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COLLIERS INTERNATIONAL

QUARTERLY RESEARCH REPORT


INDONESIA
JAKARTA 3Q 2006

Jakarta Property Market Overview


Market Conditions as at 3Q 2006

OFFICE SECTOR Ratu Prabu 2 and Beltway Office Park (Tower A) are
ready for launching as well but are scheduled to
launch the next quarter. Thus, with the addition of
EXECUTIVE SUMMARY
the new office buildings in 4Q06, office stock in the
THE — Supply of office space in Jakarta remained the CBD will rise about 121,554 sq m, while outside the
CBD the two buildings mentioned will contribute
same QoQ. Office buildings which are sched-
KNOWLEDGE

uled to finish this year are expected to be com- another 47,711 sq m to the total office stock.
pleted in 4Q06.
In addition to the total confirmed new developments
— There were no significant changes in occupancy which are currently under construction as depicted
rates QoQ, particularly in the CBD. In general, in the table below, we also hear from several devel-
offices located in South Jakarta experienced a opers that some planned office buildings are pro-
better take-up rates compared to other regions. jected to invigorate the office market over the next
three years. Our findings reveal that 3 office build-
— Meanwhile, strata office transactions were quite ings are planned for the Sudirman area, 2 buildings
slow. Significant take-up occurred at the Mega are scheduled for Gatot Subroto, 2 for Mega
Glodok Kemayoran (MGK) office which is lo- Kuningan,3 for Rasuna Said. These future develop-
cated outside the CBD. However, most other ments are still in the design stage and there are no
transactions were internal acquisitions. With it’s activities in the field. Meanwhile, outside the CBD,
significant take-up, MGK introduced a new price the TB Simatupang area is projected to have several
from the previous Rp10.10 million/sq m to office buildings added.
Rp10.25 million/sq m.
LIST OF UNDER-CONSTRUCTION
— Some buildings in the CBD adjusted their rental OFFICE BUILDINGS IN THE CBD
rates upward. They are mainly buildings with low
vacancies and buildings that have not increased Building
Marketing
Location Schedule
SGA
Scheme (sq m)
their rental rates for several quarters.
Menara Kuningan Rasuna Said Strata 4Q06 33,077
Indofood Tower Sudirman Lease 4Q06 54,606
— Changes in QoQ rental rates were also caused Plaza Marein Sudirman Strata 4Q06 28,244
by a change in rental composition in some build- Sahid Boutique Sudirman Strata 4Q06 5,627
Menara Karya Rasuna Said Lease & 1Q07 32,697
ings which was previously separated between Strata
base rent and service charge. This quarter gross Satrio Tower Satrio Lease 1Q07 60,000
rent was introduced instead as one package. BCA Tower Thamrin Lease 3Q07 82,000
Menara Palma Rasuna Said Lease 3Q07 35,000
Sentral Senayan 2 Senayan Lease 3Q07 59,205
Menara Prima Mega Kuningan Lease & 4Q07 35,000
SUPPLY Strata
The East Mega Kuningan Strata 2007 44,026
Senayan City Forum Senayan Lease 2007 20,436
Most buildings gearing up for their final stage set Pacific Place SCBD, Sudirman Lease 2007 19,000
their launch during the fourth quarter of this year, Graha Energi Sudirman Lease 2Q08 65,686
thus leaving this quarter with no new stock. Menara Bakrie Tower Rasuna Said Strata 4Q08 60,646
Source: Colliers International Indonesia, Research Department
Kuningan, Plaza Marein, and Indofood Tower are build-
ings in the CBD which seem to be ready to launch
but are scheduled for the 4Q06. Outside the CBD,
COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

LIST OF UNDER-CONSTRUCTION Overall, since relocation has dominated most of the transac-
OFFICE BUILDINGS OUTSIDE CBD tions, with only a small portion of tenants expanding, and
newer buildings have registered better absorption rates, the
Marketing SGA
Building Location
Scheme
Schedule
(sq m)
occupancy rate in the CBD only moved modestly upward to
Beltway Office Park - Building Ampera / Simatupang Lease 4Q06 6,634 90.57% from 89.75% last quarter. Despite the fact that four
A major buildings are expected to invigorate the market in 4Q06,
Ratu Prabu 2 TB Simatupang Lease 4Q06 35,900
we anticipate no major changes in occupancy rates by the
Treva Kebayoran Baru Lease 4Q06 5177
One Woltermonginsidi Kebayoran Baru Lease 1Q07 1,456 end of the year as the four new buildings have secured good
CBD Pluit Pluit Strata 2Q07 14,931 absorption rates.
Wisma Pondok Indah 2 Pondok Indah Lease 4Q07 25,846
Talavera TB Simatupang Lease 4Q07 26275
Mega Glodok Kemayoran Kemayoran Strata 2007 7,320
GP Tower (The Belezza) Permata Hijau Strata 2007 19,361
CUMULATIVE SUPPLY, DEMAND
Menara 165 TB Simatupang Lease 2007 29,383 AND OCCUPANCY RATE IN CBD
Recapital Kebayoran Baru Lease 1Q08 9,627
Source: Colliers International Indonesia, Research Department 5,000,000 95%

4,000,000
85%
ANNUAL SUPPLY OFFICE
3,000,000
IN THE CBD 75%
400,000 2,000,000
350,000 65%
1,000,000
300,000
250,000 0 55%
200,000 2000 2001 2002 2003 2004 2005 2006 P 2007 P 2008P
150,000 Supply Demand OR
100,000 Source: Colliers International Indonesia, Research Department
50,000

m2 0
-50,000 1998 2000 2002 2004 2006 2008P
FUTURE DEMAND
P
Lease Sale
Source: Colliers International Indonesia, Research Department Four coming office buildings in the CBD have declared sig-
nificant absorption before their launch—Menara Kuningan,
Plaza Marein, Indofood Tower and low-rise office compound
DEMAND Sahid Boutique Office. The buildings have secured major ten-
ants like oil; food; insurance, and finance companies and a
Leasing transactions in the quarter were similar to transac- group of developers. The four developments have registered
tions in the previous quarter. Oil, insurance, banking, and around 86% absorption before their official opening.
telecommunications companies were tenants with large space
transactions above 2,000 sq m. Again, most all of those trans- Outside the CBD, the absorption pattern for upcoming office
actions were relocations to other premises. Some tenants buildings was similar to the CBD. Despite being dominated
looked for better quality premises and wanted to relocate to by internal acquisitions made by their respective holding com-
the CBD, others relocated within the CBD but are searching panies, strata title office buildings like GP Tower on Belezza
for newer buildings, while other non-service industries relo- and Mega Glodok Kemayoran have also acquired other buy-
cated outside the CBD. Smaller transactions below 1,000 sq ers like finance companies, law firms, and textile and manu-
m were identified in the advertising, IT and shipping indus- facturing companies.
tries.

2 JAKARTA QUARTERLY RESEARCH REPORT


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

FUTURE OFFICE BUILDINGS IN THE CBD In contrast, the average rental rate for buildings with a US$
WITH THEIR CONFIRMED TENANTS rate edged down slightly by 1%. Although rent for grade B
buildings jumped by 5%, grade A buildings experienced a
SGA
Building Location
(sq m)
Major Committed Tenants decrease. Because the CBD market has more grade A build-
Menara Kuningan Rasuna Said 33,077 Petrochina ings than grade B buildings, the average base rental in US$ for
Plaza Marein Sudirman 28,244 Marein, Developer, Investment, Securities
Sahid Boutique Office Sudirman 5,627 Lasalle College
all classes of buildings was US$12.22/sq m/month, a slight
Indofood Tower Sudirman 54,606 Indofood drop from US$12.31/sq m/month. This quarter was highlighted
BCA Tower Thamrin 82,000 BCA, Platinum Fitness First
Senayan City Forum Senayan 20,436 SCTV
by the adjustment of rental rates in US$ in some thirteen
Bakrie Tower Rasuna Said 53,652 Bakrie Group grade A buildings. Seven buildings edged down the rental rate
Graha Energi Sudirman 65,686 Medco Energi while the remaining edged up the rental rate.
Source: Colliers International Indonesia, Research Department

FUTURE OFFICE BUILDINGS OUTSIDE CBD Outside the CBD, base rent increased by 2.7% during the
WITH THEIR CONFIRMED TENANTS quarter bringing this quarters figure to Rp54,425/sq m/month.
The climb was due to an average rental increase in some
Building Location
SGA
Major Committed Tenants
regions like South, North and West Jakarta.
(sq m)
GP Tower on Bellezza Permata Hijau 19,361 Textile, Law Firm, Finance
Beltway Office Park A TB Simatupang 6,634 Marathon Oil, DuPont
Ratu Prabu 2 TB Simatupang 35,900 ConocoPhillips, Thiess AVERAGE GROSS RENT (ALL
Wisma Pondok Indah 2 Pondok Indah
CBD Pluit Pluit
25,845 Danamon, Ericsson
29,862 Honey Lady
CLASS), CBD OFFICES
Recapital Adityawarman 9,626 Recapital Rp130,000 $20
Source: Colliers International Indonesia, Research Department
$20
Rp120,000 $19
$19
TREND OF RENTAL VS Rp110,000 $18
OCCUPANCY, CBD OFFICE $18
Rp130,000 92% Rp100,000 $17
$17
Rp125,000 90%
Rp90,000 $16
Rp120,000 88%
$16
86%
Rp115,000 Rp80,000 $15
84% 1Q03 2Q033Q03 4Q03 1Q042Q04 3Q044Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06
Rp110,000
82%
Rp105,000 Rupiah US$
80%
Source: Colliers International Indonesia, Research Department
Rp100,000 78%
Rp95,000 76%
Rp90,000
1Q032Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q041Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06
74% AVERAGE GROSS RENT (PREMIUM &
GRADE A), CBD OFFICES
Occupancy Rate Gross Rental Rate
Rp150,000 $20
Source: Colliers International Indonesia, Research Department

Rp140,000 $19

BASE RENTAL RATES Rp130,000


$18

$17

The average rental rate for all classes of buildings climbed Rp120,000
$16
during the quarter by 1.6% to Rp78,683 from Rp77,451/sq Rp110,000 $15
m/month. The overall increase was mostly contributed to by
grade A buildings which increased by 5%, although the aver- Rp100,000 $14
age rental rate for grade B buildings declined by 1%. 1Q032Q03 3Q03 4Q03 1Q042Q04 3Q04 4Q04 1Q05 2Q053Q05 4Q051Q06 2Q063Q06

Rupiah US$
Source: Colliers International Indonesia, Research Department

JAKARTA QUARTERLY RESEARCH REPORT 3


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

AVERAGE GROSS RENT (GRADE B), APARTMENT SECTOR


CBD OFFICES
Rp120,000 $16 STRATA-TITLED APARTMENT MARKET

EXECUTIVE SUMMARY
$15
Rp110,000

$14
Rp100,000
— Another 2,164 strata title units entered the market dur-
$13
Rp90,000
ing the quarter bringing the cumulative supply to 41,032
$12 units.
Rp80,000
$11
— With bulky supply and slow absorption, the take-up rate
Rp70,000 $10 weakened.
1Q03 2Q03 3Q034Q03 1Q04 2Q04 3Q04 4Q041Q05 2Q05 3Q05 4Q05 1Q062Q06 3Q06

Rupiah US$ — By the end of this year we do not expect that the apart-
Source: Colliers International Indonesia, Research Department ment market will strengthen. Buyers will be restrained
from buying apartment units after increased spending
during the Islamic holiday and in anticipation of further
PRICE spending for the Christmas and New Year holidays.
In the CBD, there were no changes in price. Prices hovered
between US$1,500 and US$1,700/sq m while those quoted
SUPPLY
in Rupiah ranged from Rp12 million to Rp14 million/sq m. An
adjustment occurred only in the Non-CBD area, where Mega
Glodok Kemayoran set its new price at Rp10.25 million from During the reviewed quarter, the apartment market gained
a previous Rp10.10 million/sq m. On average, the price of 2,164 additional units from four completed projects—The
office space in the Non-CBD area ranged from Rp10 million Peak and Sudirman Park in the CBD as well as Senayan Resi-
to Rp12.5 million/sq m. dence and Somerset Berlian in South Jakarta. With these units
completed, the cumulative supply increased by 5.57% QoQ
or 12.7% YoY to a total of 41,032 units found at 114 projects.
SERVICE CHARGE
The middle-to-low segment (price between Rp6 million and
Maintenance costs moved up further in the quarter for all Rp10 million/sq m) still dominated the market with a propor-
office categories. Overall, the service charge climbed by 3.8% tion of 53.5% followed by the low segment (price below Rp6
to Rp47,934/sq m/month. Likewise, maintenance costs in US$ million/sq m) at 21.6 %. Apartments in the middle-to-low class
buildings shifted up slightly to US$6.11 from US$6.05/sq m/ are mostly scattered throughout South and West Jakarta.
month last quarter. Significant changes in the service charge
occurred mostly in grade A category buildings. Outside the SUPPLY BASED ON
CBD, a modest service charge increase was also noticed from
Rp34,057 to Rp34,273/sq m/month.
SEGMENTATION (UNITS)

Luxury Low
OUTLOOK Upper
(>Rp20 mil) (<Rp6 mil)
1.5% 21.6%
(Rp15-20 mil)
Within the remaining months of the year, we expect no sig- 6.5%
nificant upsurge in rental and maintenance costs. Of course,
there will be some buildings introducing new rates, but this Middle Up
will not significantly impact overall figures. (Rp10-15 mil)
17.0% Middle Low
Leasing activities will remain vibrant over the next period. (Rp6-10 mil)
53.5%
During the low investment season this year, office transac-
tions were still dynamic, albeit dominated by expansion and Source: Colliers International Indonesia, Research Department
relocation. Thus, we expect more active transactions should
the investment realization figure improve.
4 JAKARTA QUARTERLY RESEARCH REPORT
COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

As the end of the year approaches, some projects reached


TAKE UP RATE
the topping-off stage like the two towers of Jakarta Residence,
also Setiabudi Residence and Oakwood Premier Cozmo in 45,000 80%

the CBD as well as Mediterania Boulevard Kemayoran in


40,000 76%
Central Jakarta. New projects like The Grove at the Rasuna
Epicentrum complex in the CBD, and Pallazzo Boutique Resi-
35,000 72%
dence and Monaco Residence both in Central Jakarta were
projects launched to the market during the quarter. Good 30,000 68%
response to the low-rise apartment concept, like that found
at Pearl Garden and Sudirman Residence, has spurred simi- 25,000 64%
lar developments in the surrounding CBD area. Cik Ditiro
Residence in the Menteng area, which was developed by Duta 20,000 60%
Anggada, was one of the low-rise apartment projects which 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06

received good market response. Cumulative Supply Sold Unit Take-Up Rate

Source: Colliers International Indonesia, Research Department


Colliers recorded that, from this quarter until 2009, there
will be more than 36,000 new apartment units from a total
of 47 projects entering the Jakarta market. Most of the units PRICE
will be located in North Jakarta (29.5%) and West Jakarta
(25.2%). Of this upcoming supply, the middle-to-low segment Despite growing at a slow pace, the average price in the apart-
remains the major market with a proportion of around 45%. ment market increased to Rp8.7 million/sq m from a previous
Rp8.3 million/ sq m. This incremental increase was mainly
due to price adjustments made by some of the under-con-
DEMAND struction projects.

Despite the Central Bank revision of the prime interest rate For under-construction projects in particular, prices ranged
to 10.75% from a previous 11.25%, the transaction volume from a low of Rp4.2 million/sq m (low segment) to a high of
has not increased because banks have yet to respond by Rp23.3 million/sq m (luxury segment). Details are depicted
lowering their interest rates on loans. To attract buyer inter- in the table below.
est, some developers have strengthened their marketing ef-
fort by offering longer installment periods, allowing no down AVERAGE PRICE OF UNDER CONSTRUCTION
payment, facilitating extensive exhibitions, sponsoring food PROJECT AS AT 3Q2006
festivals, and giving high discount rates for cash payments.
Classification Average Asking Price/sq m
Segmentation
(price/sq m) (in the market)
In general, the take-up rate for existing and under-construc- Low Less than Rp6 million Rp4.2 million
tion projects available in the market is 74.8%, a decrease of Middle Low >= Rp6 - 10 million Rp8.0 million
Middle up > Rp10 - 15 million Rp11.5 million
2% from the previous quarter. The middle-to-low project cat- Upper > Rp15 - 20 million Rp15.4 million
egory performed well within the quarter with an average Luxury Above Rp20 million Rp23.3 million
take-up rate of 76.1%. A limited supply of luxury projects Source: Colliers International Indonesia, Research Department

also resulted in a high take-up rate for this classification with


a sales rate of 75.2%. However, with many new apartments The CBD led the market with the average offering price of
being developed, the sales rate for under-construction projects around Rp13.2 million/sq m. Comprised of middle-up to luxury
experienced a minor decrease to 57.9% from a previous rate projects, the CBD is commonly targeted for exclusive projects
of 60%. with high quality materials and exclusive design. The land
value in the CBD also contributes to higher prices. Outside
the CBD, the average asking price hovered at around Rp8.0
million/sq m.

JAKARTA QUARTERLY RESEARCH REPORT 5


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

LEASED AND SERVICED APARTMENT LEASED AND SERVICED


MARKET APARTMENT SUPPLY
BASED ON SEGMENTATION
EXECUTIVE SUMMARY 3,000
2,500
— During the reviewed quarter, three new completed
2,000
projects added to the cumulative supply of 6,567 units.
1,500

— Middle-up projects led the market with rental rates of 1,000

above US$10.00/sq m/month. 500


0
— Most leased and serviced apartments experienced a CBD Central East North South West
downturn in occupancy which stood at 73.2% within Jakarta Jakarta Jakarta Jakarta Jakarta

the quarter. Middle-Low Middle-Up


Source: Colliers International Indonesia, Research Department
— Rental rates tended to decrease due to the strengthen-
ing of the Rupiah vs US Dollar. Over the next two years, the market is anticipated to increase
by about 1,134 additional units which will come from 10
apartment projects. Thus, the market will have around 7,701
SUPPLY total apartment units by 2008, and 53% or 4,108 will be serv-
iced apartment units. No leased apartment units are antici-
pated to enter the market through 2008.
Amid the market downswing, total supply of leased and serv-
iced apartments increased by 5.6% to 6,567 units. This in-
crease was contributed to by three new projects, all with
serviced units—The Peak (Beaufort Serviced Residence), DEMAND
Pondok Indah Square and Sommerset Berlian (in South Ja-
karta). The three projects added a total of 346 units during Expatriates continue to opt for projects located in either the
the reviewed quarter. CBD or South Jakarta as their favorite home location. The
new strata title apartment project The Pakubowono Residence,
Middle-up projects, with an average rental rate of above which is providing leased units from the remaining unsold
US$10.00/sq m, dominated the supply with a proportion of units, was quite resilient in the expatriate market due to its
about 67%, while the remaining portion was categorized as location in Kebayoran, South Jakarta and also because of its
middle-low projects with an average rental rate of below excellent greenery. Relatively large units (above 150 sq m for
US$10.00/sq m. Middle-up projects were found in all regions a 2 BR unit) with comprehensive facilities and spacious land-
of Jakarta except in East Jakarta. The CBD, where large num- scapes are key selling factors at this project.
bers of middle-up projects are located, dominates this cat-
egory with about 86% of the market. During the quarter, several apartment projects experienced a
decline in their occupancy rates due to simultaneously expiring
lease periods for some company-leased units. A smaller number
of guests coming to Jakarta and staying in apartments during
the reviewed period was also one of the reasons which help
explain the decrease.

Apartments in the Non-CBD area were those experiencing


a significant occupancy drop. By the end of the quarter, the
overall occupancy rate of leased and serviced apartments in
Jakarta reached 73.2%, a decrease of 0.5% compared to last
quarter.

6 JAKARTA QUARTERLY RESEARCH REPORT


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

LEASED AND SERVICED OUTLOOK


APARTMENT PERFORMANCE
Leased apartments will face tougher competition over the next
85%
two years with the addition of upcoming new serviced apart-
80% ments and also from converted strata title units. In the mean-
75% time, the serviced apartment market will remain relatively sta-
70%
ble since it offers short-term accommodations.
65%
The governments goal of lowering the prime interest rate below
60%
10% this year is expected to leverage the strata title market.
55% However, the impact will not materialize in the short-term
50% given that banks will still maintain their current rates. The
CBD South Jakarta Others Average eventual lowering of interest rates on loans will help fuel the
Jakarta
apartment market simply because most buyers are still de-
Source: Colliers International Indonesia, Research Department pending on mortgages.

RENTAL RATES

In contrast to prices, rental rates weakened slightly. This is


mainly due to the strengthening of the Rupiah against the U.S.
Dollar during the quarter. The published rental rate of leased
apartments in the CBD decreased to US$13.20/sq m/month
or around US$2,165/unit/month. Apartments in the Non-CBD
area were also down to US$10.90/sq m/month or around
US$1,455/unit/month. Tight competition was the key reason
for the adjustment, particularly when apartments specifically
built as strata title were also offered for lease.

New supply in the market contributed to a minor increase in


the average rental rate of serviced apartments, mainly in the
CBD. The rental rate for serviced apartments in this area in-
creased to US$21.00/sq m/month or about US$2,551/unit/
month. Flexibility during the lease period has stabilized the
rental rate and thus created a healthy occupancy rate.

Market Segment/ Average Rent/ Average Rent/


Apartment Type
Location sq m/month* Unit/month**

Leased CBD Rp 120,200 Rp 19,750,000


US$ 13.20 US$ 2,165
Non CBD Rp 99,330 Rp 13,270,000
US$ 10.90 US$ 1,455
Serviced CBD Rp 198,650 Rp 23,265,000
US$ 21.00 US$ 2,551
Rp 163,300 Rp 16,450,000
US$ 17.90 US$ 1,804
* Rental is including Service Charge
** Exchange Rate at Rp9,121/US$
Source: Colliers International Indonesia, Research Department

JAKARTA QUARTERLY RESEARCH REPORT 7


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

RETAIL SECTOR The number of strata title centers continued to grow in the
quarter. The composition of retail-for-lease versus retail-for-
sale space in the Jadebotabek area was 61.7% (around 2.61
EXECUTIVE SUMMARY
million sq m) to 38.3% (1.64 million sq m).
— Retail stock grew to 2.83 million sq m in Jakarta, of which
60.9% is retail space for lease.
CUMULATIVE SUPPLY
— Projected additional supply in 4Q06 will be dominated JADEBOTABEK
by the completion of retail centers for lease. 3,500,000

3,000,000
— Retail stock in the Jadebotabek (Jakarta-Depok-Bogor-
2,500,000
Tangerang-Bekasi) area reached 4.28 million sq m with
centers for lease dominating the market at around 61.1%. 2,000,000

1,500,000

— The average occupancy rate decreased slightly to 87.52% 1,000,000


in Jakarta. 500,000

0
— The average rental rate in 3Q06 moved downward slightly 2000 2002 2004 1Q06 3Q06 2007F
by 3.4% QoQ.
Cumulative Supply Leased Cumulative Supply Strata
Source: Colliers International Indonesia, Research Department

SUPPLY
LIST OF RETAIL CENTERS OPENED IN 3Q06
In the 3Q06 five shopping centers opened: two centers in
SGA Marketing
Bogor, two centers in Tangerang and one in Jakarta. Tamini Name Location
(sq m)
Anchors
Scheme
Square, a strata title center in East Jakarta, has been in opera- JAKARTA
tion and has secured major tenants like Carrefour, Cahaya Tamini Square East Jakarta 69,920 Carrefour, Cahaya Strata Title
Dept. Store
Dept. Store, Time Zone and Studio 21. With an additional DEBOTABEK
69,920 sq m contributed by this center, Jakarta’s total retail Bellanova Country Bogor 21,000 Hypermart, Time Strata Title
space stands at 2.83 million sq m. Mall Zone
Botanic Square Bogor 45,000 Giant Hypermarket Lease
Serpong Town Square Tangerang 55,583 Giant Hypermarket, Strata Title
Regions like Bogor and Tangerang received additional supply Electronic Solutions
from the completion of projects like Serpong Town Square BSD Junction Tangerang 10,000 No Anchor Tenant Strata Title
Source: Colliers International Indonesia, Research Department
and BSD Junction in Tangerang and Bellanova Country Mall
and Botanic Square in Bogor. Serpong Town Square is an inte-
In the Jadebotabek area, projected future supply from the
grated development consisting of offices, apartments, and a
fourth quarter of this year to 2009 is 707,243 sq m (centers
water park and trade center. The trade center has captured
for lease) and 547,750 sq m (centers for sale).
major tenants including Giant Hypermarket, Electronic Solu-
tion, Sport Warehouse and Time Zone. The other center that
In the 4Q06 a number of projects will be completed in Ja-
opened in Tangerang is the 10,000 sq m BSD Junction which
karta including Bellezza de Heritage Shopping Arcade, Bellagio
operates face-to-face with ITC BSD and is becoming one of
Boutique Mall, Kalibata Plaza (an extension of Kalibata Mall)
the prominent trade centers in the Tangerang area. In Bogor,
and Gajah Mada Square. None are strata title (center for
Bellanova Country Mall (a trade center for sale) was intro-
sale). In Bekasi, Plaza Pondok Gede II will open in 4Q06.
duced in July to serve the community in the Sentul area with
a size of 21,000 sq m. Also launched in Bogor, Botanic Square
is a strategically located mall in the heart of the city with
prompt access to toll roads. With the addition of these four
centers the total cumulative supply of retail space in Debotabek
stands at 1.41 million sq m.

8 JAKARTA QUARTERLY RESEARCH REPORT


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

FUTURE SUPPLY IN JADEBOTABEK CUMULATIVE SUPPLY, DEMAND


UP TO YEAR 2009 AND OCCUPANCY RATE
400,000 3,000,000 96%
350,000 94%
2,500,000
300,000 92%
2,000,000
250,000 90%

200,000 1,500,000 88%

150,000 86%
1,000,000
84%
100,000
500,000
50,000 82%
- 80%
0
2001 2002 2003 2004 2005 1Q06 2Q06 3Q06
2006* 2007 2008 2009
For Lease For Strata Title Supply (sq m) Demand (sq m) Occ (%)
* 4Q06 Source: Colliers International Indonesia, Research Department
Source: Colliers International Indonesia, Research Department

LIST OF FUTURE RETAIL CENTERS IN 4Q06


RENTAL, SERVICE CHARGES AND PRICES
Marketing SGA
Shopping Centre Location Status
Scheme (sq m) In general, the average rent in Jakarta dropped slightly, bring-
Bellezza de Heritage Shopping South Jakarta Lease Finishing
28,000 ing down the quarter’s average rate to Rp317,309/sq m/month
Arcade
Bellagio Boutique Mall South Jakarta Lease Finishing 18,514 from Rp328,600/sq m/month. Basically, there were no changes
Kalibata Plaza (Kalibata Mall) South Jakarta Lease Finishing 40,000 in either the rental rates or pegged rates during the quarter.
Gajah Mada Square Central JakartaLease Finishing 160,000 The rate change in Jakarta was mainly due to exchange rate
Plaza Pondok Gede 2 Bekasi Strata Finishing 50,000
Source: Colliers International Indonesia, Research Department volatility QoQ (some prominent malls in Jakarta quote a floating
US$ rate).

DEMAND In the Debotabek area, rent for leased retail centers decreased
by 0.4% QoQ from Rp266,180/sq m/month last quarter to
Hypermarket, local apparel store, electronic, health and life- Rp265,181/sq m/month. This slight adjustment was due to a
style products remained a major player in the demand for rental rate correction by ITC Depok on their secondary units
retail space. Heritage The Factory Outlet started their third and the opening of a new leased center, Botanic Square, which
outlet at BSD Plaza with other outlets in Bandung and on also affected our calculations.
Jalan Barito in Jakarta. Zara and Fitness First expanded with
new outlets in Mal Taman Anggrek. Electronic Solution (8,000 In Jakarta, the average service charge for leased retail centers
sq m) opened in the Jakarta City Center. Giant Hypermarket for this quarter was Rp58,381/sq m/month, down by 3.7%.
also opened a new store at Botanic Square in Bogor. Several For strata title centers, the average service charge was re-
specialty shops opened such as Aprica by Pediatic in Plaza corded at Rp48,923/sq m/month, up 7.66% compared to last
Indonesia, Tumble Tots in Depok Town Square, King Ciber quarters figure of Rp45,441/sq m/month.
(entertainment) in Kenari Mas, and Surline (shoe shop) in
Margo City Square. The average service charge in the Debotabek region for strata
title centers increased slightly by 0.2% (QoQ) to Rp 45,701/
Overall occupancy in Jakarta for the quarter decreased slightly sq m/month while the average service charge for leased centers
to 87.52% from 88.12% in the second quarter. The take-up was Rp46,743/sq m/month.
rate for strata title centers in Jakarta was level at 75.5% while
physical occupancy was 63.85%.

Elsewhere, overall occupancy for the entire Jadebotabek area


was 64.02% while the take-up rate for strata title centers in
this area was steady at 75.98%.

JAKARTA QUARTERLY RESEARCH REPORT 9


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

RENTAL RATE AND SERVICE OUTLOOK


CHARGE IN JAKARTA
The fact that strata title centers experienced better take-up
Rp330,000 Rp90,000 rates than occupancy indicates that the sector has tapered
Rp310,000 Rp80,000
off. Buyer profiles are dominated by speculators looking for
Rp290,000 Rp70,000
Rp270,000 Rp60,000
better future margins. The outlook becomes worse for new
Rp250,000 Rp50,000 strata title centers which do not have enough pre-committed
Rp230,000 Rp40,000 tenants before project launching. Modern strata title centers
Rp210,000 Rp30,000 have to designate part of their space for lease, particularly for
Rp190,000 Rp20,000 major tenants.
Rp170,000 Rp10,000
Rp150,000 Rp0
Unlike traditional trade centers located in “hot” areas like
2001 2002 2003 2004 2005 1Q06 2Q06 3Q06
Mangga Dua and Tanah Abang which need less effort for pro-
Rental (avg) Service Charge motion, new trade centers need a strong brand image to pull
Source: Colliers International Indonesia, Research Department tenants like well-known restaurants or hypermarkets. We are
now seeing many modern trade centers only offering 60% to
The average selling price for strata title centers is Rp58.4 70% of their space for sale. In addition, to avoid the image of
million/sq m in Jakarta and Rp44.5 million/sq m for the inconvenient ambience like narrow corridors and minimum
Debotabek area, thus bringing the whole region to an aver- air conditioning, today’s trade centers are now designed using
age of Rp53.4 million/sq m. In Jakarta, strata title centers were the mall concept and even choose names like “trade mall” or
offered in the range of Rp20 million to Rp75 million/sq m. “town square”.
However, for “hot” areas like Mangga Dua or Tanah Abang
where shopping centers are the destination for grocery mer- Nevertheless, with so many shopping centers scattered ubiq-
chandise, prices can be found above Rp100 million/sq m. In uitously in greater Jakarta, competition is tougher not only
Debotabek, higher prices can be found in fast growing areas among the centers but also among retailers. Local retailers
like Tangerang and Depok where some centers quote as high have to be in a dynamic track in order to counterbalance
as Rp75 million/sq m. All-in-all we have not detected any foreign retailers that have flooded prominent malls. We ex-
significant price increases for strata title centers given the pect that the impact of this tough rivalry will be felt by some
very tough competition in this market segment. retailers.

SELLING PRICE AND SERVICE


CHARGE IN JADEBOTABEK
Rp70,000,000 Rp70,000
Rp60,000,000 Rp60,000

Rp50,000,000 Rp50,000

Rp40,000,000 Rp40,000
Rp30,000,000 Rp30,000

Rp20,000,000 Rp20,000

Rp10,000,000 Rp10,000
Rp0 Rp0
Central East North South West Debotabek
J a k a r t a Jakarta Jakarta Jakarta Jakarta

Price (avg) Service Charge

Source: Colliers International Indonesia, Research Department

10 JAKARTA QUARTERLY RESEARCH REPORT


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

HOTEL SECTOR THE BREAKDOWN OF JAKARTA HOTELS


AS OF 3Q 2006

EXECUTIVE SUMMARY
IN TERMS OF NUMBER
— There was no additional hotel development in the quar- OF HOTELS
ter.
5 star
— In early September, PT Mandiri Karya Indah Cipta and 23%
Aston International signed an agreement to manage Aston 3 star
Mangga Dua Hotel & Residence which plans to open in 43%

2008.

— In general, the occupancy rate for all categories of hotels 4 star


34%
experienced a slight decrease. The Islamic holiday season
contributed quite heavily to a rise in occupancy over the
last three months. The hotel market still relies mainly on
Source: Colliers International Indonesia, Research Department
business guests.

— The average room rate was not significantly different QoQ. IN TERMS OF HOTEL ROOMS

SUPPLY 3 star
23%
5 star
No new hotel developments were introduced to the market, 39%
a repeat of the situation in the last quarter. This keeps this
quarter’s figure of total hotel rooms at 21,399 rooms. Patria
Park Hotel in East Jakarta is half constructed and will possibly
be on the market in 2007. 4 star
38%

The hotel composition and distribution is therefore similar to


what was described in our previous report. In total, Jakarta
has 79 hotel developments in the 3, 4, and 5-star categories. Source: Colliers International Indonesia, Research Department

Three-star hotels are still leading with the highest number of


developments, but 5-star hotels are the highest in terms of THE DISTRIBUTION OF DIFFERENT
number of rooms. STAR RATED HOTELS AND
LOCATIONS
An interesting point to highlight within this quarter is the 7,000
termination of Hilton as the operator of the Jakarta Hilton 6,000
International. The hotel was renamed The Sultan, which is 5,000
taken from the Javanese term that means “the king”. The 4,000
termination also brought consequences to other hotels owned 3,000
by the same group and managed under Hilton. Other former 2,000
Hilton hotels that localized their names include the Ayodya 1,000
Resort in Bali as well as the Singgasana Hotel in Surabaya and 0

Makassar. Central South North Jakarta West Jakarta East Jakarta


Jakarta Jakarta
3 star 4 star 5 star

Source: Colliers International Indonesia, Research Department

JAKARTA QUARTERLY RESEARCH REPORT 11


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

AVERAGE OCCUPANCY RATE (AOR) NUMBER OF PASSENGER ARRIVALS


TO JAKARTA AND OTHER PORTS
An overall increase in the AOR of 6.1% was recorded QoQ
bringing this quarter’s occupancy rate up to 67.19% from IN INDONESIA
63.35% last quarter. According to our records, all hotel cat- 5,000,000

egories registered an increase. Three-star hotels, as usual, 4,000,000


achieved the highest AOR of 78.18%, up by 5% this quarter.
3,000,000
The 4-star category reached 67.24% which is up by 6.3%,
followed by the 5-star category which increased 7.3% to 2,000,000
56.16%. The prolonged Islamic holiday (Eid Mubarak) was one 1,000,000
factor that caused the AOR to rise. In the 3-star category, two
hotels had significant occupancy growth (above 10%) in the 0
2001 2002 2003 2004 2005 until
3-month period as well as one hotel in the 4-star category 3Q06
and two hotels in the 5-star category. Jakarta Other Ports
Source: Colliers International Indonesia, Research Department; Central Bureau Statistics

OCCUPANCY RATES FOR


3, 4 AND 5 STAR HOTELS AVERAGE ROOM RATE (ARR)
100%

80%
Only the 5-star category registered an average negative growth
in ARR during the 3Q06 or a decline of 4.75% from Rp711,051
60% last quarter to Rp677,383 this quarter. Some 5-star hotels
experienced only a minor drop in ARR (ranging from between
40%
Rp10,000 to Rp30,000). One hotel had a significant decrease
20% in the 3-month period of more than Rp300,000. The highest
ARR in the quarter was quoted by the Grand Hyatt followed
0% by the Shangri-La and Ritz Carlton hotels (around Rp1 million).
2001 2002 2003 2004 2005 1Q06 2Q06 3Q06

3 Star 4 Star 5 Star Average In the 4-star category, the ARR was up slightly by 1.8% to
Source: Colliers International Indonesia, Research Department Rp384,977. Only one hotel registered a significant drop in
the 3-month period. The remaining hotels increased their ARR.
Because of stiff internal competition, the hotel industry has This quarter, the highest ARR for the 4-star category was
no option but to continuously encourage improvement. Some quoted by the Ambhara and Park Lane hotels (above
hotels have put rigorous security measures in place to moni- Rp500,000).
tor their surroundings and make sure guests are safe. In addi-
tion, hoteliers are also improving leisure and business facili- The ARR for the 3-star category was recorded at Rp289,176
ties and customer service. New technologies are also being from Rp262,712 last quarter, a jump of 10.1%.
introduced like the installation of plasma televisions and high-
speed broadband Internet access. AVERAGE ROOM RATES (ARR) FOR
3,4 AND 5 STAR HOTELS
The guest profile was still dominated by domestic clients and, Rp800,000
therefore, a downturn in passenger arrivals at Soekarna-Hatta
airport of 1.4% or 289,317 passengers did not impact the
Rp600,000
overall occupancy rate.
Rp400,000

Rp200,000

Rp0
2001 2002 2003 2004 2005 1Q06 2Q06 3Q06

3 Star 4 Star 5 Star Average


Source: Colliers International Indonesia, Research Department

12 JAKARTA QUARTERLY RESEARCH REPORT


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

REVENUE PER AVAILABLE ROOM INDUSTRIAL ESTATE SECTOR


With improving occupancy rates during the quarter, RevPAR EXECUTIVE SUMMARY
increased by 7.2% to Rp288,454. Three-star hotels
experienced the highest increase of 15.6% to Rp226,072
— No industrial estates have offered additional industrial
followed by the 4-star category which increased by 8.2% to
land for several years, thus land stock remained at 8,566
Rp258,860, and the 5-star category by 2.3% to Rp380,429.
hectares. Developers were still focusing on selling remain-
The overall increase in RevPAR seemed to be due to the
ing stock amid slow absorbtion during the year.
climb in overall occupancy.
— The automotive industry has been the main impetus for
REVENUE PER AVAILABLE ROOMS industrial land absorption. Nevertheless, high interest rates
(RevPar) FOR 3,4 AND 5 HOTELS have slowed down inquiries for new vehicle sales which
impacted the industrial market. Although land absorp-
Rp400,000
tion was still dominated by the auto industry, the amount
of land sold was far behind that of last year (22% of last
Rp300,000
years total sales).

Rp200,000
— Accordingly, slow absorption this year has caused prices
and tariffs to remain relatively stable. Developers prefer
Rp100,000
to maintain prices and give attractive discounts when
inquiries for large land parcels are made.
Rp0
2001 2002 2003 2004 2005 1Q06 2Q06 3Q06
— This quarters transactions were highlighted by a signifi-
3 Star 4 Star 5 Star cant land transaction of 9.9 hectares in the Bekasi Fajar
Source: Colliers International Indonesia, Research Department
Industrial Estate by Toyota Astra Motor for logistic pur-
poses.

OUTLOOK
SUPPLY
The hotel outlook for the year ahead looks positive given the
decision by the government and House of Representatives to
Developers are more conservative about starting their next
approve a tourism fund increase for promotion and marketing.
phase of development given that there are plenty of unsold
The fund was raised to Rp158 billion for 2007 from the current
land parcels within the regions. The decision to put off
Rp110 billion this year.
expansion is also attributable to the downturn in sales during
the year. Now, managements are focusing on selling remaining
Hoteliers are trying to form a program for selling special
stock. Regions like Bekasi, where stocks of land are being scaled
packages in coordination with travel agents and the tourism
down, have not had any industrial estates introduce new
bureau. In addition, hoteliers are now more focused on offering
portions of their stock this year. However, the prominent
special packages to domestic guests in return for their help in
industrial estate MM2100 is planning to open a new phase of
propelling the hotel market.
industrial land with a total of around 200 hectares (70% of it
is serviceable industrial land).
The Visa Indonesia Tourism Spend Report revealed spending
figures for 2005. Total Visa International inbound spending in
Jakarta will definitely have no fresh stock of industrial land as
Indonesia increased by 20% to Rp5.6 trillion (US$579 mil-
vacant land parcels in Jakarta are very expensive for industrial
lion), despite a 6% drop in foreign visitor arrivals. This indi-
purposes and are more suitable for multi-level commercial
cates that Indonesia has great internal potential for the tour-
buildings.
ism industry. It is now imperative that continued measures be
taken to stem the misperceptions of Indonesia in relation to
From Cilegon in the west to Purwakarta in the east, the total
avian influenza, tsunamis and terrorism.
amount of serviceable industrial land remains at 8,566
hectares.

JAKARTA QUARTERLY RESEARCH REPORT 13


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

DEMAND INDUSTRIAL LAND ABSORPTION


JAN-SEP 2006
Industrial land sales for the 3Q06 were at a historic low,
plummeting from 25.05 hectares last quarter to only 14.84
Serang
hectares this quarter. In Karawang, where industrial land 7%
Jakarta
17%
transactions were quite active last quarter, land sales dropped Bogor
sharply to only 0.85 hectares from 12.38 hectares. That small 3%
transaction was only a leasing transaction. The downward
trend of industrial sales this quarter was also evidenced in Karawang
Bogor, Tangerang and Serang. 37%
Bekasi
Tangerang 33%
Bekasi, which previously recorded much lower sales than 3%
Karawang, was the only region with a significant amount of
land transactions in the quarter. The amount increased from
Source: Colliers International Indonesia, Research Department
2.25 hectares last quarter to 12.37 hectares this quarter. Bekasi
Fajar Industrial Estate was the only estate with a notable If we take into account the total sales for 2006, it will be very
transaction this quarter of almost 10 hectares. The transaction tough to catch up to last year’s sales figure given that there
was concluded after Toyota Astra Motor, the automotive are only 3 months left in the year. Total sales up to this quarter
company, bought the land for logistic purposes. Some logistic are only 22% of the total sales in 2005. To achieve 50% of last
companies took smaller land parcels and 3 units of standard year’s total sales would be hard to imagine, especially if judged
factory buildings in the same estate. by potential inquiries from the last quarter and corporate
plans to wait and evaluate the situation in 2007.
Another estate in Bekasi that registered a sale of around 1.4
hectares, purchased by two companies representing new
domestic investment, was Technopark Delta Silicon. Meanwhile ANNUAL SALES OF
in Bogor, CCIE concluded a 0.43 hectare leasing transaction ha INDUSTRIAL LAND
from pesticide producers. In the 4Q06, CCIE is expected to 300
make a relatively big transaction of around 3.8 hectares with
the footwear industry in Taiwan. In the west, the Serang region 250

did not register any transactions during the quarter. 200

There were no significant changes in the tenant profile during 150


the quarter. Around 70% of this quarters transactions were 100
related to the automotive industry while the remaining were
made by the garment, coating, printing and refrigerant 50
industries. Domestic companies still dominated the number
-
of transactions which reflects slow foreign investment over 2001 2002 2003 2004 2005 3Q06
the past several years.
Source: Colliers International Indonesia, Research Department

With only limited transactions this quarter, the take-up rate


was relatively stable at around 65%. The graph below shows
PRICE, RENTAL RATES AND
industrial land and building absorption during the January –
September 2006 period. MAINTENANCE COSTS

The only figures to change this quarter were the industrial


building rents at CCIE Bogor which were converted from
US$2.50/sq m/month to Rp30,000/sq m/month. Other price
and rental tariffs were not adjusted QoQ. Maintenance costs
were kept at their current rates, mostly quoted in US$. There
is no indication that any of the industrial estates will adjust
their maintenance tariffs.

14 JAKARTA QUARTERLY RESEARCH REPORT


COLLIERS INTERNATIONAL
QUARTERLY RESEARCH REPORT

JAKARTA
3Q 2006

INDUSTRIAL LAND PRICE AND


MAINTENANCE COST

LAND PRICE (/sq m) MAINTENANCE COST (/sq m/month)


REGION
lowest highest average (Rp) lowest highest average (Rp)
Bekasi Rp400,000 Rp750,000 Rp530,800 US$0.05 US$0.07 Rp548
Karawang US$35.00 US$45.00 Rp357,156 US$0.05 US$0.05 Rp456
Bogor US$45.00 Rp550,000 Rp508,648 US$0.06 Rp600 Rp559
Serang Rp250,000 US$40.00 Rp339,704 US$0.02 Rp220 Rp197
Tangerang Rp475,000 Rp1.26 mil Rp510,749 US$0.04 Rp1,000 Rp525
Source: Colliers International Indonesia, Research Department

241 Offices Worldwide


OUTLOOK
130 Americas This year will be very tough for the industrial sector which is looking at
65 Europe, Middle East & Africa decreasing sales figures for 2006. Nevertheless, with the slowdown in
46 Greater Asia
foreign investment, the industrial market is still relying heavily on domestic
investors, particularly those with good business performance. Thus, most
52 Countries on 6 Continents
of the recent transactions during the year came from the expansion of
Argentina Macau
existing tenants.
Australia Mexico
Austria Northern Ireland
On the demand side, inquiries for logistic purposes will continue not only
Baltic States Netherlands
Belgium New Zealand
from logistic companies, but also from other industries that need to expand
Brazil Norway
their logistic capabilities. A significant transaction in the secondary market
Bulgaria Peru outside an industrial estate occurred in Cibitung, Bekasi when YCH Pte.
Canada Philippines Ltd., based in Singapore, acquired a logistic warehouse of around 8.1
Caspian Region Poland hectares from David’s Asia Pte. Ltd. Other industries like the automotive
Chile Portugal industry and related companies may expand during the rest of the year
China Romania but in moderate numbers. Although car sales in the country were low, the
Colombia Russia export-oriented automotive industry may survive and possibly expand
Costa Rica Serbia and during the last quarter of this year.
Croatia Montenegro
Czech Republic Singapore
Denmark South Africa
France Sweden
Germany Switzerland
Greece Taiwan
Hong Kong Turkey
Hungary Ukraine
India United Arab Emirates
Indonesia United Kingdom
Ireland United States
Italy Venezuela
Japan
Korea

For more information contact


Mike Broomell or Ferry Salanto at:
World Trade Centre, 10 Fl.
Jl. Jend. Sudirman 29-31
Jakarta 12920
Tel 62 21 521 1400
Fax 62 21 521 1411 © Colliers International (Indonesia) 2006
www.colliers.com Reproduction of the contents of this publication is prohibited without gaining prior permission from Colliers International.

The content of this report is for information only and should not be relied upon as a substitute for professional advice, which should be sought from Colliers International prior to acting in reliance upon any such information.
The opinions, estimates and information given herein or otherwise in relation hereto are made by Colliers International and affiliated companies in their best judgement, in the utmost good faith and are as far as possible
based on data or sources which they believe to be reliable in the contest hereto. Notwithstanding, Colliers International and affiliated companies disclaim to the extent permitted by law, any liability in respect of any claim
which may arise from any errors or omissions or from providing such advice, opinions, judgement or information.