Jakarta’s retail occupancy rate drops to 71.2% in Q3

This is a 7% decline from the start of the pandemic in Q2 2020.

Retail occupancy in Jakarta has been on a downward trend for 18 months. According to Colliers, vacant spaces increased due to weakening business activities, with many retailers deciding to close stores. In Jakarta, the average occupancy rate was recorded at 71.2% in 3Q21, a fall of about 7% since 2Q20, when the pandemic was announced. 

“In the greater Jakarta area, the average occupancy rate was 70.8% in 3Q21, down about 7% compared to 2Q20. The occupancy outlook may not look good in the short term, particularly when the erratic nature of the pandemic so far is considered, and projected upcoming supply will also add pressure. We hope that tenants with leasing commitments are able to at least maintain or lift the occupancy rate in the next three months,” Colliers adds.

Here’s more from Colliers:

Supply

The escalation in Covid-19 cases in July-August 2021 put pressure on retail market, including the schedules for mall openings. In Jakarta, the developer of Aeon Mall Tanjung Barat is awaiting the right time to open. The construction of other future malls is ongoing, albeit at a slower pace. Without any new malls being completed in 3Q, total retail space remains at 4.86 million sq m. 

In the meantime, the Margo City extension project added additional supply to the retail market in the greater Jakarta area in 2021, bringing total retail space in the Bodetabek area to 2.84 million sq m. Two new shopping centres will add to the inventory by the end of 2021.

Average rent

Landlords are keeping rents stable to keep retailers in premises. An approach used to maintain tenants, other than charging fixed rents, is to offer revenue-sharing schemes. 

During 3Q the average rent was at IDR567,007 in the Jakarta area. This figure was relatively stable after a slight increase in 2Q21, which was mainly due to the operation of new malls with higher rates. Similarly, in the greater Jakarta area, a newly operating mall brought the average rent to IDR384,121 for the quarter, up a modest 0.8% QOQ. 

Rents in both Jakarta and the greater Jakarta area are likely to stay relatively stable for the remainder of 2021. The retail outlook will largely depend on the traffic allowed into malls. Vaccinations will be one of the catalysts for restoring crowds and increasing sales volumes, in order for landlords to begin considering adjusting rents. 

Service charges have been quite stable throughout 2021. During 3Q, the service charge tariff was IDR149,199 in Jakarta, and IDR117,760 in the greater Jakarta area.