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The continued adoption of hybrid working model, particularly among multinational companies aligning with regional office policies, combined with the ongoing flight-to-quality trend, have led to a shift in demand toward smaller office spaces in higher-quality buildings located in more strategic areas. This reflects a growing preference for efficiency, accessibility, and premium-grade amenities.
Rental rates in Jakarta CBD are projected to gradually experience an uptick, amidst the absence of upcoming new supply and strengthening demand for high-quality buildings. In the meantime, rental rates in the OCBD area are expected to remain stable, as landlords are likely to maintain competitive pricing in response to future new supply and the need to attract and retain tenants.
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Despite the ongoing trends of hybrid working, the conclusion of the conducive presidential election in February has begun to stimulate movement among companies due to increased employee traffic, prompting expansion or the resumption of delayed plans to set up new offices in the Jakarta office market. As landlords continuing to offer competitive rental packages to maintain market attractiveness, further growth in office space demand is anticipated in the upcoming quarter. Leasing volume is expected to move towards pre-pandemic level, as a result of improved macroeconomic landscape and office demand over some consecutive quarters. Despite the uptick in demand, yet, particular numbers of lease currently being executed still indicate a trend towards downsizing, albeit at a gradual declining rate, whilst inquiries for higher office building quality are expected to increase as occupiers continue to strive to comply with ESG goals.
Despite the positive demand in the office sector in 2023, yet the movement for Jakarta office market remains cautious, and we expect that such condition would remain unchanged. Careful assessment of space expansion amongst corporations amidst uncertainty or so-called wait-and-see, is the most likely scenario in the election year 2024.
The economic recovery in 2023 has been a silver lining for Indonesia. Despite a noticeable uptick in demand for property, which indicated a positive trend, the movement in demand is predicted to remain cautious.
Apart from mortar-and-bricks mall, stand-alone retail concept has been eyed by some retail players due to its relatively competitive rental. Some landlords might consider revenue sharing with flexibility of proportion to attract tenants, especially to new players in this market. Due to the election year in 2024, both landlords and retailers are expected to become cautious in expanding their portfolio
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