Indonesia's Modern

Warehouse Market:
New Entrant Completed
First Project
Jakarta property market review 2Q 2023

Indonesia / August 2023

Table of Content

01 The Economy 04

02 CBD Office 05

03 Non-CBD Office 08

04 Retail 11

05 Condominiums 14

06 Logistics warehousing 17

07 Hotels 19

Click table of contents to go to preferred topic or navigate

pages by clicking on left and right arrows/page icons.

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Introduction
Indonesia’s economy is resilient, with Several new modern logistics warehouse
economic growth of 5.03% at the beginning projects were completed in the eastern
of 2023, slightly higher than the previous corridor of Jakarta, resulting in a slight
quarter at 5.01% y-o-y. decrease in the occupancy rate. Other
modern logistic warehouses are expected
The Grade A office sector continued to to be delivered by the end of the year.
experience positive net absorption during
the second quarter of 2023. Meanwhile, the International visitation in the Indonesian
flight-to-quality trend has been causing capital city continues to increase on the
vacancies in Grade B and C office spaces, back of improved air connectivity within the
resulting in negative net demand for both region and globally. Jakarta has even
categories. exceeded the pre-pandemic level in the
month of May 2023 as tourism demand
Regarding shopping malls in Jakarta, there ramps up, with top source markets being
have been noticeable activities from family- Mainland China, Malaysia, Singapore,
friendly entertainment tenants in recent Japan, and South Korea.
months alongside F&B tenants. No new
shopping malls were operational this The gradual recovery supports an
quarter, and the supply of shopping malls increasing trading performance as luxury
will likely remain limited. hotels in Jakarta were able to hold high-rate
levels. As a result, RevPAR in the first half
Similar to previous quarters, condominium of the year exceeded YTD June 2019 by
demand in the second quarter remained 9.5%.
weak. Absorption was mainly seen for
projects near completion and in prime This report provides an update on the
locations. Jakarta Property Market in the second
quarter of 2023. We are excited to see how
2H23 will turn out in a brighter way.

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01 The economy
Growth in the first half of 2023 is expected to remain healthy

GDP growth Foreign direct investments

• In the first half of 2023, the Indonesian economy is expected to USD 45.6B
remain strong. In the first quarter of 2023, Indonesia recorded
growth of 5.03% y-o-y, slightly higher than the previous quarter at USD 28.7B
USD 31.1B
5.0%
5.01% y-o-y. Bank Indonesia (BI) predicts that economic growth 3.7% 5.3%
in the second quarter of 2023 will reach 5.1%. USD 12.0B

• Indonesia’s inflation rate drops from 5.5% at the beginning of the

year to 3.52% y-o-y by the end of the second quarter (June
2020 2021 2022 1Q23 2020 2021 2022 1Q23
2023). It is the lowest inflation rate recorded in Indonesia since
May last year. BI predicts the inflation rate will reach 4% in -2.1%

September 2023.
• By the end of the second quarter (June 2023), the benchmark
interest rate remained constant at 5.75%. The benchmark Benchmark interest & inflation rates USD-IDR exchange rate
interest rate has remained unchanged since the third week of
January 2023. BI aims to keep the benchmark interest rate stable
6.0% 5.5% 5.75% 5.75% IDR 15,731
until the end of the year. On the other hand, the rupiah exchange
rate remains relatively flat at around IDR 15,034, compared to the 5.50% 3.5% IDR 15,225
5.0%
first quarter when it was IDR 15,062. 4.25% IDR 15,062 IDR 15,034

• With substantial domestic direct investment, high consumption

and consistent exports, Indonesia’s economic growth should
remain strong. BI predicts that economic growth will remain End of 3Q22 End of 4Q22 End of 1Q23 End of 2Q23 End of 3Q22 End of 4Q22 End of 1Q23 End of 2Q23
between 4.3% and 5.3% throughout 2023. Meanwhile, the
Interest rate Inflation
government will continue to promote monetary policies to reach
its targeted inflation rate of 3.6% by the end of the year. Source: Central Statistics Agency, Bank Indonesia

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02 CBD Office
Grade A remained positive, while Grade B and C continued in the negative territory
Demand
• Net demand for Grade A was • The contributions were followed • Grade B and Grade C
again recorded in positive mostly by financial service continued to perform in the
territory. The technology sector, institutions and flex-space negative territory due to the
driven by several digital operators. One operator flight-to-quality trend.
technology companies, expanded its operations by two
dominated 2Q23 with around whole floors in one building, • New workplace strategy will
45% contribution to the CBD and two others branched out to continue to impact as occupiers
positive demand. the newer Grade A buildings. remain focused on finding the
right size.

Net demand
150,000
125,000
100,000
75,000
Sqm

50,000
25,000
0
(25,000)
(50,000)
1Q14

2Q15

3Q18

4Q19

1Q23
1Q13
2Q13
3Q13
4Q13

2Q14
3Q14
4Q14
1Q15

3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18

4Q18
1Q19
2Q19
3Q19

1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22

2Q23
Grade A Grade B Grade C
Source: JLL Research

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Supply
• After Jakarta Mori Tower, Thamrin Demand, supply and occupancy
Nine 2 - Luminary Tower is the
only expected new supply for 600,000 100%
2023, with a total area of around
40,000 sqm. It is located next to 500,000 90%
its first tower, Thamrin Nine 1 -
Autograph Tower, completed in
400,000 80%
2022.

Occupancy
• The all-grade CBD occupancy Sqm 300,000 70%
rate in 2Q23 is still suppressed at
around 70%, with a declining 200,000 60%
trend in the following quarters.
However, with less supply in the
100,000 50%
upcoming five years and
improving demand, the
occupancy rate is expected to - 40%
stabilise gradually. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
-100,000 30%

Net demand New supply Occupancy rate

Source: JLL Research

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Rents
• Rents continued to decline in 2Q23 Net est. achievable rent
for Grade A offices, but at a slightly
slower rate. We see the continued 500,000
decline was an effort by landlords to

IDR per sqm per month

attract tenants due to the ongoing
market situation, including relatively 400,000
low absorption and high vacancy
rates. 300,000
• The declining rents for all grade
office buildings will likely continue in 200,000
the following half of 2023. This trend
of falling rents has remained since 100,000
mid-2015 and was hampered by the
limited demand during the pandemic,
0
affecting not just Grade A offices and
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
creating a more competitive
environment. Premium Grade A

Source: JLL Research

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03 Non-CBD Office
The occupancy rate flattening out due to limited demand and no new supply
Demand
• In 2Q23, a negative net demand was also recorded for the Non-CBD office. Similar to the CBD area, the
downsizing trend remained with flight-to-quality as the main priority for several occupiers
• Despite inquiries starting to pick up and most economic activities returned to their pre-pandemic era level,
we saw that the Non-CBD area demand is still relatively limited, especially compared to the CBD area.
The cost-saving strategy will continue to be seen in the short term.

Net absorption
200,000

150,000

100,000
Sqm

50,000

-50,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023-ytd

Source: JLL Research

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Supply
• No new completions in the second Demand, supply and occupancy
quarter of 2023. Lippo Tower @
Holland Village in Central Jakarta, 400,000 100%
with a total area of around 27,000 350,000 95%
sqm, remained the only newly added
supply in the Non-CBD area for 300,000 90%
2023. 250,000
85%

Sqm
• The Non-CBD area’s occupancy rate 200,000
80%
remained at 71% in 2Q23. 150,000
Considering the upcoming new 75%
100,000
supply and limited demand, the 70%
50,000
occupancy rate is expected to
remain under pressure in the second 0 65%
half of 2023. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023-ytd
-50,000 60%

Net demand New supply Occupancy rate

Source: JLL Research

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Rents
• Rents continued to fall in all areas of Net est. achievable rent
Non-CBD. As of 2Q23, the average
rent is recorded at around IDR 200,000
106,500 psm pm. For the TB 180,000
Simatupang corridor, a decline in

IDR per sqm per month

160,000
rents of around -0.6% was recorded.
140,000
• We have seen this trend for all areas 120,000
of Non-CBD. Limited demand and
100,000
downsizing trends will impact rents in
the second half of 2023. 80,000
60,000
40,000
20,000
0

4Q14

1Q17

2Q20

3Q22
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14

1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16

2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20

3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22

4Q22
1Q23
2Q23
Central Jakarta South Jakarta North Jakarta
East Jakarta West Jakarta TB Simatupang
Source: JLL Research

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04 Retail
Entertainment tenants actively expanding in 2Q23
Demand
• While F&B remained the most active retail segment • Another big opening was a new department store • Extremely limited supply is likely, meaning a
in 2Q23, entertainment also proliferated as consumer concept with a total area of 10,000 sqm, which continuation of the historical trend and low, single-
preferences tended towards experiential retail. implemented a different shopping experience, where digit vacancy rates are likely to persist over the five-
in addition to the goods found in department stores in year forecast horizon.
• Interactive art exhibitions are also becoming general, a variety of daily household needs can be
increasingly popular in Jakarta malls, and more found in the groceries category and a coffee corner • F&B and entertainment are likely to continue to be
tenants have started implementing the concept of an where visitors can eat and drink. the most active segments in a market where malls
interactive experience in their stores. are used as entertainment destinations as much as
shopping.

Retail net absorption

100,000
80,000
60,000
40,000
Sqm

20,000
0
-20,000
2Q14

2Q15

2Q16

2Q17

2Q18

2Q19

2Q20

2Q21

2Q22
1Q13
2Q13
3Q13
4Q13
1Q14

3Q14
4Q14
1Q15

3Q15
4Q15
1Q16

3Q16
4Q16
1Q17

3Q17
4Q17
1Q18

3Q18
4Q18
1Q19

3Q19
4Q19
1Q20

3Q20
4Q20
1Q21

3Q21
4Q21
1Q22

3Q22
4Q22
1Q23
2Q23
-40,000

Source: JLL Research

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Supply
• No new shopping malls were Supply, demand and occupancy
completed in 2Q23. New supply
has been limited in recent years 250,000 100%
due to the unofficial moratorium
on new mall development; it has 95%
200,000
been in place since 2011 and has
stemmed the flow of new supply.
90%
• Developers are active outside city 150,000
boundaries where the moratorium

Occupancy
85%
is not in place. AEON is one the
Sqm

100,000
most high-profile examples of
international developers looking to 80%
tap into strategic non-core
50,000
markets. 75%
• The future supply pipeline is likely
to stay extremely thin. Two new 0
70%
shopping malls are expected to 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
complete this year with a total of
-50,000 65%
65,000 sqm.
Net demand New supply Occupancy
Source: JLL Research

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Rents
• Given that shopping malls in Rental rates
Jakarta have become popular as
one-stop leisure and entertainment 800,000

IDR per sqm per month

options for Jakarta’s residents, 700,000
retail is one of the sectors to
recover relatively quickly after the 600,000
pandemic. 500,000

• A lack of retail supply and 400,000

sustained low vacancy rates have 300,000
supported moderate rent growth,
200,000
and Prime Mall rents increased
slightly q-o-q in 2Q23. 100,000

• Low single-digit annual rent growth 0

3Q14

4Q16

1Q19

2Q21
3Q21
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21

4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
End-2023

End-2024

End-2025

End-2026

End-2027
is expected in 2023. Also, low
vacancy rates will likely persist, and
the lack of supply will also likely
support rent growth.
Upper Middle Middle Low
Source: JLL Research

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05 Condominiums
Condominium sales continued to be muted and new launches remain unseen
Demand
• The overall sentiment in condominium sales remained soft
in 2Q23, mainly seen for projects near completion and in
prime locations, which offer high accessibility and are
typically equipped with complete supporting facilities.
• Developers remain focused on boosting sales of their
ongoing projects.
• Developers that built show units with fully furnished
interior designs were more attractive to potential buyers.

Condominium sales
7,000
6,000
5,000
Units

4,000
3,000
2,000
1,000
0
3Q13

2Q15

1Q17

4Q18

3Q20

2Q22
1Q13
2Q13

4Q13
1Q14
2Q14
3Q14
4Q14
1Q15

3Q15
4Q15
1Q16
2Q16
3Q16
4Q16

2Q17
3Q17
4Q17
1Q18
2Q18
3Q18

1Q19
2Q19
3Q19
4Q19
1Q20
2Q20

4Q20
1Q21
2Q21
3Q21
4Q21
1Q22

3Q22
4Q22
1Q23
2Q23
Source: JLL Research

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Supply
• There were no new projects launched Supply, demand and occupancy
into the market. Most developers
decided to focus on clearing out unsold
16,000 100%
units and delaying any new launches.
14,000
• In general, competition has not 80%
increased significantly as investors 12,000
continued to wait for a more suitable
10,000 60%
time to make solid decisions.

Units
8,000
• The completion of the LRT and MRT
Phase 2 in Greater Jakarta will likely 6,000 40%
offer opportunities for investors to
4,000
acquire land or undeveloped properties 20%
within the Transit-Oriented Development 2,000
corridor.
0 0%
Upper Grade Middle Grade Lower Grade

Uncompleted launched units Unit sold Sales rate

Source: JLL Research

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 Prices
• The overall high-rise residential prices slightly increased in 2Q23. Projects nearing completion were more appealing to potential buyers, both investors and end-users.

Sales prices

70,000,000
IDR per sqm in millions

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

0
3Q13

4Q20

4Q21

4Q22
1Q13
2Q13

4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20

1Q21
2Q21
3Q21

1Q22
2Q22
3Q22

1Q23
2Q23
Lower middle Middle Upper High-end Luxury
Source: JLL Research

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06 Logistics warehousing
Massive completions from a new entrant were seen

Demand and Supply

• Demand for modern logistics warehouses was still healthy in the
second quarter, supported by improved infrastructure, including toll
roads.

• The demand from third-party logistics for warehouse space remained

the main driver. Other enquiries also came from FMCG and retailers
looking for storage space close to the market. Several vacant spaces
in modern logistics warehouses that were previously occupied by e-
commerce companies, were starting to be filled again by new tenants.

• With the new completions, including six buildings completed as the

first project of Cainiao in Indonesia, the current total stock of modern
logistics warehouses in Greater Jakarta is around 2.5 million sqm.

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 Rents
• Overall, market rents increased Occupancy rates in Greater Jakarta
slightly with modest growth. Some
submarkets, such as Cikarang,
3,000,000 100%
have been experiencing intense
landscape changes due to new
2,500,000
completions and the competitive 80%
market.
2,000,000
• Commercial flexibility, both related 60%
to payment terms and technical 1,500,000
specifications, offered by
Sqm
40%
developers has shown unique 1,000,000
selling points, which include
20%
strategies to accommodate 500,000
tenants seeking space for varied
functions, such as additional office 0 0%
space and mezzanine areas. 2019 2020 2021 2022 2Q23

Total stock Occupied stock Occupancy rate

Source: JLL Research

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07 Hotels
International demand ramps up with improved air connectivity, supporting the recovery of Jakarta hotel
trading performance.

Demand
• The number of visitor arrivals in Jakarta has been rapidly increasing since the reopening of international borders. As of YTD May 2023, Jakarta has experienced a
significant 337.6% y-o-y increase in international visitor arrivals by welcoming 642,076 visitors. This represents approximately 68.3% of total international arrivals during
the same period in 2019. However, in the month of May 2023, Jakarta welcomed more than 158,700 international tourists, exceeding the pre-pandemic level for the first
time.
• Strong momentum from markets in Asia has accelerated the post-pandemic recovery with significant improvement in air capacity within the region. Additionally, with the
easing of travel restrictions in Mainland China, the number of Chinese tourists in the first five month of the year was the highest amongst all foreign nationalities, albeit at
33% below YTD May 2019 level. Malaysia, Singapore, Japan and South Korea formed the other top source markets to Jakarta.

International visitor arrivals to Jakarta

3,000,000 40%

2,500,000 20%

Annual Growth (%)

0%
Visitor Arrivals

2,000,000
-20%
1,500,000
-40%
1,000,000 Y-O-Y Growth
337.6% -60%
500,000 -80%

0 -100%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD May YTD May
International Visitor Arrivals Annual Growth 2022 2023

Source: BPS-Statistics Indonesia, JLL

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Supply Existing and future hotel supply in Jakarta

• No new hotels completed in

70,000
Jakarta in the second quarter
2023, maintaining the existing
hotel supply to 58,105 rooms in 60,000
the capital city.
50,000
• Two hotels are expected to open

No. of rooms
towards the end of the year: the
40,000
316-key Swiss-Belhotel Kelapa
Gading and the 253-key
Movenpick Jakarta Pecenongan. 30,000

• More than 1,450 hotel rooms are 20,000

expected to complete by 2025,
including major upscale and
10,000
luxury developments such as
Pan Pacific Jakarta, Hotel Okura
Jakarta and ParkRoyal Jakarta. 0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F 2024F 2025F

Existing supply New supply Future supply

Note: supply in Serviced Apartments not included in the chart

Source: JLL Research

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Trading performance Trading performance of luxury hotels in Jakarta

• Jakarta has seen a significant

growth across all hotel
segments in trading
3,000,000 100%
performance as of YTD June
2023, which has not only 90%
recovered but exceeded pre- 2,500,000
80%
pandemic levels.

ADR / RevPAR (IDR)

70%
2,000,000

Occupancy (%)
• In the first half of the year, the 60%
Luxury segment exceeded
1,500,000 50%
2019 levels by more than 9%,
reaching around IDR 1,38 40%
million in RevPAR. 1,000,000
30%
• This was mainly attributed to 20%
500,000
an uptick in ADR, which 10%
encouraged both corporate
0 0%
and leisure demand. Domestic
2019 2020 2021 2022 YTD Jun 2022 YTD Jun 2023
demand has remained robust
as well, supporting overall
trading performance. Source: STR ADR (IDR) RevPAR (IDR) Occupancy (%)
Note: Rates inclusive of Service Charge

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About JLL research
JLL Research is a multi-disciplinary professional group with core competencies in economics, real
estate market analysis and forecasting, locational analysis and investment strategy. The group is able
to draw on an extensive range and depth of experience from the Firm’s network of offices, operating
across more than 100 key markets worldwide. Our aim is to provide high-level analytical research
services to assist practical decision-making in all aspects of real estate.
The Asia Pacific Research Group monitors rentals, capital values, demand and supply factors, vacancy
rates, investment yields, leasing and investment activity, and other significant trends and government
policies relating to all sectors of the property market including office, retail, residential, industrial and
hotels. We deliver a range of global, regional and local publications as well as research-based
consultancy services.
jll.co.id

Yunus Karim JLL Indonesia

Head of Research Indonesia Stock Exchange Building Tower 2, 22nd Floor.
[email protected] Jl. Jend. Sudirman Kav. 52-53. Jakarta 12190
+62 (21) 2922-3888

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