A look back at the 2022 Jakarta property market
How has the Jakarta market performed in 2022, and what has been achieved while the pandemic situation improves?
As we enter the last month of 2022, it is a good time to look back at and reflect on how the Jakarta property market has performed and what has been achieved while the pandemic situation improves.
The government gradually eased social restrictions earlier this year, opening up almost all economic activities. This resulted in a more consistent economic growth above 5% y-o-y in the first three quarters. As of October, Oxford Economics maintain a growth forecast of 5.5% for the entire year figure.
In general, office inquiries from various industries, apart from the active technology companies, started to pick up at the start of the year. Tenants resumed executing their real estate plans cautiously, with flight-to-quality, consolidation and relocation as the central theme driven by cost savings.
Green building is also one of the driving force for tenant relocation as occupiers prioritise sustainability goals as well as the their employees’ wellbeing. Despite positive activities, tenants are still taking more time in decision-making. The downsizing trend continues as tenants adopt workplace strategies and hybrid working arrangements putting overall occupancy and rents under pressure in both CBD and non-CBD areas. A similar trend was seen last year when Grade A net demand was in the positive territory while the overall Grade was still negative as of the third quarter.
Prime shopping malls in strategic locations have enjoyed healthy foot traffic with the easing of social restrictions that allowed them to operate at full capacity. F&B and fast-fashion occupiers remain the most active sectors. In addition, children's playgrounds and other family-friendly entertainment facilities continued to expand in the newer malls, as did home appliance brands.
Meanwhile, continuing weak demand for condominiums in Jakarta shows that potential buyers, especially individual investors, are still cautious in their buying decisions. Consequently, new launches have remained limited – a similar trend since the beginning of the pandemic as developers’ response to the lackluster market condition.
On the contrary, the landed housing sector continued to be active, as can be seen from the buyers’ responses to the launch of new products of various types in the Greater Jakarta area. The VAT exemption for residential units until September also positively impacted the market.
Despite limited new supply in the first nine months, healthy demand for modern warehouses from third-party logistics and FMCG continues. Expansion from fresh food/grocery delivery, cold storage, and last-mile delivery have also supported additional demand for warehousing floor space across Greater Jakarta.
Last but not the least, data centre players remain active in developing their facilities, not only on the outskirts of Jakarta but also within the city centre.