Fri, 25 Feb 2011

From: The Jakarta Globe

By Muhamad Al Azhari & Shirley Wibisono
Analysts and industry players expect demand for office space in Jakarta’s central business district to continue growing this year as landlords take rising inflation and other costs into account.

Real estate consultancy Cushman & Wakefield said in a report on Wednesday that many landlords raised their base rental and service rates in the fourth quarter last year. It said many buildings with stable and high occupancy rates saw base rental prices increase 5 percent to 10 percent.

Adjustments in service charges ranged from 7 percent and 12 percent while rising inflation and electricity prices led to higher operational costs, the report said. By the end of the fourth quarter, the average gross rental - including base rent plus service charge - stood at Rp 145,300 ($16.42) per square meter per month.

Artadinata Djangkar, a director at commercial property developer Ciputra Property, backed up the report’s findings.

“Demand will continue growing. I see existing tenants moving to new buildings as they expand their business. As you can tell, office demand growth is closely related to economic growth,” he said on Thursday.

The report said anticipated rent hikes in January would not curb demand, predicting occupancy levels would likely rise in the first six months of 2011. Demand - which it called “pent-up” since 2008 and 2009 - in the central business district would come largely from banking, insurance and other finance-related sectors.

Demand in Jakarta’s central business district reached 50,200 square meters during the fourth quarter last year, the report showed, while occupancy levels hit 85.2 percent. New leases for all of 2010 reached 203,900 square meters, up 86 percent from 2009.

Recently completed buildings - including Equity Tower, Bakrie Tower, UOB Plaza and Cyber Two Tower - contributed 80 percent of the fourth quarter’s fresh leases, the report said.

Artadinata said he believed office blocks in Ciputra Property’s Rp 3 trillion, 5.5 hectare superblock on Jalan Dr. Satrio in Kuningang, called Ciputra World, would be absorbed. “I believe our office sales will meet with good demand. We come at the time when Indonesia’s economy is about to take off,” he said.