Jakarta’s office supply to be halved by end-2021

Total supply will grow 1.6% this year, but it will be 50% lower than last year.

With restrictions in place, construction projects have been put on hold causing office supply flow in Jakarta to be disrupted. Colliers estimates the total supply in 2021 will grow by 1.6% YOY, 50% lower than in 2020. 

“However, the amount of total office space will grow substantially as some premium class office buildings are expected to be completed in 2022- 2023.”

Here’s more from Colliers:

Outside the CBD, supply also stagnated and remained at 3.63 million sq m this quarter. Construction activity slowed and the completion of some building will be delayed. However, we still anticipate an additional circa 100,000 sq m outside the CBD area in the last quarter 2021, reflecting 4.4% YOY growth. 

Other than buildings which are currently under construction, several new projects are to be launched soon. We anticipate more supply from 2024 onwards, with the hope of positive economic projections.

Occupancy remains on a downward trend. In the CBD, occupancy continued its downturn which has been evident the last seven quarters. The average occupancy rate was recorded at 78.7% in Q3, or a 0.7% decline per quarter since Q1 2020. Occupancy levels are expected to be relatively stable in Q4 2021 but still reflect a drop of 2.6% YOY. Although there is an indication of tenant commitments to the considerable amount of new office supply in 2022, new stock and absorption rates will not balance, meaning that occupancy will likely further decline in 2022. 

Areas outside the CBD also witnessed an occupancy drop to 77.8% in Q3; 0.6% down QOQ. As is the case in the CBD, occupancy has been on a continued decline since mid-2020. In fact, the large upcoming supply is likely to put occupancy under further pressure over the next three months. We forecast an occupancy rate around 76% in Q4 2021, dropping approximately 4% YOY, as we anticipate additional new space of 106,246 sq m will come to the market in that period.