Jakarta grows into shopping destination

Tantri Yuliandini The Jakarta Post/Jakarta

Kelapa Gading Mall in North Jakarta is the place to go for those with ticklish taste buds, or if you prefer hanging out with friends and drinking coffee then perhaps Cilandak Town Square in South Jakarta is for you.

Bargain hunters should check out the clothing selection in the numerous International Trade Centers (ITC) dotted around the city, but if window-shopping is more your thing then Plaza Indonesia in Central Jakarta is the place to go.

Metropolitan Jakarta is never short of shopping destinations, and while property experts warn that there is already an oversupply of retail space in the Jakarta property market, new malls keep cropping up.

"That's what they say all the time, but the truth is that Jakarta malls are never empty," the marketing general manager for Bellanova Country Mall in Sentul, Bogor, Felix S. Hasamin, said recently.

The malls may not be empty of visitors, but with the expected development of several new malls over the next few years, the danger of oversupply is very real.

The completion of Pondok Indah Mall 2 and Pondok Indah Square (POINS) in South Jakarta, for example, increased Jakarta's total retail stock to about 2.13 million square meters as of the end of September, property consultant Jones Lang LaSalle said in its third quarter report.

In the next three years, at least 18 new retail developments are due for completion, most of which will be located in Central and South Jakarta.

In 2006 alone, an additional 510,000 square meters of retail space is expected when eight projects -- including Sudirman Place, Mega Glodok Kemayoran and Jakarta City Center -- finish construction.

"Another 550,000 square meters from seven projects are predicted to come onstream in the 2007-2008 period," Jones Lang LaSalle said.

Retail centers and shopping malls have proven to be one of the most resilient property sectors in bouncing back from the 1997 monetary crisis, and the emergence of massive shopping malls and trade centers in 2002 also marked the recovery of the property market.

But as new supply outstrips take-up, more and more vacant spaces are expected. According to Jones Lang LaSalle, vacancy levels rose to 13.7 percent during the third quarter of this year, compared to 11 percent during the same period last year.

"By the end of 2005, supply in Jakarta will be abundant while demand will decline due to the current economic condition," Jones Lang LaSalle research manager Anton Sitorus said.

He predicted vacancies will hit 17 percent to 18 percent next year, or similar to the post-1998 level, only to soften in 2007 or 2008 in line with the pick up in demand.

Most of the vacancies are in strata-titled trade centers -- aimed at customers in the middle to lower economic brackets -- with mostly repeat local tenants who are vulnerable to changes in the country's economy.

The government's move to increase fuel prices by up to 126 percent in October sparked inflationary pressure, causing the Consumer Price Index to rise to 17.9 percent in October, its highest level in the last six years.

The Indonesian Retail Merchants Association reported that small and medium-scale retailers were hit hard by high inflation rates, and would also suffer from a planned increase in electricity rates next year.

"Two years ago, I could sell five units (of strata-titled retail space) a month, but now I can only sell two," a saleswoman for a retail development company in Bekasi, Floureno Milla, said.

Short-term demand will likely be concentrated in the upper market segment rather than the middle to lower end of the market, because the former is relatively protected from the impact of higher inflation.

The occupancy rate for strata-titled retail space in Jakarta -- still considered the region with the best prospects -- stands at about 68 percent. The occupancy rate drops to about 54 percent on the outskirts of the city, according to property research firm Procon Indah.

The development of leased spaces, however, remains strong with occupancy rates of about 91 percent in Jakarta and 96 percent on the outskirts.

Colliers International reported that inquiries for retail space remained strong in some prominent leased malls such as Mall Kelapa Gading in North Jakarta, Mall Taman Anggrek in West Jakarta, Plaza Indonesia in Central Jakarta and Pondok Indah Mall in South Jakarta.

Arcadia Senayan in South Jakarta enjoys full occupancy, thanks in part to its parent, Plaza Senayan, with tenants such as Taiwanese restaurant Din Tai Fung, Red Square Bar, Brasserie Madeleine and My Body Gym and Spa, the property consultant said.

Besides competition for space, shopping mall developers are also under pressure to be more creative to attract both tenants and visitors.

The piazza concept -- a public square with room for pedestrians -- initiated by Cilandak Town Square in South Jakarta is one concept that recently has showed great popularity.

It has now been imitated by the Summarecon Group's La Piazza in Kelapa Gading, North Jakarta, Benton Junction at Supermal Lippo Karawaci, City Walk at Citra Grand Cibubur, and the Bellanova Country Mall in Sentul, Bogor, which is scheduled to open in May 2006.

So, what's your favorite shopping destination in Jakarta?