natural resources (agriculture, mining, and marine), basic industries, services, skilled labor, and technology-intensive industries. New mall development in Jakarta will be limited, with development focus more on renovations and repositioning, to bring the projects up to date to the evolving consumer behaviors and market trend. Meanwhile, retail expansion is expected to accelerate in Greater Jakarta, driven by rising demand and growing consumer bases, offering promising investment opportunities. Recent Significant Deals

Key Market Developments KEY INFRASTRUCTURE/ECONOMIC DEVELOPMENTS (EXPECTED COMPLETION) • MRT Jakarta Phase 2 (Phase 2A: 2027, Full phase 2: 2032) • MRT Jakarta Phase 3 West – East Line (Phase 1: 2032) • New Capital city of Nusantara (Phase 2: 2029, Full phase: 2040s)

TYPE

IMPLICATIONS / AREAS TO WATCH

• Infrastructure

• Higher office demand and faster commercialization along the Thamrin – Ancol corridor. • Establishment of railway connection between West and East region of Greater Jakarta. • Rising demand for residential and commercial facilities to support the New Capital City of Nusantara, including the neighboring cities such as: Balikpapan and Samarinda.

• Infrastructure

PRICE (MIL USD) / US $PSF

PROPERTY NAME

BUYER

SELLER

PROPERTY TYPE

NET YIELD (%)

DATE

PT Simatupang Jaya Realty

Gedung Bata

PT Sepatu Bata Tbk Office

944

N.A.

Q1 2024

Source: Cushman & Wakefield Research

Subang Smartpolitan

BYD

Suryacipta Swadaya Industrial land

N.A.

N.A.

Q2 2024

Rajawali Property Group

Rajawali Place

Arsari Group

Office (5 floors)

N.A.

N.A.

Q3 2024

Plaza Galeon

RGE Group

N.A.

Office

N.A.

N.A.

Q3 2024

Source: RCA, Cushman & Wakefield Research

24

25

CUSHMAN & WAKEFIELD