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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The positive sentiment towards recovery in 2022 has been high as the projected economic growth of 2022 by the government ranges 4.7%-5.5%. Some factors including vaccination rollout, the resume of business activities, and government stimulus would boost market confidence. The third dose of vaccination has been planned by the government and will be starting in the first quarter of 2022. A positive economic outlook driven by ongoing global economic improvement is expected to drive next year’s property demand growth.
The lockdown (PPKM) entering the Q3 2021 seemed to lengthen the delay of tenant activities. However, the vaccination program and such lockdown had been successful in suppressing the pandemic spread.
Despite the vaccination, as the pandemic case tends to increase by end of this quarter, there is the possibility that government would impose another restriction, especially on the red zone like Jakarta. Shall such restriction take place, business activities would undergo further slowdown that could trigger the government to revise their economic growth target to below 4.0% for 2021
Pertaining to the ongoing vaccination program, the year 2021 is expected to be the period where occupiers should gain more confidence in having their operational back, despite not in full yet.
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