,Indonesia

How ready is Jakarta's office market for the rising demand in green spaces?

Less than 20% of the city's office supply obtained green certifications.

Sustainability has been one of the key buzz words in real estate in recent years. In a recent report, JLL revealed that sustainability is the third most important consideration for occupiers after location and rent when leasing a property in Asia Pacific. In fact, 80% of occupiers said they would proactively prioritise location searches for buildings that help reduce their carbon emissions in the future.

The demand for sustainable spaces is therefore expected to surge in the near future, but is Jakarta's office market ready to capture this demand?

Here's what JLL has to say:

Indonesia has issued regulations for green buildings, some of which are set up by local governments. Jakarta is the first city in the country to issue specific regulations for green buildings in 2012. These regulations apply to new and existing buildings of certain types and sizes. However, the supply of green office buildings is still limited in Jakarta.

In 1H21, we recorded the Jakarta commercial office supply at around 360 buildings, totalling 9.8 million sqm – 6.8 million sqm in the CBD area and 3 million sqm in non-CBD. Of the total area under office supply, less than 20% has obtained green certifications and is mainly based in the CBD area. Half of the green office supply for CBD is located in the Sudirman area, followed by the Kuningan and Gatot Subroto areas.

The measurement of green office buildings in Jakarta is most commonly defined by LEED institution from the United States, the BCA Green Mark Scheme from Singapore, and the Greenship standard established under the authority of the national certification body of the Green Building Council Indonesia (GBCI) – a member of World Green Building Council.

Despite Grade B buildings accounting for approximately 50% of Jakarta office supply, most green buildings are Grade A. Grade A buildings constitute around 85% of the total green office building supply. In fact, 43% of Grade A office supply in Jakarta comprises green buildings, as compared withonly 5% for Grade B & C buildings.

Green office buildings in Jakarta have been completed predominantly from 2016 onwards when more new completions with green certifications entered the market. As Jakarta saw a vast supply, almost 60% of the total completions from 2016 obtained green certifications. Hence, the supply has increased significantly by nearly three times as recorded in 1H21 compared to pre-2016.

What’s next?

We started to see occupiers, especially multinational companies, setting sustainability as one of the main requirements when looking for office spaces in Jakarta. In the future, as demand is expected to improve post-pandemic, we anticipate seeing more such enquiries while flight-to-quality remains the main theme.

Join Realestate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

New home sales dropped 31.4% during the month.
This is due to elevated supply levels and uncertain demand from the Mainland.
The growth will be more prominent in Japan, Australia, and Hong Kong.
There were 17 major deals worth over US$12.8m each.
Private equity investors’ interest in offices will drive investment demand.
Savills expects rents of outlying business parks to bottom out soon.
Data centres accounted for 34% of all investments during the quarter.
Luxury brands are still wary of going to the high streets.
Q3 Grade A office rents increased 0.7% for the first time in five quarters.
Average multifamily asking rents dropped 3.6% over the year. 
Rents declined in all major submarkets while Kowloon rents proved more resilient.
Sales were propelled by the residential sector.
22% of all residential launches in H1 2021 were from the affordable segment.
But Colliers says transactions may pick up in Q4.