Jakarta may be hit by oversupply of retail spaces<\/p>\n
JAKARTA (JP): An international property consultant warns that
\nan oversupply on certain types of retail spaces may hit the city
\nand only those with sound fundamentals will continue to perform
\nwell.<\/p>\n
In its latest report on the city's retail sector, PT First
\nPacific Davies Indonesia, says the amount of retail space will
\ncontinue to increase so greatly in the next two to three years
\nthat it may lead to an oversupply of retail spaces in the city.<\/p>\n
\"First Pacific Davies believes that this is partly true in
\nthat there is likely to be an oversupply in certain types of
\nretail, but not all,\" it says.<\/p>\n
It projects that by the end of this year, the total supply of
\nJakarta's retail spaces will have reached 1.1 million square
\nmeters. About 38 percent of this will be less than two years old
\nand just over 60 percent will have been completed in the last
\nfive years.<\/p>\n
\"This means that the majority of Jakarta's retail property
\nstocks are relatively modern,\" the report says.<\/p>\n
In 1996, the company predicts, the supply of new retail space
\nwill amount to 213,195 square meters (sqm), including Mal Taman
\nAnggrek in West Jakarta with a net rentable area of 95,000 sqm,
\nMega Mal Pluit in North Jakarta with 90,000 sqm, Mal Depok in
\nBogor -- 25 kilometers south of Jakarta -- with 24,195 sqm and
\nPlaza Festival in South Jakarta with 4,000 sqm.<\/p>\n
In 1997, another 145,000 sqm of retail spaces will enter the
\nmarket. They consist of Ambassador in South Jakarta with a net
\nrentable area of 15,000 sqm, Mal Pejaten in South Jakarta with
\n29,000 sqm, Plaza Depok with 8,000 sqm, Mal Puri Indah in West
\nJakarta with 60,000 sqm and Mal Daan Mogot also in West Jakarta
\nwith 33,000 sqm.<\/p>\n
In 1998, there could be up to 200,000 sqm of new retail space,
\nincluding Senayan Square with a net rentable area of 20,000 sqm,
\nMal Ciputra with 75,000 sqm, Plaza Sudirman with 35,000 sqm,
\nPlaza Kota BNI with 35,000 sqm, Plaza Kasablanca with 75,000 sqm
\n-- all in South Jakarta -- Cempaka Mas in East Jakarta with
\n65,000 sqm and Plaza Modern in North Jakarta with 13,000 sqm.<\/p>\n
In addition to the above-mentioned projects, several other
\ndevelopments are on the drawing board and may be completed in
\n1998 and 1999. However, owing to strategic, financial or
\ntechnical reasons, these are not definite or may be delayed
\nindefinitely, the report says.<\/p>\n
\"This situation is unlikely to ease in the near future. Its
\neffect will be to delay development proposals and thus deter
\nfuture supply,\" it adds.<\/p>\n
Demand<\/p>\n
On the whole, demand for space in most modern shopping centers
\nis high, the report said, adding that the strongest demand comes
\nfrom restaurants, snack and fast-food operators.<\/p>\n
A larger contribution to overall demand is being made by new
\nretailers in almost all sectors, from books and electronics to
\nhardware and toys.<\/p>\n
However, demand for fashion stores aimed at the middle-upper
\nand upper market segments may decrease in the future due to a
\nproposed legislation to protect local retailers from being
\novercome by foreign ones and problems arising from under-
\nperforming stores.<\/p>\n
When demand from some sectors decreases and an oversupply of
\nretail space really occurs, First Pacific Davies predicts that
\nonly modern shopping centers with sound fundamentals will
\ncontinue to perform well.<\/p>\n
It defines such fundamentals as a proven need for modern
\nshopping facilities, a large enough catchment population with a
\nsufficiently high capability to spend, an accessible site, a good
\ndesign, an appealing mix of tenants and capable management.<\/p>\n
First Pacific Davies believes that many of the centers
\ncurrently in operation or under construction are deficient in one
\nor more of these areas.<\/p>\n
\"Moreover, due to substandard management, they could quickly
\nbecome old-fashioned, unattractive and increasingly obsolete,\" it
\nsaid, adding that the number of modern shopping centers having
\nsound fundamentals remain fairly small.<\/p>\n
Shopping centers with sound fundamentals will be able to offer
\na high rate of rents. Plaza Indonesia in Central Jakarta, for
\ninstance, commands more than US$150 per square meter per month
\nfor its best units.<\/p>\n
Meanwhile, prime rents for specialty units currently range
\nfrom $45 in new suburban shopping centers to $80 in new city
\ncenters.<\/p>\n
For department stores, rents are much lower, ranging from
\naround $6 per square meter per month up to $9.<\/p>\n
Asking rents for new centers have been constant over the last
\nyear and should remain at their current level for the foreseeable
\nfuture. Rents for newly-negotiated units in the existing centers,
\nhowever, have increased quite sharply in some cases, says First
\nPacific Davies.<\/p>\n
It states that occupancy levels in most modern shopping
\ncenters are very high, averaging between 90 percent and 95
\npercent.<\/p>\n
Because demand from specialty retailers is strong, malls which
\nare currently under construction are also achieving high levels
\nof precommitment, which can be as high as 85 percent for malls
\ndue to open soon. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jakarta-may-be-hit-by-oversupply-of-retail-spaces-1447893297",
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