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Property Times

Jakarta : Office market to cool further - Q1 2014

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Indonesia’s economic growth for 2013 was registered at 5.8%, falling in line with, and at the upper end of the previous estimate of 5.5%-5.9% released by Bank Indonesia (BI). Inflationary pressures eased, and BI has decided to keep the benchmark interest rate at 7.5% as part of the government’s strategy to lower the current account deficit to a healthier level.

The office market cooled further, with average office rents growing at a slower pace of 8.0% in Q1 to approximately IDR283,200 per sq m per month, down from the 11% growth in the previous quarter (Figure 1). Political uncertainties due to the parliamentary and presidential elections in April and July respectively were major factors causing the slowdown, as companies held back expansion plans until after the new government is in place.

Despite the more moderate economic growth expected this year, retailers are using this opportunity to gear up for expansion to increase their market share by opening more outlets. Demand for retail space increased slightly in Q1, with the occupancy rate rising marginally by 0.8 percentage point quarter-on-quarter (q-o-q) to 92.8%.

The average asking price of uncompleted condominiums in the Jakarta Central Business District (CBD) rose to IDR41.7m per sq m in Q1, with larger increases in the average asking prices within the upper, high-end and super high-end segments.

Source : DTZ (Groupe UGL)