Jakarta may face oversupply of retail space
Jakarta may face oversupply of retail space
JAKARTA (JP): With more shopping centers expected to open in
the next three years, there is some concern that Jakarta will be
oversupplied, property consultant First Pacific Davies Indonesia
said yesterday.
Julian Rayner, the company's retail space specialist, said
retail space supply would increase 18.06 percent to almost 1.3
million square meters next year.
This year alone supply is expected to increase 21.8 percent to
1.1 million square meters.
He said that because 358,000 square meters of retail space was
expected to come on line in 1998, the market would be
oversupplied for the next two to three years.
"But we believe it will only happen to certain types of retail
space. International standard shopping centers with sound
fundamentals, for example, should continue to perform well in
spite of the growing supply," he said.
He said the fundamentals included a sufficient catchment
population with an ability to spend, an accessible site, a good
design, an appealing mix of tenants and capable management.
But many shopping centers now open or under construction are
deficient in one or more of these areas, he said.
He said scarce construction finance and the high cost of
international-standard retail space could prevent oversupply.
"The scarcity of construction finance is unlikely to ease in
the near future and its effect will be to delay development
proposals and thus defer future supply," he said.
Rayner said two areas in Jakarta were not immediately
threatened by oversupply: the central business district and
north-eastern Jakarta (Kelapa Gading) where several major retail
projects are planned.
"If all planned projects proceed, then an oversupply situation
is possible in both these areas. However, this situation will
probably not materialize, mainly for funding reasons," he said.
He estimated the occupancy rate for this year and next year
would be 90 percent.
On office space, First Davies Indonesia director Martin Steens
noted that supply would reach almost 2.8 million square meters
next year with an average occupancy rate of more than 91 percent,
compared to 90 percent this year.
He said the rents for grade A office space -- around Jl.
Thamrin, Jl. Sudirman, Jl. Gatot Subroto and Kuningan -- would
increase slightly to between US$14 and $16 a square meter a
month, compared to between $8 and $13 outside prime areas.
Steens said there was a trend for companies to move from prime
areas to non-prime areas. But the growing relocations resulted
more from life-style decisions than the worsening condition of
traffic jams in prime areas, he said. (bnt)