Jakarta prime retail rents inch up 0.7% in Q2 | Real Estate Asia

Jakarta prime retail rents inch up 0.7% in Q2

Most landlords have resumed normal rent levels. 

Prime mall footfall began to pick up in Jakarta as the pandemic wanes, causing retail rents to increase 0.7% q-o-q in Q2. JLL says if the pandemic situation continues to improve, single-digit annual growth is likely.

Most of the prime mall landlords have brought their rents back to normal levels. Landlords of top-performing malls were able to enjoy strong visitor traffic.

Here’s more from JLL:

Strongest demand continues to come from the F&B segment

Occupancy levels have stayed high with demand remaining somewhat supply driven. In 2Q22, net absorption has mainly come from the recent new supply, Neo Soho, Pondok Indah Mall 3 and AEON Mall Tanjung Barat. The strongest demand came from F&B tenants, including Cinnabon, a well-known cinnamon roll franchise from the US, which opened its first store in Jakarta.

As the pandemic situation continued to ameliorate, malls have been allowed to accommodate 100% of their total capacity but have remained under strict health protocols, including the requirement for visitors to be vaccinated. Restaurants, gyms, cinemas and other entertainment-related tenants were also allowed to operate at 100% of their total capacity.

No new projects coming in to market in 2Q22

As new supply has been extremely limited in recent years, occupancy levels have remained consistently healthy. Total supply in 2022 is expected to be around 28,000 sqm, including Senayan Park after it was pushed back from last year.

Vacancy rates in Jakarta’s prime malls are still in the single digits. A moratorium on standalone retail developments has been in place in Jakarta since 2011. This has remained as an unofficial policy implemented by the Jakarta governor with the aim of easing traffic congestion in the city.

Outlook: Slow, steady rent growth to continue

The future supply pipeline is likely to remain extremely thin. Only one new mall is in the near-term supply pipeline – Senayan Park, a lifestyle mall in the CBD area. Although this project is structurally complete, it has yet to hold an official grand opening due to the pandemic.

Extremely limited future supply is likely to keep vacancy rates low, particularly as F&B and entertainment tenants are likely to continue seeking space for expansion. In terms of rents, it is likely that 2022 will see a single-digit annual growth, supported by a lack of new supply and the expected improvement of the pandemic situation.

 

Note: Jakarta Retail refers to Jakarta's overall prime retail market.

 

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