Nine retail centers to enter overcrowd market

Nine retail centers to enter overcrowd market

Dewi Santoso, The Jakarta Post, Jakarta

Nine additional retail centers are to open in Jakarta this
year, creating even greater competition in the already-packed
retail market here, said a property consultant.

As of March 2004, cumulative retail space in the capital
totaled 1.69 million square meters (sqm). The incoming nine
retail centers will add 350,000 sqm and raise the area of
cumulative retail space to more than 2 million sqm by the end of
this year.

Lini Djafar, a director at property consultant PT Procon
Indah, said over the weekend that eight of the nine retail
centers would be strata title trade centers and only one would be
a shopping mall.

The planned centers include Cililitan Wholesale Market in East
Jakarta, Roxy Square in West Jakarta and a shopping mall in
Setiabudi, South Jakarta.

Around 30 percent of existing retail properties are
international trade centers, or ITCs, and the remaining 70
percent are shopping malls that housed restaurants and
entertainment facilities, Procon said.

"But ITCs are becoming more popular because they are able to
break even faster than malls, as they can be sold immediately
after they are constructed, while malls are available only to
rent," said Lini.

In terms of occupancy rates, however, ITCs score lower at an
average 70.1 percent occupancy, compared to malls at 85.4
percent.

She said the disparity was because unlike malls, many people
bought space at ITCs for investment and not necessarily for
operation.

"At ITCs, people buy single units and they can choose to use
them, lease them or resell them. At malls, people can only rent
one or more units under a specific contractual term," she
explained.

High occupancy rates in turn caused the malls' monthly rent to
increase by 15 percent to Rp 553,625 per square meter during the
first quarter, compared to the same period last year.

According to Lini, growing demand in the retail property
market was caused by the dominant force of private consumption,
driven by strengthening buying power.

On average, private consumption contributes 70 percent of the
gross domestic product (GDP).

Procon said in the meantime, retail properties that provide
restaurants and entertainment facilities would continue to
dominate the market.