Jakarta office rents to continue declining in the next 12 months

But it’s expected to do so at a slower rate.

According to a JLL report, enquiries in Jakarta’s office segment are likely to remain healthy, but for relatively smaller sizes. Hence, occupancy rates are likely to continue to be under pressure.

While positive net demand characterised by flight to quality will likely be seen in the next 12 months, rents are expected to continue declining at a slower rate due to the upcoming supply and limited demand.

Here’s more from JLL:

A net demand of around 9,000 sqm came from a rising global technology start-up that entered a Grade A office in the Sudirman corridor. Driven by several companies, the technology sector contributed significantly, accounting for 40% of the positive demand in 2Q23.

Other than the technology sector, demand also came from various flex-space operators in the second quarter of 2023. One flex-space operator expanded its operations by two whole floors in one building, and two other operators branched out to the newer Grade A buildings.

One project postpones launch to the second half of 2023

The completion of Thamrin Nine 2 – Luminary Tower, which would deliver around 40,000 sqm, was postponed to the second half of 2023. Hence, Jakarta Mori Tower remained the only newly-added supply in the first half of 2023.

The 2Q23 vacancy rate recorded approximately 37%, slightly lower than the previous quarter due to the positive net demand and no new completions in the second quarter.

Rents continue to decline, but at a slower rate

Rents continued to decline by approximately -2.1% q-o-q and -8.2% y-o-y. As of 2Q23, Grade A net effective rents recorded slightly below IDR 200,000 per sqm, per month.

While enquiries have started to pick up as most economic activities gradually returned to pre-pandemic levels, the high vacancy rates remained, driving rents to be competitive, especially in the lower-occupancy buildings.

Note: Jakarta Office refers to Jakarta's CBD Grade A office market.