Demand for office space doubles in CBD

Abdul Khalik, The Jakarta Post, Jakarta

Accelerated economic growth nearly doubled the demand for office space in the Central Business District (CBD) in the first half of the year, making it the highest demand recorded in seven years.

Chicago-based property consultant Jones Lang LaSalle said in a report that property owners in the CBD -- locally known as the Golden Triangle, which stretches along Jl. Jend. Sudirman, Jl. MH Thamrin and Jl. Rasuna Said -- rented out a total of 60,000 square meters (sqm) of office space in the first semester, almost double the 30,700 sqm leased in the corresponding period last year.

Total take-up of office space citywide reached 2,440,000 sqm in the first six months, or 79 percent of the total stock of 3,105,000 sqm.

"The high demand has been generated by banking and telecommunications companies, which have been very busy expanding their businesses in the first semester," Jones Lang LaSalle's country head, Robin Holdsworth, told reporters on Monday.

He said that the banking sector, especially the consumer banking and credit card divisions, had been growing fast while the telecommunications sector, particularly cell phone operators, continued to expand.

Jones Lang LaSalle also noted in its report that the high demand was driven by a favorable economic performance, indicated by encouraging gross domestic product (GDP) growth in the first half, which reached 5.5 percent compared to only 4.4 during the same period last year.

"Investment also grew by 13 percent, while exports grew by 7.3 percent. Optimism over the economy is also shown by the fact that investment approvals rose by 71 percent to US$5.93 billion this year," said Anton Sitorus, the company's research manager.

Demand for office space outside the CBD has also increased as some companies moved part of their operations to other parts of Jakarta.

Holdsworth said that many banks had decided to move their back-office operations to other areas in Greater Jakarta to reduce costs.

"The office space market in South Jakarta has been experiencing similar growth in demand to that in the CBD. Other areas have seen less growth," he said.

However, Holdsworth was unable to precisely predict the impact of the recent slump in the rupiah -- which on Tuesday was trading at Rp 10,525 per dollar -- as it was still too early to say.

"If the trend continues for more than six months, then it will have a bad impact on the property business. Right now, however, none of our clients have pulled out of deals," he said.

Jones Lang LaSalle also noted that stable socio-political conditions and continued economic growth had resulted in higher hotel occupancy rates.

The firm's vice president, Djodi Trisusanto, said the occupancy rate for five-star hotels increased to 46 percent in the first six months of this year compared to the same period last year.