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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In order to reduce the spread of this pandemic, Indonesian government took initiative actions by urging societies to reduce their activities such as social distancing, wearing personal protective equipment, and also work from home (WFH), which have been applicable to all individuals, groups and institutions. Despite that one quarter has passed and there is no certainty when the pandemic would end, there are some measurement that expected to occur in office market.
Omnibus Law: What would be the significance towards Property Market?
Indonesia has been fed by flashy news recently, called Job Creation Law (Undang Undang Cipta Kerja) or well known as the “Omnibus Law”. It is, actually, aimed to improve the ease of doing business and stimulate investment climate, especially under the hit on our economy due to COVID-19 pandemic.
Further Restriction, Further “Delay” of Business Operational Improvement.
During the implementation of “New Normal” in the previous quarter, business activities contracted as operations resumed. However, surging case of Covid-19 in Q3 2020 urged Jakarta Governor to impose further restriction to 25% of capacity in September, bringing business to further decelerate.
Welcoming the New Normal :
The continuation of COVID-19 Pandemic situation has led Indonesia to adjust their lifestyle as well as how-to-do business in property market as they are urged to modify their strategy in order to adapt to the new normal situation.
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