Quarterly | Office | Jakarta | 20 July 2023

Office market remains relatively stagnant,

but structural changes are taking shape

Insights & recommendations

The post-pandemic landscape has witnessed a slow and uneven recovery, creating a significant divide
among office buildings. Those located in attractive areas are experiencing robust demand, leading to rent
growth, while older buildings are encountering a smaller pool of interested tenants.
This divergence is a result of both occupiers and landlords adapting to new working patterns. Tenants are
making efforts to shed under-utilised office space, thereby contributing to the already substantial supply of
available properties. Consequently, the market remains favorable for tenants. In this transformed era,
landlords are compelled to remain accommodative and flexible, continuously offering competitive packages
to secure transactions.

2023–2025
Q2 2023 Full Year 2022 Annual Avg.

The demand for office space remains largely

driven by technology-based companies and those
Demand involved in renewable energy. Nevertheless, many
of the inquiries received are not expected to result 32,218 sq m 159,162 sq m 190,155 sq m
in immediate transactions.

Almost 80% of the total supply projected for 2023–

2025 comprises premium and Grade A office
Supply buildings. The cumulative supply is expected to 85,782 sq m 463,096 sq m 263,025 sq m
grow at a rate of 2.0–2.5% per year during this
period.

Annual Avg Growth

QOQ/ YOY/ 2023–2025/
End Q2 End 2023 End 2025

0% 1.92% 3.28%
Rental rates are expected to increase by about 3%
per year between 2023 and 2025. However, there
Rent is still a significant gap between the asking and IDR206,371 IDR210,795 IDR227,868
transacted rental prices, which is likely to persist,
at least throughout 2023.

1
 Annual Avg Growth
QOQ/ YOY/ 2023–2025/
End Q2 End 2023 End 2025

The vacancy rate in 2023 is expected to be lower -1.47 1.69 0.11

than in 2022, primarily due to reasonable future
supply projections. This trend is predicted to
Vacancy 26.6% 28.02% 26.69%
continue, leading to a further decrease in vacancy
rates up to 2025.

The demand for fresh capital and an improving

business environment will drive an increase in 0% 0.63% 0.71%
strata-building sales volume. With limited supply
Selling price available for sale, selling prices are expected to IDR48.3mio IDR48.8mio IDR49.6mio
grow by 4–5% per year during 2023–2025.

Source: Colliers. Note: IDR14,866 = 1 USD.

Constrained supply amidst Annual supply

decelerating construction activity CBD Outside the CBD

550,000
The pace of construction progress in the office
building sector has been notably slow, leading to the 440,000
rescheduling of completion dates for some projects.
Nonetheless, a few projects managed to reach 330,000
completion and commence operations in Q2 2023.
220,000
In the CBD, T Tower, situated in Gatot Subroto,
contributed to a cumulative supply of 7.36 million sq 110,000
m in Q2 2023. Presently, three projects remain under
0
construction. Luminary Tower, located within Thamrin
2023E

2024E

2025E
2016

2017

2018

2019

2020

2021

2022

Nine, is expected to meet completion by the end of

2023. Additionally, Indonesia-1 North and South
Towers are projected to be completed in 2025. Apart Source: Colliers
from the ongoing construction, some developers are
poised to initiate new projects. The conducive Outside the CBD, Lippo Tower Holland Village has
environment is likely to facilitate the commencement become operational, contributing to a cumulative
of at least three new office developments in the near supply of 3.85 million sq m in Q2 2023. Currently, six
future. projects are under construction, collectively expected
to deliver about 260,000 sq m of new supply by 2025
outside the CBD area.

2
Cumulative supply Occupancy rate

CBD Outside the CBD CBD Outside the CBD

8,000,000 100%

6,400,000 90%

4,800,000 80%

3,200,000 70%

1,600,000 60%

0 2023E 50%

2024E

2025E
2016

2017

2018

2019

2020

2021

2022

2023E

2024E

2025E
2016

2017

2018

2019

2020

2021

2022
Source: Colliers Source: Colliers

Expectations are high for further potential

Corporate reshaping: transactions. However, the large additional supply of
strategizing future space needs, office space may exert pressure on the average
occupancy rate, at least until the end of 2023.
utilisation, and location Moreover, as we approach the general election year
in 2024, it is customary for business activities to
With the lifting of pandemic restrictions, an
experience a slight slowdown.
increasing number of companies are gradually
shifting back to work-from-office (WFO) policies. This
positive development signals a potential resurgence Steady asking rents with
in demand for office space during the post-
pandemic era. As companies that previously
attractive concessions still
downsized their office spaces and adopted hybrid available
work models consider fully returning their
employees to offices, there is a growing need for During Q2 2023, the average rent for office spaces in
larger office spaces. the CBD was recorded at IDR243,432, showing relative
stability compared to Q1 2023. Most developers are
Recent transactions in Q2 2023 have been notably expected to maintain the base rent at a steady level.
driven by various sectors, including engineering, However, the completion of some premium buildings
consultancy, services, petroleum, home product has impacted the calculation of the average rent for
packaging, healthcare, and energy. The logistics, 2023, resulting in an approximate 2% improvement
financial, and technology sectors continue to actively compared to 2022.
seek office spaces.
Asking base rent
The previous year posed challenges for start-up
businesses, with many venture capitalists exercising CBD Outside the CBD
caution in funding. Consequently, some start-up IDR400,000
companies faced financial difficulties. However,
certain resilient businesses managed to thrive and IDR320,000
receive funding for expansion. For instance, a
IDR240,000
Singaporean start-up beverage company
successfully opened its first office in Indonesia. IDR160,000
In Q2 2023, the average occupancy rate in the CBD
IDR80,000
registered at 73.7%, rising by 1.7% compared to Q1
2023. Meanwhile, the average occupancy rate IDR0
tended to be stable at 73% outside the CBD.
2023E

2024E

2025E
2016

2017

2018

2019

2020

2021

2022

Source: Colliers

3
Outside the CBD, the average rent remained stable at The modest sales volume has influenced the average
IDR169,310. It is also anticipated to remain relatively selling prices in Q2 2023, which were recorded at
stable until the end of 2023, with a slight drop of IDR 56.1 million within the CBD and IDR 42.5 million
around 3% compared to 2022. outside the CBD.
Inquiries for office spaces are expected to improve,
Selling price
boosting landlord confidence. Nevertheless, most
developers continue to prioritise increasing the CBD Outside the CBD
occupancy rate, which has been impacted by the 75
prolonged pandemic. Additionally, several future
60
projects remain on schedule to add more vacant

in IDR mio
space, intensifying competition among landlords to 45
secure tenants. As the tenant market continues to
drive landlords to work harder at retaining tenants 30
and increasing occupancy rates, landlords are offering
competitive rental rates and attractive fit-out 15
incentives in terms of periods or payment methods.
0

2023E

2024E

2025E
2016

2017

2018

2019

2020

2021

2022
Challenging sales volume drives
continued pressure on cap rates Source: Colliers

Amidst the pandemic, selling prices have remained

relatively stable, largely due to the continued
depression in rental rates. Conversely, property
owners have been hesitant to lower their selling
prices, resulting in reduced capitalisation rates for
prospective buyers, making leasing a more acceptable
option.

Appendix
Under construction projects
SGA Marketing
Project Name Location Developer
(sq m) Scheme

CBD
2023
Thamrin Nine (Luminary
Thamrin Putragaya Wahana 51,000 For lease
Tower)

2025

Indonesia-1 North Tower Thamrin Media Group 79,486 For lease

Indonesia-1 South Tower Thamrin Media Group 72,814 For sale

continued

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 SGA Marketing
Project Name Location Developer
(sq m) Scheme
continuation

Outside the CBD

2023
TB Simatupang,
Sanggala Tower Sapta Tunggal Mulia 9,900 For Lease & Sale
South Jakarta
TB Simatupang,
The Sima Grage Trimitra Usaha 59,169 For Lease & Sale
South Jakarta
Fatmawati, South
One Belpark Office Harmas Jalesveva 17,800 For Lease
Jakarta

2024
Sun & Moon (The Owner Dharmawangsa,
Dharma Tatemono 35,678 For sale
Suite by Dharmawangsa) South Jakarta
Menara Jakarta Office Kemayoran, Central
Agung Sedayu 90,000 For lease & sale
Tower Jakarta
Pantai Indah Kapuk,
ADR Office Griya Inti Perkasa 48,000 For lease
North Jakarta
Source: Colliers

Performance
Occupancy Base rent*
Office Performance
2019 Q2 2023 2019 Q2 2023
CBD
By sub-market
Thamrin 91.5% 70.6% 270,557 227,756

Sudirman 80.8% 74.5% 294,415 273,882

Rasuna said 90.6% 73.5% 215,704 199,978

Mega Kuningan 75.1% 63.8% 246,654 245,927

Gatot Subroto 83.2% 75.3% 282,357 225,957

Satrio 87.8% 81.0% 236,548 197,454

By grade
Premium 81.6% 72.6% 346,634 331,920

Grade A 82.4% 77.3% 298,796 249,141

Grade B 87.7% 71.8% 228,385 211,917

Grade C 83.0% 66.8% 173,265 159,952

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 Occupancy Base rent*
Office Performance
2019 Q2 2023 2019 Q2 2023
Outside CBD
By area
Central Jakarta 84.4% 67.1% 203,554 167,415

South Jakarta 82.0% 74.0% 211,064 176,855

North Jakarta 74.3% 70.5% 183,862 172,462

East Jakarta 90.0% 86.2% 82,286 76,909

West Jakarta 82.9% 75.7% 160,774 152,055

By grade
Grade A 67.1% 77.4% 241,146 225,396

Grade B 78.4% 70.7% 195,354 186,987

Grade C 91.9% 73.9% 136,729 124,879

*) IDR/sq m/month
Source: Colliers

6
 For further information, please contact:
Ferry Salanto Eko Arfianto
Senior Associate Director | Senior Manager | Research |
Research | Jakarta Jakarta
62(21) 3043 6730 62(21) 3043 6726
[email protected] [email protected]

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