Colliers Market Report Q2 2018

Colliers Quarterly
Q2 2018
20 September 2018
JAKARTA PROPERTY MARKET REPORT
Accelerating success.
Colliers Quarterly
JAKARTA | OFFICE
Q2 2018
20 September 2018
Rents
Ferry Salanto Senior Associate Director | We assume a 1% increase YOY in CBD
Jakarta office rents at the end of 2018. Fuelled
by a more measured quantity of supply
In the half of 2018, the total office demand in the next year, average rents are set to
CBD was equal with that in the same period in 2017. increase by less than 1% at the end of
However, rents remain under pressure by 2018. Meanwhile, average rent outside
unabsorbed spaces that have become available the CBD should be relatively flat until the
since 2017, coupled with large vacant spaces since end of 2018, but it will likely climb
considerably by 4% in 2019 and 8% in
early 2018. As such, there is bigger pressure on
2020.
landlords, and this has created a tenant market
situation. Prices
The relatively small sales throughout
Forecast at a glance 2018 should maintain the current office
price until the end of the year. With the
Demand lack of new office supplies for sale, the
We look forward to a gradual increase in CBD will likely see a moderate 5.5%
office leasing activities. We recorded increase in 2019, particularly because
more office enquiries in Q2 2018, which we still believe that the absorption of
would likely be executed in the next strata-title offices will probably not be
three or six months. Nonetheless, such significant next year. In 2020, office
enquiries are dominated by office prices in the CBD should increase
relocation, which should not affect our further by 6.8% due to the lack of supply
overall occupancy projection. and more active sales activities. The
situation is also true outside the CBD,
Supply where prices are predicted to grow by
In Jakarta, around half-a-million square 3.4% per annum in 2018 and 2019, and
metres of new office space (64% will likely continue to reach 4.6% in
scheduled to be in the CBD) should 2020.
become available for occupancy in the
remainder of 2018. Furthermore, around
660,000 sq m of new office spaces are
scheduled open between 2019 and 2020
(45% should be in the CBD). Central Business
Occupancy
Occupancy in the CBD is predicted to
record a low 79% by the end of 2018.
District
We then project it to rebound modestly
to 82% in 2019. Fuelled by stronger
economic projections and fairly low
Office Spaces Offered for Lease
supply in 2020, we project occupancy to Supply
further rise to 85%. Occupancy should
decline slightly outside the CBD, to 82% Four office buildings in the CBD officially opened in H1
at the end of 2018. Due to the large 2018, bringing a total of around 340,000 sq m or 50% of
amount of new supply in 2019, the total scheduled supply for 2018. Two buildings
occupancy will likely moderately edge coming on stream in Q2 include The Tower (in Gatot
down to 81% but will probably regain Subroto) and Menara Astra (in Sudirman). Cumulative
strength to 84% in 2020, mainly because office supply in the CBD is now 6.32 million sq m,
of a limited supply in that year. showing a 5.8% increase YTD.
Cumulative Office Supply In general, developers consider the foundation of
Indonesia's economy to be quite strong. They believe
8,000,000 that the property industry will probably grow in line with
7,000,000 Indonesia’s economic projections, which is expected to
be stable and improve in the long term. We still see the
6,000,000
desire of developers to build office buildings particularly
5,000,000 in well-established business districts, such as in the
sq m
4,000,000 CBD. This is particularly true for big, overseas

developers that are still looking for a good location to
3,000,000
build office buildings in Jakarta.
2,000,000
Annual Office Supply Based on Marketing
1,000,000
Scheme
0
600,000
500,000
400,000
Source: Colliers International Indonesia - Research
sq m
300,000
Annual Office Supply
200,000
700,000 100,000
600,000
0
500,000
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
400,000
sq m
300,000
200,000 For Lease For Sale
100,000
0
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
Cumulative Office Supply Based on Area
Annual supply Additional Supply YTD Sudirman
Under Construction In Planning Rasuna Said

Gatot Subroto
Source: Colliers International Indonesia - Research Thamrin
Mega Kuningan
Almost all (approximately 98%) of the scheduled office
buildings in 2018-2021 have begun construction. Satrio
0
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
500,000
With the capital region of Jakarta’s government allowing

for high-plot ratio in certain business areas, more new
office buildings are built with a total floor area of 80,000-
100,000 sq m or even larger. These sizeable buildings
sq m
contribute to the 5.5% annual supply growth from 2018
Cumulative Supply as of Q2 2018
to 2021. The on-going MRT construction should allow
Future Supply 2018E - 2021E
the Sudirman submarket to further dominate the market.
More future office projects are scheduled to be located Source: Colliers International Indonesia - Research
here, despite the fact that this is already the largest
submarket. Apart from the supply pipeline presented in
the table, the market is further anticipating additional
office buildings planned to be completed between 2022
and 2023.
2 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

SUPPLY PIPELINE
OFFICE BUILDING LOCATION SGA (SQ M) MARKETING SCHEME STATUS DEVELOPMENT
2018
Revenue Tower Sudirman 40,000 For Lease Under Construction
Sequis Tower Sudirman 78,000 For Lease Under Construction
Sopo Del Tower B Mega Kuningan 24,300 For Sale Under Construction
Sudirman 7.8 Tower 1 Sudirman 52,000 For Sale Under Construction
World Trade Center III Sudirman 70,000 For Lease Under Construction
World Capital Tower Mega Kuningan 72,000 For Sale Under Construction
2019
Lippo Thamrin Office Tower MH Thamrin 16,500 For Sale Under Construction
T Tower Gatot Subroto 24,000 For Sale Under Construction
Millenium Centennial Tower Sudirman 93,588 For Lease Under Construction
2020
Gayanti City Gatot Subroto 25,000 For Lease Under Construction
Thamrin Nine MH Thamrin 97,500 For Lease Under Construction
Social Security Tower HR Rasuna Said 23,500 For Lease Under Construction
Redevelopment Graha Binakarsa HR Rasuna Said 20,000 For Lease In Planning
2021
Chitaland Satrio 90,000 For Lease Under Construction
Daswin Tower HR Rasuna Said 100,000 For Lease Under Construction
Indonesia Satu North Tower MH Thamrin 43,000 For Lease Under Construction
Indonesia Satu South Tower MH Thamrin 88,500 For Lease Under Construction
Jakarta Office Tower by MORI Sudirman 90,000 For Lease Under Construction

Occupancy Occupancy Rates by Sub Market
Average Occupancy Q1 Q2 CHANGE
2017
2018 2018 QOQ HOH
100%
Thamrin 91.3% 91.6% 92.3% 0.7% 1.0%
90% Sudirman 85.3% 80.0% 82.1% 2.0% -3.3%

Rasuna Said 86.2% 89.3% 88.5% -0.8% 2.2%
80% Mega
71.5% 68.5% 71.0% 2.5% -0.5%
Kuningan
70% Gatot
77.1% 76.7% 76.9% 0.2% -0.2%
Subroto
60% Satrio 68.1% 76.0% 76.0% 0.0% 7.9%

50%
2018YTD
2018E
2019E
Pre-Committed Absorption of Office Spaces for
2010
2011
2012
2013
2014
2015
2016
2017
Lease
The large supply scheduled adds more pressure on 2017

occupancy levels, particularly as additional office
projects are scheduled to be completed in H2 2018 that
will likely bring occupancy rates to their lowest level at
the end of 2018. In Q2, however, occupancy rates
increased marginally by 1% to 82.1%, due to the
improved performance of office buildings that began
operation in 2016-2017. Additionally, office buildings that 2018E
began operation in 2018 also helped lift the overall
occupancy in the CBD, due to their good absorption
during their first year of operation.
0 100,000 200,000 300,000 400,000
On the demand side, businesses such as mining, and oil
and gas are likely to expand again, but this has yet to be Space absorbed (sq m) Space unabsorbed (sq m)
seen in leasing activity. On the other hand, the banking
industry has started to change its business model with Source: Colliers International Indonesia - Research
the growth in financial technology (FinTech) that will
likely see office footprints in this industry decline in the Co-working spaces will likely continue expanding in the
future. future, which might create a challenge for conventional
office space operators. In some situations, lessors might
Occupancy Rates by Building Grade opt to rent spaces from co-working space operators
CHANGE
rather than go directly to the developers/landlords. This
Q1 Q2
2017
2018 2018
model is also attractive for start-ups and begins to draw
QOQ HOH
in enterprising tenant or, to some extent, multinational
Premium 76.0% 68.7% 73.9% 5.2% -2.1% companies (MNCs) as potential tenants. This is because
Grade A 78.5% 77.8% 79.0% 1.1% 0.5% such companies are seeking increased flexibility in the
Grade B 91.7% 91.9% 91.5% -0.5% -0.3% leasing of office spaces, in which they are able to quickly
Grade C 86.7% 86.2% 85.8% -0.4% -0.8% reduce or increase their office space.

Average Asking Rents Average Asking Base Rents
Our rental calculation is based on available space, IDR400,000
therefore more vacant spaces in expensive buildings
could cause an increase in average rent. In Q1 2018, the
average rent increased due to the operation of new IDR300,000
premium-grade office buildings. In Q2, several buildings
have responded with the current tenant market situation; IDR200,000
some premium buildings have already lowered their
asking rents that brought the average rent in the CBD to
fall by almost 7% to an average of IDR301,085/sq IDR100,000
m/month. The tenant market situation added pressure for
landlords to lower rent by 10-40%, as compared with that
IDR0
in Q1 2018.
2018E
2019E
2018YTD
2010
2011
2012
2013
2014
2015
2016
2017
Average Asking Rents (in IDR/sq m /month) by
Building Grade
2017 Q1 Q2 CHANGE
2018 2018 Source: Colliers International Indonesia - Research
QOQ HOH
Premium 449,283 459,110 400,825 -12.7% -10.8%
Service Charges
Grade A 280,854 311,055 299,566 -3.7% 6.7%
Grade B 234,746 226,399 230,330 1.7% -1.9%
Service Charges by Sub Market
Grade C 177,343 175,445 184,533 5.2% 4.1% IDR 180,000
Source: Colliers International Indonesia - Research IDR 150,000
Average Asking Rents (in IDR/sq m /month) by IDR 120,000

Sub Market IDR 90,000
Q1 Q2 CHANGE IDR 60,000

2017
2018 2018 QOQ HOH
IDR 30,000
Sudirman 310,964 355,228 314,690 -11.4% 1.2%
IDR 0
Thamrin 291,535 275,499 287,013 5.8% -1.6%
Rasuna Said
Satrio
Thamrin
Sudirman
Gatot Subroto
Mega Kuningan
Rasuna
246,696 250,929 246,644 -1.7% 0.0%
Said
Gatot
338,600 349,096 339,853 -3.0% 0.4%
Subroto
Satrio 234,679 268,810 255,894 -12.7% 9.0%
Mega
252,665 255,862 256,479 -1.2% 1.5%
Kuningan Source: Colliers International Indonesia - Research
Developers should be more accommodating in

negotiation rents with perspective tenants. They could
consider providing additional fit-out allowance and show
more flexibility in the contract’s terms and conditions,
such as providing an option to reduce space, to
terminate or to have holdover rights. Several potential
tenants require their capital expenditure to be paid by the
landlords, with the lessor then paying by instalment
during the lease period.

Service Charges by Marketing Scheme We estimate the take-up rate to grow by 5% by the end
of 2018. We expect potential buyers of strata-title office
IDR180,000 buildings in the CBD to be mainly end-users.
IDR150,000 Office spaces in the CBD cost IDR40 million to IDR80

million/sq m, with an average of IDR57.5 million/sq m, as
IDR120,000 landlords are likely to maintain their current selling prices
at least until the end of 2018.
IDR90,000
Pre-Committed Absorption of Strata-title Office
IDR60,000 Buildings in 2017 – 2018
IDR30,000
IDR0
2017
Office For Lease Strata-Title Office
The average service charges were still relatively stable 2018E

at IDR79,231/sq m/month for all classes of office
buildings in the CBD. The average service charge of new
office buildings coming online in 2017 and 2018 was
around IDR60,000/sq m/month. Some external factors 0 150,000 300,000 450,000
such as inflation, electricity tariffs and minimum wages
are set to determine our forecast at the end of 2018 to Space absorbed (sq m) Space unabsorbed (sq m)
increase by 3-5%.
Source: Colliers International Indonesia – Research
Strata-title
We believe that landlords will probably not immediately
Average Asking Price reduce prices in the short term, because they still have
the option to offer the property for rent at a rental rate
IDR60,000,000
that is lower than the market.
IDR50,000,000
IDR40,000,000
IDR30,000,000
IDR20,000,000
IDR10,000,000
IDR0
2010
2011
2012
2013
2014
2015
2016
2017
2018YTD
2018E
2019E
Thus far, strata-title office spaces for sale composed

about 26% of the total office supply in the CBD. The
additional 415,000 sq m this year should bring
cumulative supply to 1.78 million sq m. Supply will likely
decelerate in the coming years, in line with the relatively
slower take-up.

62% of the total future supply outside the CBD from
Outside the CBD 2018 to 2021.
In TB Simatupang, after 18 months without any new

buildings, there should be at least six new office
Office Spaces Offered for Lease structures that will likely be completed between 2018
Supply and 2021. Based on the current construction progress,
The Sima, Zuria and Arkadia Tower G should become
Cumulative Office Supply operational in 2018-2019. This business corridor will
likely further grow along with the current infrastructure
4,000,000
developments, such as the MRT and the Toll Road
3,500,000 Depok-Antasari.
3,000,000
Annual Supply Based on Marketing Scheme
2,500,000
sq m
2,000,000 300,000
1,500,000 250,000
1,000,000 200,000
500,000 sq m 150,000
0 100,000
50,000
0
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
Annual Office Supply

For Lease For Sale
400,000
300,000
Cumulative Supply Based on Area
sq m
200,000
TB Simatupang
100,000 South Jakarta*

Central Jakarta
0 West Jakarta
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
North Jakarta
East Jakarta
0
1,000,000
1,200,000
200,000
400,000
600,000
800,000
Annual supply Additional Supply YTD

Under Construction In Planning
Ciputra International Tower 3 and Tamansari Parama Cumulative Supply as of Q2 2018

buildings officially began operation this quarter, bringing Future Supply 2018E - 2021E
additional supply of around 45,000 sq m. There are four
office buildings that opened within the last six months, *excluding TB Simatupang
with cumulative supply reaching 3.2 million sq m in Q2
2018. The second half of 2018 should have another Source: Colliers International Indonesia - Research
eight buildings with nearly 190,000 sq m.
South and Central Jakarta will likely still be the most

active areas in contributing new office supplies, around

SUPPLY PIPELINE
OFFICE BUILDING LOCATION AREA SGA (SQ M) MARKETING STATUS DEVELOPMENT

SCHEME
2018
St Moritz Office Tower Puri Indah West Jakarta 30,000 For Sale Under Construction
SOHO Pancoran Pancoran South Jakarta 30,000 For Sale Under Construction
The Sima TB Simatupang South Jakarta 60,000 For Lease Under Construction
Arcade Business Center Pantai Indah North Jakarta 22,000 For Lease Under Construction
Kapuk
Zuria TB Simatupang South Jakarta 6,584 For Lease Under Construction
Robina Tower Tendean South Jakarta 9,600 For Lease Under Construction
Wisma Kartika Grogol West Jakarta 11,770 For Lease Under Construction
One Belpark Office Pondok Labu South Jakarta 17,800 For Lease Under Construction
2019
Jakarta Box Tower Kebon Sirih Central Jakarta 36,000 For Lease Under Construction
The Unity Casablanca South Jakarta 80,000 For Lease Under Construction
Arkadia Tower G TB Simatupang South Jakarta 30,000 For Lease Under Construction
Agung Sedayu Office Tower Pantai Indah North Jakarta 50,000 For Lease Under Construction
Kapuk
MNC Tower II Kebon Sirih Central Jakarta 60,000 For Lease In Planning
2020
Citra Tower 1 Kemayoran Central Jakarta 40,000 For Sale Under Construction
One Tower Kemayoran Central Jakarta 21,400 For Sale Under Construction
Beltway Office Park Tower 4 TB Simatupang South Jakarta 10,000 For Lease In Planning
The Manhattan Square Tower 2 TB Simatupang South Jakarta 39,375 For Lease In Planning
2021
Wisma Barito Pacific 2 Slipi West Jakarta 26,000 For Lease Under Construction
Southgate Office Tower Tanjung Barat South Jakarta 30,000 For Lease In Planning
MTH 27 Office Suite Cawang South Jakarta 25,000 For Lease In Planning
Ciputra International Office Tower 2 Cengkareng West Jakarta 20,000 For Lease In Planning

Occupancy Average Occupancy Rates
Average Occupancy Rates 100%
100% 90%
90% 80%
80% 70%
60%
70%
50%
60%
2010
2011
2018YTD
2012
2013
2014
2015
2016
2017
50%
2019E
2018YTD
2018E
2010
2011
2012
2013
2014
2015
2016
2017
Outside the CBD* TB Simatupang
*exclude TB Simatupang
Pre-Committed Absorption Office Supply for
Since Q1 2017, the average occupancy rate of office Lease in 2017 – 2018E
buildings outside the CBD increased 2.9% to 84.8%.
Average Occupancy Rates by Building Grade

CHANGE
2017 Q1 2018 Q2 2018 2017
QOQ HOH
Grade A 72.7% 72.0% 74.2% 2.2% 1.5%
Grade B 78.3% 79.5% 80.3% 0.8% 2.0%
Grade C 92.7% 92.5% 92.2% -0.3% -0.5%
Source: Colliers International Indonesia - Research 2018E
Average Occupancy Rates by Region

CHANGE 0 50,000 100,000 150,000 200,000
2017 Q1 2018 Q2 2018
QOQ HOH
Space Absorbed (sq m) Spaces Unabsorbed (sq m)
North
81.7% 77.5% 77.2% -0.3% -4.5%
Jakarta
Central Source: Colliers International Indonesia - Research
91.7% 92.5% 91.2% -1.3% -0.5%
Jakarta
West Jakarta 82.0% 80.5% 81.6% 1.0% -0.4%
East Jakarta 100.0% 100.0% 100.0% 0.0% 0.0%
South
Jakarta
87.9% 87.9% 89.1% 1.2% 1.2%
(excl. TB
Simatupang)
TB
Simatupang
77.3% 80.1% 80.8% 0.8% 3.5%
(excl. South
Jakarta)

Rents
Average Asking Base Rents Average Asking Rents by Region
CHANGE
IDR300,000 2017 Q1 2018 Q2 2018
QOQ HOH
IDR250,000 North
223,938 212,600 211,556 -0.5% -5.5%
Jakarta
IDR200,000
Central
140,426 139,500 153,730 10.2% 9.5%
Jakarta
IDR150,000
West Jakarta 198,163 193,253 202,169 4.6% 2.0%
IDR100,000 East Jakarta 90,250 82,286 82,286 0.0% -8.8%
IDR50,000 South
Jakarta
237,960 238,743 218,000 -8.7% -8.4%
(excl. TB
IDR0 Simatupang)
2018YTD
2018E
2019E
2010
2011
2012
2013
2014
2015
2016
2017
TB
Simatupang
243,270 241,471 223,803 -7.3% -8.0%
(excl. South
Jakarta)

Outside the CBD Asking Base Rents by Area
The average rental rates of office buildings outside the
CBD also experienced a downward trend both in Q1 and IDR300,000
Q2 2018 to IDR208,679/sq m/month, down 7.1% IDR250,000
compared with that in 2017. Two out of four office
buildings that began operation in 2018 offer much lower IDR200,000
rents than current market prices. IDR150,000
IDR100,000
Whilst all regions showed a declining trend from Q4
2017 to Q1 2018, new office buildings in Q2 2018 led to IDR50,000
an increase in rent in West and Central Jakarta to grow IDR0
by 5% and 10%, respectively.
2018YTD
2010
2011
2012
2013
2014
2015
2016
2017
Office rent in TB Simatupang continues to be depressed
by the influx of new office buildings scheduled to come
on stream in the remaining months of 2018. In response Outside the CBD* TB Simatupang
to the current market situation, these future office
buildings have introduced rent tariff that is slightly below *exclude TB Simatupang
the average market rate. As such, we anticipate a
declining rate by 2-3% YOY at the end of 2018.
Average Asking Rents by Building Grade

CHANGE
2017 Q1 2018 Q2 2018
QOQ HOH
Grade A 283,353 296,108 283,054 -4.4% -0.1%
Grade B 219,720 218,054 211,081 -3.2% -3.9%
Grade C 141,140 142,829 136,909 -4.1% -3.0%

Service Charges Service Charges by Marketing Scheme
Service Charges IDR140,000
IDR140,000 IDR120,000
IDR120,000
IDR100,000
IDR100,000
IDR80,000 IDR80,000
IDR60,000 IDR60,000
IDR40,000
IDR40,000
IDR20,000
IDR0 IDR20,000
Outside CBD TB Simatupang
excluding TB IDR0
Simatupang Office For Lease Strata-Title Office

Newly operating office buildings in 2018 led the increase

in average service charges in H1 2018 by 2.6% to Strata-title
IDR60,550/sq m/month. We still expect to see around
5% increase by the end of 2018. Average Asking Prices
IDR50,000,000
Average Service Charges by Region
IDR40,000,000
CHANGE
2017 Q1 2018 Q2 2018 IDR30,000,000
QOQ HOH
North IDR20,000,000
54,084 54,882 56,713 3.3% 4.9%
Jakarta
IDR10,000,000
Central
62,893 63,865 65,691 2.9% 4.4%
Jakarta IDR0
2018YTD
2018E
2019E
2010
2011
2012
2013
2014
2015
2016
West Jakarta 55,496 55,723 57,515 3.2% 3.6% 2017
East Jakarta 43,036 48,734 48,734 0.0% 13.2%
South
Jakarta
55,907 56,652 57,278 1.1% 2.5%
(excl. TB Outside CBD excluding TB Simatupang
Simatupang)
TB Simatupang
TB
Simatupang
63,308 63,308 64,557 2.0% 2.0%
(excl. South Source: Colliers International Indonesia - Research
Jakarta)
Source: Colliers International Indonesia - Research The office market outside the CBD will probably only
witness an addition of 90,000 sq m space to the
cumulative supply of strata-title offices, which should be
recorded at 975,000 sq m by the end of 2018.
Until the end of Q2 2018, the take-up rate of office

supplies for sale only grew 2.1%, compared with that in
Q4 2017. In H2 2018, we expect the take-up rate to grow
2.5-3.0% to reach 70% by the end of 2018.
As of Q2 2018, the average selling price of strata-title

offices outside the CBD (excluding TB Simatupang) was
around IDR37 million/sq m. Due to slow absorption in
strata-title offices in H1 2018, prices will likely remain

stable until the end of 2018. Meanwhile, price in TB
Simatupang is set to be flat at IDR32.8 million/sq m in
H2 2018.
Pre-Committed Absorption of Strata-title Office

Building in 2017 – 2018E
2017
2018E
0 30,000 60,000 90,000
Space Absorbed (sq m) Spaces Unabsorbed (sq m)
For more information: Contributors:

Ferry Salanto Eko Arfianto
Senior Associate Director | Jakarta Senior Manager | Research
+62 21 3043 6730
ferry.salanto@colliers.com
Copyright © 2018 Colliers International.

The information contained herein has been obtained from
sources deemed reliable. While every reasonable effort has
been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are
encouraged to consult their professional advisors prior to
acting on any of the material contained in this report.

Colliers Quarterly
JAKARTA | APARTMENT
Q2 2018
20 September 2018
Rent
Ferry Salanto Senior Associate Director | Rent seems to have stabilised
Jakarta throughout 2018, whilst the overall 3-4%
increase in rent per annum in 2019-2020
We expect the apartment market to remain lacklustre is quite a moderate projection amidst the
in 2018, given the persistently weak sentiment tight rental market.
highlighted by slower capital gain appreciation and a
sluggish rental market. We believe low affordability, Price
which is typical in a stagnant economic growth, We still expect room for price increases
despite the current slowdown. We
prolonged weak sentiment, as a large incoming supply
expect from now to 2020, unit prices are
continues to plague the market. Also, potential buyers expected to increase by 4.5-5.5% per
may prefer to wait and see, given the looming general annum.
election that is scheduled to be held in April 2019.
Meanwhile, the interest rate hike could be a bane
when affordability is already a major concern amongst
buyers. Strata-title
On the other hand, given the strong response for
affordable projects underpinned by the healthy Apartment…still in
demand from end-users, gives optimism for the robust
line-up of new launches coming from the middle-lower
segment in the coming quarters. Affordable rates
doldrums
combined with lower mortgages should attract
developers to partake in this market. Both local and Supply
international developers join the competition to grab
this huge potential market. We are still in a positive The slow Ramadan period, which fell in Q2 2018, was
view over the residential property market in the long traditionally quiet when it comes to project launches.
term, on the back of the large and relatively young During the quarter, there were only three projects
population, as well as a low mortgage penetration launched, totalling 1,944 units. These include Apple
ratio. Residence, Puri 8 Residence and Sakura Garden City
(Cattleya Tower). Apple Residences is a low-rise
apartment, where each of the floors is an independent
Forecast at a glance dwelling. Apple Residences offers studio to three-bedroom
Demand type of units, targeting the middle market segment.
Apartment market sentiment continues
to be weak and we project the take-up Sakura Garden City (previously Southeast Capital) is a
rate to reach 84-85% by the end of mixed-use development with local developer Trivo Group,
2018. Overall demand will likely recover collaborating with Daiwa House and Japan Overseas
to 85-87%, as the market should be Infrastructure Investment Corporation for Transport &
more confident after the general and Urban Development (JOIN), under the name PT. Sayana
presidential elections in 2019 and 2020. Integra Property. This project is scheduled to be Daiwa
House’s first residential project after actively developing
Supply
We expect an additional 16,081 units or industrial parks and rental warehouses. Located on a 12-
8.3% of the current stock coming online hectare site and consisting of 12 towers, a shopping mall
in the remainder of 2018. The and hotel, the project is planned to come in four phases.
forthcoming annual supply will likely still
be significant in number, around 20,234
units in 2019 and 14,324 units in 2020.
COMPLETED APARTMENT PROJECTS DURING Q2 2018
APARTMENT NAME LOCATION REGION DEVELOPER NAME NO. OF UNITS
Casa Domaine (Tower 1) Sudirman CBD PT Griyaceria Nusamekar 162
Regent Residences (Tower 1) Semanggi CBD PT Kencana Graha Global 100
The H Residence Kemayoran (Amethyst) Rajawali Central Jakarta PT Hutama Karya Realtindo 900
Selatan
Regatta (London Tower) Pantai Mutiara North Jakarta Intiland 186
Izzara Apartment TB Simatupang South Jakarta PT Grage Trimitra Usaha 542
Puri Mansion Apartment (Tower Amethyst) Puri West Jakarta Agung Sedayu Group 800
Kembangan
Puri Orchard (Tower Cedar Heights) Raya Adicipta West Jakarta Serenity Group 1,050
Total 3,740
NEWLY LAUNCHED APARTMENT PROJECTS DURING Q2 2018
APARTMENT NAME LOCATION REGION EXPECTED ESTIMATED NO. OF UNITS

COMPLETION PRICE/SQ M
YEAR
Apple Residence Jatipadang South Jakarta 2020 IDR22 million 300
Puri 8 Residence (3 towers) Duri Kosambi West Jakarta 2022 IDR15.5 million 1,094
Sakura Garden City (Cattleya Tower) Bina Marga East Jakarta 2022 IDR15 million 550
Another brand-new project, Puri 8 Residence, was Along with the government’s intense infrastructure
developed by the joint venture between local developer, programme, the TOD (Transit Oriented Development)
PT Midas Citra Utama, and Japanese real estate concept has already been widely introduced to promote
investment company, Creed Group. Targeting the middle the benefits of living with direct access to a massive
to low market segment, Puri 8 Residence is Creed Group’s transportation hub. We believe that big developers are
second residential project after collaborating with becoming more active in launching mid-low class projects
Jababeka to develop Kawana Golf Residence, a serviced and might target less favourable locations on the outskirts
apartment with a golf resort. of Jakarta, where they can set a more competitive price
compared to downtown. Furthermore, we see foreign
The mid-low products are generally well-absorbed, developers joining the competition to grab this huge
compared with other segments. Several developers have potential market.
already done some promotions selling this product, eyeing
unit price below IDR1.5 billion. Another effort involves
selling the transportation concept.
2 Colliers Quarterly | 20 September 2018 | Jakarta | Apartment | Colliers International

NEW PIPELINE
APARTMENT NAME LOCATION REGION DEVELOPER NO. OF DEVELOPMENT

UNITS STATUS
2018
Sudirman Suites Jl. Jend. Sudirman CBD Pikko Group 380 In Operation
Casa Domaine (Tower I) Jl. Jend. Sudirman CBD Lyman Group 162 In Operation
The Suites Satrio Jl. Prof. Dr. Satrio CBD Ciputra Group 200 Under Construction
Gayanti City (2 Towers) Jl. Gatot Subroto CBD PT Buana Pasifik 598 Under Construction
International
Anandamaya Residences (3 Jl. Jend. Sudirman CBD Hongkong Land 500 Under Construction
towers)
Lavie Jl. Denpasar Raya CBD Wilsor Group 302 Under Construction
Regent Residences (tower 1) Semanggi CBD PT Kencana Graha Global 100 In Operation
The Elements Epicentrum (2 Jl. HR Rasuna Said CBD Sinarmas Land 372 Under Construction
Towers)
T - Plaza Residence (Tower A & Jl. Penjernihan Central Jakarta PT Prima Kencana 614 Under Construction
C)
The H Residence Kemayoran Jl. Rajawali Selatan Central Jakarta Hutama Karya Realtindo 800 In Operation
(Amethyst)
Signature Park Grande Jl. MT. Haryono East Jakarta KSO Fortuna Indonesia 1,100 In Operation
(Pikko)
Bassura City (Tower Jasmine) Jl. Basuki Rahmat East Jakarta Synthesis Development 480 In Operation
Bassura City (Tower Heliconia) Jl. Basuki Rahmat East Jakarta Synthesis Development 700 In Operation
Regatta London Tower Jl. Pantai Mutiara North Jakarta Intiland Development 186 In Operation
Pluit Seaview (Tower Ibiza) Pluit North Jakarta Binakarya Propertindo Group 500 Under Construction
LA City Apartment (Tower A) Jl. Raya Lenteng South Jakarta Pancanaka Samaktha 980 Under Construction
Agung
Nine Residence Warung Buncit South Jakarta PT Lippo Karawaci 246 Under Construction
Pakubuwono Terrace Grand Kebayoran Lama South Jakarta PT Selaras Mitra Sejati 435 Under Construction
Tower
District 8 (Tower Eternity) Jl. Senopati South Jakarta Agung Sedayu 461 In Operation
District 8 (Tower Infinity) Jl. Senopati South Jakarta Agung Sedayu 440 In Operation
Izzara Apartment (South and North Jl. TB Simatupang South Jakarta Grage Group 542 In Operation
Tower)
Bellevue Place Jl. MT Haryono South Jakarta Gapura Prima 240 Under Construction
One Casablanca Residence Jl. Palbatu South Jakarta Forza Land 215 Under Construction
The Foresque Jl. Pasar Minggu South Jakarta PT Griya Karunia Sejahtera 660 Under Construction
(Binakarya Propertindo
Group)
The Langham Residences Jl. Senopati South Jakarta Agung Sedayu 57 Under Construction
The Aspen Peak at Admiralty Jl. Fatmawati South Jakarta PT Harmas Jalasveva 322 Under Construction
(Tower D)
Casa Grande Residence 2 (Tower Jl. Casablanca South Jakarta Pakuwon Group 350 Under Construction
Angelo)
continued

UNITS STATUS
continuation
Bella)
Chianti)
Pondok Indah Residences (3 Pondok Indah South Jakarta Metro Pondok Indah 880 In Operation
Towers)
Pakubuwono Spring (2 towers) Jl. Teuku Nyak Arief South Jakarta PT Simprug Mahkota Indah 545 Under Construction
(Agung Podomoro Group)
Branz Simatupang (2 towers) Jl. TB Simatupang South Jakarta Tokyuland 381 Under Construction
Synthesis Residence Kemang (3 Jl. Ampera Raya South Jakarta Synthesis Development 1,100 Under Construction
towers)
Gianetti Apartment Jl. Kebon Jeruk Raya West Jakarta Bangun Investa Graha 500 Under Construction
Gallery West Jl. Panjang West Jakarta AKR 280 In Operation
Puri Mansion Apartment (Tower Jl. Lingkar Luar Barat West Jakarta Agung Sedayu Group 900 In Operation
Amethyst)
Puri Orchard (Cedar Heights Jl. Raya Adicipta West Jakarta PT Adicipta Graha Kencana 1,050 In Operation
tower) (Serenity Group)
Vittoria Residence (3 tower) Jl. Daan Mogot West Jakarta PT Duta Indah Kencana 400 Under Construction
Taman Anggrek Residence (6 Jl. Tanjung Duren West Jakarta Agung Sedayu 3,000 Under Construction
towers)
Ciputra International Puri Indah Jl. Lingkar Luar Barat West Jakarta Ciputra Group 412 In Operation
(Tower Amsterdam)
Grand Madison Park Jl. Tanjung Duren West Jakarta Agung Podomoro Group 300 Under Construction
Citra Lake Suites (Tower Jl. Raya Kresek West Jakarta Ciputra Group 116 In Operation
Rosewood)
Citra Lake Suites (Tower Jl. Raya Kresek West Jakarta Ciputra Group 140 In Operation
Greenwood)
Ciputra International Puri Indah Jl. Lingkar Luar Barat West Jakarta Ciputra Group 335 Under Construction
(Tower San Fransisco)
Puri Mansion Apartment (Tower Jl. Lingkar Luar Barat West Jakarta Agung Sedayu Group 700 Under Construction
Crystal)
West Vista (2 towers) Jl. Lingkar Luar Barat West Jakarta PT Harapan Global Niaga 2,840 Under Construction
2019
South Hill Jl. Denpasar Raya CBD Tan Kian 611 Under Construction
The Residences at The St. Regis Jl. HR Rasuna Said CBD Rajawali Property Group 164 Under Construction
Jakarta
Arandra Residence (was Sentosa Jl. Cempaka Putih Central Jakarta Gamaland 687 Under Construction
Residence) Raya
Sudirman Hill Residence Jl. Karet Pasar Baru Central Jakarta PT Muliaguna Propertindo 299 Under Construction
Barat
Menara Jakarta (Tower Equinox) Kemayoran Central Jakarta Agung Sedayu 396 Under Construction
Menara Jakarta (Tower Azure) Kemayoran Central Jakarta Agung Sedayu 860 Under Construction
The Linq Kemayoran (2 towers) Kemayoran Central Jakarta KG Global 1,020 Under Construction
Menteng 37 Jl. Menteng 37 Central Jakarta Pikko Group & Wijaya 99 Under Construction
Wisesa
continued

UNITS STATUS
continuation
Sentra Timur Residence (Tower Pulogebang East Jakarta Bakrieland Development 605 Under Construction
Safir)
Pluit Seaview (Tower Bahama) Pluit North Jakarta Binakarya Propertindo Group 650 Under Construction
Regatta Apartment (Tower New Pantai Mutiara North Jakarta Intiland Development 186 Under Construction
York)
Sedayu City (Tower Melbourne) Jl. Pegangsaan Dua North Jakarta Agung Sedayu 912 Under Construction
Raya
Jaya Ancol Seafront - Oceana Ancol North Jakarta Jaya Ancol 524 In Planning
Tower
Orient Residence Jl. Yos Sudarso North Jakarta PT Tri Raton Mega 225 Under Construction
Gold Coast Apartment (Bahama Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under Construction
Tower)
Gold Coast Apartment (Carribean Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under Construction
Tower)
Gold Coast Apartment (Honolulu Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under Construction
Tower)
La Foret Vivante Permata Hijau South Jakarta PT Mahkota Properti Indo 253 In Planning
Permata
45 Antasari (2 Towers) Jl. P. Antasari South Jakarta Cowell Development 1,924 Under Construction
Arzuria Apartment Jl. Tendean South Jakarta Tolaram Group 210 Under Construction
Fatmawati City Center - Corona Jl. Fatmawati South Jakarta Agung Sedayu 620 Under Construction
Park Suite Tower
Ratu Prabu 3 Residences Jl. TB Simatupang South Jakarta PT Ratu Prabu Tiga 61 Under Construction
Samara Suites Jl. Gatot Subroto South Jakarta Synthesis Development 300 Under Construction
Lavish Kemang Residence Jl. Kemang Raya South Jakarta PT Kemang Karya Utama 474 Under Construction
Permata Hijau Suites Jl. Raya Kebayoran South Jakarta PT Palmerindo Properti 649 Under Construction
Lama
TBS Tower Apartment TB Simatupang South Jakarta PT Mahkota Asia Graha 162 Under Construction
Kasamara Residence Jl. Kesehatan Raya South Jakarta PT MGM Propertindo 151 In Planning
19 Avenue Apartment (Tower B) Daan Mogot West Jakarta Margahayu Land 416 Under Construction
continued

UNITS STATUS
continuation
Green Sedayu Apartment (Tower Jl. Kamal Raya West Jakarta Agung Sedayu 644 Under Construction
Pasadena)
Daan Mogot City (3 towers) Jl. Daan Mogot West Jakarta PT China Harbour Jakarta 700 Under Construction
Real Estate Development
Verde Two (Tower West) HR Rasuna Said CBD Farpoint Realty 152 Under Construction
Royal Suites Kemayoran Central Jakarta Springhill Golf Group 450 Under Construction
Gold Coast Apartment (Atlantic Pantai Indah Kapuk North Jakarta Agung Sedayu 568 Under Construction
Tower)
The Kensington Royal Suites (4 Kelapa Gading North Jakarta Summarecon 790 Under Construction
Tower)
Selatan 8 (Tower Prabu) Jl. Raya Ulujami South Jakarta Karya Cipta Group 344 Under Construction
St Moritz (The New Ambassador Puri Indah Kembangan West Jakarta Lippo Karawaci 200 Under Construction
Suite Tower)
Puri Orchard (Magnolia Spring Jl. Raya Adicipta West Jakarta PT Adicipta Graha Kencana 544 Under Construction
tower) (Serenity Group)
Citra Living Apartment (Somerset Jl. Citra 7 West Jakarta Citra Mitra Graha KSO 312 Under Construction
Tower)
Citra Living Apartment (Orchard Jl. Citra 7 West Jakarta Citra Mitra Graha KSO 312 Under Construction
Tower)
2020
Verde Two (Tower East) Jl. HR Rasuna Said CBD Farpoint Realty 182 Under Construction
Le' Parc Jl. MH Thamrin CBD PT Putragaya Wahana 100 Under Construction
The Newton at Ciputra World 2 Jl. Karet Sawah CBD Ciputra Group 450 Under Construction
Holland Village (Phase II) Cempaka Putih Central Jakarta PT Lippo Karawaci 230 Under Construction
The Stature Jakarta Jl. Kebon Sirih Central Jakarta Capitaland and Credo Group 87 Under Construction
The Sahid Asena Apartment and Ciracas East Jakarta Sahid Group 476 In Planning
Garden
Prajawangsa City (8 towers) Jl. Raya Bogor East Jakarta Synthesis Development 4,000 In Planning
East 8 (2 towers) Cibubur East Jakarta Karya Cipta Group 1,172 Under Construction
Sedayu City (Tower Darwin) Jl. Pegangsaan Dua North Jakarta Agung Sedayu 936 In Planning
Raya
Regatta (Tokyo, Acapulco, Sydney Jl. Pantai Mutiara North Jakarta Intiland Development 276 In Planning
Towers)
Kemang Penthouse Jl. P. Antasari South Jakarta PT Senopati Aryani Prima & 114 In Planning
PT Mahardika Gagas
Sejahtera
Antasari Heights (One Otium Jl. P. Antasari South Jakarta PT Radinka Quatro Land 360 Under Construction
Residence)
Selatan 8 (Tower Sultan) Kebayoran Lama South Jakarta Karya Cipta Group 336 Under Construction
Fatmawati City Center(5 towers) Fatmawati South Jakarta Agung Sedayu 2,080 Under Construction
Aerium Taman Permata Buana Taman Permata Buana West Jakarta PT Itomas Kembangan 366 Under Construction
(South Tower) Perdana (Sinarmas Land &
ITOCHU)
continued

UNITS STATUS
Green Sedayu Apartment (Tower Jl. Kamal Raya West Jakarta Agung Sedayu 920 In Planning
New York)
Tomang Park Apartment (2 towers) Jl. Tawakal Ujung West Jakarta PT Phoenix Property 2,000 In Planning
Raya
Citra Lake Suites (Tower Oakwood) Jl. Raya Kresek West Jakarta Ciputra Group 117 Under Construction
Citra Lake Suites (Tower Sherwood) Jl. Raya Kresek West Jakarta Ciputra Group 122 Under Construction
2021
The Hundred Residence Mega Kuningan CBD PT Farpoint Realty 100 Under Construction
Indonesia
57 Promenade Jl. Kebon Melati CBD Intiland 496 Under Construction
The Pakubuwono Menteng Jl. Sabang Central Jakarta Pakubuwono Development 340 Under Construction
Southeast Capital (Cattleya Tower) Jl. Bina Marga East Jakarta PT Sayana Integra Properti 823 Under Construction
(Trivo Group)
West Point Apartment Jl. Macan West Jakarta PT Andaland Property 272 Under Construction
Cluny Residence (2 towers) Jl. Arjuna Selatan West Jakarta PT Alam Makmur Property 454 In Planning
Take-up Rate Changes in Different Locations in

Demand Jakarta
Overall, the Jakarta apartment market saw a quiet period Q2 Q1 Q2 QOQ YOY
2017 2018 2018
in Q2 2018 with the average take-up rate stabilising at
85.6% since the previous quarter, marking a decline of CBD 91.3% 90.5% 90.7% 0.2% -0.6%
0.1% QOQ, but an increase of 0.7% YOY. In our view, the South
sluggish market condition in the review period was related Jakarta 86.2% 88.3% 87.6% -0.7% 1.4%
to the shifts of people increasing their spending due to the Non-
Ramadan festivities and the new school year. prime
Area 83.4% 84.0% 84.1% 0.1% 0.7%
Despite a limited number of newly launched projects, the
take-up rate performance has yet to pick up. We think that
consumers still have their purchasing power, as evidenced Despite registering the highest apartment prices in
by the increasing trend of investment funds. However, Jakarta, the CBD area is still one of the most attractive
people are still hesitant to spend money to invest in places to live and work in the capital. The limited land
property. Slower capital appreciation, the generally slow remaining for development continues to be the main
rental market and increasing competition have held buyers challenge in the CBD, as this impacts overall pricing.
from purchasing an apartment. Nonetheless, Bank Albeit minor, South Jakarta has recorded a declining take-
Indonesia’s measure to increase interest rate two times in up rate along with the continued influx of new apartment
a month, to 4.75%, will likely restrain apartment demand projects.
as mortgages become costly. Also, potential buyers may
refrain from buying, and maintain a wait-and-see attitude,
given the looming general election to be held in April 2019.

Take-up Rate of Existing Projects and Those Developers' Perception over Property Market in
Under Construction (2013 - 2018YTD) 2018
100% Much Cannot

Worse worse predict
90% than last 2% 4%
year Better than
80%
5% last year
70% 34%
60%
50%
40%
2018YTD
2013
2014
2015
2016
2017
Existing projects Under construction projects Similar to

last year
55%
Source: Real Estate Indonesia - DKI Jakarta, 2018

Bank Indonesia indicates that they will likely soon
announce a relaxation on the loan-to-value ratio in trying
Impact of Government Policy to the Growth of
to boost property sales through a mortgage programme.
Real Estate
The plan is related to the decline in down payment ratio,
mortgage indent regulation and credit payment term,
although we believe that this relaxation should have Credit LTV
limited effect on the market. Our thinking is generally in Land & procedure 2%
building 7%
line with the recent survey conducted by Real Estate Tax
Indonesia-DKI Jakarta, revealing that the government’s tax reduction
reduction 29%
interventions (reducing property tax, easing permit 8%
requisition and lowering interest rate) are vital to the
recovery of the property market. It also said that most
developers (55%) are pragmatic over the current market
condition, saying that the market could stagnate this year,
whilst only 34% of respondents are optimistic about the
market condition throughout the year. Interest
rate
Trend of Third Party Fund 26% Ease of
getting
6,000,000 permit
28%
Third Party Fund (in Bn IDR)
5,000,000
Source: Real Estate Indonesia - DKI Jakarta,, 2018
4,000,000
Asking Price
3,000,000
Amid the relatively stagnant market condition, the average
asking prices of apartments have continued to trend
2,000,000
upward. Average asking prices of apartments in Jakarta
edged up slightly by 1.1% QOQ and 2.5% YOY to IDR33.2
1,000,000
million/sq m. The largest increases were seen outside the
0
CBD and South Jakarta areas. During this challenging
March March March March March March period, prices are relatively stagnant. The adjustment was
2013 2014 2015 2016 2017 2018 largely due to the inclusion of new projects with good
specifications and location coming on stream, and
properties that are offered at better building specifications,
Source: Indonesia Financial System Authorities (OJK)

particularly in the non-prime areas, impacting the overall Apartment prices have not dropped despite the stagnant
calculation. sales condition. However, we expect apartment price
appreciation will likley be capped, given the stiff
Apartment Price Changes in Jakarta Based on competition and large number of newly completed units,
Area (IDR mio/sq m) coupled with the expected large number of affordable
newly launched projects in the near term. The market will
Q2 Q1 Q2 QOQ YOY
2017 2018 2018 probably take some time to absorb the new supply, and
this gives potential buyers an option to bargain,
CBD 50.08 50.62 50.75 0.3% 1.4% notwithstanding the aggressive promotions and many
South direct prizes introduced by developers to clear off their
Jakarta 37.71 37.75 38.18 1.1% 1.3% inventory.
Non-
prime
Area
Average
24.36
32.41
24.79
32.83
25.21
33.20
1.7%
1.1%
3.5%
2.5%
Apartment for
Lease
Average Asking Prices of Apartment in Three

Regions
IDR60
Supply
Asking price/sq m (IDR mio)
None of the upcoming projects is ready for operation in Q2

IDR50
2018, thus the total stock of Jakarta’s apartment-for-lease
IDR40 market remained at 8,860 units. Going forward, we expect
the market to receive at least 847 new serviced apartment
IDR30 units in the next four years. The upcoming new projects
IDR20 are planned to be operated mainly by international
serviced apartment operators such as Oakwood
IDR10 Worldwide, Frasers Hospitality and The Ascott Limited.
The only local operator is Lavish Kemang Residence
IDR0
Serviced Apartment.
2011
2012
2013
2014
2015
2016
2017
2018YTD
The nature of serviced apartments is to cater to middle-

upper class occupiers, and therefore such projects are
mainly located in or around business areas such as the
CBD South Jakarta Non-prime area
CBD and South Jakarta. Serviced apartment projects are
generally characterised by high-standard building
maintenance, higher rental rates and global operator
management.
LIST OF FUTURE SUPPLY SERVICED APARTMENT IN JAKARTA
APARTMENT NAME LOCATION REGION EXPECTED NO. OF UNITS

COMPLETION YEAR
Ascott Sudirman Jakarta Jl. Prof Dr Satrio CBD 2018 192
Oakwood Premier at District 8 SCBD CBD 2018 180

Senopati
Somerset Kencana Jakarta Pondok Indah South Jakarta 2018 148
Somerset Sudirman Jakarta Jl. Karet Pasar Baru Central Jakarta 2019 176
Ascott Menteng Jakarta Menteng CBD 2021 151
Fraser Suites Kebon Melati Kebon Melati CBD 2022 TBA

Distribution of Apartment for Lease (Serviced and Occupancy of Apartment for Lease Based on
Non-serviced) Area
West Q2 Q1 Q2 QOQ YOY
North Jakarta 2017 2018 2018
Jakarta 5%
4% CBD 72.5% 75.1% 74.8% -0.3% 2.3%
South 68.4% 68.0% 66.9% -1.1% -1.5%
CBD Jakarta
46%
Non- 69.3% 69.3% 69.6% 0.3% 0.3%
South prime
Jakarta Area
34%
Looking forward, the majority of serviced apartments

should see an initial uptick post-Ramadan. For a fact,
serviced apartments will likely be facing increased
Central
Jakarta competition with individually owned apartment units that
11% are offered at smaller lump sum rentals, amid the on-going
diminishing enquiries. Also, in conjunction with the supply
Source: Colliers International Indonesia - Research pipeline, the vacancy rate is projected to climb as the
market needs some time to absorb the incoming supply.
Occupancy
During Ramadan (May-June), average occupancy rate of
Rental Rates
apartments-for-lease was generally flat at 70.7%, Rental tariffs for serviced and non-serviced apartments in
reflecting a minor change compared to the previous Jakarta were relatively stable. A minor adjustment that
quarter of 71.0%. A slight decrease in the overall QOQ occurred in the quarter was mainly due to the correction of
occupancy performance is a result of an intermediate the rupiah’s value against the US dollar. In Q2 2018, the
period of occupation between old and new corporate average asking rental rate in the CBD was registered at
tenants, and also because of expiring contract work IDR367,947/sq m/month, as South Jakarta (including the
permits. non-prime area) showed a relatively stable rate at
IDR224,736/sq m/month.
Occupancy Rate of Based on Type of Apartment
All in all, average asking rental rates, particularly for
Q2 Q1 Q2 QOQ YOY
2017 2018 2018
serviced apartments, will probably experience a marginal
increase throughout the year due to the operation of three
Non- 74.6% 73.9% 73.6% -0.4% -1.0% new projects in the CBD and South Jakarta, namely Ascott
serviced Sudirman Jakarta, Oakwood Premiere at District 8 and
Serviced 62.2% 65.6% 65.5% -0.1% 3.3% Somerset Kencana Jakarta. These upscale serviced
Source: Colliers International Indonesia - Research apartment projects will likely offer higher rental rates
compared with the older projects. Furthermore, with tight
competition from new upcoming projects and individually
owned apartments, the overall rental growth continues to
be moderate in the forthcoming years, around 3-4% per
annum.

Ferry Salanto Hern Rizal Gobi
Senior Associate Director | Research Manager | Research
+62 21 3043 6888


Colliers Quarterly
JAKARTA | EXPATRIATE HOUSING

Q2 2018
20 September 2018
30% of young Asian expatriates who come to Indonesia

Ferry Salanto Senior Associate Director | are married, but in most cases their job does not
Research accommodate spouses, nor children.
Kebayoran Baru and Kuningan (Patra Jasa) continue to

The expatriate housing sector will likely continue to be receive high demand as preferred relocation areas, as
under market condition. The leasing activities of reflected in the positive trend of enquiries. As a result,
expatriates searching for homes in Indonesia typically residential landlords in these locations managed to raise
picks up during summer, which falls from May to August, rents significantly after reaching high occupancy levels. It
but thus far the volume has not been as expected. is common to see that owners of these most sought after
Reasons for the prolonged stagnancy include the properties do not chase after quick money, and they are
expiration of existing work contracts, reduction in the not too worried if their property is vacant or occupied, as
number of arriving expatriates, and a lack of new, cash-flow is not an immediate issue for them.
ongoing projects of nation-wide scale. On the other
In contrast, properties in the secondary areas, such as
hand, despite the significant number of in-bound
Lebak Bulus, Permata Hijau, Ampera and Menteng,
Chinese expatriates, the impact is nothing in light of the
continue to face challenges, including limited demand
overall rental market, having a moderate impact in both
and the distance from amenities preferred by expats
apartments and housing for rent. Chinese expatriates
such as international schools, clubs, shopping malls and
typically opt for individually owned apartments or
dining areas. Menteng is known as a cultural heritage
exclusive kost-kostan type boarding houses with a group
area where most of the houses cannot be easily
of people staying in a single unit.
remodelled with a modern style, making it difficult for
On the other hand, demand for upscale property landlords to attract potential tenants. As a result, most
including those located in a housing complex and in landlords, particularly of individually owned stand-alone
stand-alone houses remains healthy. Enquiries are houses, are more accommodating in lease tenure, as
made up primarily of white-collar workers and well as in entertaining additional requests related to the
distinguished professionals, such as the country head of renovations, improvements and inclusive features of the
a company, diplomats or the chief executive director of a house.
financial institution, as well as anybody with a strong
It is common nowadays for employers to give the
housing budget. Typically, the landlords of such property
housing allowance directly to the employee, giving them
are high-net-worth-individuals (HNWI) that do not care
liberty in choosing where they decide to reside. It is quite
whether the property is vacant or not. Even when the
beneficial for the employee to pay the landlord directly, in
property is vacant, they are still reluctant to lower the
order to obtain the lowest tax rate on amount of the
rent.
housing allowance, as opposed to paying the allowance
The number of younger Asian expatriates has grown through the company. Thus, the employer may pay the
recently, particularly from India, Singapore and China. rent in full and still deduct a yearly or monthly housing
This market is generally coming with a narrow budget amount from the employee’s compensation.
(ranging from USD1,000 to USD1,500 per month), which
Currently, demand shifted from the oil and gas sector to
is difficult to match with the available leased or serviced
broader industries, such as banking and insurance,
apartments units in this budget range. On a positive
energy, infrastructure, automotive, fast moving consumer
perspective, this provides opportunity for individually
goods, consultancy services and the real estate industry,
owned apartment units that are offered for lease. In
including flexible workspace operators.
general, the remuneration package for Asian expatriates
is relatively small compared with Western expatriates, South Jakarta is still irreplaceable as an expatriate’s
and schooling fee is not included in the budget. Having home, as it provides almost all of their needs such as
said that, this market segment usually does not bring international schools, entertainment centres, shopping
their family and opts for affordable, smaller apartment spots, golf courses and other points of interest.
units located near their workplace. In addition, about 25- Moreover, we think areas such as Lippo Karawaci,
Bintaro, Bumi Serpong Damai (BSD) and Cikarang have
good potential to develop as leading alternatives where
expatriates might want to live, because these areas are
still within the catchment of the expatriate community.
HOUSING RENTAL RATES IN SEVERAL EXPATRIATES AREAS
EXPATRIATES HOUSING BY AREA SIZE (SQ M) OFFERING RENTAL RATE PER UNIT (IN USD/MONTH)
MIN MAX
Menteng
4 - 5BR House 500 - 1,200 4,000 12,000
Kuningan
4 - 5BR House 500 - 900 3,000 4,500
Pondok Indah
4 - 5BR House 450 - 1,000 3,000 12,000
Kebayoran Baru
4 - 5BR House 600 - 1,500 3,000 9,000
3 - 4BR Townhouse/complex 250 - 700 2,000 5,000
Permata Hijau, Simprug
4 - 5BR House 400 - 1,500 2,500 6,000
3 - 4BR Townhouse/complex 220 2,700 3,500
Kemang
4BR Townhouse/complex 400 - 700 2,000 6,000
3BR House 400 – 750 2,500 4,000
4 - 5BR House 550 - 1,000 3,000 6,000
Cilandak
3BR Apartment + Study 300 - 600 3,000 4,500
4 - 5BR House 450 - 750 3,000 6,000
Cipete
3BR House 300 - 500 2,500 5,000
4 -BR House 300 - 500 3,000 5,000
Pejaten
4BR House 500 - 900 3,000 5,500
Source: Colliers International Indonesia - Residential Tenant Representation
2 Colliers Quarterly | 20 September 2018 | Jakarta | Expatriate Housing | Colliers International

APARTMENT RENTAL RATES IN SEVERAL EXPATRIATES AREAS
APARTMENT BY AREA SIZE (SQ M) RENTAL RANGE (IDR million/MONTH)
NON-SERVICED SERVICED
Sudirman
2BR 106 - 145 32 - 42 46 - 67
3BR 158 - 320 45.5 - 78 68 - 94.5
Menteng
2BR 90 - 142 35 - 51 54 - 56
3BR 124 - 213 39 - 65 70
4BR 319 176
Kuningan
2BR 120 - 145 20 - 32.5 45.5 - 67.5
3BR 157 - 166 32.5 - 39 49 - 52
4BR 440 45.5
Pondok Indah
2 + 1BR 117 - 190 42 - 48 45.5 - 55
3BR 190 - 455 45.5 - 68 52 - 70
4 - 5BR 285 - 455 66 - 71 73.5 - 83
Kebayoran Baru
2BR 140 - 203 42 - 56
3BR 243 - 302 58.5 - 78
4 - 5BR 330 - 500 72 - 130
Permata Hijau, Simprug
2BR 105 - 115 40 - 41
3 - 4BR 165 - 300 35 - 52 42 - 46
Kemang
3BR 165 - 303 32.5 - 58.5
Cilandak
3 - 4BR 164 29
3BR 300 58
Cipete
4 - 4BR 220 - 295 52 - 78
Pejaten
2 - 3BR 102 - 191 18 - 29
Source: Colliers International Indonesia - Residential Tenant Representation

Ferry Salanto Hern Rizal Gobi
Senior Associate Director | Manager | Research
Research
+62 21 3043 6730


Colliers Quarterly
JAKARTA | RETAIL
Q2 2018
20 September 2018
Optimistic retail outlook, modest growth

expected
Ferry Salanto Senior Associate Director |
Jakarta Forecast at a glance
Demand
The retail business outlook started with optimism, We expect deamnd from tenants with
albeit still with modest growth. The downswing in requirements of 200-500 sq m to
consumer spending should be watched carefully by continue in 2018. Meanwhile, F&B and
the current retail business. The Central Bureau of fashion retailers should still dominate
Statistics (BPS) revealed that household enquiries, whilst the market is also
consumption grew by a relatively stagnant 4.95% in anticipating the expansion of lifestyle-
related merchants, as well as home and
H1 2018, compared to the same period last year.
interior decorating products.
Furthermore, the average income of the five big
retail companies listed on Indonesia’s stock Supply
exchange only grew modestly. Retail space in Jakarta and in the
Greater Jakarta Area is likely to grow
However, the momentum of the long mid-year Eid al- 2.9% YOY by the end of 2018,
Fitr holiday should give a boost to the retail industry, contributed by four projects (approx.
with the likelihood of increasing consumption. The 200,000 sq m). From 2019 to 2020, the
government increased the Eid al-Fitr holiday market should see almost 400,000 sq m
bonuses for civil servants, military and police of additional space in Jakarta and the
personnel through a new government regulation, Greater Jakarta Area from the opening
which stipulates that retirees living on pension of six shopping centres.
funds also received a bonus. The Association of
Occupancy
Indonesian Retail Entrepreneurs (APRINDO)
Jakarta: occupancy should gradually
reported that retailers’ performance during the improve, albeit slightly. We expect to
holiday grew by 20%, compared to only 5% in 2017. see a slight increase to 84% by the end
The Association of Indonesian Shopping Centre of 2018. However, the completion of
Management (APPBI), reported the increase in some future shopping centres should
spending during the holiday period was driven by an bring occupancy rates down by 2% in
increase in clothing and food consumption. 2019 and likely further drop 5% in 2020.
Similarly, the Indonesian Shopping Centres Tenants Greater Jakarta Area: with three
Association (HIPPINDO) said that the trend in shopping centres coming online in H2
modern retail turnover during Eid al-Fitr is estimated 2018, we expect the occupancy rate to
fall by 4.8% to 78.5% at the end of 2018.
to have increased between 15% and 20%, compared
The limited new supply next year should
to that in 2017. We believe that the Asian Games help lift occupancy to 81% in 2019 and
2018, starting in Q3 2018, and the Jakarta Great Sale 82% in 2020.
Festival (JGSF) 2018 should also contribute to the
increase in consumption in the second half of 2018. Rent
Jakarta: we anticipate very slight or flat
rental growth through the end of 2018.
As the retail market situation remains
challenging, the rent in new shopping
centres will likely be offered below
market prices, thus average rents in
Jakarta should decline by 1% in 2019
and drop by 4% in 2020. million sq m in 129 shopping centres. About 70% of total
Greater Jakarta Area: we expect rents in supply is offered as shopping malls for lease. Future
the Greater Jakarta Area to increase supply in Jakarta continues to be limited, with only five
about 1.8% through the end of 2018. A future shopping centres providing about 380,000 sq m of
7% average annual increase in 2019- retail space in 2018-2020.
2020 may happen, given that the supply
of new shopping centres will probably be The development trend has been shifting to an
limited.
integrated development concept, which is mainly
triggered by a higher plot ratio and land scarcity,
particularly in Jakarta. Some of the retail projects in the
Jakarta supply pipeline are part of an integrated development

involving Daan Mogot City, Prajawangsa, namely
Holland Village Mall and Shopping Mall at South Gate.
Supply Cumulative Retail Supply Based on Marketing
Cumulative Retail Supply Scheme
6,000,000 4,000,000
5,000,000 sq m 3,000,000
4,000,000 2,000,000
sq m
3,000,000
1,000,000
2,000,000
0
2018E
2019E
2020E
2010
2011
2012
2013
2014
2015
2016
2017
1,000,000
0
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
Retail Spaces For Lease

Retail Spaces For Sale (Strata-Title)

Retail space for lease in Jakarta will likely remain at 3.21
Annual Retail Supply million sq m in 2018, whilst strata-title retail space will
likely reach 1.44 sq m with the operation of New Harco
250,000 Plaza in the second half of 2018.
200,000 Total Retail Space by Region
150,000
sq m
CBD
100,000 North Jakarta
South Jakarta
50,000
Central Jakarta
0 West Jakarta
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
East Jakarta
0 350,000 700,000 1,050,000

sq m
Annual Supply Under Construction In Planning
Cumulative Supply Q2 2018
Future Supply 2018E - 2021E
For the last six months, there were no new shopping
centres in Jakarta, thus supply continued to be 4.65 Source: Colliers International Indonesia - Research
2 Colliers Quarterly | 20 September 2018 | Jakarta | Retail | Colliers International

SUPPLY PIPELINE
NLA DEVELOPMENT
SHOPPING CENTER LOCATION REGION DEVELOPER
(SQ M) STATUS
2018
New Harco Plaza Glodok West Jakarta Agung Podomoro Land 60,000 Under Construction
2019
Shopping Mall at South Gate Lenteng Agung South Jakarta Sinarmas Land & Aeon 39,200 Under Construction
Holland Vilage Mall Cempaka Putih Central Jakarta Lippo Karawaci Tbk 40,000 Under Construction
2020
Menara Jakarta Shopping Mall Kemayoran Central Jakarta Agung Sedayu Permai 151,560 Under Construction
Pondok Indah Mall 3 Pondok Indah South Jakarta Metropolitan Kentjana 60,000 In Planning
2021
Daan Mogot City Daan Mogot West Jakarta China Harbour 28,000 In Planning
CBD OCCUPANCY RATES BY GRADE

Occupancy Q2 2017 2017 Q2 2018
Occupancy Rates Based on Submarket Premium 97.7% 94.6% 94.6%
Middle Upper 91.1% 88.8% 87.8%
100%
Middle 85.6% 82.8% 84.2%
90% Middle Lower 76.6% 74.5% 76.2%
80% Source: Colliers International Indonesia - Research
70% NON-CBD OCCUPANCY RATES BY REGION

Q2 2017 2017 Q2 2018
60%
South Jakarta* 89.7% 87.3% 87.1%
50% Central Jakarta* 70.4% 68.8% 68.7%

2018YTD
2018E
2019E
2010
2011
2012
2013
2014
2015
2016
2017
North Jakarta 86.3% 86.7% 86.7%

West Jakarta 82.1% 81.0% 81.3%
East Jakarta 84.3% 72.6% 75.4%
CBD Outside The CBD Jakarta *excluding CBD

The key to survive in the currently sluggish market is to
During the first six months of 2018, several shopping improve the physical appearance and upgrade the
centres have returned to operation after being tenant mix. There has been a shift in the concept of
refurbished and renovated, with both existing and new shopping centres that is now drawing visitors’ attention,
tenants. This has helped increase occupancy rates in in the era of online shopping and e-commerce. In
Jakarta, albeit insignificantly. Overall occupancy in general, we expect malls to still rely on the domination of
Jakarta was 83.8%, moving upward by less than 1%. F&B retailers. Speciality stores or boutique concepts are
likely to be the alternative, replacing the less desirable
Since Q3 2017, occupancy rates in the CBD have been
department store format.
relatively stable at 87%. With moderate leasing activities,
we anticipate a marginal increase to 88% by the end of
2018.

SELECT COMMITTED SHOPPING CENTRE TENANTS
OCCUPIED
EXPECTED
SHOPPING CENTER AREA TENANT NAME PRODUCT SPACES
OPENING
(SQ M)
Victoria's Secret Beauty
Grand Indonesia Thamrin, CBD Fashion 280 Q3 18
& Accessories
Plaza Senayan Senayan, CBD Marks & Spencer Fashion 340 Q3 18
South Bekasi,
Grand Galaxy Park H&M Fashion 2,000 Q3 18
Bekasi
South Bekasi,
Revo Town Ace Hardware Home Equipment 2,000 Q3 18
Bekasi
Sunter, North Food &
Sunter Mall Starbucks Coffee 350 Q3 18
Jakarta Beverages
Sunter, North
Sunter Mall The Foodhall Supermarket 800 Q3 18
Jakarta
Epicentrum Walk Rasuna Said, CBD Informa Home Equipment 2,400 Q3 18
Kelapa Gading,
Mall Of Indonesia Flix Cinema Entertainment 4,500 Q4 18
North Jakarta
Rents CBD Asking Base Rents by Mall Grade
Average Asking Rents in Jakarta IDR3,000,000
IDR1,000,000 IDR2,500,000
IDR800,000 IDR2,000,000
IDR600,000 IDR1,500,000
IDR400,000
IDR1,000,000
IDR200,000
IDR500,000
IDR0
2018E
2018YTD
IDR0
2010
2011
2012
2013
2014
2015
2016
2017
Premium Middle - Middle Middle -

Upper Lower
CBD Outside CBD Jakarta Source: Colliers International Indonesia - Research
Source: Colliers International Indonesia - Research Outside the CBD, rents stood at IDR533,568 per sq m
per month. We anticipate a modest growth of less than
The average rent in Jakarta was IDR616,491 per sq m 2% by the end of 2018, given the absence of new
per month, up only 1% compared to 2017. The relatively shopping centres, especially middle-upper class
unchanged rental tariff is likely continue in H2 2018. The establishments.
CBD fetched the highest rents at IDR891,726 per sq m
per month, which is flat compared to Q1.

Asking Base Rents by Area Outside the CBD Average Service Charges by Mall Grades
IDR1,600,000 IDR300,000
IDR1,200,000 IDR250,000
IDR200,000
IDR800,000
IDR150,000
IDR400,000
IDR100,000
IDR0
Central Jakarta*
South Jakarta*
West Jakarta
East Jakarta
North Jakarta
IDR50,000
IDR0
Premium Middle - Middle Middle -
Upper Lower

*excluding CBD
Source: Colliers International Indonesia - Research Average Service Charges by Area Outside the
CBD
Service Charges IDR180,000
Average Service Charges in Jakarta
IDR150,000
IDR200,000
IDR120,000
IDR160,000
IDR90,000
IDR120,000
IDR60,000
IDR80,000
IDR30,000
IDR40,000 IDR0
South Central North West East
IDR0 Jakarta* Jakarta* Jakarta Jakarta Jakarta
2018YTD
2018E
2010
2011
2012
2013
2014
2015
2016
2017
*exclude CBD
CBD Outside CBD Jakarta
The average service charge was IDR134,350 per sq m

per month, strengthening by only 0.9% compared to that
in 2017. Based on Colliers resarch, about 40-45% of all
operating shopping centres in Jakarta have yet to
increase their tariffs for the last 18 months.

planning are scheduled to be developed in Bekasi
Greater Jakarta between 2022 and 2023.
Shopping centre expansions will also probably contribute

(Bogor, Depok, Tangerang and to the future supply in Greater Jakarta. For example, the
Bekasi) well-known developer of Bintaro Jaya plans to expand
this existing shopping centre, which was built in 2014.
Supply Total Retail Spaces by Region

Cumulative Retail Supply
3,000,000 Bogor
2,500,000 Depok
2,000,000
Tangerang
sq m
1,500,000
1,000,000 Bekasi
500,000 0 300,000 600,000 900,000 1,200,000

sq m
0
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
Cumulative Supply Q2 2018 Future Supply 2018E - 2021E

Annual Retail Supply
350,000
300,000
250,000
200,000
sq m
150,000
100,000
50,000
0
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
Annual Supply Under Construction In Planning
The lack of new shopping centres in Q2 kept cumulative

supply in the Greater Jakarta Area at 2.55 million sq m.
Three new shopping centres are scheduled to enter the
market, bringing about 145,000 sq m of space to Greater
Jakarta in the remainder of 2018.
In addition to the confirmed future projects in the supply

pipeline table below, some projects currently under

SUPPLY PIPELINE
NLA DEVELOPMENT
SHOPPING CENTER LOCATION REGION DEVELOPER
(SQ M) STATUS
2018
Galeria Vivo Sentul Sentul Bogor Megapolitan 35,000 Under Construction
AEON Mall Sentul City Sentul Bogor AEON & Sentul City 71,000 Under Construction
Pesona Square Shopping Mall Juanda Depok Menara Depok Asri 40,000 Under Construction
2019
Grand Dhika City Mall Bekasi Bekasi Adhi Persada Property 24,000 Under Construction
2020
Plaza Indonesia Jababeka Cikarang Bekasi Plaza Indonesia Realty & 55,685 Under Construction
Graha Buana Cikarang
2021
Mall at Transpark Cibubur Cibubur Depok Transcorp 30,000 Under Construction
AEON Mall Deltamas Deltamas Bekasi AEON & Deltamas 90,000 In Planning
Occupancy Average Occupancy by Region in Greater

Jakarta
Average Occupancy in Greater Jakarta
100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
50%
2018YTD
50%
2010
2011
2012
2013
2014
2015
2016
2017
2018YTD
2018E
2019F
2010
2011
2012
2013
2014
2015
2016
2017
Bogor Depok Tangerang Bekasi
Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research
Quarterly occupancy in Greater Jakarta rose 1.3% to

83.3% in Q2 2018. Occupancy might drop by 4.8% at the
end of 2018, not only because of external factors such
as the downswing in economy but also because of the
large quantity of new supply in H2 2018.

SELECT TENANT COMMITMENTS IN FUTURE SHOPPING CENTERS
YEAR
SHOPPING CENTER AREA TENANT NAME
OPERATION
H&M, Nike, Sport Station, Planet Sport, Starbucks, J'Co, Ta

Pesona Square Mall Juanda, Depok 2018
Wan, Skechers, Kidz Station, Pizza Hut
Galleria Mall Vivo Sentul Cibinong, Bogor Starbucks, Centro Dept Store, Lulu Hypermarket 2018
Service Charges
Rents
Service Charges in Greater Jakarta
Average Rents in Greater Jakarta
IDR120,000
IDR500,000
IDR100,000
IDR400,000
IDR80,000
IDR300,000 IDR60,000
IDR40,000
IDR200,000
IDR20,000
IDR100,000
IDR0
2018YTD
2018E
2010
2011
2012
2013
2014
2015
2016
2017
IDR0
2018YTD
2018E
2010
2011
2012
2013
2014
2015
2016
2017

As of Q2 2018, average service charges were
Compared to the 2017 figure, average rents in Greater IDR105,466 per sq m per month. Some shopping
Jakarta climbed only a modest 0.2% to IDR386,253 per centres adjusted their service charges 10-25% higher,
sq m per month. which increased the average figure 3% compared to
2017. All in all, there are some middle and middle-upper
Average Rents by Region in Greater Jakarta class shopping centres in Greater Jakarta that still quote
IDR1,200,000 the same tariff for the last year.
IDR1,000,000 Additionally, as we expect the minimum wage to

increase in 2019, we expect some landlords to apply and
IDR800,000 introduce a new tariff for service charges by the end of
2018.
IDR600,000
Notably, almost 20% of the total number of shopping
IDR400,000
centres (middle-low class) in Greater Jakarta still quote
IDR200,000 relatively low tariffs, starting from IDR35,000 to
IDR70,000 per sq m per month.
IDR0
Bogor
Depok
Tangerang
Bekasi

Service Charges by Region in Greater Jakarta
IDR180,000
IDR150,000
IDR120,000
IDR90,000
IDR60,000
IDR30,000
IDR0
Bogor
Depok
Tangerang
Bekasi

Senior Associate Director | Research Senior Manager | Research
+62 21 3043 6888


Colliers Quarterly
JAKARTA | INDUSTRIAL ESTATE

Q2 2018
20 September 2018
Ferry Salanto Senior Associate Director | Land Supply

Jakarta Future industrial land development will be heavily
concentrated in Karawang, not only from the
The industrial market’s overall performance up to H1
development of several new industrial estates within
2018 still posed a tough situation with its total sales,
Trans Hexa Karawang (THK), which includes Karawang
representing only 32.7% of the total sales in 2017.
New Industry City, Artha Industrial Hill and other future
The outlook for the second semester of 2018 might
estates within the THK consortium, but also from the
be good for certain industrial estates. However, the
existing industrial estates such as Suryacipta, KIIC and
overall market performance will still be challenging,
Kota Bukit Indah (Indotaisei and Besland Pertiwi).
particularly in catching up with last year's
Meanwhile, GT Techpark at Karawang (Gajah Tunggal
achievement.
Group) decided not to sell or offer any land for sale, as
their internal group of companies may use the land for
Forecast at a glance future expansion. From the existing industrial estates,
Karawang is expecting to see a total of around 464
Demand
We forecast that logistics, food, hectares (gross area). This land stock will be delivered in
automotive and manufacturing sectors stages.
will remain as the leading generators of
industrial demand. These sectors still The future Patimbang port in Subang continues to
dominate the overall number of appeal to industrial developers to open new industrial
enquiries for industrial land and will likely estates. One existing industrial estate in Karawang
spur the overall demand for industrial indicated that they have secured around 2,000 hectares
land in the future. Some industrial of land in Subang, as part of their expansion plan
estates reported that demand from those benefiting from the port operation. Another JV of local
sectors will likely materialise over the and big overseas groups has also been eyeing at
rest of the year. expanding to Subang. It is also indicated that state-
owned companies are collaborating to consider Subang
Supply
Karawang remains as the main industrial as their future expansion.
land supplier in the future, which will be
heavily concentrated in the Karawang Thus far, the expansion in Serang will be mainly
area, contributed by the existing and contributed by two industrial estates, whilst the land
future industrial estates. Over the next expansion in Tangerang will also be contributed by the
three to four years, Subang will become most active industrial estate, such as Millennium.
another active region in supplying future
industrial land stock, mainly due to its
proximity to the future Patimbang port.
Land Price
Price will remain soft throughout 2018,
amidst the current sluggish market.
Price will likely be adjusted higher by 5%
to 10% per annum over the next two or
three years.
Industrial Land Stock Status in Some Active Other than GIIC and AIH, sales for each industrial estate
and Future Industrial Estates were relatively small in number. Modern Cikande booked
fewer transactions than last quarter, totalling around 2.71
4,000 hectares comprising the expansion of a local garment
industry with 2.46 hectares and a new local building
3,500 material company taking around 2,500 sq m of land.
3,000 Although this reflects a steady performance QOQ, the
total sale of 6.26 hectares in the first semester was only
Hectares
2,500
17.3% of total sales in 2017.
2,000
Bekasi Fajar (BFIE) reported a total of 1.71 hectares
1,500
(lower than that in Q1 2018) from three transactions,
1,000 including a 1.35-ha deal from a new local automotive
company, 2,180 sq m from the expansion of a consumer
500
packaging company from Japan and one new local
0 industry taking around 1,420 sq m. Despite representing
Bogor Karawang Serang only 25% of the total sales in 2017, it is reported that
Existing Stock sales in H1 2018 has yet to reach its peak, owing to the
Remaining Unsold Land sluggish period during the long holiday in June. The
Potential Land To Be Developed management is expecting to see substantial amount of
transactions that will potentially materialise in the second
Source: Colliers International Indonesia - Research semester of this year.
Land Sales Activity Several logistics companies were reported to buy a total
of 1.2 hectares of land in Jababeka, slightly smaller than
Substantial land transactions were fairly limited to the last quarter’s sales.
total deal made by two industrial estates – Greenland
International Industrial Centre (GIIC) and Artha Industrial In Karawang, the new KNIC (Karawang New Industry
Hill. These two estates made up about 60% of the total City) concluded a single 1.14-ha transaction to a new
transactions (nearly 68 hectares) in the first semester of Chinese heavy equipment company. For the last three
2018. Nonetheless, it will be very challenging for the consecutive quarters, KNIC has consistently booked
industrial market to catch up with the total sales figure land transactions, particularly benefiting from the
registered last year. Thus far, the 68-ha deal recorded in expansion of Chinese companies, given its background
the first six months this year only constituted 32.7% of as a Chinese-based company, China Fortune Land
the total sales in 2017. For the last few years, big deals Development (CFLD).
were only produced by the same industrial estates, and
therefore, expecting the amount of this year’s transaction Still in Karawang, the total quarterly sales in KIIC
volume to be the same with that of last year is tough. It dropped from 1.8 hectares last quarter to only 2,000 sq
would need a total transaction of 140 hectares in the m. The land bought this quarter was for the expansion of
remainder of 2018 to offset last year's sales an existing Japanese-based company in the plating and
performance. coating industry.
The GIIC reported a total sale of 22 hectares for two Sales transaction this quarter was closed by Griya Idola,
consecutive quarters, bolstering its position as the most which sold four SFB units (totalling to three buyers) for
active industrial estate in selling land. The food industry expansion purposes. Three local companies buying SFB
acquired around 20 hectares of land. Other than that, this quarter came from the plastic moulding, panel and
two hectares were sold to an auto-related company. chemical industries.
As a newly operating industrial estate in Karawang, On the other front, we saw an increasing leasing activity
Artha Industrial Hill (AIH) sold quite sizeable land plots to in Q2 from two industrial estates that specialises in land
four companies, three of which are Korean. This leasing, namely CCIE (Cibinong Centre Industrial Estate)
comprised 5.1 hectares to Korean textile companies, 4.5 and Kota Bukit Indah (run by Besland Pertiwi). CCIE
hectares to a Korean automotive company and 6.4 closed a leasing deal with a local logistics company of
hectares to a Korean electric company. The total 19.1-ha 1.5 hectares. Meanwhile, Kota Bukit Indah confirmed two
sales in AIH this quarter was closed by one local drone leasing deals for two units of SFB from a tenant that
and unmanned aerial vehicle manufacturer that bought produces plastics and mattresses. The biggest leasing
3.1 hectares. transactions were from tenants in the automotive and
2 Colliers Quarterly | 20 September 2018 | Jakarta | Industrial Estate | Colliers International

logistics sectors, taking around 3.2 hectares. The total industrial estates including KIIC, KBI, BFIE, GIIC, AIH
leasing transaction recorded this quarter was the highest and Modern Cikande. Meanwhile, the electronic sector of
since the booming period in Q2 2012, although it did not 9.5 hectares was contributed by two companies in AIH.
reflect the overall market situation, since compared to
sales, the leasing transaction was negligible in volume. Types of Active Industries During H1 2018
Land Absorption During Q2 2018 Metal Heavy

Logistics/ Packaging
Oil & Gas 4%Equipment
Warehousing 0% Clothing
Related 8% 2%
Chemicals1% 4%
Greenland International… 1% Textiles
8%
Artha Industrial Hill Electronics Molding

14% 0%
Building Material
Kota Bukit Indah (Besland… 3%
Medical
1%
Modern Cikande Steel-related
Others
5%
1%
Bekasi Fajar Plastics
1%
Consumer
CCIE Goods
1%
Jababeka
Automotive
Karawang New Industry City 17%
KIIC
Food
31%
Griya Idola
0 5 10 15 20 25
hectares Source: Colliers International Indonesia - Research
Source: Colliers International Indonesia - Research Annual Industrial Land Absorption

Land Absorption During H1 2018 1,400
1,200
Greenland International…
Artha Industrial Hill 1,000
Modern Cikande
800
Hectares
Bekasi Fajar
600
Kota Bukit Indah (Besland…
Jababeka 400
CCIE
200
KIIC
Karawang New Industry City 0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Q2 2018
Krakatau Industrial Estate…

Jakarta Bogor Tangerang
Griya Idola
Karawang Bekasi Serang
0 5 10 15 20 25
hectares Source: Colliers International Indonesia - Research
Up to June 2018, the food industry still dominates and

being the most widely expanding sector buying industrial
land. This was mainly seen at GIIC, and some small
transactions that occurred in Jababeka and Modern
Cikande. The automotive sector, which took about 17%
of the total transactions, concluded the first semester of
2018 with a total of about 11.35 hectares of land in six

Land Price and Maintenance Costs Greater Jakarta Industrial Land Prices
USD300.00
There was no change in land price during the quarter.
The sales performance up to June 2018 was not enough
USD250.00
to raise the confidence of industrial landlords to push
higher prices this quarter. Looking at the current sluggish USD200.00
market, prices are unlikely to increase over the next
USD/sq m
semester, as industrial developers will take ultimate USD150.00
priority to consolidate internally during the slow period.
USD100.00
Some industrial developers revealed that price is one of
the many factors that determine whether people will buy USD50.00
or not. Location is the next thing that buyers consider.
USD0.00
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Q2 2018
We do not see any indications in the two-most active
regions, Bekasi or Karawang, in changing the offering
price at the current level. In Serang, where one of the
most consistent estates in selling is located and land Bogor Bekasi Tangerang
price has continuously been adjusted, the overall land Karawang Serang
price has been stable QOQ.
Land price change in Tangerang may occur in certain
estates with impressive sales. However, the overall land Greater Jakarta Industrial Maintenance Costs
price might be stagnant in this region because most of
the industrial estates are not active in selling. All in all, it USD0.10
is unlikely to see price change in the reminder of 2018.
USD0.08
Most industrial estates in Karawang start their land price
USD/sq m/month
at USD170/sq m, whilst prices in Bekasi are a bit higher

USD0.06
starting from USD172 to USD229/sq m. The overall
Tangerang area is at an average of USD185/sq, m but
one new active industrial estate has already set a higher USD0.04
price than others, which is now at USD233/sq m.
USD0.02
The maintenance tariff for industrial estates in the
greater Jakarta area has been stagnant for several USD0.00
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Q2 2018
years. Tariff is generally quoted in US dollars, ranging
from USD0.07 to 0.08/sq m/month in Bekasi, which is
the highest compared with other regions. In Karawang,
the tariff is a bit lower at USD0.06 to 0.07/sq m/month. Bogor Bekasi Tangerang
The two active industrial estates in Serang set the Karawang Serang
maintenance tariff in rupiah, ranging from IDR650 to
IDR650/sq m/month. Source: Colliers International Indonesia – Research

INDUSTRIAL LAND PRICES AND MAINTENANCE COSTS (IN USD EQUIVALENT)
Land Price (/sq m) Maintenance Cost (/sq m/month)
Lowest Highest Average Lowest Highest Average
Bogor 215.2 340.7 277.9 0.06 0.07 0.07
Bekasi 172.1 229.5 210.8 0.07 0.08 0.07
Tangerang 179.3 233.1 185.3 0.03 0.07 0.06
Karawang 170.0 185.0 177.0 0.06 0.10 0.07
Serang 143.4 165.7 154.6 0.04 0.05 0.04
For more information:

Ferry Salanto
Senior Associate Director | Research
+62 21 3043 6888


Colliers Quarterly
JAKARTA | HOTEL
Q2 2018
20 September 2018
Occupancy
Ferry Salanto Senior Associate Director | We foresee overall occupancy by the
Jakarta end of 2018 reaching 62.2%, up
moderately compared to the same
Jakarta’s hotel market performed relatively slow in period last year. Assuming a sound
Q2 2018 both in terms of occupancy and project economy in 2019, hotel occupancy
development. The month of Ramadan, including the would likely increase by about 63-64%.
traditional fast, triggered the overall slowdown. We
expect the Asian Games, to be held in August this Room Rate
year, to serve as a catalyst to propel the sluggish The ADR may go up marginally by 1.1%
hotel sector. This, coupled with the upcoming YOY at the end of 2018, reaching about
general elections in 2019, might create increased USD80 or equivalent to IDR1.12 million.
With the inclination that occupancy will
demand for room accommodations and convention
likely only rise modestly, we project ADR
space. for the next two years to reach USD81.
Forecast at a glance Supply

Demand A large quantity of hotel supply in the pipeline as
The Asian Games should drive major planned is dominated by 3-star hotels managed by
demand in 2018, along with rooms that
independent hotel operators. Not all hotel owners are
shall be used by political parties in
willing to be bound with brand name chains, particularly
preparation for the upcoming legislative
and presidential elections. because of the restriction and fee-sharing to which the
owners have to abide. Such arrangements for brand
Supply name operators is more likely for 4- and 5-star hotels.
Jakarta is expecting 2,064 additional Owners commonly parter with brand name hotel
rooms this year, consisting of 804 3-star operators to lift their own hotel brand, guarantee the
hotel rooms, 375 4-star hotel rooms and market of loyal customers and make sure there are
885 5-star hotel rooms. In 2019, Jakarta standardised operating procedures.
anticipates 1,824 more rooms and in
2020, another 537 new rooms.
NEWLY OPERATING HOTEL DURING 2018
HOTEL NAME STARRED STR CHAIN LOCATION REGION NO. OF OPENING TIME
RATING SCALE RATE ROOMS
Mercure PIK Avenue 4-star Upscale Pantai Indah North Jakarta 240 February 2018
Kapuk
NEW PIPELINE
HOTEL NAME STARRED STR CHAIN LOCATION REGION NO OF PROJECT PROJECTED

RATING SCALE ROOMS STATUS COMPLETION
RATE TIME
Holiday Inn Express 3-star Upper Matraman East Jakarta 190 Under 2018
Matraman Midscale Construction
Ibis Styles TB Simatupang 3-star Upper TB Simatupang South Jakarta 110 Under 2018
Midscale Construction
Dalton Jakarta Hotel 3-star Undefined Otista East Jakarta 147 Under 2018
Construction
Hotel by Graha Gatsu 3-star Undefined Gatot Subroto South Jakarta 100 Under 2018
Lestari Construction
Midtown Point - Ibis Styles 3-star Undefined Jl. Fachrudin Central Jakarta 225 Under 2018
Construction
Asana Taman Mini 3-star Undefined Taman Mini East Jakarta 160 Under 2019
Indonesia Indah Construction
Des Indes Boutique Hotel 3-star Undefined HOS Central Jakarta 97 Under 2019
by Preference Tauzia Cokroaminoto Construction
Artama Hotel Kebon 3-star Undefined Jl. Kebon Central Jakarta 100 Under 2019
Kacang Kacang Construction
R1 Hotel 3-star Undefined Jl. H. Agus Central Jakarta 135 Under 2019
Salim Construction
Aston Titanium Cijantung 4-star Upscale Cijantung East Jakarta 225 Under 2018
Construction
Swiss-Belhotel Kirana 4-star Upscale Kelapa Gading North Jakarta 316 Under 2018
Avenue - Kelapa Gading Construction
Erian Hotel 4-star Undefined Jl. Wahid Central Jakarta 150 Under 2018
Hasyim Construction
Front One Boutique Hotel 4-star Undefined Jl. Arjuna Raya West Jakarta 100 Under 2019
Arjuna Construction
Novotel Cikini 4-star Upscale Cikini Central Jakarta 274 Under 2019
Construction
Aloft Jakarta Simatupang 4-star Upscale Jl. TB South Jakarta 180 Under 2019
Simatupang Construction
Batiqa Casablanca 4-star Undefined Jl. Casablanca South Jakarta 156 Under 2020
Construction
Alila - SCBD lot 11 5-star Luxury SCBD CBD 250 Under 2018
Construction
Park Hyatt Hotel 5-star Luxury Jl. Kebon Sirih Central Jakarta 150 Under 2018
Construction
InterContinental Jakarta 5-star Luxury Pondok Indah South Jakarta 300 Under 2018
Pondok Indah Hotel & Construction
Residences
Regent 5-star Luxury Jl. Gatot CBD 160 Under 2018

Subroto Construction
St Regis 5-star Luxury Jl. HR Rasuna CBD 280 Under 2019

Said Construction
The Langham 5-star Luxury SCBD CBD 200 Under 2019

Construction
Waldorf Astoria 5-star Luxury Jl. MH Thamrin CBD 181 Under 2020
Construction
Rosewood Jakarta 5-star Luxury Jl. Prof. Dr. CBD 200 Design 2020
Satrio
2 Colliers Quarterly | 20 September 2018 | Jakarta | Hotel | Colliers International

Cumulative Hotel Rooms Performance
20,000 Monthly Average Occupancy Rate (AOR)
16,000 100%
12,000
80%
8,000
60%
4,000
0 40%
2018E
2019E
2020E
2010
2011
2012
2013
2014
2015
2016
2017
Q1 2018
Q2 2018
20%
3-star 4-star 5-star 0%
Feb
Apr
Aug
Oct
Nov
Dec
Mar
Jan
May
Jun
Jul
Sept
2014 2015 2016 2017 2018
Cumulative Hotel Projects

Source: STR
100
The trend in occupancy from January to May this year
80 was still in line with the general trend in the last three
years. It seems that government and corporate events
60 were held prior to the sluggish month of Ramadan. The
May occupancy data showed a downward trend in hotel
40 room transactions simultaneously with the fasting month.
At press time, we have not received the figure for June,
20 but June tends to have the lowest occupancy for the
entire year. The number of local business travellers was
0
fairly lower than during Ramadan, because many
2018E
2019E
2020E
2010
2011
2012
2013
2014
2015
2016
2017
Q1 2018
Q2 2018
Jakartans were out of town during this long holiday

season.
Starting from July onward, there will probably be a

3-star 4-star 5-star
potential for hotel occupancy to grow, as business
activities should resume to a normal pace after the
holiday. With the Asian Games 2018 approaching, the
outlook for room absorption should be more brisk than in
the previous years. Another supporting factor is the
general elections next year, which could create demand
for accommodations and conventions from political
parties, in anticipation of that big event.

Monthly Average Daily Rate (ADR) the same time, brand new hotels almost always offer a
special rate during their pre-opening.
USD120
USD100
USD80
USD60
USD40
USD20
USD0
Feb
Apr
Aug
Oct
Nov
Dec
Mar
Jan
May
Jun
Jul
Sept
2014 2015 2016 2017 2018
Source: STR
Despite being in line with the trends form 2014 to 2017,

the monthly ADR figures in 2018 (January-May) were the
lowest for the last four years. This explains a situation
wherein there is equilibrium between the number of hotel
rooms and potential guests. Recent supply has been
growing more slowly. However, we think there are too
many rooms already. To survive from this current
situation, hoteliers have adjusted their price considering
there are more rooms than guests. Hoteliers may
emphasise maintaining, or if possible lifting occupancy
level, rather than leaving the rooms unoccupied because
the price is not competitive. In short, hoteliers are
prioritising raising occupancy rather than increasing
room rates.
Jakarta’s hotel market is more focused on business than

leisure, with corporations mainly contributing to the
overall room demand. Given the current situation where
there are many options for accomidations, corporate
clients are becoming more price-sensitive. They will
likely choose accommodations with comparable quality
and specification, but with a more competitive price. At

Ferry Salanto Nurul Soraya
Senior Associate Director Senior Research
Research Executive | Research
+62 21 3043 6888


Colliers Quarterly
BALI | HOTEL
Q2 2018
20 September 2018
Ferry Salanto Senior Associate Director | Supply

Jakarta Cumulative Hotel Rooms
Since early 2018, after the Mount Agung eruption, 28,000
tourism in Bali has gradually recovered. The number
of inbound tourists increased and was higher than in 21,000
the same period last year, a good signal for Bali’s
tourism industry. Also, several events have attracted 14,000
tourists, in addition to the cultural and natural
attractions. 7,000
Forecast at a glance 0
2010
2011
2012
2013
2014
2015
2016
2017
2018E
2019E
2020E
Q1 2018
Q2 2018
Demand
Several events planned to take place in
Bali should complement the number of
inbound leisure tourists, including the 3-Star 4-Star 5-Star
IMF-WB Annual Meeting in October,
FIABCI Meeting in December and Source: Colliers International Indonesia - Research
Global Business Summit 2018.
Cumulative Hotel Projects
Supply
Bali plans 1,521 additional rooms 250
through the end of 2018, consisting of
684 4-star hotel rooms and 837 5-star 200
rooms. From 2019-2020, 919 more new
rooms should be available in six hotel 150
projects. By the end of 2020, there
should be a total of 60,604 hotel rooms 100
in Bali.
50
Occupancy 0
2018E
2019E
2020E
2010
2011
2012
2013
2014
2015
2016
2017
Q1 2018
Q2 2018
By the end of 2018, we project

occupancy to reach 71.1%. Our
estimation for 2020 is more optimistic,
reaching 75-80% occupancy on the back
3-Star 4-Star 5-Star
of stronger inbound tourism.
Room Rate Source: Colliers International Indonesia - Research

The ADR of hotels in Bali will potentially
be recorded at USD116 and will likely There were two new hotels that began operation in Q2
increase further to USD117-118 at the 2018.
end of 2020.
The upcoming supply will probably be dominated by
upscale and luxury class hotels, as the number of new
hotels in Bali is increasingly regulated. A new bank
regulation that relates to the provision of loans has
reduced the plan to develop new hotels in Bali, not to
mention financing issues, permit issues and more
importantly the overall condition of the hotel market.
NEWLY OPERATING HOTEL DURING H1 2018
HOTEL NAME STARRED STR CHAIN SCALE LOCATOIN REGION NO. OF OPENING
RATING RATE ROOMS TIME
Radisson BLU Bali Uluwatu 4-star Upper Upscale Jl. Pemutih Uluwatu 240 January
2018
The Element Ubud 4-star Upscale Jl. Andong Ubud 152 March 2018
Fairfield Hotel 4-star Upper Midscale Jl. Sri Rama Legian 163 May 2018
Artotel Haniman Ubud 4-star Undefined Jl. Jatayu Ubud 22 June 2018
Marriott's Bali Nusa Dua 5-star Upper Upscale Nusa Dua Nusa 79 January
Gardens Dua 2018
Como UMA Canggu 5-star Luxury Mejan Canggu 119 February
2018
Renaissance Bali Resort & 5-star Upper Upscale Pantai Uluwatu 207 March 2018
Spa Uluwatu Balangan
NEW PIPELINE

RATING SCALE RATE ROOMS STATUS COMPLETION TIME
YELLO Hotel Kuta 3-star Undefined Pantai Kuta Kuta 138 Under 2020
Beach Construction
The Himana - Upper 209 Under 2018

Mercure Bali 4-star Midscale Jl Uluwatu II Jimbaran Construction
Jimbaran
Swiss-Belresort Undefined 163 Under 2018
4-star Jimbaran Jimbaran
Jimbaran Construction
Swiss-Belresort Undefined Jl Raya 273 Under 2018

4-star Legian
Arjuna (condotel) Arjuna Construction
Eastin Hotel Undefined Jl Munduk 100 Under 2018

4-star Canggu
Residence Catu Construction
Upscale Jl. Batu Belig Seminyak 102 Under 2019

Aloft Seminyak 4-star
Construction
Upscale Jl. Raya Kuta Kuta 80 Under 2019

Aloft Bali Kuta 4-star
Construction
Jumeirah Luxury Pecstu Indah Jimbaran Under 2018

104
Resort Construction
Solis Capella Luxury Ubud Ubud Under 2018

108
Resort Hotel Construction
Samana Condotel Undefined Jl. Telaga Tanjung Under 2018

250
Waja Benoa Construction
Hyatt Regency Luxury Danau Sanur Under 2018

375
Bali Tamblingan Construction
Waldorf Astoria Luxury Bukit Jimbaran Under 2019

96
Bali Uluwatu Pandawa Construction
Shangri-La's Nusa Luxury Kompleks Nusa Dua Under 2019

246
Dua Resort & Spa BTDC Construction
Swissotel Bali Upper Upscale Jl. Pantai Jimbaran Under 2019

170
Pandawa Construction
2 Colliers Quarterly | 20 September 2018 | Bali | Hotel | Colliers International

Since 2016, we have recorded a number of hotels being
taken over and rebranded, as indicated in the table.
REBRANDED HOTELS IN BALI (2016 – 2018YTD)

STARED- YEAR OF YEAR OF NO OF
HOTEL NAME PREVIOUS NAME LOCATION REGION
RATING OPERATION REBRANDING ROOM
Ibis Styles Bali Kuta
Grand Livio 3-star 2014 2016 Jl Dewi Sri Kuta 97
Dewi Sri
Dafam Savvoya Savvoya Seminyak
3-star 2013 2016 Jl Mertanadi Kuta 111
Seminyak Hotel Hotel
Best Western Premier
Ramada Sunset Road 4-star 2013 2016 Jl Sunset Road Kuta 271
Sunset Road
The Tanjung Benoa
Ramada Tanjung Benoa 4-star 1991 2016 Jl Pratama Tanjung Benoa 181
Resort
The Camakila Ramada Camakila 4-star 2009 2016 Jl Padma Utara Legian 116
Four Points by
Jl Raya
Sheraton Bali - Vasanti Hotel 4-star 2013 2016 Seminyak 121
Petitenget
Seminyak
Permata Kuta Hotel Aston Tuban Inn 4-star 2006 2016 Jl Kediri Kuta 120
Amnaya Resort Kuta Alaya Kuta 4-star 2016 2017 Jl Kartika Plaza Kuta 116
Jl Yoga
Fox Harris Jimbaran Pramapada 4-star 2017 2017 Jimbaran 125
Perkanthi
The Kuta Playa Hotel &
Wyndham Garden Kuta 4-star 2008 2017 Jl Pantai Kuta Kuta 155
Villas
Jl Raya Nusa
Hilton Bali Resort Grand Nikko Bali 5-star 1996 2016 Nusa Dua 408
Dua Selatan
Hotel Nikko Bali Benoa Grand Aston Bali Beach
5-star 1997 2018 Jl Pratama Tanjung Benoa 188
Beach Resort & Spa
Comparison of Foreign Tourist Arrivals at

Tourism Ngurah Rai International Airport in 2002 - 2003,
2005 - 2006, 2017 - 2018YTD
After Mount Agung’s eruption, tourism is back on track.
Inbound tourism numbers have been constantly 700,000
increasing since January with the lifting of travel
warnings. Despite 14 countries (the UK, the US, 600,000
Australia, Hong Kong, New Zealand, Singapore, 500,000
Malaysia, Poland, Ireland, Canada, France, the
400,000
Philippines, Switzerland and Brazil) issuing travel advice
on Indonesia after the bombings in Surabaya last May, 300,000
this terrorist attack did not severely impact Bali’s tourism 200,000
industry. The situation was generally safe, and high-
100,000
standard security measures were implemented in vital
areas such as airports, hotels, malls and many other 0
Feb
Apr
Aug
Oct
Nov
Dec
Jan
May
Jun
Jul
Mar
Sept
places, as a preventive measure.
2002 2003 2005

2006 2017 2018
Source: Statistics Bali Province
The Bali Provincial Statistics Centre Report disclosed

that recovery after the Bali bomb attacks in 2002 and in
2005 took two months. Meanwhile, recovery after the
volcanic eruption in 2017 took four months, including the
pre-eruption in September and post-eruption in
December. This was demonstrated by the decreasing
number of inbound tourists, as presented in the chart.

After the bomb attacks in Bali in 2002 and in 2005, the from India might increase further especially after the visit
airport was not closed, thus the recovery was of Prime Minister Narendra Modi in May 2018.
considerably faster. In contrast, Ngurah Rai Airport was
closed for three days after the Mount Agung eruption, Performance
which substantially impacted Bali’s tourism industry.
Average Occupancy Rate (AOR)
Mount Agung erupted again in April and early July 2018,
but this time the airport was not closed.
100%
In anticipation of another potential eruption, Bali has
started developing alternative transportation means 80%
other than air transport such as roads, ferries and
60%
cruises. Coinciding with the preparations for the IMF-WB
Annual Meeting to be held in October, several
40%
infrastructure projects are under construction, including
an entrance underpass to Ngurah Rai International
20%
Airport and its expansion, as well as the Benoa port
extension.
0%
Feb
Apr
Aug
Oct
Jan
Mar
May
Nov
Dec
Jun
Jul
Sept
Regarding this important IMF-WB Annual Meeting, the
government is preparing to use five airports to welcome
delegations. These include Blimbingsari Airport in
2015 2016 2017 2018
Banyuwangi, Lombok International Airport in Lombok,
Juanda International Airport in Surabaya, Adi Sumarmo
International Airport in Solo, and Sultan Hasanuddin Source: STR
International Airport in Makassa. These airports will
serve as alternative airports if Ngurah Rai International The month of January still felt the impact of Mount
Airport is over capacity or closed. Agung, but the AOR rebounded in February and
continued increasing through May, reaching 68.3%.
Number of Foreign Tourist Arrivals at Ngurah
Rai International Airport by Month Starting in June, we project the market situation to rise in
anticipation of local tourists during the Eid al-Fitr in June
700,000 and foreign tourists for summer holidays.
600,000
Average Daily Rate (ADR)
500,000
USD140
400,000
USD120
300,000
USD100
200,000
USD80
100,000
USD60
0
USD40
Feb
Apr
Aug
Oct
June
July
Nov
Dec
Jan
Mar
May
Sept
USD20
2013 2014 2015 USD0
Feb
Apr
Aug
Oct
Jan
May
Nov
Dec
Jun
Mar
Jul
Sept
2016 2017 2018
Source: Bali Tourism Office 2015 2016 2017 2018
Chinese, Australian and Indian visitors are still the three Source: STR
leading markets for Bali, with the Indian market growing
since 2012. Based on statistics from the Bali Tourism Bali’s ADR will likely achieve its peak during the island’s
Province, from January to May 2018, a total of 158,957 high season in July and August, as depicted in the
Indian tourists arrived in Bali, which is a 62% increase Monthly ADR chart.
from the same period in 2017. The number of tourists

Senior Associate Director Senior Research
Research Executive | Research
+62 21 3043 6888


Colliers Half Year Report
H1 2018
20 September 2018
SURABAYA PROPERTY MARKET REPORT
Accelerating success.
Colliers Quarterly
SURABAYA | OFFICE
H1 2018
20 September 2018
Ferry Salanto Senior Associate Director | Occupancy rate

Surabaya We expect 2018’s supply projection to
effect the occupancy at the end of 2018,
As the second largest city in Indonesia, Surabaya is pushing it to drop below 70%. We
a business gateway for companies wishing to invest expect occupancy to decline
continuously until 2020.
in the eastern part of the country. Despite the large
opportunities, average office absorption was only
around 14,000 sq m per annum from 2010 to 2017. Rents
This modest absorption was offset by a relatively Large vacant spaces and additional new
small increase in office space supply during that supply in the remainder of 2018 should
period, which brought the average occupancy rate to push rents down by 2.6% to
remain steady at 81%. IDR128,138/sq m/month. In 2019, with
limited new supply, rent is predicted to
The competition from shop-houses for lease, known move upward by 4%, but could again
as ruko and rukan, is still a challenge. Ruko and see pressure from a substantial amount
rukan offer cheaper rents than office buildings. of new space in 2020, which could bring
the average rent to IDR127,678/sq
In anticipation of a large upcoming supply in 2018, m/month.
we expect landlords to maintain the current level of
rents, especially for new office buildings with less
Prices
than 50% occupancy. Large vacant spaces have
already pushed the Surabaya office market into a In Surabaya, the current slowdown in
tenant’s market. Landlords of existing office the economy has made investments in
office property less attractive. Landlords
buildings should also need to be wary of relocating
are keeping their average prices at
tenants to newer buildings that offer competitive
IDR30 million/sq m for the rest of 2018.
rents. We anticipate prices to climb in 2019-
2020, albeit gradually at between 2.0%
and 2.5%.
Forecast at a glance
Demand
Total office space absorption in
Surabaya is scheduled to reach 13,000
sq m per annum in 2018-2020. We
expect forthcoming leasing or sales
transactions to come from the
insurance, finance and shipping
industries.
Supply
Total office supply in Surabaya should
exceed 400,000 sq m by the end of
2018, which is an increase of 19.3%
YOY. Between 2019 and 2020, total
office space is planned to increase to
550,000 sq m.
Annual Supply
Lease 120,000
100,000
Supply
80,000
Cumulative Office Supply
60,000
700,000
40,000
600,000
20,000
500,000
0
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
400,000
300,000
In Operation Under Construction In Planning
200,000
100,000 Source: Colliers International Indonesia - Research
0 Cumulative Office Supply by Region

2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
Central Surabaya
South Surabaya
New office supply in Surabaya is scheduled to be
substantial between 2018 and 2021, with at least 11 new
buildings bringing approximately 330,000 sq m of office West Surabaya
spaces. During the first half of 2018, eight office
buildings continue to be under construction, with four of East Surabaya
these scheduled for completion in 2018. This will likely
bring about 65,000 sq m of new office supply online.
North Surabaya
Future developments that are already under construction
this year include Satoria, Pelindo Place and an office 0 100,000 200,000 300,000
building within the Capital Square Complex. We expect
these three establishments to be completed in 2020. Existing Supply 2017 Future Supply 2018E - 2021E
Pelindo Place, located near Tanjung Perak Harbour, is
planned to become the first commercial office building in Source: Colliers International Indonesia - Research
North Surabaya.
Future office supply in Surabaya is planned mainly in
We expect the growth of office supply to continue at West Surabaya, particularly in the HR Muhammad-
least through 2021, however, three buildings that are Darmo area, which is in line with the Surabaya
scheduled to be completed in 2021 are still in the government’s spatial planning policy (RTRW) 2014-2034
planning stages. that designates the area for trade and residential use.
2 Colliers Quarterly | 20 September 2018 | Surabaya | Office | Colliers International

NEW SUPPLY PIPELINE
OFFICE BUILDING LOCATION DEVELOPER SGA (SQ M) MARKETING SCHEME
2018
Praxis Office Panglima Sudirman Intiland Development 12,000 For Lease & Sale
Voza Office Tower HR Muhammad Avia Avian 18,607 For Sale
Spazio Tower Bukit Darmo Intiland Development 20,000 For Sale

Boulevard
Tirta Kencana Kertomenanggal Tirta Kencana 15,000 For Lease
2019
Pakuwon Tower Basuki Rahmat Pakuwon Jati 39,740 For Lease & Sale
2020
Satoria Tower HR Muhammad Satoria Group 34,000 For Sale
Capital Square HR Muhammad Greenwood 39,950 For Lease
2021
One Galaxy Dharmahusada Puri Galaxy (Sinar Galaxy Group) 31,450 For Lease
Grand Sungkono Lagoon Abdul Wahab Siamin PP Property 38,250 For Lease
Ciputra World Surabaya Office Tower Mayjend Sungkono Ciputra Group 37,400 For Sale
Cumulative Office Supply by Marketing Scheme institutional investors continue to be the main targets of
strata office buildings in Surabaya.
500,000
Performance
400,000
Occupancy
300,000 Occupancy Rates
200,000 100%
100,000 90%
0
80%
2018E
2019E
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
70%
For Lease For Sale
60%
50%
Since 2016, strata-title offices regained popularity in
2010
2011
2012
2013
2014
2015
2016
2017
2018YTD
2018E
Surabaya, and three new strata-title office buildings

composing about 100,000 sq m are scheduled to come
online this year alone. This is a significant jump, almost
double, from 2017. We expect the strata-title office stock
to double from 2018 to 2021. Both individual and Source: Colliers International Indonesia - Research

The pattern of declining occupancy in 2016 will likely The Rents
recur at the end of 2018, given the substantial supply
coming online. The absence of new office supply for the Average Asking Base Rents, per sq m
last 18 months has helped occupancy rates stabilise at
IDR160,000
around 76.7%. Leasing activity was still dominated by
trading, shipping and freight forwarding business lines, IDR140,000
particularly in the central business district. IDR120,000
IDR100,000
The occupancy performance of office buildings in Central
IDR80,000
Surabaya still helps underpin the overall occupancy
performance in Surabaya. To date, the occupancy rate in IDR60,000
Central Surabaya was 83.2%, revealing a 1.7% increase IDR40,000
from the previous period. IDR20,000
We still see several local and overseas investment IDR0
2018YTD
2018E
2010
2011
2012
2013
2014
2015
2016
2017
companies targeting Surabaya for business expansion.
Nevertheless, such companies only require relatively
small office spaces (some needing below 100 sq m).
Typically, these companies are commonly new or start-
up businesses that require some time before firming up
their operations with a wider and permanent operation in
Surabaya. Having said that, we think that there is a great Starting in early 2017, we witnessed average rental rates
opportunity for flexible workspace operators that provide declining, which continued in H1 2018. A further
a more flexible scale of office spaces in Surabaya. downward trend will likely to occur in the remainder of
Similar to what we are seeing in Jakarta, these flexible 2018. Two office buildings located in Central Surabaya
workspace operators provide more options in the market. announced they were lowering their rents by about 15%
In line with this situation, we have identified that in the HOH, despite the fact that there were not many vacant
past year some flexible workspace operators have spaces in these buildings. With this adjustment, the
started to emerge in Surabaya, such as Sub CO, Koridor overall average rental rate in Surabaya declined 2.1%
and Revio. YOY to register at IDR131,561/sq m/month. The average
asking rental rates in Surabaya were 55% lower than in
Occupancy Rates Based on Regions
Jakarta.
100%
The currently sluggish market coupled with a large
90% number of additional office buildings pushed landlords of
newer office buildings to refer to the market price as
80% basis, in order to maintain their competitiveness.
Average asking rental tariffs for new office buildings is
70% currently ranging from IDR135,000 to IDR150,000/sq
60%
m/month.
50%
2018YTD
2010
2011
2012
2013
2014
2015
2016
2017
Central Surabaya South Surabaya

West Surabaya East Surabaya

Asking Base Rents Based on Region, per sq m Service Charges Based on Region, per sq m
IDR300,000 IDR120,000
IDR250,000 IDR100,000
IDR200,000 IDR80,000
IDR60,000
IDR150,000
IDR40,000
IDR100,000
IDR20,000
IDR50,000
IDR0
Central South West East
IDR0
Surabaya Surabaya Surabaya Surabaya
Central South West East
Surabaya Surabaya Surabaya Surabaya
Service Charges
Average Service Charges, per sq m Strata-title
IDR80,000 Average Asking Prices
IDR70,000
IDR35,000,000
IDR60,000
IDR30,000,000
IDR50,000
IDR25,000,000
IDR40,000
IDR20,000,000
IDR30,000
IDR15,000,000
IDR20,000
IDR10,000,000
IDR10,000
IDR5,000,000
IDR0
IDR0
2018YTD
2010
2011
2012
2013
2014
2015
2016
2017
2018E
2018YTD
2018E
2013
2014
2015
2016
2017

Over the last year, service charges have increased a
slight 4.4%, with the majority of office buildings in In Surabaya, asking prices have been relatively stable at
Surabaya increasing the tariff by IDR5,000. In the review IDR28 - IDR29 million/sq m since 2017. Nevertheless,
period, average service charges were registered at some landlords with limited availability of spaces
IDR67,497/sq m/month. With more strata-title buildings confidently set the selling prices higher than the market
in the pipeline, the average service charge is likely to prices.
increase moderately, mainly because strata-title office
Some strata-title office buildings in Surabaya saw good
buildings generally quote lower tariff than buildings
absorbtion in H1 2018, although it took about three to
offered for lease.
four years to achieve this level of absorption. Sales
transactions for strata-title office buildings were still
dominated by investors

+62 21 3043 6888


Colliers Quarterly
SURABAYA | APARTMENT
H1 2018
20 September 2018
Ferry Salanto
Surabaya
Senior Associate Director |
Apartment for
More stock in the market has led to a buyer’s market,
which will likely cap property price appreciation.
Demand has improved somewhat but remained
Strata-title
patchy. We believe market sentiment could remain
soft in 2018, as the market continues to digest a Supply
large quantity of unsold inventory. We expect the
Following the completion of three projects in Surabaya
strongest demand to be in small units with relatively
that brought a total of 4,379 units online, there are now
affordable pricing. This year, the bulk of new
34,998 apartment units in stock, reflecting a 14.3%
launches from developers will likely come from mid-
increase HOH and 21.2% YOY. These three newly
low class apartments priced below IDR1.5 billion per
completed projects are predominantly in the middle-low
unit. This typical unit type remains the most saleable
class. Overall, the middle-low segment still dominates
product in this subdued apartment market.
the apartment market in Surabaya, accounting for 53%
of stock. We expect this domination to continue in the
Forecast at a glance future.
Demand For the past three years, West Surabaya continues to be
Market sentiment in Surabaya is yet to
a popular location for apartment development, as shown
recover, particularly because of a large
by numerous units launching in the region, especially
number of available units. By the end of
2018, the take-up rate may edge up within the areas surrounding Jl. Darmo, Jl. Mayjen
modestly to 81-82%. A brisker outlook Sungkono and Jl. HR. Muhammad, and also within
for 2019 and 2020 may allow the take- upscale housing compounds such as Graha Family,
up rate to reach 84% and 85%, Citra Indah and Pakuwon Indah. With massive
respectively. commercial developments and the upcoming West Outer
Ring Road providing better access to industrial areas in
Supply Gresik, Tuban and Mojokerto, there will likely be a wider
The total number of strata-title target market, from employees to expatriates.
apartments will reach 36,523 units by
Furthermore, in contrast with Jakarta, which is very
2021. From now to 2020, supply is
much on the radar of overseas developers, most
scheduled to grow by 9,251 units per
annum. About 46% of all new units are developers in Surabaya are local players, such as
scheduled in the mid-low segment. Pakuwon, Intiland, Ciputra, Gunawangsa Group, Puncak
Group and PT Pembangunan Property (PT.PP Property,
Rent Tbk).
In this competitive rental market, we see
no room for rents to increase,
particularly for local operators. We
expect the average rent to increase by
1-2% per annum in 2019-2021.
Price
Asking prices should post modest
growth over the next two years,
increasing by 5-6%, as buyers may still
need some convincing for them to
overcome their inertness.
APARTMENT PROJECTS COMPLETED DURING H1 2018
DEVELOPMENT LOCATION REGION DEVELOPER NAME #UNITS
Puncak Dharmahusada (2 towers) Jl. Ir. Soekarno East Surabaya Puncak Group 2,886
Jl. Panglima Sudirman Central Surabaya Intiland 293
Praxis
Gunawangsa Tidar (2 towers) Jl. Raya Tidar Central Surabaya Gunawangsa Group 1,200

The mixed-use development concept has been quite
Market Segmentation of Existing Projects
popular in Surabaya as land availability becomes scarce.
Upper The mixed-use concept typically combines commercial
4% and residential functions offers a practical and simple
Low style of living. As such, this concept might attract the
Mid-up
21%
22% millennial market, which prioritises living in vibrant areas
that are close to their work and leisure amenities.
Market Segmentation of Future Apartments

Upper Low
4% 7%
Mid-low Mid-up
53% 41%
Mid-low
Overall, the supply of apartment units in Surabaya still
48%
continues to grow. Despite being pressured by low sales
activity, developers still have positive expectations for
the market, which translates into a number of projects
being introduced and launched.
NEWLY INTRODUCED/LAUNCHED APARTMENTS IN H1 2018
EXPECTED
ASKING
APARTMENT LOCATION REGION #UNITS COMPLETION
PRICE/SQ M*
TIME
The Trans Icon Apartment Jl. Frontage Ahmad Yani South Surabaya 1,100 2021 IDR23,000,000
Vertu Apartment Jl. Mayjen Sungkono West Surabaya 184 2021 IDR32,000,000
Westown View Jl. Raya Wiyung West Surabaya 936 2021 IDR17,500,000
Darmo Hill Residence Jl. Pakis Argosari West Surabaya 341 2021 IDR25,000,000
(Rosewood Tower)
Tierra Apartment (Star Tower) Jl. Darmo Harapan West Surabaya 638 2021 IDR16,000,000
*Price excludes VAT
2 Colliers Quarterly | 20 September 2018 | Surabaya | Apartment | Colliers International

which will likely restrain apartment demand as
Demand mortgages become costlier. In the period when demand
The general apartment market situation in Surabaya for apartment is low, the priority of developers lies in
remains unchanged, compared to the previous period. sustaining their properties’ sales momentum, which is
The overall take-up rate declined slightly HOH by 1.4%, increasingly being challenged by the currently tepid
to 81%. Whilst some projects are performing well in market. Therefore, attractive product offerings with
sales, a number of newly launched projects added strong value propositions, such as location, concept and
downward pressure to the overall take-up rate. a clear target market are critical to drive sales.
Prominent developers such as Ciputra, Pakuwon and PT
PP Property still appeal to consumers in Surabaya, for
confidence in their overall reputation. In general,
Asking Price
apartment products from reputable developers are The sluggish sales performance of apartments in
relatively well-absorbed. Surabaya has resulted in a slower increase of apartment
prices in H1 2018. The average price of strata-title
Average Take-up Rate apartments in Surabaya was IDR18.3 million/sq m,
increasing by slightly less than 1% from the previous
H1 H2 H1
HOH YOY period (0.7% HOH and 2.3% YOY).
2017 2017 2018
West The Average Price of Strata-title Apartment in
88.3% 87.8% 86.8% -1.0% -1.4%
Surabaya
Surabaya
East
78.7% 80.3% 79.1% -1.2% 0.4%
Surabaya IDR25,000,000
South -10.8%
81.3% 83.0% 72.2% -9.1%
Surabaya
IDR20,000,000
Central
63.0% 67.6% 72.6% 4.9% 9.6%
Surabaya
IDR15,000,000
H1 H2 H1
HOH YOY
2017 2017 2018 IDR10,000,000
Existing
97.4% 97.9% 94.7% -3.2% -2.7%
projects
IDR5,000,000
Under-
construction 67.4% 68.6% 67.2% -1.5% -0.2%
projects IDR0
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
Total 81.3% 82.3% 80.9% -1.4% -0.4%
Ramadan and the new school year, which fell in May-

June this year, marked the slow sales period particularly
when people generally limit their spending for food, Source: Colliers International Indonesia - Research
clothes and travel.

The highest average asking price of IDR28.6 million/sq
On the other hand, PT. PP Property Tbk recorded bulk m is found at Central Surabaya. However, it experienced
sales worth IDR2.1 trillion for three apartment projects, the lowest price growth of 0.6% from the previous period
which are Grand Shamaya Lagoon (Tower 2), Grand and increased by a slight 2% from the previous year.
Dharmahusada Lagoon (Tower 2) and Grand Sungkono The slow growth in apartment prices in Central Surabaya
Lagoon (Tower 4). The sale was made to a third party, was likely because the current market price had reached
Arvaca Investama, a Middle East-based investor the accepted psychological price range, thus putting a
company, as strategic partner. Similarly, we expect other drag on price increases.
bulk sales transactions that are still in the pipeline, but
To stoke demand we have witnessed smaller units being
have yet to be finalised. All in all, we did not see any
offered with more accommodative payment schemes,
direct impact to the overall take-up rate, as the three
such as very low or even 0% down payments, with a
towers are still in the planning stages.
longer instalment period that could stretch to 100
We expect market sentiment in Surabaya to remain soft months. Furthermore, with the number of unsold units in
in 2018, particularly in the high-interest rate environment, the market remaining high, developers will probably be

more focused on clearing their inventory, thus leading to
a buyers’ market.
Apartment for
Asking Price (in IDR/SQ m) in Different Areas of
Surabaya
Region H1 2017 H2 2017 H1 2018 HOH YOY
Lease
West
Surabaya 20,868,577 21,398,894 21,511,756 0.5% 3.1% Supply
East
Surabaya 16,201,929 16,465,676 16,903,737 2.7% 4.3% As of H1 2018, the supply of apartments for lease has
South remained stable, mainly because there is no new supply
Surabaya 18,025,147 18,025,147 18,742,800 4.0% 4.0% in the market. The total stock of serviced apartments
Central stayed at 691 units, with most of the units located in
Surabaya 29,123,333 29,550,900 29,631,000 0.3% 1.7% West Surabaya (77.3%), followed by Central Surabaya
(22.7%). Furthermore, 144 additional serviced apartment
East and West Surabaya are still the most appealing units from Oakwood Hotel and Residence Surabaya are
locations as reflected in their continuing flow of newly scheduled to be ready for operation in July 2018. The
launched projects, resulting in the increase in average project, as planned, is the first serviced apartment
project located in East Surabaya.
prices. On the other hand, the increase in average prices
in South Surabaya was due to the launch of Trans Icon
Central and West Surabaya have been known as
Surabaya, which introduces a price higher than the
premium locations where multinational companies and
overall market in the area.
expatriates settle. Hence, these areas are still preferred
locations for serviced apartments due to their
For individual investors, on the ground feedback hints
that they are still keen to commit, but are still concerned neighbourhood profile, well-supported infrastructure and
about the potential for capital gains and delivery time. accessibility to the downtown and industrial areas such
Buyers may still need some convincing for them to as Gresik, Tuban and Mojokerto.
overcome their inertness. Marketing strategies are
becoming even more important because without a Occupancy
focused and sustained marketing effort, market activity
Despite having no additional supply, leasing activity was
falls back into a slumber. However, the rising cost of raw
still weak as the occupancy rate of the city’s rental
materials due to the strengthening US dollar against the
apartment market decreased by 6% HOH and 7% YOY
rupiah is harder to pass on to buyers with the current
to 52% by the end of the first half of 2018. Besides the
slow demand. Consequently, developers may suffer from
sluggish economy and lack of national-scale projects
lower margins, as they find it challenging to pass through
that could bring expatriates to Surabaya, demand for
incremental cost pressure via higher prices. Also, as
rental apartments has been pressured by the
land is becoming more expensive over time, we think
competition, both from privately owned strata-title
developers may have to rethink strategies tapping into
apartments for rent and hotel rooms, which offer long-
the premium market segment, as it is not likely to fare
stay accommodation. In recent years, demand for long-
well in the current market condition.
stay occupation, particularly from expatriates, has
increased alongside the presence of industrial estates
located in East Java. Meanwhile, the hotel sector
recorded weak performance, especially at four- to five-
star hotels, over the same period. As a result, many of
the hotel projects adjusted their operating strategy by
converting portions of their units to serviced apartments
to improve returns.

100% Most operating serviced apartment projects choose to
maintain their existing rates but are offering various
rental concessions to entice prospective tenants, both for
80% individual and corporate tenants. Currently, a typical
one-bedroom serviced apartment in Surabaya is offered
60% at around IDR22.2 million/unit/month, whilst two- and
three-bedroom units are offered at around IDR24.6
million/unit/month and IDR29.3 million/unit/month,
40%
respectively.
20% IDR300,000
0% IDR250,000
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
IDR200,000
IDR150,000
Source: Colliers International Indonesia - Research IDR100,000
Overall, in this environment with a combination of

factors, such as slow influx of expatriates and increasing IDR50,000
competition from individually owned strata-title
apartments, landlords of apartments for lease require a IDR0
H1 2018
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
clear marketing strategy to draw in tenants. Also, short-
term tenants that mostly come from individual business
travellers and family holidays during the weekend
continue to help lift overall occupancy rate.
Rental Rate
Overall, the serviced apartment market in Surabaya
experienced a slight rental increase of 0.7% HOH and
9.2% YOY to IDR259,700/sq m/month. As demand is still
slow and the fact that apartments for lease are
competing head-to-head against individually owned
strata-title apartments, rental rates should ebb.

Ferry Salanto Rizal Gobi
Senior Associate Director | Surabaya Manager | Surabaya
+62 21 3048 6730
Ferry.Salanto@colliers.com


Colliers Quarterly
SURABAYA | RETAIL
H1 2018
20 September 2018
Ferry Salanto Senior Associate Director | Supply

Jakarta Cumulative Retail Supply in Surabaya
Local fashion retailers continued to receive more 1,400,000
pressure from the expansion of foreign retailers,
which offer both quality and affordability, 1,200,000
particularly for youngsters and millennials. 1,000,000
Meanwhile, we also expect to see the expansion of
800,000
F&B brands, in line with the developing lifestyle in
Surabaya. 600,000
We expect brick and moartar stores to survive in 400,000

Surabaya despite the growing online market. Even 200,000
so, the current trend nowadays is that successful
0
online merchants still need to have a display store in
2020E
2021E
2010
2011
2012
2013
2014
2015
2016
2017
2018YTD
2018E
2019E
shopping malls.
Forecast at a glance
Demand Source: Colliers International Indonesia - Research
Apart from F&B, the health and beauty
industries will likely become more active Surabaya is anticipating a limited quantity of new retail
retailers looking for retail space in supply through the end of 2018; probably only one new
Surabaya. shopping centre will be ready for operation this year. As
of H1 2018, the lack of new shopping centres in
Supply Surabaya for the last six months has maintained the total
The addition of new retail space in retail supply at 1.1 million sq m.
Surabaya is planned to reach around
140,000 sq m in 2018-2020, Going ahead, we expect at least five shopping centres to
representing 12.8% of current stock. be completed between 2019 and 2021. Four of these are
During that period, supply should grow currently under construction and will likely open in 2019
by 4.3% per annum. or 2020. An increasing number of shopping centres are
part of an integrated development with residential and
Occupancy retail functions complementing each other, i.e. the retail
Our three-year occupancy projection is adding more value to the residences, whilst the
relatively stable at 81%, given that the
residential provides a captive market for the shopping
quantity of supply coming online is
moderate. centres.
Rents
We forecast the average rents of
shopping centres in Surabaya to
increase by 5% from H1 to H2 2018 and
should further climb by 3.6% from early
2019 to the end of 2020.
Annual Retail Supply in Surabaya Distribution of Existing and Future Retail
Spaces in Surabaya
140,000
120,000
Central Surabaya
100,000
80,000
South Surabaya
60,000
40,000 West Surabaya
20,000
0 North Surabaya
2010
2011
2012
2013
2014
2015
2016
2017
2018E
2019E
2020E
2021E
East Surabaya
In Operation Under Construction In Planning
0 200,000 400,000
Cumulative Supply in 2018YTD Supply 2018E - 2020E
NEW SUPPLY PIPELINE
SHOPPING CENTER REGION DEVELOPER NLA (SQ M) MARKETING DEVELOPMENT

SCHEME STATUS
2018
The Central Central Surabaya Gunawangsa 10,000 For Lease Under Construction
2019
One Galaxy Mall East Surabaya Sinar Galaxy Group 40,000 For Lease Under Construction
2020
Ciputra World Surabaya Mall 2 South Surabaya Ciputra Group 40,000 For Lease Under Construction
Lagoon Avenue Dharmahusada East Surabaya PP Properti 12,545 For Lease Under Construction
East Coast Center 2 East Surabaya Pakuwon 36,920 For Lease Under Construction
2021
Grand Sungkono Lagoon Shopping South Surabaya PP Properti 15,000 For Lease In Planning
Mall
More shopping centres are scheduled to be developed in

East and South Surabaya, underpinned by rapid
residential development in the eastern region.
2 Colliers Quarterly | 20 September 2018 | Surabaya | Retail | Colliers International

According to the Central Statistics Bureau (BPS), albeit
Performance moderate, East Java’s Consumer Tendency Index
Demand and Occupancy (Indeks Tendensi Konsumen [ITH]) improved in Q1
2018, compared to that in Q4 2017. The survey revealed
Average Occupancy Rate
the business and economic situation regarding
100% purchasing plans for several product categories such as
food, clothing, education, transportation, health and
90% luxury goods. The BPS projects that the index is
expected to improve in Q2 2018.
80%
In addition, the Association of Indonesian Shopping
Centres (APPBI) East Java continued to aggressively
70%
seek ways to encourage transactions in the malls.
APPBI works closely with Bank Negara Indonesia (BNI)
60%
in applying for EDC (Electronic Data Capture) to improve
a number of merchants in several Surabaya shopping
50%
malls.
2010
2011
2012
2013
2014
2015
2016
2017
2018YTD
2018E
2019E
Above all, the average occupancy rate of shopping

centres in Surabaya was recorded to only edge up by
1.2% HOH to 79.6% this semester. Newly opened malls
that bring fresh tenancy mix and offer attractive sales
programmes have heightened the competition amongst
Average Occupancy Rates in Different Regions shopping malls in an environment where we have seen
of Surabaya some fashion and F&B retailers have closed shop.
100% E-commerce trading has yet to erode the overall

business of local retailers in Surabaya. However, the
90% immediate competition might come from international
80% brands. Major foreign brands such as H&M and Uniqlo
have added more challenge to retailers, competition-
70% wise. Competitive prices, good product packaging and
60% presentation are amongst the considerations for
shoppers to accept the concept presented by most
50% international brands.
2013
2014
2015
2016
2017
2018YTD
In addition to retailers, mall landlords also rearrange and

refresh their tenancy mix in order to keep up with the
competition. Some existing malls, including Grand City
Central Surabaya North Surabaya
and Ciputra World Surabaya, attempt to revivify their
East Surabaya West Surabaya
tenant composition by having more F&B retailers, in
South Surabaya
order to raise the number of visitors.
Over the remainder of 2018 to the end of 2019, we
Bomb attacks that took place in Surabaya in mid-May estimate average occupancy to stay around 81-82%.
had a short-term impact on mall visitation, especially in This is mainly due to a positive consumer index and
restaurants. Several stores closed temporarily, reducing sound economic growth projections, as well as by a
foot traffic for several days. According to the Association relatively regulated quantity of future supply over the
of Indonesian Café and Restaurant Entrepreneurs coming years.
(APKRINDO), sales volume or the number of visitors in
East Java was only around 10-20% than normal. In the
same month, events such as the Surabaya Shopping
Festival 2018 effectively regained shoppers’ confidence
to visit the malls.

Rents Service Charges
Average Rental Rates Average Service Charges
IDR600,000 IDR160,000
IDR500,000 IDR140,000
IDR120,000
IDR400,000
IDR100,000
IDR300,000 IDR80,000
IDR200,000 IDR60,000
IDR40,000
IDR100,000
IDR20,000
IDR0 IDR0
2018YTD
2018E
2010
2011
2012
2013
2014
2015
2016
2017
2018YTD
2018E
2010
2011
2012
2013
2014
2015
2016
2017
Compared to the previous semester, average rent was In the last six months, most of the shopping centres did
stagnant at IDR480,542/sq m/month, as landlords not change their service charges; only a few adjusted the
generally focus on maintaining or even increasing their tariff higher by 1-5%, bringing the average cost to
occupancy level. Even so, some malls with retail location IDR124,614/sq m/month.
in demand are confident in introducing a 15% rental
Range of Service Charges in Different Regions
increase for tenants whose lease contracts are expiring.
Because of this, we expect to see the average rent IDR160,000
adjusting ub by 5% YOY at the end of 2018.
IDR120,000
Ciputra World Surabaya, Grand City, Galaxy Mall,
Tunjungan Plaza and Pakuwon Mall are still the most
IDR80,000
expensive retail locations in Surabaya, as they are
categorised as upper-class shopping centres with asking
IDR40,000
rents starting from IDR500,000 up to IDR850,000/sq
m/month.
IDR0
North Surabaya
Central Surabaya
West Surabaya
East Surabaya
South Surabaya
Average Rental Rates in Different Regions
IDR1,000,000
IDR800,000
IDR600,000
IDR400,000
IDR200,000 Source: Colliers International Indonesia - Research
IDR0
North Surabaya
Central Surabaya
West Surabaya
South Surabaya
East Surabaya

.

+62 21 3043 6888


Colliers Quarterly
SURABAYA | HOTEL
H1 2018
20 September 2018
Supply
Hotel In H1 2018, there were three new hotels that began
operation, comprising of 426 rooms in 3-star hotels (with
Ferry Salanto Senior Associate Director | two hotel projects providing 177 rooms) and one 4-star
Jakarta hotel project with 249 rooms.
The eruption of Mount Agung, in Bali, led to a spill- Cumulative Hotel Rooms
over of hotel guests to Surabaya in early 2018. Some
hoteliers revealed that several MICE activities that 8,000
were previously planned to be held in Bali were 7,000
partially shifted to Surabaya. Meanwhile, the month 6,000
of Ramadan, followed by Eid al-Fitr, making a long
5,000
holiday from mid-May to mid-June, changed the
timing for business travel mainly facilitated by the 4,000
government. 3,000
2,000
Forecast at a glance 1,000
Demand 0
H1 2018
2010
2011
2012
2013
2014
2015
2016
2017
2020E
2018E
2019E
The hotel industry will continue to be
propelled by MICE activities, ultimately
from government and corporate sources.
3-Star 4-Star 5-Star
Supply
Through 2020 in Surabaya, 2,904 Source: Colliers International Indonesia - Research
additional rooms will come online,
consisting of 1,133 3-star hotel rooms, Cumulative Hotel Projects
1,167 4-star hotel rooms and 604 5-star
hotel rooms. 60
Occupancy 50
The year-to-date occupancy (up to May
40
2018) was recorded at 55.8%, which is a
4% increase compared with the same 30
period last year. The competition
amongst hotels will likely remain intense 20
in Surabaya. Thus, we predict
occupancy over the next two years to 10
slightly drop to around 55.5%.
0
H1 2018
2010
2011
2012
2013
2014
2015
2016
2017
2018E
2019E
2020E
Room Rate
The monthly ADR of hotels in Surabaya
has been stable over the last three
years. We expect the ADR to hover
around USD46 over the next two years. 3-Star 4-Star 5-Star

NEW HOTEL PROJECTS DURING H1 2018
HOTEL NAME STARRED STR CHAIN LOCATION REGION NO. OF OPENING TIME
RATING SCALE RATE ROOMS
Great Hotel 3-star Undefined Jl. Diponegoro South Surabaya 90 March 2018
Batiqa Hotel 3-star Undefined Jl. Darmokali South Surabaya 87 May 2018
Novotel Samator 4-star Upscale Jl. Kedung Baruk East Surabaya 249 February 2018
Surabaya Timur Hotel
NEW PIPELINE

RATING SCALE RATE ROOMS STATUS COMPLETION
TIME
One Galaxy Hotel 3-star Undefined MERR II C East Surabaya 110 Under 2018
Construction
Continent My Tower – 3-star Undefined Rungkut East Surabaya 134 Under 2018
Rungkut Construction
Palm Park Hotel 3-star Undefined Jl. Kapas Central 101 Under 2018
Surabaya Krampung Surabaya Construction
Life Hotel 3-star Undefined Jl. Sumatera East Surabaya 100 Under 2019
Construction
Yello Rungkut 3-star Undefined Rungkut East Surabaya 168 In Planning 2020
Arum Hotel 3-star Undefined Jl. Gunung East Surabaya 120 In Planning 2020
Anyar
Mercure @Praxis 4-star Upscale Embong Central 288 Under 2018

Sonokembang Surabaya Construction
Grand Dafam Kayun 4-star Midscale Kayon Central 169 Under 2018
Surabaya Construction
Swiss-Belhotel Darmo 4-star Upscale Darmo Central 226 Under 2018

Surabaya Surabaya Construction
Harris HR Muhammad 4-star Upper Midscale Jl. HR West Surabaya 168 Under 2019
Muhammad Construction
Four Points by Sheraton 4-star Upscale Jl. Puncak West Surabaya 316 Under 2019
Surabaya, Pakuwon Indah Lontar Construction
Indah
The Westin Surabaya 5-star Upper Upscale Jl. Puncak West Surabaya 204 In Planning 2019
Indah Lontar
AKR Signature Gallery - 5-star Upper Upscale Jl. Gubeng East Surabaya 200 Under 2020
Hilton Hotel Construction
The Trans Luxury Hotel 5-star Undefined Jl. Ahmad Yani South 200 In Planning 2020
Surabaya
Supply growth from 2018 onward has declined, for hotel development, as there is already oversupply in
compared with that in 2015-2017. This is in part due to Surabaya.
the downturn in the overall hotel performance in
Surabaya, which resulted in the limited financial support The projected hotel supply in 2018 comes from delayed
projects that were planned to be operational in 2016-
2 Colliers Quarterly | 20 September 2018 | SURABAYA | HOTEL | Colliers International

2017. These hotel projects were postponed due to gather, such as in malls, hotels, airports and office
various issues, including a delay in construction, buildings.
financial or permitting issues.
The downswing in hotel performance in May is more
Most hotel projects in Surabaya are located in Central likely due to the slow month of Ramadan, highlighted by
Surabaya, despite the fact that this area already has so lower business activity, particularly from the government.
many existing hotels. This is because Surabaya remains After the long Eid al-Fitr holiday, we expect to see
the central business area, where government offices and market performance to rebound, and this has been the
most commercial office buildings are located. The city trend over the last couple years.
centre area is also considered a melting pot, especially
for guests coming in from eastern Indonesia. Average Daily Rate (ADR)
Meanwhile, the southern and western parts of Surabaya USD70

cater to hotel guests mainly coming from industrial
USD60
locations outside Surabaya, such as Sidoarjo and
Gresik, as they are accessible from the toll road. USD50
USD40
Performance
USD30
Average Occupancy Rate (AOR)
USD20
80%
70% USD10
60% USD0 Feb
Apr
Aug
Oct
Nov
Dec
Jan
Mar
Jun
May
Jul
Sept
50%
40% 2014 2015 2016 2017 2018
30%
20% Source: STR
10% The ADR figures for the first half this year are likely to be
0% similar to the numbers recorded in 2016 and 2017. The
market remains price-sensitive, so that hoteliers would
Nov
Oct
Dec
Mar
Apr
May
Jul
Jan
Jun
Aug
Feb
Sept
rather keep their rates steady, prioritising occupancy.

Hotels need to maintain a competitive rate in order to
2014 2015 2016 2017 2018
continue attracting guests, especially with private
corporations and the government as the major demand
Source: STR
in Surabaya.
Occupancy in Surabaya was good during the first quarter
We have seen an increasing number of people using
of 2018, benefiting from the spill-over of guests from
online travel agents, (OTA) as they offer a simpler
Bali, shifting their location due to the eruption of Mount
processes, more practical use, competitive pricing and
Agung. Several MICE events previously planned to take
better promotions. Even now, the government and
place in Bali were relocated to Surabaya, as it is the
private corporations are booking through OTA.
closest and most comparable destination after Bali.
Competition in the accommodation business is not only
On the other hand, Surabaya, which has been known as
amongst hotel operators but also from apartment units
a peaceful area, was disturbed by terrorist bombings in
offered for lease, a comparison of which is available
early May. This pushed several countries such as the
below.
UK, the US, Australia and France to issue travel
warnings for Surabaya. Thankfully, security measures
were able to control the situation and the condition on
the ground returned to normal after several days. The
tense atmosphere after the bombing was reflected in the
increasing security measures in spots where people

GENERAL COMPARISON OF 3-STAR HOTEL ROOMS VERSUS APARTMENT UNITS IN SURABAYA
HOTEL APARTMENT
Room Size 20 - 30sqm (depend the room type) Approximately 20 to 60 sq m
Room Type 1 BR with different size depending on hotel rate 1BR, 2BR or 3BR ranging from 21 to 57 sq m
Room Rate (IDR)/day 300,000 - 400,000 (most affordable room type,

No standard price
depending upon the season)
Room Capacity Maximum two Not regulated
Kitchen No Yes
Breakfast Yes No (yes for serviced apartment)

Source: booking.com
COMPARISON OF 3-STAR HOTELS AND APARTMENTS IN EAST SURABAYA
Swiss-Belinn Manyar Educity Apartment

Room size (sq m) 24 47
Room type 1BR 3BR
Room capacity 2 7
Room rate (IDR/day) 655,000 650,000
Facilities
Kitchen No Yes
Breakfast Yes No
Swimming Pool &
Yes Yes
Fitness Centre
Remarks - Located in a superblock area (Pakuwon City)
Source: booking.com

COMPARISON OF 3-STAR HOTELS AND APARTMENTS IN WEST SURABAYA
Supermall Mansion Supermall Mansion

Whiz Prime Darmo Harapan
Orchard Tower Tanglin Tower
Room size (sq m) 24 25 29
Room type 1BR 1BR 1BR (with living room)
Room capacity 2 3 3
Room rate
(IDR/day)
350,000 380,000 449,000
Facilities
Kitchen No Yes Yes
Breakfast Yes No No
Swimming Pool &
Fitness Centre
Yes Yes Yes
Located above Supermall Located above Supermall

Remarks -
PTC Surabaya PTC Surabaya
Source: booking.com

Senior Associate Director | Research Senior Research Executive | Research
+62 21 3043 6888


Colliers Market Report Q2 2018

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Colliers Market Report Q2 2018

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Colliers Quarterly

JAKARTA PROPERTY MARKET REPORT

4,000,000 CBD. This is particularly true for big, overseas

Cumulative Office Supply Based on Area

Annual supply Additional Supply YTD Sudirman

Under Construction In Planning Rasuna Said

With the capital region of Jakarta’s government allowing

2 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

OFFICE BUILDING LOCATION SGA (SQ M) MARKETING SCHEME STATUS DEVELOPMENT

Revenue Tower Sudirman 40,000 For Lease Under Construction

Sequis Tower Sudirman 78,000 For Lease Under Construction

Sudirman 7.8 Tower 1 Sudirman 52,000 For Sale Under Construction

T Tower Gatot Subroto 24,000 For Sale Under Construction

Millenium Centennial Tower Sudirman 93,588 For Lease Under Construction

Gayanti City Gatot Subroto 25,000 For Lease Under Construction

Thamrin Nine MH Thamrin 97,500 For Lease Under Construction

Redevelopment Graha Binakarsa HR Rasuna Said 20,000 For Lease In Planning

Chitaland Satrio 90,000 For Lease Under Construction

Daswin Tower HR Rasuna Said 100,000 For Lease Under Construction

Source: Colliers International Indonesia - Research

3 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

90% Sudirman 85.3% 80.0% 82.1% 2.0% -3.3%

60% Satrio 68.1% 76.0% 76.0% 0.0% 7.9%

Source: Colliers International Indonesia - Research

Source: Colliers International Indonesia - Research

The large supply scheduled adds more pressure on 2017

4 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

Average Asking Rents (in IDR/sq m /month) by IDR 120,000

Q1 Q2 CHANGE IDR 60,000

Developers should be more accommodating in

5 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

IDR150,000 Office spaces in the CBD cost IDR40 million to IDR80

Source: Colliers International Indonesia - Research

The average service charges were still relatively stable 2018E

Source: Colliers International Indonesia - Research

Thus far, strata-title office spaces for sale composed

6 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

In TB Simatupang, after 18 months without any new

Annual Office Supply

100,000 South Jakarta*

Annual supply Additional Supply YTD

Source: Colliers International Indonesia - Research

Ciputra International Tower 3 and Tamansari Parama Cumulative Supply as of Q2 2018

South and Central Jakarta will likely still be the most

7 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

OFFICE BUILDING LOCATION AREA SGA (SQ M) MARKETING STATUS DEVELOPMENT

Zuria TB Simatupang South Jakarta 6,584 For Lease Under Construction

Source: Colliers International Indonesia - Research

8 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

Outside the CBD* TB Simatupang

Average Occupancy Rates by Building Grade

Source: Colliers International Indonesia - Research 2018E

Average Occupancy Rates by Region

Source: Colliers International Indonesia - Research

9 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

Source: Colliers International Indonesia - Research

Average Asking Rents by Building Grade

Source: Colliers International Indonesia - Research

10 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International

Source: Colliers International Indonesia - Research

Newly operating office buildings in 2018 led the increase

Until the end of Q2 2018, the take-up rate of office

As of Q2 2018, the average selling price of strata-title

11 Colliers Quarterly | 20 September 2018 | Jakarta | Office | Colliers International