Rentals for retail space rise as demand continues to grow
JAKARTA (JP): An increase in demand for retail space over the past several months has resulted in an increase in rentals, and the trend is likely continue.
According to the latest property market overview issued by international property consultant Colliers Jardine, rentals for retail space in Jakarta and surrounding areas increased by 10 percent and 5 percent, respectively, in August over the previous year,
The high demand for retail property has pushed up rental rates. The average monthly rent in rupiah stood at Rp 200,000 (US$22.2) per sq meter for inner Jakarta and Rp 120,000 per sq meter for outer Jakarta.
For premium shopping centers, the average monthly rate ranged from $70 per sq meter to $80 per sq meter at the end of August.
Colliers Jardine's managing director in Indonesia, Richard Rossiter, said, "Fully occupied malls located in outer Jakarta, including Bintaro Plaza, Metropolitan Mall, Diamon Mall and Mall Cikarang, have started collecting higher monthly rentals in the range of $11.50 to $17.10 per sq meter."
Due to the rupiah's depreciation in February, 2001, premium shopping centers such as Pondok Indah Mall, Plaza Senayan and Plaza Indonesia have adopted higher fixed exchange rates in the range of Rp 5,000 to Rp 5,500 per U.S. dollar.
According to the Association of Indonesian Shopping Centers, the current fixed exchange rate, on average, ranges from Rp 4,000 to Rp 4,500 per dollar.
Along with the expansion plans of the major retail players and the forecast recovery of the country's economy, the average monthly rent is expected to increase by 10 percent to Rp 220,000 ($24.40) per sq meter in Jakarta and by 8 percent to Rp 130,000 ($14.40) in outer Jakarta.
According Colliers Jardine, as of the first half of this year, the service charges for Premium Grade developments ranged from $7 per sq meter per month to $10 sq meter per month. For A/B Grade projects, the range is between Rp 25,000 per sq meter and Rp 50,000 per month. Most retailers have adopted a standard of Rp 40,000 per sq meter per month.
In Surabaya, the rental rates of the shopping centers are between $20 per sq meter to $50 per sq meter (at an exchange rate of between Rp 3,500 and Rp 4,000 per U.S. dollar).
In Bandung, the rental rates for most shopping centers remain stable. The rentals at the Palaguna Plaza are, for example, between Rp 50,000 and Rp 55,000 per sq meter, according to Colliers Jardine.
Indonesia's retail property sector demonstrated resilience amid a topsy-turvy economy to achieve an average occupancy rate of 97 percent in the first semester ended in June.
"Compared to other property segments where flagging confidence prevails due to political and economic uncertainties, the retail sector is doing reasonably well," Rossiter said.
However, toward the end of 2001, the momentum of retail space absorption is expected to slow as inoperative malls are scheduled to reopen, combined with the launch of new shopping malls. Soon- to-open retail centers include ITC Cempaka Mas (65,000 sq meters), the extended section of Pasaraya Grande (29,000 sq meters) and Plaza Cibubur (9,000 sq meters).
A total of 154,000 sq meters of retail space is forecast to enter the market from August till the year's end. The fresh supply will continue into 2002, with 194,000 sq meters of space to enter the market, an increase of 11.6 percent over the current level.
Colliers Jardine also said that certain malls tend to attract a certain kind of retail business, a trend that is likely to continue with the new shopping centers coming into operation.
For example, Harco Mas Mangga Dua and Glodok Plaza are focusing on the computer and electronics markets, whereas smaller outlets from ITC Kuningan are dedicated to fashion retail.(hen)