Property Market overview - Amazon Simple Storage Services3.amazonaws.com/zanran_storage/ · Several planned buildings were introduced in this quarter, including Menara Bidakara 2,

c o l l i e r s i n t e r n at i o n a l | J a K a rta , B a l i , s U r a B aYa

Property Market overview

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oFFice sector

sUPPlY

tHe cBDIn the early quarter of 2008, the CBD office market saw additional space of more than 100,000 sq m. Nevertheless, from the total projection of more than 200,000 sq m of space this year, none came onto the market during the quarter under review. Buildings that are expected to be com-pleted in the near future are The Energy, UOB Tower, Prudential Tower, City Tower and Menara DEA 2. Some other under-construction buildings with projected completion dates in 2008-2009 are listed in the table.

Several planned buildings were introduced in this quarter, including Menara Bidakara 2, Graha 18, Setiabudi Tower, Republic Plaza and Sentral Senayan 3. These buildings are expected to add a total of around 160,000 sq m to the market.

In the quarter, we saw changes in building names due to tenant movements. The space va-cated by Standard Chartered Bank has been acquired by ANZ Bank, which moved from Panin building. The building’s name was, therefore, changed to ANZ Tower. Meanwhile, after signing a sizeable transaction deal, the under-construction Sudirman Tower was renamed Pruden-tial Tower after its anchor tenant.

To date, total office supply in the CBD remained at 3.71 million sq m, which represents around 70% of the total office stock in the whole Jakarta area.

INDONESIAN ECONOMIC INDICATOR

2004 2005 2006 2007 2Q08

economic Growth (% YoY) 5.00 5.70 5.50 6.30 6.40

inflation rate (%) 6.40 17.11 6.60 6.59 8.851

exchange rate (rp/Us$) 8,934 9,695 8,980 9,124 9,2451

interest rate - central Bank rate (%) 7.40 12.75 9.75 8.00 9.002

econoMic inDicators

Source: Statistics Indonesia, Finance Department, Bank Indonesia

Notes:1 January - July 2008 2 august 2008

None of the under-construction office buildings in the CBD were launched in the reviewed quarter; however, future sup-ply in the remainder of the year will be quite significant.

colliers international2

IN THE CBD AREA

BUilDinG naMe location eXPecteD coMPletion

the energy scBD 2008

city tower MH thamrin 2008

UoB Plaza MH thamrin 2008

Boutique office @senayan city senayan 2008

Menara Dea ii Mega Kuningan 2008

Menara Palma rasuna said 2008

Prudential tower sudirman 2009

cyber 2 rasuna said 2009

Bakrie tower rasuna said 2009

the Plaza MH thamrin 2009

eighty 8 @Kota Kasablanka casablanca 2009

Menara Bidakara 2

Graha 18

republic Plaza

Kuningan city office tower

sentral senayan 3

equity tower

office @ciputra tower

Gatot subroto

scBD

rasuna said

satrio

senayan

scBD

satrio

2009

2009

2009

2010

2010

2010

2011

total space 797,779 sq m

list oF UnDer constrUction oFFice BUilDinG

The Knowledge Report | August | 2008 | Quarterly Research Report

annUal sUPPlY in tHe cBD & ProJection UP to 2010

Source: Colliers International Indonesia - Research Department


.

(50,000)

0

50,000

100,000

150,000

200,000

250,000

300,000

2000 2001 2002 2003 2004 2005 2006 2007 2008P 2009P 2010Psq m

For Lease For Sale

colliers international 3


oUtsiDe tHe cBD Three buildings became ready for operation in the quarter, including Recapital in Kebayoran Baru, The Boulevard in Tanah Abang and Treva in Kebayoran Baru. The latter was of-fered for en-bloc sale. This boosted space in the area outside the CBD by another 22,678 sq m, bringing the cumulative office stock in the non-CBD area to 1.59 million sq m. An-other building, Talavera, is expected to come into operation in 3Q08.

Around 127,518 sq m of office space is in the pipeline and scheduled for completion in 2009. Menara 165 is working fast to finish the podium for their training facilities and other buildings listed in the table below are

now progressing with their development phases. It is interesting to note is that most of these buildings are located in South Jakarta. Meanwhile, on Jalan S.Parman, construction is progressing on the sizeable Central Park Office Tower, which is offered for strata-title sale. Also in the Kemayoran area, KEM Tower is finalising construction.

In the quarter, new office buildings were in-troduced, i.e. Area 24. This project is located on Jalan Pasar Minggu Raya, Pancoran and projected for completion in 2011. Sitting on 2.5 hectares of land, this mixed-use develop-ment will provide around 48,000 sq m of office space.

OUTSIDE THE CBD

BUilDinG naMe location eXPecteD coMPletion

talavera tB simatupang 2008

Grand Kebon sirih Kebon sirih 2008

Menara 165 tB simatupang 2009

arcadia tower F tB simatupang 2009

Gandaria office arteri Pondok indah 2009

Mt Haryono office Mt Haryono 2009

Mt Haryono square otista 2009

KeM tower

central Park office tower

total space

Kemayoran

Grogol, s Parman

2009

2010

242,293 sq m

list oF UnDer constrUction oFFice BUilDinG


DeManD

tHe cBDSome of the significant transactions we re-corded include those from Prudential and Ace Ina in Menara Cakrawala, ABN Amro in Wisma Nusantara, Global TV in Ariobimo, Sari Jaya Group in Permata Bank Tower, LG in Pacific Place and other small transactions in other office buildings. Furthermore, signifi-cant relocations to newer buildings included

those by such tenants as Standard Chartered Bank and BCA. The movement of large ten-ants left sizeable vacant spaces in their previ-ous buildings. Thus, the combination of ten-ant movements stabilised the occupancy rate this quarter at 88.76%, which reflects a slight downturn compared to the previous quarter.

Three new buildings outside the CBD area came into operation, adding another 22,678 sq m of space.


cUMUlatiVe sUPPlY, DeManD anD occUPancY rate



Several buildings quoted US$ rate in the CBD adjusted the rental upward bringing the average rental buildings rate to increase significantly.

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008P 2009P 2010P

70%

73%

76%

79%

82%

85%

88%

91%

94%

97%

100%

Supply Demand Occupancy Rate

Although most of the leasing activity gener-ated so far this year has come from existing users relocating within the marketplace, the good news is that very few of these moves has involved downsizing. Space consolidation has, in most cases, resulted in an increase, rather than a decrease, in the size of the space occupied. We have managed to record some significant deals during the quarter, includ-ing an investment holding company that relocated and expanded from Menara BCD to a newer building, Sentral Senayan 2, tak-ing up around 5,900 sq m. Another large deal inked in the second quarter was the 7,200 sq m deal signed by an engineering company and poultry feed companies in BRI 2. Other deals signed within this quarter with a size of more than 1,500 sq m included space in Ariobimo Sentral taken by a leading local bank, space in Menara Anugrah taken by a flavours and fragrance company, space in Menara Mulia taken by an advertising company and space in Menara Prima taken by a local bank. Me-nara Prima has so far concluded around 6,736 sq m in this quarter alone. Several sizeable transactions of between 1,500 and 3,100 sq m occurred in The Energy, involving such com-panies as oil and mining enterprises, law firms, banks and financial institutions, with a total space of around 12,281 sq m. On other fronts, sizeable strata-title transac-tions were concluded in The East, with the relocation and expansion of the CPO Planta-tion company, which took around 6,600 sq m, and a telecommunication company that took around 2,000 sq m.

Meanwhile, commitment levels for under-construction projects were quite high. Of the office buildings that are under construction and scheduled to come into operation in 2008, about 125,724 sq m, or 67% of the total space, has been pre-committed by several ten-

ants. Up to now, several under-construction office buildings projected to be completed in 2009 have captured pre-committed tenants, despite their being small. Of the total po-tential supply in 2009, around 16% has been committed.

Continuing the trend of a stronger strata-title office market, some 80% of all strata-title of-fice buildings in the remainder of 2008 have been sold. The trend continues next year, with some 91% of the 86,026 sq m office space available in 2009 already sold.

oUtsiDe tHe cBDLeasing transactions outside the CBD area were not as active as within the CBD area. Several transactions on our records included the expansion of Barito Group in their own building. Another sizeable transaction oc-curred in Graha Atrium by finance companies and law firms. Nevertheless, the amount of vacated space was higher than the newly occupied space, which pushed occupancy down modestly to 88.36% from the previous 90.09%.

In the southern area, particularly along Jl. TB Simatupang, the pre-commitment level was quite high. The Talavera building, which is scheduled to come into operation in the next quarter, has made a commitment with several tenants, among them a big oil com-pany; oil-related companies, such as drilling providers and contractors; pharmaceutical companies; banks; and service office provid-ers. Another building that is currently under construction, Arcadia Tower F, was reported to have engaged a large telecommunication company, although this has not been officially confirmed.



asKinG Base rental rates

tHe cBDThe adjustment in base rental rates continued in this quarter. This time, several buildings with Rupiah rental rates moved their base rentals upwards at rates ranging between Rp5,000 and Rp10,000, or an increase of around 6% to 15% compared to the previous quarter. Similarly, after a significant climb last quarter, some buildings with US$ rates introduced new rental tariffs ranging from US$0.50 to US$2.00, reflecting an increase of around 10% compared to the previous quar-ter. Overall, the reasons for introducing new rental rates were mainly cited as the build

ings having achieved high occupancy rates and the need to adjust to the current market level. With all these changes taking place in the quarter, the overall average base rentals for office buildings in the CBD area rose to Rp87,268/sq m/month, up from the previous Rp85,176/sq m/month. An upward trend in average rentals also occurred in the buildings offering US$ rates with this quarter’s average asking rental recorded at US$15.71/sq m/month, a slight increase of 3.3% compared to the previous quarter.

aVeraGe asKinG Gross rent (all classes) For cBD oFFice sPace


oUtsiDe tHe cBDRental rates in this area remained flat, with a few adjustments in two buildings, thus stabilising the average asking rental rate at Rp59,450/sq m/month. Both buildings offer

ing Rupiah rates and those with US$ rates maintained their current rate at the same level as in the previous quarter.

Base rentals in the CBD continued to climb this quar-ter, but remained steady outside the CBD area.

serVice cHarGes

tHe cBDDespite the fuel price adjustment in the quar-ter, most developers still declined to introduce new tariffs for service charge. However, 114 projects introduced a new maintenance tariff as a result of increased operational costs. The increases ranged from Rp3,000 to Rp5,000/sq m/month, while one building with a US$ rate pushed the service charge upward by US$2.00/sq m/month. However, on average, the overall service charge tariff remained stable at Rp47,429/sq m/month. Meanwhile, the average service charge for US$ buildings was registered at US$6.06/sq m/month.

oUtsiDe tHe cBDWe saw only four buildings outside the CBD area that increased their service charge tariff. Three buildings increased the charge by Rp10,000, while the remaining building raised the rate by just Rp2,500. All in all, the average service charge did not register a wide discrepancy compared to the previous quarter, standing at Rp33.543/sq m/month. Meanwhile, the average service charge for US$ buildings within the non-CBD area was an average of US$4.30/sq m/month.

Mounting operational costs will likely push rentals up-ward in the next period.

Rp100,000

Rp110,000

Rp120,000

Rp130,000

Rp140,000

Rp150,000

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

Rupiah US$



oUtlooKThe short-term outlook for the office market remains bright. Much of this optimism is due to continued inquiries from existing tenants who plan to expand and the modest growth in supply over the next two years. We also con-tinue to see activity generated by the legal, finance-related, oil and mining, education, and telecommunication sectors.

Fuel price hikes might have an impact in the coming consecutive quarters, resulting in mounting operational costs. Thus far, many

developers are consolidating in anticipation of these increases. Newer buildings have ap-plied a different strategy toward service charge costs so that the whole rental package (base rent plus service charge) will not be high. Several newer buildings have implemented a separate electricity meter for tenants in order to curb service charge costs and allow tenants to control their own electricity costs. This system has made overall rental packages more attractive.



aPartMent strata-title For sale

sUPPlYDespite tough sales, supply is still vibrant, as indicated by the introduction of new apart-ment developments with a total of around 7,500 units.

Some of the newly introduced apartment projects are part of integrated developments that include two towers of Casa Grande Apart-ments at Kota Kasablanka, Denpasar Residence at Kuningan City, a three-tower apartment project at The St. Moritz Penthouse and Resi-dence in Puri Indah West Jakarta, and Ancol Mansion in Ancol, North Jakarta. Meanwhile the under-construction mixed-use project of Kemang Village in Kemang, South Jakarta, opened its new “Tiffany” tower, while Central Park in West Jakarta introduced its new tower, “Alaina”. Other projects were also introduced, among them The Stupa apartments in Men-teng, Central Jakarta, which is aimed at upper-class buyers, and those targeting mid-to-lower class buyers, such as The Tamansari Residence in the CBD, Intan apartments in TB Simatu-pang and Permata Regency apartments in West Jakarta. The lower-class apartment market is also growing following the government’s deci-sion to offer incentives for low-cost apartments (Rusunami, an abbreviation of Rumah Susun

Sederhana Milik). Thus far, projects such as Casablanca East Residence, Tanjung Kalibata and Gading Nias Residence have been intro-duced to the market.

A 2.8% growth in supply came from an ad-ditional 1,593 units that entered the market in eight projects, boosting the total supply to 60,838 units. This quarter, seven projects came into operation, namely Salemba Residence (Tower A), Patria Park, Sahid Metropolitan Residence, Cik Ditiro Residence, Hamptons Park (Tower D) and fX Residence.

The growth in apartment supply is enormous, with the expectation of another 11,107 new units coming online in the remainder of 2008. Most of the new supply will be provided by such massive developments as Seasons City and two low-cost apartment developments, Menara Cawang and East Park Apartments. The apartment market will continue to grow with another 50,613 units over the next quar-ter (within the period of 2009-2010) and, by end of 2010, the total number of apartment units for sale will be around 120,000, which is almost double the current stock!

sUPPlY GroWtH oF aPartMents For strata-title sale


aPartMent sector

Additional supply from seven projects invigorated the mar-ket within the quarter.

0

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40,000

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140,000

2000

2001

2002

2003

2004

2005

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2007

2Q20

08

2008

(p)

2009

(p)

2010

(p)

Tot

al U

nit



Significant supply in the quarter did not change the overall pattern of apartment dis-tribution in Jakarta. North Jakarta, the CBD and West Jakarta are the largest providers of apartments in terms of numbers of units. As

seen in the graph, a large number of the units available on the market are middle-class, with an asking price per sq m of between Rp6 mil-lion and Rp15 million.

CBD

26%

South

Jakarta

9%

North

Jakarta

25%

East Jakarta

1%

West

Jakarta

21%

Central

Jakarta

18%

-

2,000

4,000

6,000

8,000

10,000

CBD Central

Jakarta

East

Jakarta

North

Jakarta

South

Jakarta

West

Jakarta

Low Middle-Low Middle-Up Upper Luxury

aPartMents For strata-title sale BaseD on location anD MarKet seGMentration


The trend in preferred apartments has not changed for several periods. The emphasis on more greenery would boost the image of a de-velopment, as would its proximity to such fa-cilities as international schools, retail centres, hospitals, business centres and entertainment

areas. Meeting these criteria, South Jakarta continues to be the preferred location for resi-dential areas primarily aiming at the middle-to-upper market. This will continue in the future, with more than 22,000 units planned for development in the South Jakarta area..

FUtUre sUPPlY BaseD on location

CBD

8.6%

South Jakarta

34.6%North Jakarta

12.6%

East Jakarta

20.7%

West Jakarta

16.0% Central Jakarta

7.4%




taKe-UP rate For strata-title aPartMents


DeManDExternal factors, such as increasing interest rates, are not reinforcing demand and growth in demand was relatively low, at 72.3%, this quarter, leaving around 16,800 units unsold.

Amid negative indicators, sales of govern-ment-subsidised projects, which set the maximum price of Rp144 million per unit, were quite vibrant. Projects such as Menara Cawang, Tanjung Kalibata and Kalibata Resi-dence recorded a take-up rate of more than 80% within the quarter.

Prices remained stable, but will possibly increase due to mounting construction costs.

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008

Tak

e U

p R

ate

Cost concerns have also driven demand for private residences at an affordable price. In a metropolitan city such as Jakarta, the need for decent accommodation with easy access to the business district has grown. In response to enquiries, projects such as Sahid Metropoli-tan Residence and such under-construction projects as The Tamansari Residence and

Setiabudi Royal Residence are trying to cap-ture this market, particularly targeting young executives. As of the quarter under review, Sahid Metropolitan Residence has managed to record an 80% take-up rate, while the under-construction projects have sold around 30% of the total number of units.

PriceWith the current tight competition, the offer prices for Jakarta apartments in the period remained relatively stable, with the average price steady at around Rp10.7 million/sq m.

Projects in the CBD area were offered at an average of around Rp15.4 million/sq m. In South Jakarta, where a mixture of projects are located, offered lower prices of about Rp10.7 million/sq m. Outside the CBD area, the aver-age offer price was Rp8.3 million/sq m.

More low-cost, government-subsidised projects are being built in response to the need for affordable accommodation.



aVeraGe asKinG Price Per sQM For strata-title sale aPartMent


sUPPlYThere were no significant changes in the stock of apartments for lease in Jakarta, with the small increment of 2.4% QoQ coming from the completion of the re-construction of Shangri-La Residence. This apartment building located in the CBD comprises 168 units. To captivate a wider market, the project offers such leasing options as providing both serviced and non-serviced units. With these additional units, the cumulative supply of apartments for lease and serviced apartments was 7,133 units, with the proportion of units for lease and serviced units equal.

By the end of 2008, the market anticipates a growth of 14% YoY, with the addition of 600 serviced units. This will be the highest growth for the past 10 years. Further, up to year 2010, new supply will come mainly from serviced apartments. Non-serviced units be provided only by the completion of such under-construction projects as Golf Pondok Indah Apartment (Tower 3).

cUMUlatiVe sUPPlY oF aPartMents For serViceD anD non-serViceD


0

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4,000,000

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8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008

Pri

ce/s

q m

(in

Rp)

CBD South Jakarta Non CBD Average

aPartMent For lease (serViceD anD non serViceD)

0

1,000

2,000

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2000 2001 2002 2003 2004 2005 2006 2007 2Q2008 2008(p) 2009(p) 2010(p)

Tot

al U

nit

168 units from the Shangri-La Residence boosted the total supply of apartments for lease (both serviced and non-serviced apartment) to 7,133 units.


The upcoming serviced units are mostly of-fered as a “serviced unit for sale”. This concept allows consumers to get a guaranteed return from the operator. We noted that some proj-ects have shifted a portion of units for sale into serviced units for sale to lure buyers. The As-ton International chain currently is the largest operator managing serviced apartments.

Grand Aston SOHO Hotel and Residence in Slipi, West Jakarta, provides about 50% of its serviced units (out of a total of 96 apartments) for sale. Apart from apartments, this project features hotel rooms and office space within

one tower. Further north, City Loft Gajahma-da in the Kota area provides around 26% of its total of 600 units as serviced apartments. City Loft Gajahmada, managed by Aston Interna-tional, is an integrated development compris-ing apartments and a retail centre.

Serviced apartments are found mostly in the CBD and South Jakarta, since both areas are preferred by expatriates. By nature, serviced apartments are best suited to those looking for relatively longer-term accommodation but who need hotel service during their stay.


The market is anticipating another 600 units by the end of 2008.

sUPPlY oF aPartMents For lease (serViceD anD non-serViceD)


DeManDDespite continued enquiries for apartments for lease, with a number of apartment units for strata-title sale converted into units for lease, competition became tougher, which led to a lower occupancy rate for apartments for lease (non-serviced units), falling to 71.9%. On the other hand, benefiting from daily guests, serviced units experienced a small rise in oc-cupancy to 70.1% in the quarter, bringing the overall average occupancy of apartments for lease, serviced and non-serviced units to 71.6%.

In order to survive in the competitive leasing market, offering an option of serviced facili-ties at an additional charge was applied com-monly to increase occupancy rates. Projects also offered package rates in addition to this serviced concept.

Under current market conditions, it is predict-ed that the occupancy rate will further decline to around 69% over the next six months.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

CBD Central Jakarta East Jakarta North Jakarta South Jakarta West Jakarta

Middle-Low Middle-Up

Occupancy was basically stable, dropping only modestly. The market for apartments for lease is becoming tougher and fac-ing competition from strata-title apartments offered for lease.



occUPancY rate oF aPartMents For lease (serViceD anD non-serViceD)


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2Q2008

rental ratesThe overall rental rates for apartments for lease were steady at an average of US$13.40/sq m/month. A small increment was con-tributed by projects in the CBD area, where rentals grew to US$17.30/sq m/month. This growth came particularly from serviced units that charged a higher rate for daily guests. However, on another front, other areas largely experienced a decrease in rates as a result of a tariff campaign among apartment projects.

Rental rates between apartments located in South Jakarta and other areas outside the CBD were quite competitive, at US$11.00 to $12.00/sq m/month. In the CBD, rental rates remained stable at around US$17.00/sq m/month.

aVeraGe rental rates oF aPartMents For lease (serViceD anD non-serViceD)

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008

Ren

tal R

ate

(US$

/sq

m/m

onth

)

CBD South Non CBD Average


Rental rates were stable.


oUtlooKA gloomy outlook for the apartment sector is threatening the market. From a demand per-spective, apartments are mostly absorbed by non-resident buyers. Further, buyers’ are pri-marily domestic, with only a few overseas buy-ers who make their purchase by nominating an Indonesian citizen or through a company. We see that local capacity is quite limited and, since the investment motive is still dominant, the local market will focus more on leasing the units they have bought. Furthermore, there are many upcoming developments due over the next two years. Therefore, a revised regulation that is now in parliament should be released soon to protect the market from oversupply. Under this regulation, the apart-ment market will become more attractive to overseas buyers since it will provide an own-ership guarantee. In the Asia Pacific region, apartment prices in Indonesia (for the same development standard) are very competitive compared to the other countries.

Having said that, there is a need for accom-modation for local Indonesians. The only constraint on the sale of existing apartment developments is the price. With a large and relatively low-priced land bank available in the greater Jakarta area (Bekasi, Tangerang and Bogor regions), small and simple landed houses are affordable to most domestic buy-ers. However, since Jakarta is the centre of business activity, it is common for those living in the greater Jakarta area to work in the city. Then, transportation becomes a problem, particularly if it takes more than two hours to reach the workplace. As we mentioned in an earlier publication, the government has been promoting the development of low-cost multi-family housing located within easy reach of Jakarta. These government-subsi-dised projects have received a good response from the market, particularly since they offer proximity to the workplace at an affordable price and flexible payment terms.




eXPatriate HoUsinG anD aPartMents

eXPatriate HoUsinG

rental ratesAverage rentals for expatriate housing were relatively stable during the first semester of 2008, as was multinational companies’ budgets for their expatriate housing. From a company perspective, middle-level management has a budget of between US$3,000 and US$3,500 per month, while higher ranking officers’ bud-get is up to US$5,000/month.

From market availability, houses in Menteng (Central Jakarta), Kuningan, Kebayoran Baru, Pondok Indah and Kemang fetched high rental rates due to limited stock of expatriate-standard housing. Lower rates were found in the southern Simatupang area, such as in Lebak Bulus and Cilandak, with average offer-ing rentals of around US$2,000/month.

areaasKinG rates (Us$/Unit/MontH)* aVeraGe size (sQ M)

loW HiGH aVeraGe BUilDinG lanD

Menteng $3,000 $12,000 $4,384 762 960

Kuningan $2,000 $10,000 $3,475 475 758

Kebayoran $2,000 $12,000 $3,521 574 658

Kemang $1,500 $11,000 $2,700 520 858

Pondok indah $2,000 $8,500 $3,155 539 645

Permata Hijau $1,500 $5,500 $2,807 629 757

lebak Bulus $1,500 $4,500 $2,815 580 1,158

Pejaten $1,500 $7,000 $2,918 534 1,000

cilandak $1,500 $6,000 $2,668 496 849

cipete $1,500 $7,000 $2,765 464 777

eXPatriate HoUsinG rental rates (1H2008)

Source: Colliers International Indonesia - Research Department*Majority unfurnished

DeManDOn the demand side, there were no changes in the type of industry that were looking for expatriate-standard housing. As of the current period, enquiries came largely from banking, mining, oil and gas companies. Requirements for housing did not change and most expatri-ates demanded well-maintained and relatively new houses. This kind of relatively new hous-ing was not immediately available in the mar

ket due to a lack of land within the prestigious areas. Kemang, which was once well-known as an expatriate area, is now perceived as an area with an unsolved traffic problem. Pondok Indah and Kebayoran Baru remain the most sought-after areas for expatriates, despite the limited supply of expatriate-standard housing in this area. The Kemang border area, such as Cipete and Pejaten, was a preferred secondary location.


eXPatriates aPartMents

rental ratesDevelopers are now becoming more flexible in offering rental schemes. Previously, one-year leases were not common but, currently, several apartment buildings welcome such a scheme, due mostly to tight competition. In general, asking rental rates increased slightly

over the previous half, with two- and three-bedroom apartments offered for lease at be-tween US$2,000 and US$3,500/unit/month. Projects with comprehensive facilities were offering higher rentals of up to US$5,000/month and asking for a longer lease period of a minimum of two years.



selecteD eXPatriate aPartMents

aPartMentaVeraGe Us$ asKinG rent/MontH aVeraGe

occUPancY2Br 3Br 4Br

Darmawangsa, sailendra na 5,000 3,500 - 5,800 88.50%

Four seasonsPlaza senayan, the Plaza residence

na2,150 - 4,500 3,275 - 5,000 4,750 - 5,500 84.00%

the residence, Golf Pondok indah, Bukit Golf, ascott, Menteng executive

2,200 - 3,400 2,400 - 3,800 4,600 - 5,350 87.20%

aston, Batavia, Pavillion Park, Permata Hijau, Puri casablanca, casablanca

1,100 - 2,400 1,300 - 2,600 2,500 - 3,500 84.17%

taman rasuna, semanggi, slipi, Kintamani, taman Pasadenia, Puri imperium

500 - 1,500 700 - 2,000 3,000 - 3,500 86.67%

all 500 - 4,500 700 - 5,000 2,500 - 5,800 85.91%

occUPancYThe overall occupancy rate of apartments for lease experienced a further reduction to an average of 71.6%. Similar to the previous half, serviced apartments performed better than

non-serviced units. In this slowing market, selected expatriate apartments managed to maintain their performance, with occupancy rates of between 80% and 88%.

sUPPlY anD DeManDUnlike demand for houses, demand for apart-ment accommodation comes mostly from single expatriates, those living in Jakarta without a family or couples with no kids who have a minimum requirement of a three-bed-room apartment. In most cases, if the resident occupies only one bedroom, the remaining

bedrooms are converted into guest rooms, of-fices and/or libraries. In terms of location, the focus remains on the CBD and surrounding area, and South Jakarta. The Pakubuwono Residence in South Jakarta is one of the most sought-after apartment buildings as it provides comprehensive facilities and larger unit sizes.

selecteD aPartMents MarKeteD For sale

naMe location Units Price ranGe/Unit coMPletion Year

Hampton’s Park south Jakarta 646 rp0.8 - rp2.0billion 2008

Kempinski Private residence cBD 203 rp1.8 - rp3.9 billion 2008

nirvana Boutique residence south Jakarta 56 rp4.0 - rp11.0 billion 2008

regatta (3 towers) north Jakarta 186 rp4.0 - rp5.0 billion 2008

Permata Hijau residence south Jakarta 196 rp1.1 - rp1.3 billion 2009

Kemang Village (3 towers) south Jakarta 728 rp1.1 - rp4.0 billion 2009

the stupa residence central Jakarta 59 rp1.7 - rp2.9 billion 2010



oUtlooKThe availability of good housing that meets expatriate requirements is becoming limited. A significant number of houses are not being built in the preferred locations, nor are older houses being refurbished. The requirements are clear: a house needs to be well maintained, offer good accessibility to the workplace and feature such amenities as proximity to an in-ternational school, international clubs, medi-cal services and shopping centres; most also prefer that the house is relatively new. More expatriates coming to Jakarta with their fami-lies means more demand for landed houses, particularly those with such facilities as a pri-vate swimming pool and a backyard garden to cater to small parties.

The apartment market may benefit from the scarcity of good expatriate houses. A develop-ment type such as Pakubowono apartments could absorb quite a few expatriates, mainly because the project offers comprehensive fa-cilities and more greenery, which is a luxury in a busy city such as Jakarta.



retail sectorGiven the two-year supply projection, the retail market is in a negative stage. Competi-tion has become tougher since quite a few new shopping centres are looking for good tenants. This creates a “tenant market” where big ten-ants (in particular the anchor, sub anchor and junior anchor) have more bargaining power than the landlords.

Amidst the sluggish indications, the market recognised the operation of new shopping centres this quarter which includes the reju-venation and re-conceptualisation of fX Life

style X’nter in Jalan Jendral Sudirman. After the fiasco of the previous Sudirman Place, the project was taken over by Plaza Indonesia management which converted it into a new shopping centre bringing a different concept to the market. Another retail space enter-ing the market is Citywalk shopping arcade which is part of the apartment development, City Loft Sudirman. In the Pluit area, North Jakarta, Pluit Junction came onto the market. With these three shopping centres, the retail market in Jakarta received another 82,094 sq m which brings the cumulative supply to 3.21 million sq m.


Three projects in Jakarta and one project in the greater area of Jakar-ta entered the market this quarter.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2001 2002 2003 2004 2005 2006 2007 1Q2008 2Q2008 2008P 2009P 2010P

for Lease for Strata-title Sale

cUMUlatiVe retail sUPPlY in JaKarta




IN JAKARTA

BUilDinG naMe location MarKetinG scHeMe

eXPecteD coMPletion

season city Jl. latumenten for strata-title sale 2008

Grand Paragon Jl. Gajah Mada for lease 2008

Blok M square Jl. Melawai raya for strata-title sale 2008

Mal of indonesia Jl. Bulevard Barat for lease 2008

emporium Pluit Jl. Pluit selatan raya for lease 2008

Pulogadung central Business Jl. raya Penggilingan for strata-title sale 2008

Mall Pejaten Village Jl. Margasatwa for lease 2008

Koja trade Mall Jl. Kramat Jaya for strata-title sale 2009

shopping Mall @Gandaria Jl. Gandaria for lease 2009

Pusat Grosir senen Jaya Jl. senen raya for strata-title sale 2009

Mt Haryono sentral Bisnis Jl. Mt Haryono for strata-title sale 2009

Galeria Glodok Jl. Gajah Mada for lease 2009

central Park Mall Jl. s. Parman for lease 2009

Kota Kasablanka Jl. casablanca for lease 2010

Kuningan city Jl. Prof. Dr. satrio for lease 2010


list oF UnDer constrUction retail centers


From the table above, a number of retail centres are expected to finalise in the rest of this year. Thus far around 70% of space of the under-construction projects in 2008 has been committed by several tenants particularly hy-permarkets.

The construction activities in the DeBoTa-Bek (Depok, Bogor, Tangerang, Bekasi) area are quite vibrant and a few projects are ex-pected to complete this year such as City Mall Tangerang, Pamulang Square and Taman Topi in Bogor.

list oF UnDer constrUction retail centers

IN DEBOTABEK

BUilDinG naMe location MarKetinG scHeMe

eXPecteD coMPletion

Pamulang square tangerang for strata-title sale 2008

city Mal tangerang tangerang for lease & for strata-title sale

2008

Plaza Dua raja Bogor for strata-title sale 2008

tangerang city tangerang for strata-title sale 2009



With supply projection over the next two years, the market should be cautious particularly in anticipating tougher competi-tion to get good brand tenants.



DeManDAdditional space in the quarter did not bring the overall occupancy rate down, but it was still stable over the quarter, standing at 87.8%. The newly operating malls in the quarter have succeeded in getting good occupancy at the time of their operation. The fX Lifestyle X’nter acquired several branded tenants prior to its operation. Depicting its name as a life-style centre the concept will be different from its previous operation like providing MICE (Meeting Incentive Convention Exhibition) facilities. To date, the mall has implemented a fresh concept bringing names like VIP Ce-lebrity Fitness, lifestyle restaurants and F&B outlets, health products, fashion and Bali Deli supermarket. The Citiwalk and Pluit Junction have also been operating with significant oc-cupation mostly with F&B outlets.

Furthermore, the occupancy level of exist-ing shopping centres has been quite stable over the quarter. Newly operating shopping centres like Grand Indonesia Shopping Town continued to attract more tenants to take the remaining vacant space. During the quarter, a significant leasing transaction was made by Gramedia bookstore acquiring around 4,000 sq m of space in this mall.

A similar pattern also occurred in the Debota-bek area which registered a slight downturn in occupancy from the previous 88.06 to only 86.02% this quarter. Overall, the oc-cupancy rate of shopping centres within this area was relatively stable with no significant fluctuation. The only significant take-up that we recorded for this quarter was the space acquisition by Star Department Store at Su-marecon Mall Serpong of around 7,500 sq m. Nevertheless, the latter transaction cannot lift up the overall occupancy since the newly operating shopping centre is operating with a lot of vacant space. Further, Bekasi Square which is operating with major tenants like Carrefour, Electronic City and Amazone (game and entertainment centre) still has some vacant space.

Hypermarkets have consistently penetrated to the future malls. Carrefour hypermarket has committed as the anchor for future shopping centres like Seasons City, Blok M Square, Emporium Mall and Central Park Mall. Meanwhile, Hypermart always follows into the new malls of its group company, Lippo. The future Pejaten Mall and Kemang Village Mall are most likely to capture Hypermart as their anchor tenant. Meanwhile, in Pamulang Square, Giant hypermarket has committed as the anchor tenant.

0

350,000

700,000

1,050,000

1,400,000

1,750,000

2,100,000

2,450,000

2,800,000

3,150,000

3,500,000

2001 2002 2003 2004 2005 2006 2007 1Q2008 2Q2008

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cumulative Supply (sq m) Cumulative Demand (sq m) Occupancy (%)

cUMUlatiVe sUPPlY, DeManD anD occUPancY rate


aVeraGe asKinG rental rates (oF tYPical Floor) anD serVice cHarGesChanges to the average rental rates from Rp319,597/sq m/month to Rp333,384 this quarter were largely due to the adjustment of the rental rate in two shopping centres and the adjustment made because of the influx of new retail centres in the quarter which affect-ed the overall calculation. In particular, with the operation of fX Lifestyle X’nter which captures the middle to upper class segment and asks for a higher rental rate, the overall calculation was somewhat elevated this quar-

ter. Meanwhile, being well-positioned in the market, Cilandak Town Square (Citos) whose concept is being copied by other retail centres all over Indonesia, has adjusted the rental rate upward during the period. Another factor that drove rental escalation was the adjustment in the pegged rate by Gajah Mada Plaza which set the pegged rate at Rp7,140/US$, up by Rp500 compared to last quarter. Overall, the average rental changes this quarter did not re-ally reflect the overall market conditions.



rental rates anD serVice cHarGes in JaKarta


oUtlooK

The average rental adjustment in the quarter did not really reflect that the market is reviv-ing because of the calculation adjustment due to the influx of new shopping centres.

Service charges were relatively stable but most possibly will be adjusted upward amidst mounting operational costs.

Rp0

Rp50,000

Rp100,000

Rp150,000

Rp200,000

Rp250,000

Rp300,000

Rp350,000

2001 2002 2003 2004 2005 2006 2007 1Q2008 2Q2008

Ren

tal R

ates

Rp0

Rp10,000

Rp20,000

Rp30,000

Rp40,000

Rp50,000

Rp60,000

Rp70,000

Serv

ice

Cha

rge

Rental Rates Service Charge

With conditions where tenants a lot of choice of good shopping malls, the retail market in Jakarta, particularly the newly built shopping centres, have no option except to offering something different to the past. The existence of anchor tenants, sub anchor or junior anchor is crucial for newly built shopping centres par-ticularly in convincing other specialty shops which pay the maximum possible rent.

To lure good brand anchor, sub anchor or junior anchor tenants, developers of new shopping malls are normally giving appealing incentives like revenue sharing of the rental rate percentage which depends on business performance. This practice sometimes does not work and therefore, a few landlords grant potential tenants an exemption of paying the base rent (but not service charges). Worse

than that, a few landlords are even paying for the fitting-out costs. However the worst case, amidst a very competitive market, is where the landlords become the shareholder/partner of the business to get a good tenant. This common practice is not applicable to the established malls which attract a lot of shop-pers. With strong concepts and solid trade mixes, several established shopping malls have secured full occupancy levels.

Another challenge for newly built shopping centres is how to encourage store owners to open in the specified time and in some cases this is facilitated by giving rental incentives to the tenants. This measure is important for landlords to create a good image for their malls, in particular during their early opera-tion.

Despite no changes in rental rate in the DeBoTaBek area, the overall average rental rate in this area for this quarter was down to Rp268,582/sq m/month from Rp271,600/sq m/month. Changes were mostly due to the operation of the new shopping centres which resulted in the change to the overall calcula-tion.

As mentioned previously, only Gajah Mada Plaza adjusted the pegged rate this quarter which brought the average pegged rate up slightly to Rp7,140/US$.

Despite mounting operational costs, none of the operating shopping centres adjusted

service charge tariffs, at least in the reviewed quarter. However, it is quite likely that opera-tional costs will be adjusted following the fuel price hike. This quarter, the average service charge in Jakarta rose from Rp62,328/sq m/month to Rp64,242/sq m/month. The in-crease was very especially affected by the addi-tion of new shopping centres like fX Lifestyle X’nter and City Walk which applied higher service charge rates compared to the market average. Nonetheless, service charge tariffs in the DeBoTaBek area were down modestly to Rp51,184/sq m/month from the previous Rp52,617/sq m/month. This is again due to the influx of new shopping centres with lower service charge tariffs than the market average which impacts the overall calculation.

Due to tough competition, new shopping centres should be more flexible in allow-ing good tenants to enter.



annUal inDUstrial lanD sales

sUPPlYNo expansion activity from the operating industrial estate and thus industrial land stock remained unchanged quarter-on-quarter (QoQ) i.e. standing at 8,606.8 hectares.

There is definitely a plan for fresh supply from a number of industrial estates located in Bekasi and Serang in 2008-2009, measuring a total of about 520 hectares in area. This total

future supply will be contributed by the Green Land IE of about 450 hectares which is part of the next development stage of the total 1,000 hectares area for industrial purposes. Another expansion will be finalised at the end of this year by KIEC of around 70 hectares. Another land expansion will occur in Bekasi by either MM2100 or Bekasi Fajar, but things have not been finalised between the two.


inDUstrial estate sector

DeManDThus far, total transactions during the first semester of 2008 were around 88% of the total sales in 2007. This gives hope that the total industrial land sales for the whole of 2008 would exceed the total sales in 2007. Apart from the automotive and logistics re-lated industries which have been the demand generator for industrial land, in this quarter packaging related industry was quite active in acquiring both Standard Factory Buildings (SFBs) and industrial land. The biggest land acquisition in the quarter was made by local industry which produces plastic for packag-ing of around 8 hectares in Delta Silicon in Cikarang, Bekasi. Similarly, a significant transaction in Jababeka was done for ware-housing purposes. In any case, small transac-tions made by packaging related industries also occurred during the quarter.

Inquiries from logistics related companies have been quite consistent for some period and have remained so in the reviewed quarter.

Around 6.6 hectares were sold to a com-pany running warehouse business for food and heavy equipment industries. Not to mention other small transactions for warehousing purposes.

Auto related industries, as the major demand driver for industrial land sales, continued to perform with several transactions made., There were quite a few transactions made by, in particular, auto-part companies, although they were insignificant in total sales. In our records, several active industries procured either land or SFBs including metal, print-ing, pharmaceutical, electronic, garment and manufacturing industries.

Interesting to note is that the SFB sales were quite active during the reviewed period. A total of 11 units of SFB were sold in this quar-ter while around 5 units of SFB were leased. Detailed information on the SFB sales this quarter is presented in the table.

-

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2Q08

hect

ares

Supply remained stagnant but expansion plans from existing industrial estates might occur next year.



sales oF stanDarD FactorY BUilDinGs DUrinG 2Q08

naMe#sFB solD/

leaseDsFB size (sQ M) inDUstrY tYPe

Greenland (Deltamas) 3 units sold 685 - 2,000 automotive, metal workshop, packaging

Kiec 1 unit leased 5,000 Petrochemical related

BFie 3 units sold 1,380 - 1,403 Warehouse

Kota Bukit indah 5 units leased - automotive, electronic, garment

Delta silicon 4 units sold 464 - 1,206 logistic, packaging, plastic, satellite, communication


In terms of size, Jababeka recorded the highest total sales i.e. 13 hectares followed by Delta Silicon in the second place with 11 hectares land sales. Both industrial estates are located in Bekasi and, combined with other sales from other industrial estates in Bekasi, total sales in this region for the quarter stood at 32.54 hect-ares. Significant sales were also recorded in BFIE which also ranked third in terms of sales. Due to the shortage of land, MM2100, which recorded significant sales in the early year, did not register any sales in the reviewed quarter. Despite a high level of inquiries, industrial lots were not immediately available primarily in responding to sizeable requirements.

Karawang sales were only represented by KIIC and Suryacipta while industrial building rent-al transaction occurred in Kota Bukit Indah. Sizeable transaction in Karawang was largely contributed to by KIIC with the acquisition of 5 hectares of land by the coil centre industry of Japan. The 1.7 hectares land sale by Sury-acipta was contributed to by two companies in the filtration and aluminium based industries.

Two industrial estates in Serang have been quite consistent in contributing the whole sales for the quarter. Both KIEC and Modern Cikande shared an almost similar number of land sales this quarter with around 6 hectares each. Around 5.5 hectares of land was sold to

two food processing industries (a local com-pany and a company from Singapore) while the remaining small plot was rented by a local company (petrochemical related industry). For some periods Modern Cikande IE has been receiving inquiries from heavy industry such as the steel and chemical industries. Five hectares of land was sold to the steel industry of China as part of the expansion plan while around 1.2 hectares were sold to new local chemical industry. Still in this industrial estate, a shoes manufacturer from Korea also expanded.

With all the total recorded transactions of around 53.5 hectares, the take-up rate as at 2Q08 was 66.8%, leaving around 2,855 hect-ares of land unsold.

For some periods, a large number of the trans-actions were characterised by the expansion activities from the operating industry. We have witnessed that export-oriented manufac-turing industries performed quite well which resulted in increased demand for industrial land for business expansion. Nevertheless, in the quarter we also saw some new businesses opening new industries. Some opening might be derived from the existing business owner creating new business lines but some are truly new industrialists.

Sales for the quarter may be smaller than those in the pre-vious quarter; however total sales up to the first semester this year almost accomplished total sales in the last year.



cUMUlatiVe sUPPlY, DeManD anD taKe-UP rate



Prices and costs are relatively stable. Adjustment in land price was made in one industrial estate while one industrial estate intro-duced a new maintenance tariff.

0 2 4 6 8 10 12 14

Greenland (Kota Delta Mas)

Kota Bukit Indah

Suryacipta

KIIC

KIEC

Modern Cikande

Bekasi Fajar

Delta Silicon

Jababeka

hectare

inDUstrial lanD transactions recorDeD in 2Q08

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2000 2001 2002 2003 2004 2005 2006 2007 2Q08

hect

ares

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cumulative Supply (ha) Cumulative Demand (ha) Take-up Rate (%)

inDUstrial lanD Prices anD Maintenance costKIEC was the only industrial estate to intro-duce new land prices. The remaining estates did not register a change over the quarter, however, plans for adjusting land price may be implemented next year. Several factors are taken into account before introducing new pricing (up by 5-10%) which include contin-ued inquiries for industrial land in this estate, judging investors’ buying capability and in-creasing land tax value. The land rental rate also remained flat for this period.

Despite recording zero sales for this quarter, Sentul Industrial Estate in Bogor was the only industrial estate to introduce a new mainte-nance cost tariff. The current maintenance tariff now is US$0.065 a slight increase com-pared to last quarter or up by 8%. Still in the Bogor region, another industrial estate, CCIE is also planning to put in new maintenance tariff of around 10% increase, particularly for contract renewal. Overall, besides the above-mentioned, maintenance costs remained stable in the remaining industrial estates.




Greater JaKarta inDUstrial lanD ValUes

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08

Bogor Tangerang Karawang Bekasi Serang


Greater JaKarta aVeraGe Maintenance costs

$0.00

$0.01

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08

Bogor Tangerang Karawang Bekasi Serang

`

reGion lanD Price (/sQ M) Maintenance cost (/sQ M/MontH)

loWest HiGHest aVeraGe (rp)

loWest HiGHest aVeraGe (rp)

Bekasi Us$ 55.00 rp 750,000 rp 597,507 Us$ 0.05 Us$ 0.07 rp 591

Karawang rp 300,000 Us$ 50.00 rp 384,338 Us$ 0.05 Us$ 0.06 rp 489

Bogor Us$ 45.00 rp 650,000 rp 580,817 rp 600 Us$ 0.065 rp 601

serang rp 300,000 Us$ 65.00 rp 487,425 rp 220 rp 280 rp 257

tangerang rp 600,000 rp 1.26 mill rp 614,677 Us$ 0.04 rp 1,000 rp 530

inDUstrial lanD Prices anD Maintenance cost


Moving ahead, operational challenges will be tougher particularly in facing the power shortage problem.



oUtlooKIn the immediate future, the government will issue a regulation which impels new investors/industrialists to open or expand only within the industrial estate. This would be positive news for industrial estate landlords. Neverthe-less, with the recent power crisis, industrialists are experiencing a difficult situation. While business people busily adjust to the new reali-ty, the government has rushed to introduce an alternative solution by encouraging shifts in workdays for industries. The plan of shifting weekdays to include Saturdays and Sundays was certainly not an ad-hoc measure to solve the current power crisis, but was designed to last a bit longer. Currently, the state-owned electricity company, PLN, can only provide below 200 kVA installation for new industry. However, there are some industrial estates in Bekasi which will not be affected by the power crisis issue since they engage with a pri-vate electricity company, Cikarang Listrindo which can provide better power supply.

On the demand front, there are only a few companies that buy industrial lands for in-vestment. Some big companies with growing business may keep the land for expansion plan purposes. This is mostly due to antici-pating the long process in land acquisition particularly when there is an immediate need for expansion.

We still expect that industrial sales this year to perform better than last year. From our ex-ploration, quite a few industrial landlords’ in-quiries would still be active in the remaining part of the year particularly from warehouse or logistic related industries. Furthermore, as mentioned earlier, the first semester sales are approximate to last year’s sales which pro-motes the hope of a better year.



sUPPlY

DistriBUtion oF star-rateD Hotels


Two hotels, Sahid Jaya and Mandarin, are having major refurbishments done to stay competitive in the market.

No new hotels started operations during the second quarter of 2008. However, our tailored hotel research during this quarter suggested a minor adjustment to the calculation of 3, 4 and 5-star hotels. With this adjustment, total stock within 3, 4 and 5-star hotels in Jakarta, as of 2Q08, was 21,521 rooms from 88 hotels.

Of these 88 hotels, the number of 3-star hotels dominated the market with 42%. 4 and 5-star hotels shared the balance with 34% and 24%, respectively. Yet, in terms of numbers of hotel rooms, 5-star hotels had the highest percent-age with 39%, followed very closely by 4-star hotels with 38%.

BY NUMBER OF ROOMS BY NUMBER OF DEVELOPMENTS

3 star

42%

4 star

34%

5 star

24%3 star

23%

4 star

38%

5 star

39%

In the rest of 2008, four hotels are approaching completion stage which includes 3-star Harris Hotel in Kelapa Gading and 4-star Grand Aston Soho, Hotel & Residence. In the 5-star category, two hotels are almost in operation and projected to finish this year. The Belezza mixed-use complex in Permata Hijau, South Jakarta is finalising its hotel tower, The Grand Aston Albergo, after the operation of other

components like retail, office and apartment. The Grand Aston Albergo will be operated as a 5-star hotel standard. Another 5-star hotel finishing construction and refurbishment is the legendary Hotel Indonesia which will be run by Kempinski. Kempinski Hotel Indonesia is part of an integrated development called Grand Indonesia.

Hotel sector

JaKarta MarKet

No new hotels launched in the quarter, and this brought total number of hotel rooms in Jakarta to stabilize at 21,521.



Raffles Hotels chain will man-age their first hotel in Indone-sia after signing an agreement with Ciputra Property.

list oF FUtUre Hotels in JaKarta

naMeYear oF

oPeration location

3-star

Harris 2008 north Jakarta

Patria Park - ibis 2010 east Jakarta

Permata Gunung sahari - Best Western 2010 central Jakarta

4-star

Grand aston soho, Hotel & residence september 2008 West Jakarta

aston Marina ancol (Mediterania Marina residences, tower a) 2009 north Jakarta

aston Mangga Dua, Hotel & residence 2009 central Jakarta

Hotel @emporium Pluit 2009 north Jakarta

Four Points Hotel @rasuna said 2009 south Jakarta

Hotel by Menteng Group 2009 south Jakarta

novotel simatupang 2009 south Jakarta

Hotel @Gandaria Main street 2009 south Jakarta

5-star

Kempinski Hotel indonesia 2008 cBD

the Grand aston albergo in Bellezza 2008 south Jakarta

Hotel @Kota Kasablanka 2009 south Jakarta

the aryaduta regency 2009 south Jakarta

Premier ancol - Best Western 2010 north Jakarta

Hotel @ciputra World, managed by raffles Hotels 2011 cBD

st regis Hotel and residence 2011 cBD

total rooms 5,230 sqm

toUrisM PerForManceThe total number of visitor arrivals to Jakarta in the first quarter of 2008 recorded at 683,883 growing by 23.43% compared to the same period of 2007. The half year figures represent

about 60% of the total figure last year. Look-ing at historical data where second quarter figures normally exceed first quarter figure, the outlook for a positive trend is possible.



Source: BPS

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

2000 2001 2002 2003 2004 2005 2006 2007 until

June'08

Soekarno Hatta Other Ports

Visitor arriVals to JaKarta anD otHer Ports

Malaysia

25%

China

12%

Japan

12%

Korea

8%

Others

28%

Singapore

15%

Our data indicated that up until 1H08, the majority of foreign visitors to Jakarta were Asian (66.10%), of which were dominated by

Malaysian, Singaporean, Japanese, China and Korean.

ForeiGn toUrist to JaKarta

Source: BPS

aVeraGe occUPancY rate (aor)Most 3-star hotels experienced a positive trend over the quarter, and only a few hotels recorded a minor drop in occupancy. Some of the 3-star hotels which registered significant occupancy quarter-on–quarter (QoQ) are Sanna Hotel, Willtop and Sentral. The up-ward trend has brought the AOR for 3-star hotels from 77.11% to 81.21%. Similarly, AOR for 4-star hotels climbed from 65.77% to 73.67%. Although a small number of 4-star hotels experienced a drop in occupancy, a large number of hotels recorded a significant

jump in occupancy; they were Santika, Cipu-tra, Nikko, Sari San Pacific, Atlet Century Park, Le Grandeur, Batavia, Sun Lake, Acacia and Novotel Mangga Dua. Like the other two hotel categories, AOR for 5-star hotels also posed a positive trend. Last quarter the AOR was at 55.81% and in this quarter AOR was up moderately to 58.89%. Around six 5-star hotels experienced significant increases in occupancy, i.e. Sheraton Media, Shangri-La, The Dharmawangsa, Gran Mahakam, Ary-aduta and JW Marriott.




aVeraGe occUPancY rate (aor) oF star-rateD Hotels


cUMUlatiVe sUPPlY, DeManD anD taKe-UP rate

ARR figures for 3 and 4-star hotels posed an upward trend, albeit modestly, while 5-star hotels showed a modest drop QoQ. But overall

the ARR was quite stable over the quarter, and we still expect that a positive trend will continue in the remainder of 2008.


Both AOR and ARR posed a moderately posi-tive trend over the quarter.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08

3 Star 4 Star 5 Star Average

aVeraGe rooM rate (arr)

Rp-

Rp100,000

Rp200,000

Rp300,000

Rp400,000

Rp500,000

Rp600,000

Rp700,000

Rp800,000

2000 2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08


Fueled by positive trends in occupancy and stable ARR over the quarter, the Revenue Per

Available Room went upward accordingly.reVenUe Per aVailaBle rooM (revPar)


Rp-

Rp50,000

Rp100,000

Rp150,000

Rp200,000

Rp250,000

Rp300,000

Rp350,000

Rp400,000

Rp450,000

2000 2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08


reVenUe Per aVailaBle rooM (reVPar) oF star-rateD Hotels


oUtlooKThe performance of the hotel market in Ja-karta was quite good, although moderate, par-ticularly as indicated by the growing trend in occupancy and room rates. Further, the supply projection over the next couple of years also suggests that confidence in this market is quite strong.

The upcoming election in 2009 can be perceived from two different angles. Firstly, concerning the security issue which would restrain foreigners’ visits to Indonesia, this should not have much of an effect on the Jakarta hotel market since domestic busi-ness travellers will continue to be the main demand generator. Secondly, there would be opportunities as preparations for the election campaign and general election in 2009 will increase demand for meeting facilities as well as hotel rooms.

Bali MarKetThis first issue on the Bali Hotel Market pre-sented by Colliers International Indonesia will be regularly published for our clients, col-leagues and readers who are interested in the tourism trends in Bali.

In reviewing the hotel market in Bali, we try to categorise the area based on its market characteristics and by region as depicted in the table below. The following seven market areas are located in the southern part of Bali. Additionally, there are several areas such as Lovina Beach (Singaraja Regency) and Can-didasa Beach (Karangasem Regency) which have been developed as tourist areas.

1. nusa Dua

2. tanjung Benoa

3. sanur

4. Kuta, legian

5. Jimbaran, Ungasan, Uluwatu

6. seminyak, canggu, tanah lot

7. Ubud

8. others: Denpasar, singaraja, lovina, candidasa, etc.

The increase in fuel prices will lead to a strong adjust-ment in the room rates.



toUrisM oVerVieW

nUMBer oF ForeiGn anD DoMestic Visitors to Bali (tHroUGH nGUraH rai international airPort)

Source: Ngurah Rai Airport Statictics

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2003 2004 2005 2006 2007 Jan - April 2008

Foreign Domestic

Both foreign and domestic visitors to Bali from Ngurah Rai International Airport are about the same in terms of numbers. The figure we recorded up to April this year suggests that the total number of visitors this year would exceed

those of 2007. The total number of visitors up to April 2008 represented around 70% of the total visitors of 2007. Positive projection is possible since peak seasons in Bali occur in the second quarter every year.



coMParison oF Direct toUrist arriVals to Bali FroM 10 Main MarKet

Source: BTDC

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Japan Australia Taiwan South

Korea

Malaysia RRC UK Germany France

2006 2007 1H2008

For several years Bali has been a favourite place for the Japanese followed by Austra-lians. The reason for the latter fact is mostly geographical. Another emerging market is Russia. Despite being smaller in number

compared to the other 10 main markets, the growth trend is quite significant. The Bali market is now expecting the arrival of more Russian tourists.

Hotel oVerVieW

Despite a balanced proportion of foreign and domestic visitors to Bali, more foreign-

ers (about 67%) stay in star-rated hotel than domestic tourists.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006

Foreign Domestic

ratio BetWeen ForeiGn anD DoMestic GUests to Bali star-rateD Hotels

Source: Bali Statistics



0

2

4

6

8

10

12

14

16

Nusa Dua Tanjung

Benoa

Sanur Kuta Jimbaran Seminyak Ubud Denpasar Others

3 star 4 star 5 star

nUMBer oF 3, 4 anD 5-star Hotels oPeratinG in DiFFerent areas


Kuta, as the busiest resort area, captures the highest number of hotel developments. However compared to exclusive resort areas like Nusa Dua or Ubud, Kuta has fewer 5-star hotels. Nusa Dua and Ubud have more 5-star

hotels than the other resort areas. We also no-tice that Seminyak and Jimbaran are becom-ing more upper class areas, as they have more 5-star hotels.

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

2002 2003 2004 2005 2006 2007 until May 2008


aVeraGe lenGtH oF staY (los) oF GUests at 3, 4 anD 5-star Hotels


The average Length of Stay was relatively sta-ble. The LOS of 3, 4 and 5-star hotels ranged from three to four days. Since 2006, those

staying in 5-star hotel spent a relatively longer time than those at other star-rated categories.



nUsa DUaNusa Dua is a well-planned 350-hectare resort area in Bali and provides the highest numbers of 5-star hotels. This area is controlled by BTDC (Bali Tourism Development Corpora-tion). The 4 and 5-star hotels in Nusa Dua are managed mainly by international hotel opera-tors, such as Sheraton, Westin, Hyatt, Melia Bali and Nikko. Only Ayodya is managed by a local operator, after their contract with Hil-ton ended in 2006.

Up to the first semester of this year, the aver-age occupancy rate indicated a positive trend with all star-rated hotels categories showing an inclining trend. AOR reached above 70% with Westin Hotel having the best perfor-mance of almost 90% occupancy.

The ARR in Nusa averages at US$112 for all hotel categories. The highest ARR was achieved by The Bale Nusa Dua at US$439 followed by Amanusa boutique hotel at US$392. Overall, the ARR showed an up-ward trend compared to last year.

PerForMance oF 3, 4 anD 5-star Hotels in nUsa DUa

AVERAGE OCCUPANCY RATE AVERAGE ROOM RATE

0%

20%

40%

60%

80%

100%

2003

2004

2005

2006

2007

1H20

08


$-$20$40$60$80

$100$120$140$160

2003

2004

2005

2006

2007

1H20

08



tanJUnG BenoaTanjung Benoa is located in the northern part of Nusa Dua, in a peninsula called Benoa. Be-sides being visited as a tourism area, Tanjung Benoa also provides a harbour and several water sports facilities.

The occupancy rate in Tanjung Benoa was quite good compared to other resort areas. On average the occupancy level was 77.4% with

all star-rated categories performing almost equally.

The ARR for the semester reached US$70.88. Five-star hotel achieved US$84.25, while the 3 and 4-star ARR in the area are about the same i.e. US$63.42 and US$64.98 respec-tively.

PerForMance oF 3, 4 anD 5-star Hotels in tanJUnG Benoa


0%

20%

40%

60%

80%

100%

2003

2004

2005

2006

2007

1H20

08


$0

$20

$40

$60

$80

$100

2003

2004

2005

2006

2007

1H20

08





sanUrSanur was the first tourism area in Bali, devel-oped in the 1930s. Some international hotel chain operators have been managing hotels including Bali Hyatt, Mercure Resort Sanur and Sanur Paradise Plaza.

Four and five-star hotel recorded significant upward trends in occupancy. The AOR for 5-star hotel reached 72.14%, jumping from the previous 61.45% last year. Likewise, the AOR for 4-star hotel which climbed to 75.34% from

the previous 68.77%. Despite recording a posi-tive trend, the AOR of 3-star hotel in Sanur was relatively steady.

Compared to the other resort areas in the southern part of Bali, Sanur has fewer 5-star hotels and, therefore, the ARR for this area is the lowest. There was no significant differ-ence in ARR across the 3, 4 and 5-star hotel categories. The ARR for Sanur was recorded at US$55.37.

PerForMance oF 3, 4 anD 5-star Hotels in sanUr



0%

20%

40%

60%

80%

100%

2003

2004

2005

2006

2007

1H20

08


$-

$10

$20

$30

$40

$50

$60

$70

2003

2004

2005

2006

2007

1H20

08


KUtaSince the 1960s, star-rated hotels and retail and entertainment facilities have been devel-oped in Kuta. Now, Kuta has become the main tourist destination particularly for those who like to assemble together.

The AOR in Kuta was quite steady standing at 71.74% and 3-star hotel performed best compared to 4 and 5-star hotel. The AOR for 3-star hotel was recorded at 75.12% since

quite a few number of 3-star hotels achieved occupancy rates of above 80%.

Kuta area does not aim at the upper class mar-ket and therefore there are more 3-star hotels found in this area. As at the first quarter of this year, the ARR registered at US$67.24, with Holiday Inn Bali Hai recording the highest ARR at US$155.

PerForMance oF 3, 4 anD 5-star Hotels in KUta



0%

20%

40%

60%

80%

100%

2003

2004

2005

2006

2007

1H20

08


$0

$20

$40

$60

$80

$100

2003

2004

2005

2006

2007

1H20

08




JiMBaranSimilar to Ubud, Jimbaran hotels also com-prise top class hotels. The latest luxury resort is Bvlgari Hotel. Located at Pecatu, this hotel is developed by MRA Group & Partner, who holds Bvlgary licences in Indonesia. Mean-while, the Four Seasons Jimbaran is ranked number 5 in the World Best Award 2006 by Travel and Leisure Magazine (number 8 in 2005) followed by The Ritz Carlton ranked number 7.

Since 2006, the AOR in Jimbaran has trend-ed up and this suggests that hotels in Jimba-ran are becoming more popular particularly among those looking for the ultimate atmo-

sphere. AOR was at 75.89% with 3-star hotel recording the highest at 83.33%. Three-star hotel like Sari Segara Resort even achieved AORs of around 90% in the reviewed period.

Since 5-star hotel population accounted for the highest market share, the ARR for Jimbaran was quite high i.e. at US$114.55. The ARR for 5-star hotel was US$220.14, far above 3 and 4-star hotel. As a luxury hotel, Bvlgary achieved the highest ARR at US$586.94. Upper class hotels like Four Seasons and Karma Jimbaran also reached high ARRs i.e. US$328.77 and US$327.11, respectively.


PerForMance oF 3, 4 anD 5-star Hotels in JiMBaran

0%

20%

40%

60%

80%

100%

2003

2004

2005

2006

2007

1H20

08


$0

$50

$100

$150

$200

$250

2003

2004

2005

2006

2007

1H20

08



seMinYaKSeminyak and its surroundings are called the Sunset Coast area where people can find fash-ionable boutiques, retail outlets, clubs, cafés and restaurants. Among foreigners, Seminyak is becoming more popular as a residential area with 24-hour activities, including night-life entertainment. The areas developed towards the northern parts of Seminyak include Cang-gu and Tanah Lot.

Occupancy was quite steady and alike for all star-rated hotel categories. The AOR within the period was 74.81%.

The ARR for 5-star hotel was far above the 4 and 3-star hotel category. Overall ARR was at US$114.25 largely due to the high ARR for 5-star hotel (US$172.09). A high ARR was mostly recorded by villa concept hotels of which there are quite a few in Seminyak.




PerForMance oF 3, 4 anD 5-star Hotels in seMinYaK

0%

20%

40%

60%

80%

100%

2003

2004

2005

2006

2007

1H20

08


$-

$50

$100

$150

$200

2003

2004

2005

2006

2007

1H20

08



UBUDCompared to the other resort areas, Ubud has a unique position as it sells agro-related cultures and has a paddy rice field scene which offers a serene and tranquil environment.

To offer a peaceful environment, hotels are developed with a limited number of units, facilitated by high quality of services and therefore this boosts the room rate.

In the reviewed period, Ubud recorded the highest AOR of 79.10%, sharing about the

same figure for all hotel categories. A large number of hotels in Ubud even reached oc-cupancy rates of above 85%.

Due to exclusivity and a limited number of rooms, Ubud recorded a high ARR over the review period. The ARR for this quarter was US$190.39, mostly fueled by a high ARR in the 5-star hotel category which was at US$254.96. Several hotels recorded high ARRs of above US$300. The highest ARR was recorded by Amandari at US$512.00.


PerForMance oF 3, 4 anD 5-star Hotels in UBUD


0%

20%

40%

60%

80%

100%

2003

2004

2005

2006

2007

1H20

08


$-

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

2003

2004

2005

2006

2007

1H20

08




sUraBaYa MarKet

For the past two years, there has been no change in the number of hotel rooms in Sura-baya, with the total remaining stable at 4,682. Furthermore, Surabaya will see a flat supply projection for the remainder of 2008. Looking at the current supply position, in terms of the number of hotel developments, the 3-star cat-egory has the most, at 13 hotels (48% of the total market), although all hotel categories have almost an equal number of rooms.

Hotel supply in Surabaya has been stable for the past eight years. Relatively new hotels appeared only in 2002, namely in the form of the 4-star Somerset Hotel & Residence. In 2005, the 3-star hotel Altea Mirama closed for renovation and returned to operation in 2006, having been upgraded to a 4-star and

bearing a new brand, Mercure Surabaya.

New hotel developments are expected to come on stream in 2009, when the 3-star Aston Palace at Twin Towers and the 5-star Aryaduta Hotel at the City of Tomorrow are scheduled to open. Over the coming two years, Surabaya’s hotel market will see an additional 1,560 hotel rooms in three 3-star hotels (580 rooms), two 4-star hotels (380 rooms) and two 5-star hotels (600 rooms)

The largest number of hotel developments is concentrated in Central Surabaya (the downtown area), followed by West Surabaya, which is now growing as a commercial area in the city.

sUPPlY

0

500

1,000

1,500

2,000

2,500

2000 2001 2002 2003 2004 2005 2006 2007 1H2008 2009 2010

3-star 4-star 5-star

cUMUlatiVe rooMs in, 3, 4 anD 5-star Hotels in sUraBaYa


Unlike the growing occupancy trend in 3- and 4-star hotels, 5-star hotels have seen a decline, with the quarter-on-quarter occu-pancy of 5-star hotels dropping from 56.63% to 55.09%. From the total of five 5-star hotels operating in Surabaya, Hyatt Regency Sura-baya enjoyed consistent performance during the quarter, with an occupancy rate of around 67%. Other hotels posted rates of around 57%. The performance of 3- and 4-star hotels was much better than that of 5-star properties, with the average occupancy rate (AOR) in 3-star hotels rising to 72.80% from the previ-

ous 68.93%. Only two hotels had AORs of below 60%, while such hotels as the Narita and the Santika have consistently performed well, with AORs of above 80%. The 4-star hotels also displayed a positive trend, with 76.76% occupancy during the quarter, which was better than the 71.14% in the previous quarter. Two 4-star hotels had an AOR below 60%, but the rest performed better with levels of above 80%, among them the Somerset, the Novotel, the Plaza Surabaya, the Tunjungan and the Mercure.

aVeraGe occUPancY rates


The 3- and 4-star hotels enjoyed much better occupancy rates than the 5-star hotels in Surabaya.


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 1Q2008 2Q2008

3-star 4-star 5-star average

aVeraGe occUPancY rates oF 3, 4 anD 5-star Hotels in sUraBaYa


Despite the low occupancy rates, the average room rate (ARR) in 5-star hotels was much higher than that achieved by 3- and 4-star hotels. This is one of the reasons for falling demand in 5-star hotels as the market may be price-sensitive in terms of hotel rates. On the other hand, there was only a small gap between the ARR of 3-star hotels and that of 4-star hotels. Having said that, hotel guests will benefit from this situation, since they can pay a little more but enjoy a better class of hotel (4-star). This would also explain the previous chart, with 4-star hotels enjoying the highest AOR since 2007.

The ARR for 3-star hotels this quarter was Rp279,481, down from Rp281,577 in the previous quarter. On average, the ARR for re-spective hotels was about the same, although the Elmi and the Santika performed slightly better than others. The 4-star hotels regis-tered an ARR of Rp327,107 for the quarter, up moderately from Rp324,136, with the Tunjungan and the Garden Palace hotels post-ing the highest ARR of the 4-star hotels. An ARR of Rp602,715 was achieved in the 5-star category, which was an increase of 3% over the quarter. In this hotel category, two hotels, i.e. the Shangri-La and the Sheraton, have continuously performed better than the other 5-star hotels. The ARR for the Shangri-La was Rp835,930, which is about the same as 5-star hotel rates in Jakarta, while the Sheraton achieved an ARR of Rp672,000.

aVeraGe rooM rates

aVeraGe rooM rates oF 3, 4 anD 5-star Hotels in sUraBaYa


Rp-

Rp100,000

Rp200,000

Rp300,000

Rp400,000

Rp500,000

Rp600,000

Rp700,000

2000 2001 2002 2003 2004 2005 2006 2007 1Q2008 2Q2008

3-star 4-star 5-star average


The average room rate (ARR) of 5-star hotels was far beyond that of 3- and 4-star hotels.


contact inForMation

293 oFFices in 61 coUntries on 6 continents

Usa 99 canada 19latin america 18 asia Pacific 62 eMea 95

$2.0 billion in annual revenue 868 million square feet under management

15,573 Professionals

this report and other research materials may be found on our website at www.colliers.com. Questions related to information herein should be directed to the research Department at the number indicated above. this document has been prepared by colliers international for advertising and general information only. colliers international makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. any interested party should undertake their own inquiries as to the accuracy of the information. colliers international excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. colliers international is a worldwide affiliation of independently owned and operated companies.

Our Knowledge is your Property

Colliers International IndonesiaWorld Trade Centre 10th floorJalan Jenderal Sudirman Kav 29 - 31Jakarta 12920Tel : 62 21 521 1400Fax : 62 21 521 1411


oUtlooKFor several years, the profile of hotel guests in Surabaya has been dominated by domes-tic guests (around 85%), with the remainder being overseas guests. This has led to a con-tinually good performance of 3- and 4-star hotels in Surabaya since domestic guests are generally more price-sensitive.

www.colliers.co.id

The average room rate (ARR) of 5-star hotels was far beyond that of 3- and 4-star hotels.

Mike BroomellManaging DirectorTel : 62 21 521 1400Fax : 62 21 521 1411Email : [email protected]

Ferry SalantoDivision Manager, Research ServiceTel : 62 21 521 1400Fax : 62 21 521 1411Email : [email protected]

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