Both enquiry levels and leasing activity within the Jakarta CBD office market continued at higher levels during the second quarter. Enquiries for Grade A and B office buildings came mainly from existing tenants or those seeking to relocate to buildings with adequate space to meet their expansion requirements. Interest in grade C buildings was mostly from newly established companies, or relocations from outside the CBD area with requirements for smaller space of below 100 sq.m.
The majority of leasing transactions during the quarter occurred in Grade A buildings, due to the space availability within this sub-market. Coal mining and its related services industries were observed as the largest demand generators in the CBD area in the second quarter.
For the second straight quarter, no new supply was completed within the CBD office market, leaving the total cumulative supply unchanged at 4.13 million sq.m.
Some 198,200 sq.m. of additional supply is, however, expected to be completed during the second half of the year, as a result of seven projects currently in the advanced stages of construction.
The average gross rental (base rent plus service charge) within the CBD office market increased over the quarter by 0.8% to Rp. 152,400 per square meters per month. In USD terms, the average gross rental increased by 2.1% quarter-on quarter to USD17.73 per square meters per month. Several landlords were able to increase their base rental rate for new tenants, in line with the limited vacancy in their buildings.
Based on building grades, Grade B and Grade A offices achieved gross rental increments of 1.5% and 1.2% quarter-on-quarter respectively whilst Grade C offices increased by 0.9%.
Transactions of strata-title office space within the CBD area remained active, with several larger deals of between 1,000 sq.m. and 7,700 sq.m. recorded over the quarter. Pre-sales of projects still under construction continued to increase, with projects such as Office 8 in Jl. Senopati and AXA Tower in Jl. Prof. Dr. Satrio claiming to have achieved effectively 100% and 70% sales commitments respectively.
The mining sector, particularly coal mining, was the largest demand source for strata-title offices during the second quarter, with the majority of the larger presales deals coming from this industry.
The average sales price per sq.m. increased by approximately 7% during the quarter on the back of this continuing strong demand for office ownership. Sales prices are expected to increase further as remaining space availability in active projects become limited.
Leasing and sales activities are predicted to remain strong for the remaining part of the year. Net take-up is projected to remain at higher levels with the Banking sector expected to return as a major contributor to the CBD net take-up in the coming quarters.
Following its improving trend during the first semester of 2011, overall occupancy is expected to remain stable in the second half of the year due to the new supply scheduled for completion in the second semester.
As a result, rental rates are projected to remain stable until the end of 2011, assuming no significant increase in electricity tariffs.