The Ripple Effect of Chinese Manufacturing Investment: Demand for Modern Warehouses Soars
Economic activity in the commercial property sector throughout the first quarter of 2026 showed uneven growth patterns. While the office and vertical residential sub-sectors are still struggling to emerge from a phase of stagnation, the logistics industry and modern storage space rental are moving in a different direction.
The warehousing sector has managed to maintain its position as the most resilient and consistent performing property segment.
Macroeconomic data shows that Indonesia’s gross domestic product (GDP) grew 5.61% year-on-year in the first quarter of 2026, with the manufacturing sector being the dominant contributor. In the same period, net foreign direct investment (FDI) reached $15.1 billion, an increase of 7.8% year-on-year. The top three countries investing capital are Singapore, Hong Kong, and China. The influx of foreign capital, especially in the real sector and manufacturing, mechanically directly increases the need for large-scale commercial distribution space.
A market research report on commercial property in the first quarter of 2026 shows that the supply of modern logistics space in the Greater Jakarta area has now reached a cumulative 3.2 million square meters. Although the supply continues to increase periodically, the market has proven capable of absorbing the new spaces without putting pressure on occupancy rates. The high market absorption rate is directly reflected in the stability of logistics property occupancy. In the Greater Jakarta area, the average occupancy rate for modern warehouses remains strong at 96%. This figure reflects a very healthy market condition, where the available vacant space in the market is relatively limited for a dynamic metropolis.
Country Head and Head of Logistics & Industrial JLL Indonesia, Farazia Basarah, explained how foreign capital dynamics are driving this ecosystem in an integrated manner from upstream to downstream. “This growth is driven by strong Chinese manufacturing investment, including demand for modern warehousing, ready-to-use factory rentals, and industrial land,” said Farazia, Tuesday (May 17, 2026).