Retail space market faces oversupply<\/p>\n
Anissa S. Febrina, The Jakarta Post, Jakarta<\/p>\n
Jakarta will face an oversupply in strata-title retail space by
\nthe end of this year with an additional 250,000 square meters
\nentering the market, a property research company says.<\/p>\n
\"By the end of 2005, supply in Jakarta will be abundant while
\nthe demand will decline due to the current economic condition,\"
\nJones Lang LaSalle research manager Anton Sitorus said on
\nThursday.<\/p>\n
With several economic turn offs -- particularly higher
\ninflation and increasing interest rates -- the occupancy rate in
\nthe subsector, which is aimed primarily at middle-lower bracket
\ncustomers, is estimated to decline.<\/p>\n
The central bank predicts that the country will see double
\ndigit inflation until October 2006. The government was expecting
\na full-year inflation of 8 percent this year and 8.6 percent next
\nyear.<\/p>\n
Indonesian Retail Merchants Association (Aprindo) reported
\nthat small- and medium-scale retailers were hit hard by the high
\ninflation rate, not to mention the planned increase in
\nelectricity rates next year.<\/p>\n
In the first nine months of this year, developers supplied a
\ntotal of 791,244 sqm in new strata-title retail space, of which
\nonly 72 percent is occupied.<\/p>\n
As construction on some trade centers is expected to be
\ncompleted by the end of this year, there will be a new supply of
\nmore than 250,000 sqm.<\/p>\n
\"Since demand is less, the occupancy level will decline to
\naround 63 percent,\" Anton said.<\/p>\n
Data from Coldwell Banker Commercial (CBC) shows a higher
\nestimated new space of 412,500 sqm by the end of this year.<\/p>\n
According to CBC, the new supply will come from the completion
\nof Taman Palem Mall and Mega Glodok in North Jakarta; Lindeteves
\nTrade Center and Gajah Mada Square in Kota, West Jakarta; as well
\nas Pasar Cibubur and Cibubur Point in East Jakarta.<\/p>\n
LaSalle's study in the retail space market revealed that
\nvacancies in trade centers was expected to decrease in the next
\nthree years with lower supply and increasing demand.<\/p>\n
However, it said the occupancy level would unlikely increase
\nabove the current level.<\/p>\n
In 2002, the strata-title retail space market boomed, with
\ninvestment in the subsector able to break even in just a couple
\nof years.<\/p>\n
However, as more space became available as demand waned,
\ndevelopers have had to work harder to profit.<\/p>\n
\"They used to only have to sell 60 percent of their projects
\nto profit. Now, they have to sell at least 75 percent,\" LaSalle
\nstrategic consulting and investment head Bayu Utomo said.<\/p>\n
\"Actually, some trade centers could still have an occupancy
\nrate of more than 80 percent. However, it depends on the location
\nand the scale of the project,\" Anton added.<\/p>\n
He explained that developers should not carelessly pick any
\nlocation where there was obviously no market and downscale their
\nprojects in order to avoid a higher vacancy rate.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/retail-space-market-faces-oversupply-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}