2022-06-16-莱坊-Jakarta_Retail_Market_Overview_H2_2021_2页_789kb

Summary of Jakarta Retail Market Overview (2H 2021)

Market Recovery and Key Factors

The Jakarta retail market recovered during the second half of 2021, driven by improved pandemic conditions and relaxed micro-scale activity restrictions (PPKM Mikro level 1, allowing malls to operate until 10 pm at full capacity). This led to increased mall foot traffic and private consumption, particularly in the fourth quarter. However, ongoing concerns include new virus variants, inflation, and business disruptions that continue to exert pressure on the market.

Supply and Occupancy Data

• New retail development: Only one new leased mall project was completed in 2021 (AEON Southgate – Tanjung Barat), bringing the cumulative leased mall stock to 3,213,007 square meters. Cumulative strata-title mall space remained unchanged at 1,651,199 square meters.
• Total market stock as of end of 2021: 4,864,206 square meters for leased malls.
• Supply concentration: Premium Grade A and Grade A buildings dominate, with CBD and Prime Non-CBD areas accounting for the largest supply in these grades.
• Occupancy rates decreased year-on-year: Leased malls fell to 80.5% (a nominal decrease of 4.1%), while strata-title malls decreased to 72.4% (nominal 4.3% decrease). Premium Grade A saw a real decrease of 3.6% to 87.9%, and Grade A dropped 2.9% to 83.5% in real terms.

New Projects and Delays

The second half of 2021 added minimal new supply due to project delays caused by continuing construction postponements. The projected pipeline for new retail supply between 2022 and 2024 is 261,545 square meters, primarily in Non-CBD areas, with most projects delayed until market conditions improve. Future developments include five new leased malls within mixed-use properties and one new strata-title mall in a freestanding premise.

Retailer Activity

Positive trends include expansions by food and beverage, fast fashion, and e-commerce retailers, such as Kids Station, Atmos, and Index Living Mall in various locations. However, closures persisted for large grocery and department stores due to economic downturn risks, with some changing business models. Overall, market fundamentals face pressure from economic uncertainty and potential retail closures.

Economic Outlook and Risk Factors

• Economic challenges: Extended economic downturn and risks of closure continue to affect the market. A potential increase in VAT from 10% to 11% in April 2022 and to 12% by 2025, along with multi-tariff taxes in 2022, could impact purchasing power and business operations.
• Sector projections: Food and beverage, beauty, and e-commerce sectors are expected to remain active in 2022, while entertainment awaits further recovery. Mass vaccination efforts and government incentives may help alleviate pressures.
• Supply outlook: New supply additions are contingent on market improvement, with a focus on Non-CBD areas, which house 75% of the supply by the end of 2021.

Conclusion

Despite signs of recovery and some retailer expansions, the Jakarta retail market faces headwinds from economic uncertainty, supply delays, and policy changes. The future will depend on successful vaccination drives, government support, and sector resilience, particularly in 2022.