Retail Jakarta Spotlight - January 2020
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Savills World Research
Indonesia
Spotlight
Retail ● Jakarta January 2020
Spotlight ● Retail January 2020
Spotlight
Retail ● Jakarta
Economy
2019 has been a tough period for the global As part of the open market, Indonesia through education and health is
economy with trade tension between US cannot escape from various global issues. anticipated to improve. Furthermore,
and China and recessions in some countries. In order to achieve economic target, the structural reforms have been widely
World GDP growth recorded its weakest country should quickly response and put a implemented in many aspects, including
pace since GFC a decade ago, reflecting balance between sustaining growth laws and regulations. For instance,
common influences across regions and momentum and maintaining government had proposed to the
country-specific factors. macroeconomic and financial stability. parliament Omnibus bill to amend around
74 laws in efforts to cut red tapes.
While economy this year is predicted to Indonesia has so far sustained a solid
grow moderately, many expect that the growth on the back of strong domestic Indonesia’s economic growth for 2020 is
bottom has passed. Yet, downside risks consumption, fiscal expansion and export projected to increase modestly. The
remain with US-Iran conflict, surmounting growth. The government massive spending government is targeting GDP growth at
debts worldwide and unfinished trade talks on infrastructure is expected to continue 5.3% – higher than 2019 (estimated)
– these may hamper global recovery. while development on human capital - growth rate of 5.0%.
CHART 1
National GDP Growth, 2006-2020F
Indonesia has so far sustained a solid progress
on the back of strong domestic consumption,
fiscal expansion and export growth.
The government massive spending on
infrastructure is expected to continue while
human capital development program through
education and health is anticipated to improve.
Source: BPS *) Government target
**) Estimate
TABLE 1
Key Figures – Indonesian Economy, 2011-2019
2011 2012 2013 2014 2015 2016 2017 2018 2019
GDP Growth (%) 6.50 6.23 5.78 5.09 4.79 5.02 5.07 5.17 5.02**
Interest Rate (%) 6.00 5.75 7.50 7.75 7.50 4.75 4.25 6.00 5.00
Inflation Rate (%) 5.38 4.28 6.97 6.45 6.38 3.02 3.61 3.13 2.72
Exchange Rate (USD/IDR) 9,068 9,670 12,189 12,440 13,795 13,436 13,548 14,481 13,091
Unemployment Rate (%) 6.56 6.07 6.17 5.94 6.18 5.61 5.50 5.34 5.28
Source: BPS. BI, MoF *) government target, unless other mentioned **) latest data available
savills.co.id/research 1
Spotlight ● Retail January 2020
CHART 2 To anticipate the sluggish economy,
Interest Rate & Inflation, 2015-2019 Indonesian government has implemented
some policies to ensure domestic stability
and resiliency. In line with global trends
among central banks in cutting off interest
rates, Bank Indonesia also trimmed the
benchmark interest rate four times in 2019
– which now stood at 5.0%.
The move had some positive impacts to
support low inflation and relatively stable
rupiah. By end 2019, inflation rate stood at
2.7% which still within the target range of
2.5%-4.5%. As for 2020, the government
targets the inflation rate at 3.0±1%.
Source: BPS, BI
Meanwhile, rupiah exchange rate against US
dollar have been relatively stable in 2019 and
it was closed at IDR 13,900 by end-Dec. Solid
CHART 3
Rupiah Exchange Rate (USD/IDR), 2014-2019 foreign reserves (approx. USD 129 billion)
helped to maintain the rupiah.
Furthermore, the government recently
announced to lower oil and gas prices in early
2020. If realized, this will help to reduce
household’s gasoline expenditures that in
turn would boost spending in other sectors
including in the property sector.
Aside from the above, the government
continues their efforts to cut red tapes and
providing more tax provisions to spur
investments. Compared to other countries in
the region, Indonesia with much bigger
economy and healthier GDP growth should
Source: BI be able to attract international and foreign
companies to do business here. Interests in
the last few years remained high with energy
and trading sectors became investors’ focus.
CHART 4
IDX Composite & Property Index, 2014-2019 With more acceleration in economic growth
and better policies in place, we expect to see
gradual improvements in spending power as
well as better wealth distribution. As such,
we expect inquiry from both end-users and
investors to gradually strengthen, while more
corporate expansion would translate into
more demand in sectors like office, logistics
and hotel accommodations.
However, we also believe that developers
should wisely manage their expectation
particularly on their pricing to make it more
attractive in order to win the competition
during a tough market condition.
Source: BEI
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Spotlight ● Retail January 2020
Jakarta Retail
Some renovation works and upgrades in
The retail market had witnessed some a number of shopping centers were
positive growth in 2019 compared to the eventually finished in 2019 which also
Retail enquiries grew bring in new tenants to that centers. For
previous year with net take-up picked-up
strongly and mall occupancies rebounded positively in 2019. example, large vacant areas previously
to healthier levels. Renovations and occupied by department stores had
been modified and converted to smaller
design renewal/ spaces for mini anchors or some
Three small shopping centers with total positioning works as specialty tenants.
leasable area of around 24,000 sqm were
completed in 2019. The new projects are seen in a number of With a number of openings especially
all categorized as middle-up lifestyle malls shopping malls had from new local F&B players, retail take-
with focus on leisure and F&B tenants. successfully lure more up in 2019 rose quite significantly
They are located in Central Jakarta, South compared to previous year. Combined
Jakarta and West Jakarta. With the traffic thus attracted with expansions from existing stores,
additional inventory, total retail supply retailers to expand net take-up totalled at around 75,000
(for lease) rose to approx. 3.1 million sqm sqm in 2019, quite a big jump from 2018
as of end-2019.
their outlets.
when net take-up were almost non-
existent.
By grade, the largest proportion in the
existing stock came from middle-up
shopping centers, accounting for 41% of CHART 5
the overall stock. The second largest stock Supply, Demand & Occupancy, 2010-2019
came from upper grade segment with
around 33% of the total. Meanwhile high-
end and middle-low retail centers -
accounted for 13.5% and 12.5%,
respectively.
By location, about 38% of total stock was
located in South Jakarta then followed by
North Jakarta at 20%. West Jakarta and
Central Jakarta constituted about 19% and
15% of the entire stock, respectively.
Meanwhile, East Jakarta as the largest
population in the capital city has the
smallest retail stock instead. Source: Savills Research & Consultancy
TABLE 2
Market Indicators – Rental Shopping Malls | Jakarta
Change (%)
2H19 1H19 2H18
HoH YoY
Existing Stock (sqm) 3,164,139 3,159,139 3,086,566 0.2% 2.5%
High-end 427,466 427,466 427,466 0.0% 0.0%
Upper 1,038,450 1,034,150 1,034,150 0.0% 0.4%
Middle-up 1,298,242 1,293,242 1,274,069 0.4% 1.9%
Middle-low 399,981 399,981 399,981 0.0% 0.0%
Avg. Rent (/sqm /mth) 346,200 346,200 348,430 0.0% -0.6%
High-end 773,571 773,571 773,571 0.0% 0.0%
Upper 505,556 505,556 502,222 0.0% 0.7%
Middle-up 289,326 289,326 291,568 0.0% -0.8%
Middle-low 211,042 211,042 213,333 0.0% -1.1%
Source: Savills Research & Consultancy
savills.co.id/research 3
Spotlight ● Retail January 2020
CHART 6 In general, the retail property sector in
Net Take-Up by Grade, 2010-2019 Jakarta remained attractive amid ongoing
competitions from online shopping. With
growing affluent class and thriving youth
segment, the market in Jakarta continued
to attract international retailers, particularly
F&B and fashion sector.
Some new foreign entrants in 2019 include
Eben (Hong Kong), Karuizawa (Japan), Nars
(USA), Pizza Maru (South Korea), Yogurtland
(USA), Ben Gong’s Tea (China), Harrits
Donuts & Coffee (Japan), Maki-san
(Singapore), Gram (Japan) and Hai Di Lao
China). Meanwhile, bubble tea craze is
currently a hit in Jakarta as evidenced by
many boba store openings in town. Tiger
Source: Savills Research & Consultancy
Sugar, Xing Fu Tang and Diagon Alley (all
from Taiwan) are some prominent players
that made their debut in 2019. They
CHART 7 aggressively expanded not only in Jakarta,
Vacancy by Grade, 2010-2019 but also in other big cities like Medan,
Surabaya, Bali, Bandung and Semarang.
Meanwhile, existing studio chain Cinemaxx
had rebranded as Cinepolis with official
announcement in early December 2019.
Cinepolis entered a partnership with Lippo
Group, the owner of Cinemaxx, by acquiring
40% of its stake. That move was taken as an
effort to heighten moviegoers’ experience
through innovation from the Cinepolis.
Also, fast fashion retailers like H&M and
Uniqlo continued to penetrate the market
with more stores targeting primarily youth
Source: Savills Research & Consultancy customers and young professionals.
Overall, increasing demand led to a lower
vacancy from 12.1% in 2018 to 10.4% by
CHART 8
end-2019. This also had reflected in entire
Rental Index by Grade, 2010-2019 (2010 = 100)
mall segments: in high-end malls vacancy
down to 4.5%, 5.9% in upper grade malls,
16.7% in middle-up and in middle-low
shopping centers vacancy down to 8.0%
Amid the decline in vacancy, retail rents
were basically unchanged as landlords
continued to focus on retaining their
tenants and trying to lure new ones. The
overall average rent in Jakarta stood at IDR
346,000 per sqm per month as of December
2019. In Jakarta’s high-end malls, rents for
typical specialty stores in prime floors are
Source: Savills Research & Consultancy offered at the average of IDR 773,571 per
sqm per month.
savills.co.id/research 4
Spotlight ● Retail January 2020
What is the outlook? CHART 9
Annual Supply, 2010-2019
Between 2020 and 2022, around 450,000
sqm of retail space from 18 projects is
scheduled for completion and will add to
the supply in Jakarta.
In terms of grade, most of the upcoming
supply is categorized as middle-up malls,
representing 60% of the future supply while
the rest is upper grade malls. By location,
the concentration of future supply will be in
North Jakarta (28%), South Jakarta (27%)
and Central Jakarta (26%). West Jakarta and
East Jakarta accounted for 12% and 7%
respectively. Source: Savills Research & Consultancy
Some projects previously scheduled for
completion in the last quarter of 2019 had CHART 10
delayed their openings – mostly due to slow Supply, Demand & Occupancy Forecast, 2020-2022
construction works. Those centers are
anticipated to open for trade in early 2020.
If completed, soon there will be two new
centers in the SCBD area (D8 and Elysee)
and one new mall in Senayan area (Spark).
The upcoming centers will be a fresh
addition to the CBD retail supply which had
seen no new developments in the last few
years. In response to the current trends, the
developers adopted lifestyle concept in their
malls with significant contents on F&B and
leisure retailers. With more lifestyle centers,
the CBD will be perceived as the most hip
Source: Savills Research & Consultancy
and trendy location in the capital city.
TABLE 3
Future Supply – Rental Shopping Mall | Jakarta
2020 2021 2022
Future Supply (sqm) 184,366 114,276 154,910
High-end - - -
Upper 154,366 16,000 11,910
Middle-up 30,000 98,276 143,000
Middle-low - - -
Central Jakarta 32,979 63,276 24,910
South Jakarta 124,887 - -
North Jakarta - 25,000 100,000
West Jakarta 26,500 26,000 -
East Jakarta - - 30,000
Source: Savills Research & Consultancy
savills.co.id/research 5Spotlight ● Retail January 2020
CHART 11
Rental Index Forecast, 2020-2022
Moderate Scenario
Source: Savills Research & Consultancy
With big population base and rising middle Meanwhile, successful upgrades in a Bell (USA), Go Noodle (Malaysia) and %
consumers, Indonesia continues to attract number of malls have brought positive Arabica (Japan) will open their stores soon
offshore investors. Growing investors’ impacts to their performances, which here. Meanwhile local coffee chain Kopi
appetite to acquire malls in Indonesia inspire other landlords to refresh their Kenangan, with strong back-up from from a
garnered a buzz in 2019. Notable deals centers in order to attract more tenants and global investor continues to expand and
include NWP Retail (Nirvana Wastu visitors. Some landlords that plan to targeting to add over 1,000 new outlets
Pratama), Indonesia’s largest independent renovate their malls include Melawai Plaza over the next 2 years.
retail shopping mall platform backed by and Gajah Mada Plaza.
Warburg Pincus, taking over malls from Along with the anticipated growth in
Lippo group. NWP entered into conditional Going ahead, we expect Jakarta future retail demand, retail rents are projected to pick
sale and purchase agreements to buy five scene will be more dynamic and innovative up gradually. Based on our moderate
malls located across the country in end- as retail brands evolving to create unique scenario, we expect the hike at around
2019 for a reportedly IDR 1.8 trillion. The value and experience to their customers. 3%-4% hike per annum over the next two
deal marked growing participation of Furthermore, F&B sector is projected to to three years.
international operators in Indonesia’s remain popular and have strong growth;
retail market – following the expansion of more investors and international players
Korean and Japanese retail developers. are seen to expand to Indonesia like Taco
Quickly
HopHop Boba Craze
Diagon Alley
Tiger Sugar
Outlet expansion
HeiHei (major brands)
IN Tea
Dirty Milk
Kamu Tea Bubble tea (or pearl milk tea,
Fat Bubble bubble milk tea called boba) is a
Chatime
Heycha
tea-based drink invented in
Kokumi Taiwan in the 1980s.
OneZo The first boba drink in Indonesia
Koi The was launched in 2000 – with
Daboba
‘Quickly’ as the pioneer.
Forever Tea
Ben Gong's Tea Later in 2001, Hop Hop opened
Happy Lemon targeting lower segment.
Gulu Gulu In the past couple of years,
Fat Straw Indonesia has experienced an
Xing Fu Tang
influx of boba outlets from local
0 50 100 150 200 250 and international alike.
# of outlets
savills.co.id/research 6Spotlight ● Retail January 2020
Glossary
• The Jakarta retail market covers the administrative region of DKI Jakarta,
Forecasting Methodology
which is defined based on municipality i.e.: Central Jakarta, South Jakarta,
East Jakarta, West Jakarta and North Jakarta
• Optimistic Scenario
• Demand as defined by net absorption (net take-up) refers to the net increase Based on assumptions that the general economic conditions to
in occupied retail space within a particular period. improve significantly (i.e. better GDP growth and positive macro
environment) which will lead to a more robust purchasing power
• High-end malls refer to shopping centers located in prime CBD areas with and consumer spending, thus generate significant retailer
international standard features and rated as the highest rank in terms of expansion, which would be reflected in significant take-up
building size, quality, tenancy mix and profile, facilities, maintenance etc. increase.
• Upper-grade malls refer to shopping centers located in strategic areas with • Moderate Scenario
excellent quality and rated as the second highest rank in terms of building
size, quality, tenancy mix and profile, facilities, maintenance etc. Based on assumptions that the general economic conditions to
grow moderately (i.e. stable GDP growth and neutral macro
• Middle-up malls refer to shopping centers located in good areas with good environment) which will provide a foundation for steady consumer
quality and rated as the third highest rank in terms of building size and spending and positive retailer expansion.
quality, tenancy mix and profile, facilities, maintenance etc.
• Pessimistic Scenario
• Middle-low malls refer to shopping centers located in decentralized areas
with standard quality and rated as the lowest rank in terms of building size Based on assumptions that the general economic conditions to
and quality, tenancy mix and profile, facilities, maintenance etc. weaken (i.e. lower GDP growth and negative macro environment)
with lack of retailer expansion and weak consumer spending.
• Vacancy rate refers to the ratio of vacant available retail space to the total
stock in the market.
• Gross rent refers to the total rental payable by tenants. This is equivalent to
the sum of base rent plus service charges.
• Base rent is the standard minimum rental payable for a retail space without
taking into account any add-ons such as service charge and after-hours
utility costs that make up the total occupancy costs.
• Service charge is the collective name for the cost of air-conditioning,
electricity and other services in public area as well as management charges
passed on to occupiers.
Please contact us for further information
Savills Indonesia Savills Research
Jeffrey Hong Anton Sitorus Simon Smith
President Director Director, Research Senior Director
Savills Indonesia Consultancy Asia Pacific
+62 21 293 293 80 +62 21 293 293 80 +852 2842 4573
jeffrey.hong@savills.co.id anton.sitorus@savills.co.id ssmith@savills.com.hk
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