Jakarta Property Market Overview

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OW

LED

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THE

COLLIERS INTERNATIONALQUARTERLY RESEARCH REPORT

JAKARTA3Q 2006

INDONESIA

Jakarta Property Market OverviewMarket Conditions as at 3Q 2006

OFFICE SECTOR

EXECUTIVE SUMMARY

� Supply of office space in Jakarta remained thesame QoQ. Office buildings which are sched-uled to finish this year are expected to be com-pleted in 4Q06.

� There were no significant changes in occupancyrates QoQ, particularly in the CBD. In general,offices located in South Jakarta experienced abetter take-up rates compared to other regions.

� Meanwhile, strata office transactions were quiteslow. Significant take-up occurred at the MegaGlodok Kemayoran (MGK) office which is lo-cated outside the CBD. However, most othertransactions were internal acquisitions. With it’ssignificant take-up, MGK introduced a new pricefrom the previous Rp10.10 million/sq m toRp10.25 million/sq m.

� Some buildings in the CBD adjusted their rentalrates upward. They are mainly buildings with lowvacancies and buildings that have not increasedtheir rental rates for several quarters.

� Changes in QoQ rental rates were also causedby a change in rental composition in some build-ings which was previously separated betweenbase rent and service charge. This quarter grossrent was introduced instead as one package.

LIST OF UNDER-CONSTRUCTIONOFFICE BUILDINGS IN THE CBD

Ratu Prabu 2 and Beltway Office Park (Tower A) areready for launching as well but are scheduled tolaunch the next quarter. Thus, with the addition ofthe new office buildings in 4Q06, office stock in theCBD will rise about 121,554 sq m, while outside theCBD the two buildings mentioned will contributeanother 47,711 sq m to the total office stock.

In addition to the total confirmed new developmentswhich are currently under construction as depictedin the table below, we also hear from several devel-opers that some planned office buildings are pro-jected to invigorate the office market over the nextthree years. Our findings reveal that 3 office build-ings are planned for the Sudirman area, 2 buildingsare scheduled for Gatot Subroto, 2 for MegaKuningan,3 for Rasuna Said. These future develop-ments are still in the design stage and there are noactivities in the field. Meanwhile, outside the CBD,the TB Simatupang area is projected to have severaloffice buildings added.

Source: Colliers International Indonesia, Research Department

SUPPLY

Most buildings gearing up for their final stage settheir launch during the fourth quarter of this year,thus leaving this quarter with no new stock. MenaraKuningan, Plaza Marein, and Indofood Tower are build-ings in the CBD which seem to be ready to launchbut are scheduled for the 4Q06. Outside the CBD,

Building LocationMarketing Scheme

ScheduleSGA

(sq m)Menara Kuningan Rasuna Said Strata 4Q06 33,077 Indofood Tower Sudirman Lease 4Q06 54,606 Plaza Marein Sudirman Strata 4Q06 28,244 Sahid Boutique Sudirman Strata 4Q06 5,627 Menara Karya Rasuna Said Lease &

Strata 1Q07 32,697

Satrio Tower Satrio Lease 1Q07 60,000 BCA Tower Thamrin Lease 3Q07 82,000 Menara Palma Rasuna Said Lease 3Q07 35,000 Sentral Senayan 2 Senayan Lease 3Q07 59,205 Menara Prima Mega Kuningan Lease &

Strata 4Q07 35,000

The East Mega Kuningan Strata 2007 44,026 Senayan City Forum Senayan Lease 2007 20,436 Pacific Place SCBD, Sudirman Lease 2007 19,000 Graha Energi Sudirman Lease 2Q08 65,686 Bakrie Tower Rasuna Said Strata 4Q08 60,646

2 JAKARTA QUARTERLY RESEARCH REPORT


JAKARTA3Q 2006

DEMAND

Leasing transactions in the quarter were similar to transac-tions in the previous quarter. Oil, insurance, banking, andtelecommunications companies were tenants with large spacetransactions above 2,000 sq m. Again, most all of those trans-actions were relocations to other premises. Some tenantslooked for better quality premises and wanted to relocate tothe CBD, others relocated within the CBD but are searchingfor newer buildings, while other non-service industries relo-cated outside the CBD. Smaller transactions below 1,000 sqm were identified in the advertising, IT and shipping indus-tries.


FUTURE DEMAND

Four coming office buildings in the CBD have declared sig-nificant absorption before their launch—Menara Kuningan,Plaza Marein, Indofood Tower and low-rise office compoundSahid Boutique Office. The buildings have secured major ten-ants like oil; food; insurance, and finance companies and agroup of developers. The four developments have registeredaround 86% absorption before their official opening.

Outside the CBD, the absorption pattern for upcoming officebuildings was similar to the CBD. Despite being dominatedby internal acquisitions made by their respective holding com-panies, strata title office buildings like GP Tower on Belezzaand Mega Glodok Kemayoran have also acquired other buy-ers like finance companies, law firms, and textile and manu-facturing companies.

CUMULATIVE SUPPLY, DEMAND AND OCCUPANCY RATE IN CBD

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

2000 2001 2002 2003 2004 2005 2006 P 2007 P 2008P

55%

65%

75%

85%

95%

Supply Demand OR


ANNUAL SUPPLY OFFICE IN THE CBD

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1998 2000 2002 2004 2006

P

2008P

m2

Lease Sale

LIST OF UNDER-CONSTRUCTIONOFFICE BUILDINGS OUTSIDE CBD


Building LocationMarketing Scheme

ScheduleSGA

(sq m)Beltway Office Park - Building A

Ampera / Simatupang Lease 4Q06 6,634

Ratu Prabu 2 TB Simatupang Lease 4Q06 35,900Treva Kebayoran Baru Lease 4Q06 5177One Woltermonginsidi Kebayoran Baru Lease 1Q07 1,456CBD Pluit Pluit Strata 2Q07 14,931Wisma Pondok Indah 2 Pondok Indah Lease 4Q07 25,846Talavera TB Simatupang Lease 4Q07 26275Mega Glodok Kemayoran Kemayoran Strata 2007 7,320GP Tower (The Belezza) Permata Hijau Strata 2007 19,361Menara 165 TB Simatupang Lease 2007 29,383Recapital Kebayoran Baru Lease 1Q08 9,627

Overall, since relocation has dominated most of the transac-tions, with only a small portion of tenants expanding, andnewer buildings have registered better absorption rates, theoccupancy rate in the CBD only moved modestly upward to90.57% from 89.75% last quarter. Despite the fact that fourmajor buildings are expected to invigorate the market in 4Q06,we anticipate no major changes in occupancy rates by theend of the year as the four new buildings have secured goodabsorption rates.

JAKARTA QUARTERLY RESEARCH REPORT 3


JAKARTA3Q 2006


Building LocationSGA

(sq m)Major Committed Tenants

Menara Kuningan Rasuna Said 33,077 PetrochinaPlaza Marein Sudirman 28,244 Marein, Developer, Investment, SecuritiesSahid Boutique Office Sudirman 5,627 Lasalle CollegeIndofood Tower Sudirman 54,606 IndofoodBCA Tower Thamrin 82,000 BCA, Platinum Fitness FirstSenayan City Forum Senayan 20,436 SCTVBakrie Tower Rasuna Said 53,652 Bakrie GroupGraha Energi Sudirman 65,686 Medco Energi

FUTURE OFFICE BUILDINGS IN THE CBDWITH THEIR CONFIRMED TENANTS


Building LocationSGA

(sq m)Major Committed Tenants

GP Tower on Bellezza Permata Hijau 19,361 Textile, Law Firm, FinanceBeltway Office Park A TB Simatupang 6,634 Marathon Oil, DuPontRatu Prabu 2 TB Simatupang 35,900 ConocoPhillips, ThiessWisma Pondok Indah 2 Pondok Indah 25,845 Danamon, EricssonCBD Pluit Pluit 29,862 Honey LadyRecapital Adityawarman 9,626 Recapital

FUTURE OFFICE BUILDINGS OUTSIDE CBDWITH THEIR CONFIRMED TENANTS

TREND OF RENTAL VS OCCUPANCY, CBD OFFICE

Rp90,000

Rp95,000

Rp100,000

Rp105,000

Rp110,000

Rp115,000

Rp120,000

Rp125,000

Rp130,000

1Q032Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q041Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06

74%

76%

78%

80%

82%

84%

86%

88%

90%

92%

Occupancy Rate Gross Rental Rate


BASE RENTAL RATES

The average rental rate for all classes of buildings climbedduring the quarter by 1.6% to Rp78,683 from Rp77,451/sqm/month. The overall increase was mostly contributed to bygrade A buildings which increased by 5%, although the aver-age rental rate for grade B buildings declined by 1%.

In contrast, the average rental rate for buildings with a US$rate edged down slightly by 1%. Although rent for grade Bbuildings jumped by 5%, grade A buildings experienced adecrease. Because the CBD market has more grade A build-ings than grade B buildings, the average base rental in US$ forall classes of buildings was US$12.22/sq m/month, a slightdrop from US$12.31/sq m/month. This quarter was highlightedby the adjustment of rental rates in US$ in some thirteengrade A buildings. Seven buildings edged down the rental ratewhile the remaining edged up the rental rate.

Outside the CBD, base rent increased by 2.7% during thequarter bringing this quarters figure to Rp54,425/sq m/month.The climb was due to an average rental increase in someregions like South, North and West Jakarta.



AVERAGE GROSS RENT (ALL CLASS), CBD OFFICES

Rp80,000

Rp90,000

Rp100,000

Rp110,000

Rp120,000

Rp130,000

1Q03 2Q033Q03 4Q03 1Q042Q04 3Q044Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06

$15

$16

$16

$17

$17

$18

$18

$19

$19

$20

$20

Rupiah US$

AVERAGE GROSS RENT (PREMIUM & GRADE A), CBD OFFICES

Rp100,000

Rp110,000

Rp120,000

Rp130,000

Rp140,000

Rp150,000

1Q032Q03 3Q03 4Q03 1Q042Q04 3Q04 4Q04 1Q05 2Q053Q05 4Q051Q06 2Q063Q06

$14

$15

$16

$17

$18

$19

$20

Rupiah US$


APARTMENT SECTOR

STRATA-TITLED APARTMENT MARKET

EXECUTIVE SUMMARY

� Another 2,164 strata title units entered the market dur-ing the quarter bringing the cumulative supply to 41,032units.

� With bulky supply and slow absorption, the take-up rateweakened.

� By the end of this year we do not expect that the apart-ment market will strengthen. Buyers will be restrainedfrom buying apartment units after increased spendingduring the Islamic holiday and in anticipation of furtherspending for the Christmas and New Year holidays.

SUPPLY

During the reviewed quarter, the apartment market gained2,164 additional units from four completed projects—ThePeak and Sudirman Park in the CBD as well as Senayan Resi-dence and Somerset Berlian in South Jakarta. With these unitscompleted, the cumulative supply increased by 5.57% QoQor 12.7% YoY to a total of 41,032 units found at 114 projects.

The middle-to-low segment (price between Rp6 million andRp10 million/sq m) still dominated the market with a propor-tion of 53.5% followed by the low segment (price below Rp6million/sq m) at 21.6 %. Apartments in the middle-to-low classare mostly scattered throughout South and West Jakarta.


JAKARTA3Q 2006


AVERAGE GROSS RENT (GRADE B), CBD OFFICES

Rp70,000

Rp80,000

Rp90,000

Rp100,000

Rp110,000

Rp120,000

1Q03 2Q03 3Q034Q03 1Q04 2Q04 3Q04 4Q041Q05 2Q05 3Q05 4Q05 1Q062Q06 3Q06

$10

$11

$12

$13

$14

$15

$16

Rupiah US$

PRICE

In the CBD, there were no changes in price. Prices hoveredbetween US$1,500 and US$1,700/sq m while those quotedin Rupiah ranged from Rp12 million to Rp14 million/sq m. Anadjustment occurred only in the Non-CBD area, where MegaGlodok Kemayoran set its new price at Rp10.25 million froma previous Rp10.10 million/sq m. On average, the price ofoffice space in the Non-CBD area ranged from Rp10 millionto Rp12.5 million/sq m.

SERVICE CHARGE

Maintenance costs moved up further in the quarter for alloffice categories. Overall, the service charge climbed by 3.8%to Rp47,934/sq m/month. Likewise, maintenance costs in US$buildings shifted up slightly to US$6.11 from US$6.05/sq m/month last quarter. Significant changes in the service chargeoccurred mostly in grade A category buildings. Outside theCBD, a modest service charge increase was also noticed fromRp34,057 to Rp34,273/sq m/month.

OUTLOOK

Within the remaining months of the year, we expect no sig-nificant upsurge in rental and maintenance costs. Of course,there will be some buildings introducing new rates, but thiswill not significantly impact overall figures.

Leasing activities will remain vibrant over the next period.During the low investment season this year, office transac-tions were still dynamic, albeit dominated by expansion andrelocation. Thus, we expect more active transactions shouldthe investment realization figure improve.


SUPPLY BASED ON SEGMENTATION (UNITS)

Middle Low(Rp6-10 mil)

53.5%

Luxury(>Rp20 mil)

1.5%

Middle Up(Rp10-15 mil)

17.0%

Upper(Rp15-20 mil)

6.5%

Low (<Rp6 mil)

21.6%


JAKARTA3Q 2006


As the end of the year approaches, some projects reachedthe topping-off stage like the two towers of Jakarta Residence,also Setiabudi Residence and Oakwood Premier Cozmo inthe CBD as well as Mediterania Boulevard Kemayoran inCentral Jakarta. New projects like The Grove at the RasunaEpicentrum complex in the CBD, and Pallazzo Boutique Resi-dence and Monaco Residence both in Central Jakarta wereprojects launched to the market during the quarter. Goodresponse to the low-rise apartment concept, like that foundat Pearl Garden and Sudirman Residence, has spurred simi-lar developments in the surrounding CBD area. Cik DitiroResidence in the Menteng area, which was developed by DutaAnggada, was one of the low-rise apartment projects whichreceived good market response.

Colliers recorded that, from this quarter until 2009, therewill be more than 36,000 new apartment units from a totalof 47 projects entering the Jakarta market. Most of the unitswill be located in North Jakarta (29.5%) and West Jakarta(25.2%). Of this upcoming supply, the middle-to-low segmentremains the major market with a proportion of around 45%.

DEMAND

Despite the Central Bank revision of the prime interest rateto 10.75% from a previous 11.25%, the transaction volumehas not increased because banks have yet to respond bylowering their interest rates on loans. To attract buyer inter-est, some developers have strengthened their marketing ef-fort by offering longer installment periods, allowing no downpayment, facilitating extensive exhibitions, sponsoring foodfestivals, and giving high discount rates for cash payments.

In general, the take-up rate for existing and under-construc-tion projects available in the market is 74.8%, a decrease of2% from the previous quarter. The middle-to-low project cat-egory performed well within the quarter with an averagetake-up rate of 76.1%. A limited supply of luxury projectsalso resulted in a high take-up rate for this classification witha sales rate of 75.2%. However, with many new apartmentsbeing developed, the sales rate for under-construction projectsexperienced a minor decrease to 57.9% from a previous rateof 60%.


TAKE UP RATE

20,000

25,000

30,000

35,000

40,000

45,000

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q0660%

64%

68%

72%

76%

80%

Cumulative Supply Sold Unit Take-Up Rate

PRICE

Despite growing at a slow pace, the average price in the apart-ment market increased to Rp8.7 million/sq m from a previousRp8.3 million/ sq m. This incremental increase was mainlydue to price adjustments made by some of the under-con-struction projects.

For under-construction projects in particular, prices rangedfrom a low of Rp4.2 million/sq m (low segment) to a high ofRp23.3 million/sq m (luxury segment). Details are depictedin the table below.

Segmentation Classification (price/sq m)

Average Asking Price/sq m (in the market)

Low Less than Rp6 million Rp4.2 millionMiddle Low >= Rp6 - 10 million Rp8.0 millionMiddle up > Rp10 - 15 million Rp11.5 millionUpper > Rp15 - 20 million Rp15.4 millionLuxury Above Rp20 million Rp23.3 million

AVERAGE PRICE OF UNDER CONSTRUCTIONPROJECT AS AT 3Q2006


The CBD led the market with the average offering price ofaround Rp13.2 million/sq m. Comprised of middle-up to luxuryprojects, the CBD is commonly targeted for exclusive projectswith high quality materials and exclusive design. The landvalue in the CBD also contributes to higher prices. Outsidethe CBD, the average asking price hovered at around Rp8.0million/sq m.



JAKARTA3Q 2006

LEASED AND SERV ICED APARTMENTMARKET

EXECUTIVE SUMMARY

� During the reviewed quarter, three new completedprojects added to the cumulative supply of 6,567 units.

� Middle-up projects led the market with rental rates ofabove US$10.00/sq m/month.

� Most leased and serviced apartments experienced adownturn in occupancy which stood at 73.2% withinthe quarter.

� Rental rates tended to decrease due to the strengthen-ing of the Rupiah vs US Dollar.

SUPPLY

Amid the market downswing, total supply of leased and serv-iced apartments increased by 5.6% to 6,567 units. This in-crease was contributed to by three new projects, all withserviced units—The Peak (Beaufort Serviced Residence),Pondok Indah Square and Sommerset Berlian (in South Ja-karta). The three projects added a total of 346 units duringthe reviewed quarter.

Middle-up projects, with an average rental rate of aboveUS$10.00/sq m, dominated the supply with a proportion ofabout 67%, while the remaining portion was categorized asmiddle-low projects with an average rental rate of belowUS$10.00/sq m. Middle-up projects were found in all regionsof Jakarta except in East Jakarta. The CBD, where large num-bers of middle-up projects are located, dominates this cat-egory with about 86% of the market.


Over the next two years, the market is anticipated to increaseby about 1,134 additional units which will come from 10apartment projects. Thus, the market will have around 7,701total apartment units by 2008, and 53% or 4,108 will be serv-iced apartment units. No leased apartment units are antici-pated to enter the market through 2008.

DEMAND

Expatriates continue to opt for projects located in either theCBD or South Jakarta as their favorite home location. Thenew strata title apartment project The Pakubowono Residence,which is providing leased units from the remaining unsoldunits, was quite resilient in the expatriate market due to itslocation in Kebayoran, South Jakarta and also because of itsexcellent greenery. Relatively large units (above 150 sq m fora 2 BR unit) with comprehensive facilities and spacious land-scapes are key selling factors at this project.

During the quarter, several apartment projects experienced adecline in their occupancy rates due to simultaneously expiringlease periods for some company-leased units. A smaller numberof guests coming to Jakarta and staying in apartments duringthe reviewed period was also one of the reasons which helpexplain the decrease.

Apartments in the Non-CBD area were those experiencinga significant occupancy drop. By the end of the quarter, theoverall occupancy rate of leased and serviced apartments inJakarta reached 73.2%, a decrease of 0.5% compared to lastquarter.

LEASED AND SERVICED APARTMENT SUPPLY

BASED ON SEGMENTATION

0

500

1,000

1,500

2,000

2,500

3,000

CBD CentralJakarta

EastJakarta

NorthJakarta

SouthJakarta

WestJakarta

Middle-Low Middle-Up



JAKARTA3Q 2006


RENTAL RATES

In contrast to prices, rental rates weakened slightly. This ismainly due to the strengthening of the Rupiah against the U.S.Dollar during the quarter. The published rental rate of leasedapartments in the CBD decreased to US$13.20/sq m/monthor around US$2,165/unit/month. Apartments in the Non-CBDarea were also down to US$10.90/sq m/month or aroundUS$1,455/unit/month. Tight competition was the key reasonfor the adjustment, particularly when apartments specificallybuilt as strata title were also offered for lease.

New supply in the market contributed to a minor increase inthe average rental rate of serviced apartments, mainly in theCBD. The rental rate for serviced apartments in this area in-creased to US$21.00/sq m/month or about US$2,551/unit/month. Flexibility during the lease period has stabilized therental rate and thus created a healthy occupancy rate.

* Rental is including Service Charge** Exchange Rate at Rp9,121/US$Source: Colliers International Indonesia, Research Department

LEASED AND SERVICED APARTMENT PERFORMANCE

50%

55%

60%

65%

70%

75%

80%

85%

CBD South Jakarta Others AverageJakarta

Apartment TypeMarket Segment/

LocationAverage Rent/ sq m/month*

Average Rent/ Unit/month**

Leased CBD Rp 120,200 Rp 19,750,000US$ 13.20 US$ 2,165

Non CBD Rp 99,330 Rp 13,270,000US$ 10.90 US$ 1,455

Serviced CBD Rp 198,650 Rp 23,265,000US$ 21.00 US$ 2,551Rp 163,300 Rp 16,450,000US$ 17.90 US$ 1,804

OUTLOOK

Leased apartments will face tougher competition over the nexttwo years with the addition of upcoming new serviced apart-ments and also from converted strata title units. In the mean-time, the serviced apartment market will remain relatively sta-ble since it offers short-term accommodations.

The governments goal of lowering the prime interest rate below10% this year is expected to leverage the strata title market.However, the impact will not materialize in the short-termgiven that banks will still maintain their current rates. Theeventual lowering of interest rates on loans will help fuel theapartment market simply because most buyers are still de-pending on mortgages.



JAKARTA3Q 2006

RETAIL SECTOR

EXECUTIVE SUMMARY

� Retail stock grew to 2.83 million sq m in Jakarta, of which60.9% is retail space for lease.

� Projected additional supply in 4Q06 will be dominatedby the completion of retail centers for lease.

� Retail stock in the Jadebotabek (Jakarta-Depok-Bogor-Tangerang-Bekasi) area reached 4.28 million sq m withcenters for lease dominating the market at around 61.1%.

� The average occupancy rate decreased slightly to 87.52%in Jakarta.

� The average rental rate in 3Q06 moved downward slightlyby 3.4% QoQ.

SUPPLY

In the 3Q06 five shopping centers opened: two centers inBogor, two centers in Tangerang and one in Jakarta. TaminiSquare, a strata title center in East Jakarta, has been in opera-tion and has secured major tenants like Carrefour, CahayaDept. Store, Time Zone and Studio 21. With an additional69,920 sq m contributed by this center, Jakarta’s total retailspace stands at 2.83 million sq m.

Regions like Bogor and Tangerang received additional supplyfrom the completion of projects like Serpong Town Squareand BSD Junction in Tangerang and Bellanova Country Malland Botanic Square in Bogor. Serpong Town Square is an inte-grated development consisting of offices, apartments, and awater park and trade center. The trade center has capturedmajor tenants including Giant Hypermarket, Electronic Solu-tion, Sport Warehouse and Time Zone. The other center thatopened in Tangerang is the 10,000 sq m BSD Junction whichoperates face-to-face with ITC BSD and is becoming one ofthe prominent trade centers in the Tangerang area. In Bogor,Bellanova Country Mall (a trade center for sale) was intro-duced in July to serve the community in the Sentul area witha size of 21,000 sq m. Also launched in Bogor, Botanic Squareis a strategically located mall in the heart of the city withprompt access to toll roads. With the addition of these fourcenters the total cumulative supply of retail space in Debotabekstands at 1.41 million sq m.


The number of strata title centers continued to grow in thequarter. The composition of retail-for-lease versus retail-for-sale space in the Jadebotabek area was 61.7% (around 2.61million sq m) to 38.3% (1.64 million sq m).

Name LocationSGA

(sq m)Anchors

Marketing Scheme

Tamini Square East Jakarta 69,920 Carrefour, Cahaya Dept. Store

Strata Title

Bellanova Country Mall

Bogor 21,000 Hypermart, Time Zone

Strata Title

Botanic Square Bogor 45,000 Giant Hypermarket LeaseSerpong Town Square Tangerang 55,583 Giant Hypermarket,

Electronic Solutions Strata Title

BSD Junction Tangerang 10,000 No Anchor Tenant Strata Title

DEBOTABEK

JAKARTA

LIST OF RETAIL CENTERS OPENED IN 3Q06

In the Jadebotabek area, projected future supply from thefourth quarter of this year to 2009 is 707,243 sq m (centersfor lease) and 547,750 sq m (centers for sale).

In the 4Q06 a number of projects will be completed in Ja-karta including Bellezza de Heritage Shopping Arcade, BellagioBoutique Mall, Kalibata Plaza (an extension of Kalibata Mall)and Gajah Mada Square. None are strata title (center forsale). In Bekasi, Plaza Pondok Gede II will open in 4Q06.

CUMULATIVE SUPPLY JADEBOTABEK

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2000 2002 2004 1Q06 3Q06 2007F

Cumulative Supply Leased Cumulative Supply Strata




JAKARTA3Q 2006

Source: Colliers International Indonesia, Research Department* 4Q06Source: Colliers International Indonesia, Research Department

Shopping Centre LocationMarketing Scheme

StatusSGA

(sq m)Bellezza de Heritage Shopping Arcade

South Jakarta Lease Finishing 28,000

Bellagio Boutique Mall South Jakarta Lease Finishing 18,514 Kalibata Plaza (Kalibata Mall) South Jakarta Lease Finishing 40,000 Gajah Mada Square Central JakartaLease Finishing 160,000 Plaza Pondok Gede 2 Bekasi Strata Finishing 50,000

LIST OF FUTURE RETAIL CENTERS IN 4Q06


DEMAND

Hypermarket, local apparel store, electronic, health and life-style products remained a major player in the demand forretail space. Heritage The Factory Outlet started their thirdoutlet at BSD Plaza with other outlets in Bandung and onJalan Barito in Jakarta. Zara and Fitness First expanded withnew outlets in Mal Taman Anggrek. Electronic Solution (8,000sq m) opened in the Jakarta City Center. Giant Hypermarketalso opened a new store at Botanic Square in Bogor. Severalspecialty shops opened such as Aprica by Pediatic in PlazaIndonesia, Tumble Tots in Depok Town Square, King Ciber(entertainment) in Kenari Mas, and Surline (shoe shop) inMargo City Square.

Overall occupancy in Jakarta for the quarter decreased slightlyto 87.52% from 88.12% in the second quarter. The take-uprate for strata title centers in Jakarta was level at 75.5% whilephysical occupancy was 63.85%.

Elsewhere, overall occupancy for the entire Jadebotabek areawas 64.02% while the take-up rate for strata title centers inthis area was steady at 75.98%.

CUMULATIVE SUPPLY, DEMAND AND OCCUPANCY RATE

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2001 2002 2003 2004 2005 1Q06 2Q06 3Q06

80%

82%

84%

86%

88%

90%

92%

94%

96%

Supply (sq m) Demand (sq m) Occ (%)

RENTAL, SERVICE CHARGES AND PRICES

In general, the average rent in Jakarta dropped slightly, bring-ing down the quarter’s average rate to Rp317,309/sq m/monthfrom Rp328,600/sq m/month. Basically, there were no changesin either the rental rates or pegged rates during the quarter.The rate change in Jakarta was mainly due to exchange ratevolatility QoQ (some prominent malls in Jakarta quote a floatingUS$ rate).

In the Debotabek area, rent for leased retail centers decreasedby 0.4% QoQ from Rp266,180/sq m/month last quarter toRp265,181/sq m/month. This slight adjustment was due to arental rate correction by ITC Depok on their secondary unitsand the opening of a new leased center, Botanic Square, whichalso affected our calculations.

In Jakarta, the average service charge for leased retail centersfor this quarter was Rp58,381/sq m/month, down by 3.7%.For strata title centers, the average service charge was re-corded at Rp48,923/sq m/month, up 7.66% compared to lastquarters figure of Rp45,441/sq m/month.

The average service charge in the Debotabek region for stratatitle centers increased slightly by 0.2% (QoQ) to Rp 45,701/sq m/month while the average service charge for leased centerswas Rp46,743/sq m/month.

FUTURE SUPPLY IN JADEBOTABEK UP TO YEAR 2009

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2006* 2007 2008 2009

For Lease For Strata Title



JAKARTA3Q 2006

The average selling price for strata title centers is Rp58.4million/sq m in Jakarta and Rp44.5 million/sq m for theDebotabek area, thus bringing the whole region to an aver-age of Rp53.4 million/sq m. In Jakarta, strata title centers wereoffered in the range of Rp20 million to Rp75 million/sq m.However, for “hot” areas like Mangga Dua or Tanah Abangwhere shopping centers are the destination for grocery mer-chandise, prices can be found above Rp100 million/sq m. InDebotabek, higher prices can be found in fast growing areaslike Tangerang and Depok where some centers quote as highas Rp75 million/sq m. All-in-all we have not detected anysignificant price increases for strata title centers given thevery tough competition in this market segment.

RENTAL RATE AND SERVICE CHARGE IN JAKARTA

Rp150,000

Rp170,000

Rp190,000

Rp210,000

Rp230,000

Rp250,000

Rp270,000

Rp290,000

Rp310,000

Rp330,000

2001 2002 2003 2004 2005 1Q06 2Q06 3Q06

Rp0

Rp10,000

Rp20,000

Rp30,000

Rp40,000

Rp50,000

Rp60,000

Rp70,000

Rp80,000

Rp90,000

Rental (avg) Service Charge


SELLING PRICE AND SERVICE CHARGE IN JADEBOTABEK

Rp0

Rp10,000,000

Rp20,000,000

Rp30,000,000

Rp40,000,000

Rp50,000,000

Rp60,000,000

Rp70,000,000

Central

Jakarta

East

Jakarta

North

Jakarta

South

Jakarta

West

Jakarta

Debotabek

Rp0

Rp10,000

Rp20,000

Rp30,000

Rp40,000

Rp50,000

Rp60,000

Rp70,000

Price (avg) Service Charge


OUTLOOK

The fact that strata title centers experienced better take-uprates than occupancy indicates that the sector has taperedoff. Buyer profiles are dominated by speculators looking forbetter future margins. The outlook becomes worse for newstrata title centers which do not have enough pre-committedtenants before project launching. Modern strata title centershave to designate part of their space for lease, particularly formajor tenants.

Unlike traditional trade centers located in “hot” areas likeMangga Dua and Tanah Abang which need less effort for pro-motion, new trade centers need a strong brand image to pulltenants like well-known restaurants or hypermarkets. We arenow seeing many modern trade centers only offering 60% to70% of their space for sale. In addition, to avoid the image ofinconvenient ambience like narrow corridors and minimumair conditioning, today’s trade centers are now designed usingthe mall concept and even choose names like “trade mall” or“town square”.

Nevertheless, with so many shopping centers scattered ubiq-uitously in greater Jakarta, competition is tougher not onlyamong the centers but also among retailers. Local retailershave to be in a dynamic track in order to counterbalanceforeign retailers that have flooded prominent malls. We ex-pect that the impact of this tough rivalry will be felt by someretailers.



JAKARTA3Q 2006

THE BREAKDOWN OF JAKARTA HOTELSAS OF 3Q 2006

HOTEL SECTOR

EXECUTIVE SUMMARY

� There was no additional hotel development in the quar-ter.

� In early September, PT Mandiri Karya Indah Cipta andAston International signed an agreement to manage AstonMangga Dua Hotel & Residence which plans to open in2008.

� In general, the occupancy rate for all categories of hotelsexperienced a slight decrease. The Islamic holiday seasoncontributed quite heavily to a rise in occupancy over thelast three months. The hotel market still relies mainly onbusiness guests.

� The average room rate was not significantly different QoQ.

SUPPLY

No new hotel developments were introduced to the market,a repeat of the situation in the last quarter. This keeps thisquarter’s figure of total hotel rooms at 21,399 rooms. PatriaPark Hotel in East Jakarta is half constructed and will possiblybe on the market in 2007.

The hotel composition and distribution is therefore similar towhat was described in our previous report. In total, Jakartahas 79 hotel developments in the 3, 4, and 5-star categories.Three-star hotels are still leading with the highest number ofdevelopments, but 5-star hotels are the highest in terms ofnumber of rooms.

An interesting point to highlight within this quarter is thetermination of Hilton as the operator of the Jakarta HiltonInternational. The hotel was renamed The Sultan, which istaken from the Javanese term that means “the king”. Thetermination also brought consequences to other hotels ownedby the same group and managed under Hilton. Other formerHilton hotels that localized their names include the AyodyaResort in Bali as well as the Singgasana Hotel in Surabaya andMakassar.

IN TERMS OF NUMBER OF HOTELS

3 star43%

4 star34%

5 star23%

IN TERMS OF HOTEL ROOMS

3 star23%

4 star38%

5 star39%



THE DISTRIBUTION OF DIFFERENT STAR RATED HOTELS AND

LOCATIONS

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Central

Jakarta

South

Jakarta

North Jakarta West Jakarta East Jakarta

3 star 4 star 5 star




JAKARTA3Q 2006



AVERAGE OCCUPANCY RATE (AOR)

An overall increase in the AOR of 6.1% was recorded QoQbringing this quarter’s occupancy rate up to 67.19% from63.35% last quarter. According to our records, all hotel cat-egories registered an increase. Three-star hotels, as usual,achieved the highest AOR of 78.18%, up by 5% this quarter.The 4-star category reached 67.24% which is up by 6.3%,followed by the 5-star category which increased 7.3% to56.16%. The prolonged Islamic holiday (Eid Mubarak) was onefactor that caused the AOR to rise. In the 3-star category, twohotels had significant occupancy growth (above 10%) in the3-month period as well as one hotel in the 4-star categoryand two hotels in the 5-star category.

Because of stiff internal competition, the hotel industry hasno option but to continuously encourage improvement. Somehotels have put rigorous security measures in place to moni-tor their surroundings and make sure guests are safe. In addi-tion, hoteliers are also improving leisure and business facili-ties and customer service. New technologies are also beingintroduced like the installation of plasma televisions and high-speed broadband Internet access.

The guest profile was still dominated by domestic clients and,therefore, a downturn in passenger arrivals at Soekarna-Hattaairport of 1.4% or 289,317 passengers did not impact theoverall occupancy rate.

AVERAGE ROOM RATE (ARR)

Only the 5-star category registered an average negative growthin ARR during the 3Q06 or a decline of 4.75% from Rp711,051last quarter to Rp677,383 this quarter. Some 5-star hotelsexperienced only a minor drop in ARR (ranging from betweenRp10,000 to Rp30,000). One hotel had a significant decreasein the 3-month period of more than Rp300,000. The highestARR in the quarter was quoted by the Grand Hyatt followedby the Shangri-La and Ritz Carlton hotels (around Rp1 million).

In the 4-star category, the ARR was up slightly by 1.8% toRp384,977. Only one hotel registered a significant drop inthe 3-month period. The remaining hotels increased their ARR.This quarter, the highest ARR for the 4-star category wasquoted by the Ambhara and Park Lane hotels (aboveRp500,000).

The ARR for the 3-star category was recorded at Rp289,176from Rp262,712 last quarter, a jump of 10.1%.

OCCUPANCY RATES FOR 3, 4 AND 5 STAR HOTELS

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005 1Q06 2Q06 3Q06

3 Star 4 Star 5 Star Average

AVERAGE ROOM RATES (ARR) FOR 3,4 AND 5 STAR HOTELS

Rp0

Rp200,000

Rp400,000

Rp600,000

Rp800,000

2001 2002 2003 2004 2005 1Q06 2Q06 3Q06

3 Star 4 Star 5 Star Average

Source: Colliers International Indonesia, Research Department; Central Bureau Statistics

NUMBER OF PASSENGER ARRIVALS TO JAKARTA AND OTHER PORTS

IN INDONESIA

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

2001 2002 2003 2004 2005 until3Q06

Jakarta Other Ports



JAKARTA3Q 2006

REVENUE PER AVAILABLE ROOM

With improving occupancy rates during the quarter, RevPARincreased by 7.2% to Rp288,454. Three-star hotelsexperienced the highest increase of 15.6% to Rp226,072followed by the 4-star category which increased by 8.2% toRp258,860, and the 5-star category by 2.3% to Rp380,429.The overall increase in RevPAR seemed to be due to theclimb in overall occupancy.


OUTLOOK

The hotel outlook for the year ahead looks positive given thedecision by the government and House of Representatives toapprove a tourism fund increase for promotion and marketing.The fund was raised to Rp158 billion for 2007 from the currentRp110 billion this year.

Hoteliers are trying to form a program for selling specialpackages in coordination with travel agents and the tourismbureau. In addition, hoteliers are now more focused on offeringspecial packages to domestic guests in return for their help inpropelling the hotel market.

The Visa Indonesia Tourism Spend Report revealed spendingfigures for 2005. Total Visa International inbound spending inIndonesia increased by 20% to Rp5.6 trillion (US$579 mil-lion), despite a 6% drop in foreign visitor arrivals. This indi-cates that Indonesia has great internal potential for the tour-ism industry. It is now imperative that continued measures betaken to stem the misperceptions of Indonesia in relation toavian influenza, tsunamis and terrorism.

REVENUE PER AVAILABLE ROOMS (RevPar) FOR 3,4 AND 5 HOTELS

Rp0

Rp100,000

Rp200,000

Rp300,000

Rp400,000

2001 2002 2003 2004 2005 1Q06 2Q06 3Q06

3 Star 4 Star 5 Star

INDUSTRIAL ESTATE SECTOR

EXECUTIVE SUMMARY

� No industrial estates have offered additional industrialland for several years, thus land stock remained at 8,566hectares. Developers were still focusing on selling remain-ing stock amid slow absorbtion during the year.

� The automotive industry has been the main impetus forindustrial land absorption. Nevertheless, high interest rateshave slowed down inquiries for new vehicle sales whichimpacted the industrial market. Although land absorp-tion was still dominated by the auto industry, the amountof land sold was far behind that of last year (22% of lastyears total sales).

� Accordingly, slow absorption this year has caused pricesand tariffs to remain relatively stable. Developers preferto maintain prices and give attractive discounts wheninquiries for large land parcels are made.

� This quarters transactions were highlighted by a signifi-cant land transaction of 9.9 hectares in the Bekasi FajarIndustrial Estate by Toyota Astra Motor for logistic pur-poses.

SUPPLY

Developers are more conservative about starting their nextphase of development given that there are plenty of unsoldland parcels within the regions. The decision to put offexpansion is also attributable to the downturn in sales duringthe year. Now, managements are focusing on selling remainingstock. Regions like Bekasi, where stocks of land are being scaleddown, have not had any industrial estates introduce newportions of their stock this year. However, the prominentindustrial estate MM2100 is planning to open a new phase ofindustrial land with a total of around 200 hectares (70% of itis serviceable industrial land).

Jakarta will definitely have no fresh stock of industrial land asvacant land parcels in Jakarta are very expensive for industrialpurposes and are more suitable for multi-level commercialbuildings.

From Cilegon in the west to Purwakarta in the east, the totalamount of serviceable industrial land remains at 8,566hectares.


JAKARTA3Q 2006


INDUSTRIAL LAND ABSORPTION JAN-SEP 2006

Jakarta17%

Bogor3%

Bekasi33%Tangerang

3%

Karawang37%

Serang7%


If we take into account the total sales for 2006, it will be verytough to catch up to last year’s sales figure given that thereare only 3 months left in the year. Total sales up to this quarterare only 22% of the total sales in 2005. To achieve 50% of lastyear’s total sales would be hard to imagine, especially if judgedby potential inquiries from the last quarter and corporateplans to wait and evaluate the situation in 2007.

ANNUAL SALES OF INDUSTRIAL LAND

-

50

100

150

200

250

300

2001 2002 2003 2004 2005 3Q06

ha


P R I C E , R E N T A L R A T E S A N DMAINTENANCE COSTS

The only figures to change this quarter were the industrialbuilding rents at CCIE Bogor which were converted fromUS$2.50/sq m/month to Rp30,000/sq m/month. Other priceand rental tariffs were not adjusted QoQ. Maintenance costswere kept at their current rates, mostly quoted in US$. Thereis no indication that any of the industrial estates will adjusttheir maintenance tariffs.

DEMAND

Industrial land sales for the 3Q06 were at a historic low,plummeting from 25.05 hectares last quarter to only 14.84hectares this quarter. In Karawang, where industrial landtransactions were quite active last quarter, land sales droppedsharply to only 0.85 hectares from 12.38 hectares. That smalltransaction was only a leasing transaction. The downwardtrend of industrial sales this quarter was also evidenced inBogor, Tangerang and Serang.

Bekasi, which previously recorded much lower sales thanKarawang, was the only region with a significant amount ofland transactions in the quarter. The amount increased from2.25 hectares last quarter to 12.37 hectares this quarter. BekasiFajar Industrial Estate was the only estate with a notabletransaction this quarter of almost 10 hectares. The transactionwas concluded after Toyota Astra Motor, the automotivecompany, bought the land for logistic purposes. Some logisticcompanies took smaller land parcels and 3 units of standardfactory buildings in the same estate.

Another estate in Bekasi that registered a sale of around 1.4hectares, purchased by two companies representing newdomestic investment, was Technopark Delta Silicon. Meanwhilein Bogor, CCIE concluded a 0.43 hectare leasing transactionfrom pesticide producers. In the 4Q06, CCIE is expected tomake a relatively big transaction of around 3.8 hectares withthe footwear industry in Taiwan. In the west, the Serang regiondid not register any transactions during the quarter.

There were no significant changes in the tenant profile duringthe quarter. Around 70% of this quarters transactions wererelated to the automotive industry while the remaining weremade by the garment, coating, printing and refrigerantindustries. Domestic companies still dominated the numberof transactions which reflects slow foreign investment overthe past several years.

With only limited transactions this quarter, the take-up ratewas relatively stable at around 65%. The graph below showsindustrial land and building absorption during the January –September 2006 period.

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Fax 62 21 521 1411www.colliers.com

© Colliers International (Indonesia) 2006Reproduction of the contents of this publication is prohibited without gaining prior permission from Colliers International.

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3Q 2006

JAKARTA

INDUSTRIAL LAND PRICE ANDMAINTENANCE COST


OUTLOOK

This year will be very tough for the industrial sector which is looking atdecreasing sales figures for 2006. Nevertheless, with the slowdown inforeign investment, the industrial market is still relying heavily on domesticinvestors, particularly those with good business performance. Thus, mostof the recent transactions during the year came from the expansion ofexisting tenants.

On the demand side, inquiries for logistic purposes will continue not onlyfrom logistic companies, but also from other industries that need to expandtheir logistic capabilities. A significant transaction in the secondary marketoutside an industrial estate occurred in Cibitung, Bekasi when YCH Pte.Ltd., based in Singapore, acquired a logistic warehouse of around 8.1hectares from David’s Asia Pte. Ltd . Other industries like the automotiveindustry and related companies may expand during the rest of the yearbut in moderate numbers. Although car sales in the country were low, theexport-oriented automotive industry may survive and possibly expandduring the last quarter of this year.

lowest highest average (Rp) lowest highest average (Rp)Bekasi Rp400,000 Rp750,000 Rp530,800 US$0.05 US$0.07 Rp548Karawang US$35.00 US$45.00 Rp357,156 US$0.05 US$0.05 Rp456

Bogor US$45.00 Rp550,000 Rp508,648 US$0.06 Rp600 Rp559Serang Rp250,000 US$40.00 Rp339,704 US$0.02 Rp220 Rp197Tangerang Rp475,000 Rp1.26 mil Rp510,749 US$0.04 Rp1,000 Rp525

REGIONLAND PRICE (/sq m) MAINTENANCE COST (/sq m/month)

Jakarta Property Market Overview

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