The latest market insight about all property market sectors, including office building, retail, and industrial space
Driven by economic uncertainty and the weakening of Rupiah, the office sector might be experiencing a distinct "flight to value“, whereas tenants would consider to move to highly-competitive offices in strategic locations, even as the "flight to quality" trend persists. This would also imply that tenants would hold more bargaining power to renegotiate their passing rental prior to the lease expiry. Such widespread push for cost efficiency would also be fueling growth in flexible office, furnished spaces, and co-working office. In the meantime on the supply side, developers are delaying new projects to avoid high construction costs caused by the rising price of imported components.
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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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