Growth in Jakarta's office space sector is expected to continue its
upward trend. The Colliers International Asia Real Estate Forecast 2014,
released by the leading global commercial real estate company, mentions a
significant increase of new rental office space in the capital city of
Indonesia. As such, Indonesia's office space sector (which is particularly
centered in the big cities on Java such as Jakarta and Surabaya) is Asia's
leader in terms of office space growth. However, this year's growth will not be
as strong as in 2012 and 2013.
Ferry Salanto, Associate Director at Colliers' Jakarta branch, sees
slowing growth in Indonesia's office sector in 2014 due to the sharply
depreciated Indonesia Rupiah rate (which fell over
20 percent against the US dollar in 2013). As a result, a number of Indonesian
property developers have postponed projects as they rely on US-denominated
imports for building materials. As (office space) property projects take a few
years to realize, the impact of the current slowdown of projects will be felt
in 2016. According to Salanto, there will be a 50 percent reduction in the
supply of new office space in 2016.
Because property prices in Indonesia (particularly Jakarta) have risen
steeply in recent years, tenants have started to shift their focus to
alternative locations, instead of premium or strategic locations in the
business districts. Moreover, the supply of new offices in the business
districts is low as most parts have already been developed. Although subject to
variation, generally, office rental rates in Indonesia are expected to increase
3 percent in 2014.
In 2013, Jakarta's office space growth reached 37 percent. This is
expected to slow to 13 percent this year. Despite this significant slowdown,
Indonesia remains the leader in terms of office space growth in Asia - followed
by Manila (9 percent growth) - in 2014.
Source: www.indonesia-investments.com
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