2023-10-25-莱坊-Jakarta_CBD_Office_Market_Overview_H1_2023_2页_142kb

Jakarta CBD Office Market Overview (1H 2023)

Core Content

The Jakarta CBD office market report for the first half of 2023 provides an analysis of current market trends, including supply and demand dynamics, occupancy levels, rental rates, and the impact of new developments. It highlights the ongoing challenges and opportunities in the commercial real estate sector, particularly in the context of post-pandemic office return and evolving workplace culture.

Key Market Trends

• Office Stock Growth: The total office stock in Jakarta CBD increased by 4.0% to 7,285,585 square meters in 1H 2023, with new projects such as Mori Tower, Autograph Tower, and BRILiaN Tower contributing to the expansion.
• Grade Distribution:
  • 28% of the rental office stock is classified as Premium Grade A.
  • 61% is Grade A.
  • 10% is Grade B.
  • 1% is Grade C.
• New Supply Pipeline: Approximately 182,860 square meters of new office supply is expected to enter the market from 2H 2023 to 2025, all located in the Thamrin submarket. These new developments will incorporate green office concepts and aim for green building certifications.
• Net Absorption:
  • The net absorption in Jakarta CBD reached 184,399 square meters in 1H 2023, returning to positive territory after a period of decline.
  • The largest net take-ups were observed in Premium Grade A (46,979 sqm) and Grade A (140,162 sqm) buildings.
  • Grade B and Grade C buildings showed negative net take-ups of 2,431 sqm and 311 sqm, respectively.
• Occupancy Rate: The overall occupancy rate remained stable at 74%, leaving 1,922,690 square meters of vacant spaces.
• Rental Rates:
  • The average asking base rental in Rupiah terms decreased by 1.0% (yoy) to Rp233,716 per square meter per month, the lowest since 2013.
  • Premium Grade A buildings saw the highest rental growth of 13.2% (yoy), reaching Rp290,055 per square meter per month.
  • Total service charges increased slightly by 1.9% (yoy) to Rp94,610 per square meter per month, influenced by rising minimum wages, electricity tariffs, and fuel prices.

Market Dynamics

• Demand Drivers:
  • Flight-to-quality and group company consolidation were key factors driving demand.
  • Cost-saving opportunities and sustainability requirements, especially from multinational corporations, played a significant role in leasing activity.
• Leasing Activity:
  • Leasing activity was driven by companies in various sectors including Energy, IT, Mining, Agrobusiness, Retail, Oil and Gas, Chemicals, Trading, and Logistics.
  • The flexible working model, shorter office leases, and the adoption of ESG values are reshaping the office market structure.
• Market Outlook:
  • The Jakarta office market is expected to remain tenant-favorable, with slower leasing activities due to uncertainty.
  • Challenges include double-digit vacancies, inflationary pressures, upcoming general elections, and moderating economic growth in 2023, amid global growth slowdown risks.
  • Companies are likely to review their office portfolios, consolidate and optimize space usage to reduce costs.

Resilience of Premium Grade A and Grade A Buildings

• Despite market pressures, Premium Grade A and Grade A buildings have shown resilience, maintaining higher performance and occupancy levels.
• These buildings are expected to attract more demand from prime sectors and corporate clients seeking high-quality spaces.

Contact Information

• Research Enquiries:

  • Syarifah Syaukat
  • Senior Research Advisor
  • Email: syarifah@id.knightfrank.com
  • Phone: +62 21 570 7170

• Commercial Enquiries:

  • Andi Rina Martianti
  • Associate Director
  • Email: rina.martianti@id.knightfrank.com
  • Phone: +62 21 570 7170