Grade A Office Rental Prices in the Jakarta CBD Grown Positively in Almost the Last Decade

JAKARTA, October 29, 2024 – JLL Indonesia, a leading professional services firm specializing in real estate and investment management, today announced key findings from its Jakarta Property Market Review for the third quarter of 2024. The report highlights stability in office and retail sectors, with notable growth in Grade A office rental prices in the Central Business District (CBD).

The Jakarta CBD office market remains stable, with occupancy rates holding steady at approximately 70%. Yunus Karim, Head of Research at JLL Indonesia, noted that occupancy in non-CBD areas also showed stability, standing at 71%, with South Jakarta experiencing strong absorption rates. “We’re seeing positive traction in Premium-grade office spaces, which have recorded consistent demand since early 2023,” Karim commented.

Angela Wibawa, Head of Office Leasing Advisory, emphasized the notable growth in rental prices: "Grade A buildings, particularly Premium Grade, experienced a rental price increase of 0.7%, marking an important recovery in the office leasing business. This represents a turning point for rental prices to become positive since mid-2015."

Retail occupancy in Jakarta has remained robust, driven by continued expansion in food and beverage and fashion brands. “International restaurant chains are actively entering or expanding within Indonesia, while fashion has also seen notable activity with several flagship stores opening this quarter,” Yunus Karim explained. While no new malls became operational this quarter, several are on track to open by year-end, creating added momentum in Jakarta’s retail sector.

The condominium sales activity in Jakarta showed steady activity in the third quarter, largely influenced by recent launches such as the Two Sudirman located in the CBD and a new tower at LRT City Tebet. Vivin Harsanto, Head of Advisory at JLL Indonesia, observed, “Buyers are prioritizing developments with strong transit access, especially in regions like Bodetabek. The government’s VAT DTP incentive has further supported ready-to-occupy condominium sales, allowing buyers to capitalize on favorable purchase terms.” She noted that developers are utilizing innovative sales strategies, such as offering flexible payment programs and rental guarantees, to attract a more cautious buyer base.

Indonesia’s tourism sector continues to recover, drawing increased interest from investors anticipating value appreciation across hospitality properties. Julien Naouri, Vice President of Investment Sales & Acquisitions, JLL Hotels and Hospitality Group, Asia Pacific, noted, “With travel momentum on the rise, investor interest in Indonesia remains strong as they expect property values to appreciate alongside improving trading performance. This optimism is underscored by Indonesia’s attractive growth potential.”

Modern logistics warehouses in Jabodetabek maintain a stable occupancy rate of 90%, driven by strong demand from various industries, with the composition of new tenants showing diversification across sectors such as electric vehicle manufacturing, electrical derivatives, pharmaceuticals, medical devices, retail, household appliances, furniture, and raw materials in Bekasi, Bogor, Cikarang, and Karawang. Farazia Basarah, Country Head and Head of Logistics & Industrial at JLL Indonesia, explained, “In addition to local developers, international players are exploring expansion opportunities through strategic collaborations and business expansions in the form of Built-to-Suit facilities or cold storage warehouses.” She added, “One project has been completed in the Cibitung area, and it is estimated that around three buildings will be finished by the end of 2024, located in areas such as Bogor, Jakarta, and Karawang. Logistics service providers remain the dominant tenants in the modern warehousing sector.”

Indonesia’s economy is projected to grow between 4.7% and 5.5% by year-end, reinforcing its appeal as a leading investment destination in Southeast Asia. Farazia Basarah highlighted, "Indonesia's economic stability, coupled with a young demographic, presents promising opportunities for sustainable growth. Investors are particularly interested in the residential, industrial, and data center segments in Indonesia. Additionally, Foreign Direct Investment (FDI) in Indonesia, dominated by the manufacturing sector, surged by 18.6% from the previous year and has become one of the main drivers of growth in the logistics and industrial sectors. Indonesia has a market that offers opportunities for sustainable growth and attractive portfolio diversification, not only in Jakarta but also in various other cities across Indonesia."

JLL Indonesia’s Jakarta Property Market Review 3Q24 offers a comprehensive view of the city's dynamic property landscape, from office and retail to residential, condominium, and logistics. The full report is available upon request, providing deeper insights for industry stakeholders.