Most of the property products in Greater Jakarta area experienced lower demand in the third quarter (Q3) of 2016, only industrial land which enjoyed a significant increase. The tax amnesty program launched by the government on 1 July 2016 is expected to improve the demand in the next quarter.
According to Cushman & Wakefield Indonesia, a commercial real estate services company based in USA, the biggest drop of demand was experienced by office space by 54%, while the others slightly decreased. The Purpose-Built Rental Apartment experienced a 4.8% occupancy decrease to 74.4%, compared to the last quarter.
However the Serviced Apartment enjoyed occasional increase of demand from Idul Fitri and school holiday season. The demand from short-stay tenants, especially from Middle East and Europe, who came for holiday in this quarter, gave occupancy increment of 1.3% from that in the previous quarter to 74.2%.
The average occupancy rate of Jakarta retail market dropped 0.3% from last quarter
reaching 84.0%. In the meantime the average occupancy rates of hotel market continues
to decline due to decreasing room absorption and high level of supply, the YTD occupancy level of 3-star (economy), 4-star (Mid and upscale) and 5-star (Upperupscale and luxury) segment hotels decreased to 54.7%, 57.9% and 51.1% respectively as of end H1 2016.
The subsectors experienced a slightly increase in demand were condominium by 0.1% and residential by 2.0%, while the industrial increased significantly by 282% from 13.4 ha in Q2 to 51.3 ha in Q3. On the supply side, the office space welcomed an additional supply of THE Tower (62,000 sqm) on Jl. Jendral Gatot Subroto in Q3 2016, bringing the total cumulative supply to 5.57 million sq.m. About 40,000 sqm of office supply is projected to enter the market in the fourth quarter of 2016. Rental rates in Rupiah decreased in Q3 2016 and are expected to remain under pressure in Q4.
The total cumulative supply of retail space in Jakarta increased to 4,163,735 sq.m., with 73.0% (3,039,077 sq.m.) and 27.0% (1.124.700 sq.m.) of leased and strata title retail centers respectively with the opening of two new retail centers, namely PIK Avenue and Neo Soho.
In the coming quarter of 2016, five new retail centers are expected to enter the market, and almost all of them are leased retail centers. If these five retail centers are completed within the expected time, they will bring the cumulative retail space in Jakarta to 4,283,535 sq.m. by the end of 2016.
The total cumulative supply of Greater Jakarta condominiums stood at 188,265 units as of September 2016, increased by 4.0% QoQ. At the same period, 11 new projects were launched to the market. These projects brought the total proposed condominium to about 203,765 units. Lower- middle segment condominiums dominated these newly launched projects of 44.7%, followed by middle (35.6%), upper-middle (12.3%), and upper segment projects (7.4%), respectively. Based on location, these projects were dominated by Tangerang (43.6 %) and East Jakarta (18.5%).
Most developers of residential launched their new clusters in H1 2016, increasing total net supply to 5,734 units. The new supply was dominated by middle to upper segment with the largest share occurred in Tangerang, of about 79% of the total new supply. For hotel, with 2,000 new hotel rooms completed, the total supply of 3 to 5-star hotel rooms in Jakarta will be about 35,200 rooms by end of 2016.
The tax amnesty program is expected to increase the demand, especially on condominium and apartment. The completion of the new Terminal 3 Ultimate at Soekarno- Hatta International Airport in Tangerang, Banten, is predicted to bring in more tourists to raise the occupancy rate of the hotel. Meanwhile the developers of landed residential started to introduce lower down payment to 20% with longer down payment installment period for mortgage payment to boost the demand.