What you need to know about Jakarta’s upcoming office property supply
Supply was stagnant at 6.96 million sq m in Q4 2021.
Jakarta did not welcome any new office property supply at the end of 2021 with several projects still in the final stages of construction.
In the CBD, with no new additional supply for the last six months, Colliers says the cumulative supply remained at 6.96 million sq m in Q4 2021. Some projects are undergoing changes in their schedules for completion to the following year. Based on the progress of construction, seven buildings are likely to be completed to add about 350,000 sq m of new supply by 2022.
Here’s more from Colliers:
Due to the pandemic, developers are still adopting a “wait and see” position, and no new projects are likely to be introduced until 2022. Further additional office space will be limited in 2024-2025.
A similar situation is also being seen outside the CBD. Without new office buildings being completed, the cumulative supply stagnated at 3.62 million sq m in Q4 2021, only growing 1.4% compared to 2020. Some landlords also changed the scheduled completion of projects outside the CBD to the following years.
As a result, it is estimated that around 200,000 sq m of new supply will be added in 2022. Additional office supply outside the CBD will be relatively limited after 2022. Some potential developments are likely, however, but currently there has been no official announcement from developers about commencing construction.
Reducing space occupied has been the main theme during 2021. Many companies generally have decided to reduce their occupied space by about 10%–30% when renewing or restructuring their leases. Some companies have decided not to extend their leases.
Consequently, in addition to newly opened offices, such reduction of office space by existing tenants has increased the availability of space and continued to put pressure on average occupancy rates. In the CBD, such rate was recorded at 78.4% in Q4 2021, a drop of 5.2% compared to 2019.
Nevertheless, demand for office spaces began to strengthen in the last six months of 2021 and leasing activities increased. Companies in essential sectors such as mining, manufacturing, trading, property, and oil and gas are currently actively looking for new office spaces and a number of transactions are expected to close in 2022. Unfortunately, the CBD will face a very large additional supply and the average occupancy rate may still be on a downward trend until 2022.
Outside the CBD, the average occupancy rate was recorded at 79.2% in Q4 2021, a decline of about 3% compared to pre-pandemic in 2019. However, the large additional supply will again decrease the average occupancy rate in 2022.