Jakarta’s office market to see new opportunities in 2022
The increasing vaccination rate and the better-maintained pandemic at the end of 2021 have brought optimism to the growth in the property sector.
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However, with the continuation of the Work From Home (WFH) system, the office subsector is still facing the challenges of downsizing, delayed office space expansion from potential tenants, and new supply entering the market amidst the pandemic.
The cumulative total office stock in the Jakarta CBD increased slightly year on year by 2.4%. Besides, approximately 407,647 square meters of the total new office supply in the pipeline with five projects underway are expected to enter the market in 2022.
The overall occupancy has continued to experience a downward trend, dipping to 71.8% at the end of 2021. And the continuing trend of flight to quality was partly reflected in the net absorption figures for the entire year 2021. Grade A and Grade B Premium buildings recorded the largest negative net take-ups.
While, the recurring wave of Delta-variant has continued to impact all business sectors negatively and triggered some downsising-consolidations, relocations and office closures in the Jakarta CBD office buildings in 2021. Leasing transactions during the second half of 2021 primarily involved companies from the Pharmaceuticals, FMCG (Fast Moving Consumer Goods), Banking, Information Technology (IT), Fintech and Construction sectors.
With the new supply in 2022 equivalent to 5.8% of existing stock and set against slow market conditions leading to an increase in vacancy, rental values are expected to remain under downward pressure. In the near term, existing buildings with rising vacancy continue to face difficulty with greater flexibility in rental incentives and negotiations to capture new leases and maintain existing tenants.
Most companies are expected to focus on returning to normal office settings, despite the broader acceptance of hybrid working models (sharing time between the traditional office settings and working remotely).
Although other occupiers have been taking advantage of the subdued market situation to upgrade into newer buildings with more attractive deals and better space specifications, they have been more cautious in their decision-making as well as focusing on renewing and restructuring current leases with more flexible contracts and conservative space requirements to improve security in a volatile market condition.
Despite the market challenges, demand for office space is expected to improve slowly, given the positive economic outlook in 2022.
Willson Kalip, Country Head of Knight Frank Indonesia, states, “Amidst the continuation of WFH with a hybrid pattern, the need for office space will remain as the collaboration facility among employees to boost productivity spirit. However, a more flexible design with large circulation will be the trend.”
Source : https://kfmap.asia/research/jakarta-cbd-office-market-overview-h2-2021/1780