Jakarta’s property market saw sluggish growth in the first quarter of this year, confirming analysts’ expectation of weak market growth in the capital city’s property market throughout 2021. Property consultancy Colliers International reported declining occupancy rates in retail and offices as well as muted sales in new apartments as business activity and consumer spending remained low. “If we look at the demand cycle, the bottoming was expected in 2020 but we can see that, with the reality of a pandemic that is out of our control, we now expect the cycle to continue and may reach its lowest point this year,” said Colliers research head Ferry Salanto.
For the first time after 21 years, the Jakarta CBD & Non-CBD office markets saw an annual negative take-up of 82,400 sqm and 57,000 sqm respectively for the whole year 2020. The COVID-19 has severely affected all business sectors and triggered some downsizings, relocations and even office closures across all office buildings. A total of about 366,000 sqm new office space has entered the market during 2020, which notably lower than that was recorded in the previous year. Rental rates decreased further in line with the falling occupancy level of the market during year 2020.
With the outlook for positive economic growth of about 5% in 2021, demand for office is projected to start emerging in the second quarter 2021, mostly coming from the re-activations of the previously considered relocations and/or expansion plans. New demand for office space is expected to grow stronger in the second half of 2021 following the expected improving business activities and performance especially after the commencement of vaccine distribution program by the government. Rentals, however, will remain under downwards pressure as vacancies will continue to rise in 2021 due to completion of some large new office projects. Landlords will continue to face challenge to raise their base rental or service charge, particularly during the first semester of 2021.