Jakarta to see 700,000sqm of new office supply by 2025

A majority of the space is located in the CBD.

Construction activity in Jakarta’s office property sector continues, albeit at a slow pace. According to a Colliers report, some developers are still completing the certification required to legally operate office buildings.

Approximately 700,000 sq m of new supply is currently under construction in Jakarta, with about 70% of that space located in the CBD, and expected to be completed by 2025. 

Here’s more from Colliers:

A slowdown in office investment was caused by a rising inflation forecast and higher building material prices. Buildings already under construction will be delivered, while new ones appear to be delayed.

Investors are rethinking value and emphasising environmental, social and governance (ESG) factors in response to current occupant preferences, increasing regulatory requirements and operating asset costs. 

Building sustainability and high environmental standards are now key requirements in office space selection, particularly for multinational corporations. Providing a safe working environment has become an essential component of global policies.

Only two new operational buildings were completed in 2022 – PNM Tower (previously known as Office One) and Menara BRI – both in 1Q 2022. Until the end of 2022, the total area of office supply in the CBD was 7.04 million sq m. So far, the annual supply of office space for 2022 is around 76,000 sq m, the lowest in recent years. Nonetheless, the small supply addition this year is beneficial in preventing overall occupancy performance from declining further. 

Five office buildings, totaling approximately 320,000 sq m of new office space, are scheduled to be completed in 2023. With the current low occupancy, this will be a substantial amount of annual supply, and if the level of office space inquiries does not increase, the office market will face another difficult year. 

South Jakarta continues to actively contribute to office supply outside of the CBD. MTH 27 Office Suites is a recent project that began operating in 2022, bringing total supply outside the CBD to 3.72 million sq m. 

Another four projects have also been completed; however, those office buildings will most likely be operational by 2023, adding about 115,000 sq m of new supply.