Leasing transactions in the existing retail centers in Jakarta were very active during the review period. The annual event of the Jakarta Great Sale had encouraged tenants to open new outlets before the event started in mid-June 2011.
Anchor / big tenants which opened new branches in existing centers included Matahari Department Store in Mal Artha Gading, Electronic Solution in Pasaraya Blok M, Muji in Grand Indonesia, and Best Denki in Mal Ciputra.
Many F&B retailers have also opened additional outlets, such as Burger King in Blok M Plaza, Mal Sunter, and Mal Ciputra; Yoshinoya in Plaza Semanggi, Pondok Indah Mall and Mal Taman Anggrek; Paradise Dynasty, Espressamente Illy, De Luca, and Monolog in Plaza Senayan; Fashion Pasta, Sop Ikan Batam, Dapoer Prana and Java Bean in Citiwalk Sudirman; Mad For Garlic in Grand Indonesia; Fish&Co, Pancious and Seoul Korean Restaurant in Emporium Pluit Mal; Pandan Village, Teritorri Teriyaki, Spinelli Coffe and Fatburger in Pondok Indah Mall.
Other tenants who opened their outlets during the review period included Bikram Yoga in Plaza Senayan Arcadia, Nano Reflexology in PX Pavilion and many MAP stores in Central Park.
Despite only one new retail center being completed in the second quarter of 2011, the opening of outlets by new tenants in the existing centers prior to the Jakarta Great Sale 2011 had resulted in the relatively high quarterly net take-up of Jakarta’s retail space totalling 43,100 square meters (sq.m.) during the review quarter.
This resulted in the average occupancy rate of 81.0%, an increase of 0.7% (quarter-on-quarter) or 2.8% (year-on-year), leaving approximately 663,100 sq.m of vacant retail space as at the end of June 2011.
By the sub-sector, the occupancy rate of the existing rental retail centers in Jakarta increased by 0.8% and stood at 88.4% at the end of the quarter, whilst the strata-title centers saw its occupancy rate reach 65.4%, an increase of 0.4% from the last quarter’s figure.
As of June 2011, total retail supply in Jakarta stood at 3,486,900 sq.m, comprising 2,365,500 sq.m (67.8%) within retail centers for lease and 1,121,300 sq.m (32.2%) in strata-title retail centers.
Additional retail space during the 2nd Quarter 2011 came from the completion of 1 (one) center, namely Kalibata City Square, a middle segment retail center-for-lease in Kalibata City complex, South Jakarta.
CBD and North Jakarta continue to contribute the largest portions of supply at 736,800 sq.m (21.1%) and 736,600 sq.m (21.1%), respectively. South and West Jakarta follow at 658,900 sq.m (18.9%) and 618,700 sq.m (17.7%) of space respectively, whilst Central and East Jakarta comprise 439,900 sq.m (12.6%), and 295,900 sq.m (8.5%) of the total supply.
Through to the end of 2011, a further 114,100 sq.m of retail space is expected to enter the market. Almost all (96.4%) of this future supply will be centers for lease, with only 3.6% of stratatitle space. Should these proposed new centers meet their completion schedules, total supply within Jakarta will reach 3,599,800 sq.m by the end of the year.
Rental rates were relatviely stable during the review period. Average base rentals were recorded at Rp.602,500 per sq.m per month or a slight increase of 0.4% (QoQ) or 0.9% (YoY) for specialty shop units on the ground floor within premium locations.
Service charges ranged between US$10.00 and US$14.50 per sq.m per month (Rp.72,500 to Rp.130,500). The concessionary exchange rates ranged between Rp.7,000 and Rp.9,000 per US$1.00.
With relatively high GDP growth, stable interest rate and the strong performance of the stock market, the general economic indicators of Indonesia continued to improve in 2011 and results in the improvement of the general buying power.
Leasing activities are expected to remain buoyant in the 2nd half 2011 and retailers are expected to continue making precommitments within the under-construction centers.
The Jakarta retail market will continue to see new foreign retailers opening their first outlets in the city. Leasing transaction are mix between F&B and other retailers, such as super/hypermarket, fashion, electronics, etc.
Additional retail supply through the end of 2011 will come from 6 retail centers, namely Kuningan City, Ancol Beach City, Tebet Green, Grand Paragon, Qioz+ (Kalibata City Square), and Jembatan Senen Jaya. Most of these supply are retail centers or supporting retail facilities within the mixed-use developments.
With additional new retail supply entering the market, the average occupancy level is projected to decline, pending to physical occupancy of retailers.
Base rental and service charge are expected to remain stable, as strong competition in the retail market continues.