Local retail market still promising: Expert
JAKARTA (JP): The retail market in Jakarta is expected to increase this year as consumer confidence has recovered with the strengthening of the rupiah to the greenback, according to property consultant Jones Lang LaSalle/PT Procon Indah.
The increase of consumer purchasing power and declining deposit rates from over 60 percent in mid-1998 to only 13 percent last month has improved retailer confidence levels, the consultant said in a biweekly property report.
In July and August, the opening of two refurbished retail centers in Mega ITC, Central Jakarta and Duta Merlin, West Jakarta increased the retail supply by 42,600 square meters, bringing the total to 1.12 million square meters as of the end of August, it said.
Additional supply was also generated by the newly refurbished Lippo Karawaci in Tangerang, which was damaged during the May riots last year.
The consultant said no retail project was under active construction at present except for renovation work in Plaza Slipi Jaya, West Jakarta. The work for Plaza Glodok will commence soon, and both centers are likely to enter the market in the year 2000/2001.
Jones Lang LaSalle said a total of 8,800-square-meter retail space was occupied in the second quarter, resulting in an increase in occupancy rate to 83.6 percent from 82.8 percent in the corresponding period last year.
By the opening of two retail centers recently, an additional 24,700-square-meter retail space was absorbed, it said.
The consultant said, however, assuming stable occupancy in other centers in the last two months, market occupancy would decrease to 82.8 percent by the end of the third quarter based on physical occupancy.
It also said foreign hypermarkets and retailers such as Continent, Carrefour and Sogo Department Store expanded their businesses by opening new outlets in Jakarta this year.
Inquiries received by the consultant increased by 30 percent in the second quarter. Potential buyers were showing more serious interest after the general election than those prior. The inquiries mostly came from new retailers, both foreign and local, from fashion, accessories and food sectors.
The company also said that the average face rentals remained relatively stable during the second quarter, where prime space ground floor rented in prime centers was priced at US$48.80 per square meter a month. Rents for secondary centers were stable at $35 per square meter with particular exchange rates introduced by owners, it added.
It expected rentals in rupiah terms to gradually increase with higher demand.
Despite uncertainty over the presidential election, aggressive expansion by major foreign retailers is expected to continue and will increase average occupancy of Jakarta retail centers to 86 percent in 1999, it said. (01)