Flight-to-quality, competitive rents to dominate Jakarta’s office market in 2024 | Real Estate Asia

Flight-to-quality, competitive rents to dominate Jakarta’s office market in 2024

No new supply is expected for next year.

According to a JLL report, flight-to-quality should remain the demand characteristic for the next 12 months in Jakarta’s office market.

“With one project expected to be completed in the remaining quarter of 2023 and no new supply expected for 2024, we anticipate it will support the occupancy rate despite remaining under pressure,” the report said.

JLL added that competitive rents are expected to continue to be a feature of the market as the year closes, as well as for 2024 with the upcoming national election, despite declining at a slower rate.

Here’s more from JLL:

Net demand surpassed 20,000 sqm for the first time in the past two years. Looking at the leasing market, the technology sector was relatively less dominant than in previous quarters, while investment firms and government-related tenants were somewhat more active.

One major flex-space operator acquired the vacant space in a Grade A office in the Sudirman corridor that another major flex-space operator left in early 2023.

One project completion is postponed to 4Q23

The completion of Thamrin Nine 2 – Luminary Tower, at around 40,000 sqm, was postponed to the last quarter of 2023. By the third quarter of 2023, Jakarta Mori Tower was still the only new addition of the year to stock.

We recorded the vacancy rate improving at approximately 36%, better than the past two quarters. This was due to positive net demand, and supported by the absence of new completions.

Rent decline tapers off

Rents continued to fall at around -1.9% q-o-q and -7.9% y-o-y. Grade A net effective rent has been recorded below IDR 200,000 per sqm per month since the previous quarter.

Despite stabilised vacancy rates, rents remained competitive due to the suppressed market and relatively limited new demand, especially in older and lower-occupancy buildings.

Note: Jakarta Office refers to Jakarta's CBD Grade A office market.

 

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