Spotlight
Retail ● Jakarta January 2020
Savills World Research
Indonesia
Spotlight ● Retail January 2020
Spotlight
Retail ● Jakarta
savills.co.id/research 1
Economy
2019 has been a tough period for the global
economy with trade tension between US
and China and recessions in some countries.
World GDP growth recorded its weakest
pace since GFC a decade ago, reflecting
common influences across regions and
country-specific factors.
While economy this year is predicted to
grow moderately, many expect that the
bottom has passed. Yet, downside risks
remain with US-Iran conflict, surmounting
debts worldwide and unfinished trade talks
– these may hamper global recovery.
As part of the open market, Indonesia
cannot escape from various global issues.
In order to achieve economic target, the
country should quickly response and put a
balance between sustaining growth
momentum and maintaining
macroeconomic and financial stability.
Indonesia has so far sustained a solid
growth on the back of strong domestic
consumption, fiscal expansion and export
growth. The government massive spending
on infrastructure is expected to continue
while development on human capital -
through education and health is
anticipated to improve. Furthermore,
structural reforms have been widely
implemented in many aspects, including
laws and regulations. For instance,
government had proposed to the
parliament Omnibus bill to amend around
74 laws in efforts to cut red tapes.
Indonesia’s economic growth for 2020 is
projected to increase modestly. The
government is targeting GDP growth at
5.3% – higher than 2019 (estimated)
growth rate of 5.0%.
TABLE 1
Key Figures – Indonesian Economy, 2011-2019
2011 2012 2013 2014 2015 2016 2017 2018
2019
GDP Growth (%) 6.50 6.23 5.78 5.09 4.79 5.02 5.07 5.17 5.02**
Interest Rate (%) 6.00 5.75 7.50 7.75 7.50 4.75 4.25 6.00 5.00
Inflation Rate (%) 5.38 4.28 6.97 6.45 6.38 3.02 3.61 3.13 2.72
Exchange Rate (USD/IDR) 9,068 9,670 12,189 12,440 13,795 13,436 13,548 14,481 13,091
Unemployment Rate (%) 6.56 6.07 6.17 5.94 6.18 5.61 5.50 5.34 5.28
Source: BPS. BI, MoF *) government target, unless other mentioned **) latest data available
CHART 1
National GDP Growth, 2006-2020F
Source: BPS *) Government target
**) Estimate
Indonesia has so far sustained a solid progress on the back of strong domestic consumption,
fiscal expansion and export growth. The government massive spending on
infrastructure is expected to continue while human capital development program through
education and health is anticipated to improve.
Spotlight ● Retail January 2020
savills.co.id/research 2
To anticipate the sluggish economy,
Indonesian government has implemented
some policies to ensure domestic stability
and resiliency. In line with global trends
among central banks in cutting off interest
rates, Bank Indonesia also trimmed the
benchmark interest rate four times in 2019
– which now stood at 5.0%.
The move had some positive impacts to
support low inflation and relatively stable
rupiah. By end 2019, inflation rate stood at
2.7% which still within the target range of
2.5%-4.5%. As for 2020, the government
targets the inflation rate at 3.0±1%.
Meanwhile, rupiah exchange rate against US
dollar have been relatively stable in 2019 and
it was closed at IDR 13,900 by end-Dec. Solid
foreign reserves (approx. USD 129 billion)
helped to maintain the rupiah.
Furthermore, the government recently
announced to lower oil and gas prices in early
2020. If realized, this will help to reduce
household’s gasoline expenditures that in
turn would boost spending in other sectors
including in the property sector.
Aside from the above, the government
continues their efforts to cut red tapes and
providing more tax provisions to spur
investments. Compared to other countries in
the region, Indonesia with much bigger
economy and healthier GDP growth should
be able to attract international and foreign
companies to do business here. Interests in
the last few years remained high with energy
and trading sectors became investors’ focus.
With more acceleration in economic growth
and better policies in place, we expect to see
gradual improvements in spending power as
well as better wealth distribution. As such,
we expect inquiry from both end-users and
investors to gradually strengthen, while more
corporate expansion would translate into
more demand in sectors like office, logistics
and hotel accommodations.
However, we also believe that developers
should wisely manage their expectation
particularly on their pricing to make it more
attractive in order to win the competition
during a tough market condition.
CHART 2
Interest Rate & Inflation, 2015-2019
Source: BPS, BI
CHART 3
Rupiah Exchange Rate (USD/IDR), 2014-2019
Source: BI CHART 4
IDX Composite & Property Index, 2014-2019
Source: BEI
Spotlight ● Retail January 2020
savills.co.id/research 3
Jakarta Retail
The retail market had witnessed some
positive growth in 2019 compared to the
previous year with net take-up picked-up
strongly and mall occupancies rebounded
to healthier levels.
Three small shopping centers with total
leasable area of around 24,000 sqm were
completed in 2019. The new projects are
all categorized as middle-up lifestyle malls
with focus on leisure and F&B tenants.
They are located in Central Jakarta, South
Jakarta and West Jakarta. With the
additional inventory, total retail supply
(for lease) rose to approx. 3.1 million sqm
as of end-2019.
By grade, the largest proportion in the
existing stock came from middle-up
shopping centers, accounting for 41% of
the overall stock. The second largest stock
came from upper grade segment with
around 33% of the total. Meanwhile high-
end and middle-low retail centers -
accounted for 13.5% and 12.5%,
respectively.
By location, about 38% of total stock was
located in South Jakarta then followed by
North Jakarta at 20%. West Jakarta and
Central Jakarta constituted about 19% and
15% of the entire stock, respectively.
Meanwhile, East Jakarta as the largest
population in the capital city has the
smallest retail stock instead.
Some renovation works and upgrades in
a number of shopping centers were
eventually finished in 2019 which also
bring in new tenants to that centers. For
example, large vacant areas previously
occupied by department stores had
been modified and converted to smaller
spaces for mini anchors or some
specialty tenants.
With a number of openings especially
from new local F&B players, retail take-
up in 2019 rose quite significantly
compared to previous year. Combined
with expansions from existing stores,
net take-up totalled at around 75,000
sqm in 2019, quite a big jump from 2018
when net take-up were almost non-
existent.
TABLE 2
Market Indicators – Rental Shopping Malls | Jakarta
2H19 1H19 2H18 Change (%)
HoH YoY
Existing Stock (sqm) 3,164,139 3,159,139 3,086,566 0.2% 2.5%
High-end 427,466 427,466 427,466 0.0% 0.0%
Upper 1,038,450 1,034,150 1,034,150 0.0% 0.4%
Middle-up 1,298,242 1,293,242 1,274,069 0.4% 1.9%
Middle-low 399,981 399,981 399,981 0.0% 0.0%
Avg. Rent (/sqm /mth) 346,200 346,200 348,430 0.0% -0.6%
High-end 773,571 773,571 773,571 0.0% 0.0%
Upper 505,556 505,556 502,222 0.0% 0.7%
Middle-up 289,326 289,326 291,568 0.0% -0.8%
Middle-low 211,042 211,042 213,333 0.0% -1.1%
Source: Savills Research & Consultancy
CHART 5
Supply, Demand & Occupancy, 2010-2019
Source: Savills Research & Consultancy
Retail enquiries grew positively in 2019. Renovations and design renewal/
positioning works as seen in a number of shopping malls had
successfully lure more traffic thus attracted retailers to expand
their outlets.
Spotlight ● Retail January 2020
savills.co.id/research 4
In general, the retail property sector in
Jakarta remained attractive amid ongoing
competitions from online shopping. With
growing affluent class and thriving youth
segment, the market in Jakarta continued
to attract international retailers, particularly
F&B and fashion sector.
Some new foreign entrants in 2019 include
Eben (Hong Kong), Karuizawa (Japan), Nars
(USA), Pizza Maru (South Korea), Yogurtland
(USA), Ben Gong’s Tea (China), Harrits
Donuts & Coffee (Japan), Maki-san
(Singapore), Gram (Japan) and Hai Di Lao
China). Meanwhile, bubble tea craze is
currently a hit in Jakarta as evidenced by
many boba store openings in town. Tiger
Sugar, Xing Fu Tang and Diagon Alley (all
from Taiwan) are some prominent players
that made their debut in 2019. They
aggressively expanded not only in Jakarta,
but also in other big cities like Medan,
Surabaya, Bali, Bandung and Semarang.
Meanwhile, existing studio chain Cinemaxx
had rebranded as Cinepolis with official
announcement in early December 2019.
Cinepolis entered a partnership with Lippo
Group, the owner of Cinemaxx, by acquiring
40% of its stake. That move was taken as an
effort to heighten moviegoers’ experience
through innovation from the Cinepolis.
Also, fast fashion retailers like H&M and
Uniqlo continued to penetrate the market
with more stores targeting primarily youth
customers and young professionals.
Overall, increasing demand led to a lower
vacancy from 12.1% in 2018 to 10.4% by
end-2019. This also had reflected in entire
mall segments: in high-end malls vacancy
down to 4.5%, 5.9% in upper grade malls,
16.7% in middle-up and in middle-low
shopping centers vacancy down to 8.0%
Amid the decline in vacancy, retail rents
were basically unchanged as landlords
continued to focus on retaining their
tenants and trying to lure new ones. The
overall average rent in Jakarta stood at IDR
346,000 per sqm per month as of December
2019. In Jakarta’s high-end malls, rents for
typical specialty stores in prime floors are
offered at the average of IDR 773,571 per
sqm per month.
CHART 6
Net Take-Up by Grade, 2010-2019
Source: Savills Research & Consultancy
CHART 7
Vacancy by Grade, 2010-2019
Source: Savills Research & Consultancy
CHART 8
Rental Index by Grade, 2010-2019 (2010 = 100)
Source: Savills Research & Consultancy
Spotlight ● Retail January 2020
savills.co.id/research 5
What is the outlook?
Between 2020 and 2022, around 450,000
sqm of retail space from 18 projects is
scheduled for completion and will add to
the supply in Jakarta.
In terms of grade, most of the upcoming
supply is categorized as middle-up malls,
representing 60% of the future supply while
the rest is upper grade malls. By location,
the concentration of future supply will be in
North Jakarta (28%), South Jakarta (27%)
and Central Jakarta (26%). West Jakarta and
East Jakarta accounted for 12% and 7%
respectively.
Some projects previously scheduled for
completion in the last quarter of 2019 had
delayed their openings – mostly due to slow
construction works. Those centers are
anticipated to open for trade in early 2020.
If completed, soon there will be two new
centers in the SCBD area (D8 and Elysee)
and one new mall in Senayan area (Spark).
The upcoming centers will be a fresh
addition to the CBD retail supply which had
seen no new developments in the last few
years. In response to the current trends, the
developers adopted lifestyle concept in their
malls with significant contents on F&B and
leisure retailers. With more lifestyle centers,
the CBD will be perceived as the most hip
and trendy location in the capital city.
CHART 9
Annual Supply, 2010-2019
Source: Savills Research & Consultancy
CHART 10
Supply, Demand & Occupancy Forecast, 2020-2022
Source: Savills Research & Consultancy
TABLE 3
Future Supply – Rental Shopping Mall | Jakarta
2020 2021 2022
Future Supply (sqm) 184,366 114,276 154,910
High-end - - -
Upper 154,366 16,000 11,910
Middle-up 30,000 98,276 143,000
Middle-low - - -
Central Jakarta 32,979 63,276 24,910
South Jakarta 124,887 - -
North Jakarta - 25,000 100,000
West Jakarta 26,500 26,000 -
East Jakarta - - 30,000
Source: Savills Research & Consultancy
Spotlight ● Retail January 2020
savills.co.id/research 6
With big population base and rising middle
consumers, Indonesia continues to attract
offshore investors. Growing investors’
appetite to acquire malls in Indonesia
garnered a buzz in 2019. Notable deals
include NWP Retail (Nirvana Wastu
Pratama), Indonesia’s largest independent
retail shopping mall platform backed by
Warburg Pincus, taking over malls from
Lippo group. NWP entered into conditional
sale and purchase agreements to buy five
malls located across the country in end-
2019 for a reportedly IDR 1.8 trillion. The
deal marked growing participation of
international operators in Indonesia’s
retail market – following the expansion of
Korean and Japanese retail developers.
Meanwhile, successful upgrades in a
number of malls have brought positive
impacts to their performances, which
inspire other landlords to refresh their
centers in order to attract more tenants and
visitors. Some landlords that plan to
renovate their malls include Melawai Plaza
and Gajah Mada Plaza.
Going ahead, we expect Jakarta future retail
scene will be more dynamic and innovative
as retail brands evolving to create unique
value and experience to their customers.
Furthermore, F&B sector is projected to
remain popular and have strong growth;
more investors and international players
are seen to expand to Indonesia like Taco
Bell (USA), Go Noodle (Malaysia) and %
Arabica (Japan) will open their stores soon
here. Meanwhile local coffee chain Kopi
Kenangan, with strong back-up from from a
global investor continues to expand and
targeting to add over 1,000 new outlets
over the next 2 years.
Along with the anticipated growth in
demand, retail rents are projected to pick
up gradually. Based on our moderate
scenario, we expect the hike at around
3%-4% hike per annum over the next two
to three years.
CHART 11
Rental Index Forecast, 2020-2022 Moderate Scenario
Source: Savills Research & Consultancy
Boba Craze Outlet expansion
(major brands)
0 50 100 150 200 250
Xing Fu TangFat StrawGulu Gulu
Happy LemonBen Gong's Tea
Forever TeaDabobaKoi TheOneZo
KokumiHeycha
ChatimeFat BubbleKamu TeaDirty Milk
IN TeaHeiHei
Tiger SugarDiagon Alley
HopHopQuickly
Bubble tea (or pearl milk tea,
bubble milk tea called boba) is a
tea-based drink invented in
Taiwan in the 1980s.
The first boba drink in Indonesia
was launched in 2000 – with
‘Quickly’ as the pioneer.
Later in 2001, Hop Hop opened
targeting lower segment.
In the past couple of years,
Indonesia has experienced an
influx of boba outlets from local
and international alike.
# of outlets
Spotlight ● Retail January 2020
savills.co.id/research 7
Glossary
• The Jakarta retail market covers the administrative region of DKI Jakarta,
which is defined based on municipality i.e.: Central Jakarta, South Jakarta, East Jakarta, West Jakarta and North Jakarta
• Demand as defined by net absorption (net take-up) refers to the net increase in occupied retail space within a particular period.
• High-end malls refer to shopping centers located in prime CBD areas with international standard features and rated as the highest rank in terms of building size, quality, tenancy mix and profile, facilities, maintenance etc.
• Upper-grade malls refer to shopping centers located in strategic areas with excellent quality and rated as the second highest rank in terms of building size, quality, tenancy mix and profile, facilities, maintenance etc.
• Middle-up malls refer to shopping centers located in good areas with good quality and rated as the third highest rank in terms of building size and quality, tenancy mix and profile, facilities, maintenance etc.
• Middle-low malls refer to shopping centers located in decentralized areas with standard quality and rated as the lowest rank in terms of building size and quality, tenancy mix and profile, facilities, maintenance etc.
• Vacancy rate refers to the ratio of vacant available retail space to the total stock in the market.
• Gross rent refers to the total rental payable by tenants. This is equivalent to the sum of base rent plus service charges.
• Base rent is the standard minimum rental payable for a retail space without taking into account any add-ons such as service charge and after-hours utility costs that make up the total occupancy costs.
• Service charge is the collective name for the cost of air-conditioning, electricity and other services in public area as well as management charges passed on to occupiers.
Forecasting Methodology
• Optimistic Scenario
Based on assumptions that the general economic conditions to improve significantly (i.e. better GDP growth and positive macro environment) which will lead to a more robust purchasing power and consumer spending, thus generate significant retailer expansion, which would be reflected in significant take-up increase.
• Moderate Scenario
Based on assumptions that the general economic conditions to grow moderately (i.e. stable GDP growth and neutral macro environment) which will provide a foundation for steady consumer spending and positive retailer expansion.
• Pessimistic Scenario
Based on assumptions that the general economic conditions to weaken (i.e. lower GDP growth and negative macro environment) with lack of retailer expansion and weak consumer spending.
Please contact us for further information
Savills Indonesia Savills Research
Jeffrey Hong President Director Savills Indonesia +62 21 293 293 80 [email protected]
Anton Sitorus Director, Research Consultancy +62 21 293 293 80 [email protected]
Simon Smith Senior Director Asia Pacific +852 2842 4573 [email protected]
Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 700 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.