Q2 2016-researchand forecastreport-jakarta-apartment

Quarterly Report

JAKARTA | APARTMENTQ2 2016 Accelerating success.

Apartment SectorFerry Salanto Senior Associate Director | Research

During the quarter, apartment sales performance continued to languish with a moderate 0.5% growth in price compared to the previous quarter. There were 4,777 new units from the hando-ver of a total of eight apartment towers from five projects. The cumulative supply of strata-title apartments in Jakarta grew by 2.9% QoQ or 12.4% YoY to a record 167,697 units. Prices of apartments have been relatively flat as most of the projects hold prices in order to attract buyers. The average asking price of apartments in Jakarta was recorded at IDR31 million/sq m (excluding VAT), increased modestly by 0.5% QoQ.

Forecast at a glance

APARTMENT FOR STRATA-TITLE

SupplyBy the end of the second quarter of 2016, cumulative supply of strata-title apartments in Jakarta had grown at a moderate pace of 2.9% QoQ, equal to 12.4% YoY, to a record 167,697 units. During this quarter, the market received 4,777 new units from the handover of eight apartment towers in five projects, including The Green Pramuka, Royal Springhill, Bassura City, Casablanca East Residence and 19 Avenue. In terms of market segment, middle-lower class apartments dominate the current additional supply at 86.4% of three projects located in non-prime areas.

Green Pramuka City (Orchid and Penelope Towers) and Royal Springhill (Bouvardia and Bulgari Towers) are both located in Central Jakarta; however they are targeting different mar-ket segments, i.e. middle-low and middle-upper, respectively. Meanwhile, East Jakarta continued to see new middle-low class projects from the opening of Bassura City (Edelweiss Tower) and Casablanca East Residence (Dallas & Casablanca Towers). In West Jakarta, 338 additional units came from the completion of a mid-rise apartment project, 19 Avenue (Tower A). 19 Avenue was previously a stalled Rusunami (low-cost apartment) project called Orchard Place Residence, developed by PT Bintang Milenium Indonesia. It was acquired by Marga-hayu Land, who changed the name. Targeting the same low segment, fully furnished 19 Avenue (Tower A) apartments are offered at prices ranging from IDR400 million to IDR600 mil-lion per unit.

As of the middle of 2016, about 40.6% of the 26,583 projected units which will be completed this year have been handed over, leaving about 15,793 units to be handed over in the next se-mester.

SupplyJakarta will see an additional 15,442 units for the remainder of 2016 and a total 25,222 units in 2017.

DemandAlthough the market saw an increase in launching activity, buying sentiment has remained lukewarm; investors and end-users are holding their plans to buy apartments in view of the current economic slowdown. We opine that take-up rates will continue to hover at between 86% and 87%.

RentGiven a drop in the expatriate community, we expect asking rental rates will remain unchanged until the end of 2016.

PriceWe predict an 9% to 11% increase in the average asking price for apartments for sale due to the high-er prices quoted by future apartment projects which will open by the end of the year.

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2 Quarterly Report | Q2 2016 | Apartment | Colliers International

same period in 2015. This suggests that developers are ge- nerally quite cautious over the current market condition, with considerable supply going forward and, to some extent, slow absorption. East Jakarta hosts about 87% of the total newly introduced/launched units from two projects: East 8 and Prajawangsa City. East 8, developed by Karya Cipta Group, is targeted at the middle-lower segment, particularly workers in the surrounding areas. East 8 apartment is located in a settled residential area and will benefit from easy accessibility to public transportation, including the future LRT and the existing Jagorawi toll road. With a similar target market, Prajawangsa City, developed by Synthesis Development, together with St. Carolus Vereeniging, claims to be an improvement on their previous project, Bassura City, with bigger units and more green space.

Another new project by Synthesis Development is Samara Suites, which was previously launched as The Residence at Ga-tot Subroto, which offered bigger units and higher prices. Sub-sequently, the developer revised the concept, including the floor plan, unit size and pricing strategy, in order to meet the budget of buyers. As of the end of May, 60 units in Samara Suites have been booked. Another project located in a so-called expatri-ate area, Lavish Residence Kemang, offers a single apartment tower and targets the middle-upper segment. Lavish Kemang Residence is developed by PT Kemang Karya Utama, which has extensive experience in developing houses and townhouses for expatriates.

Source: Colliers International Indonesia - Research

Strata-title Apartment Annual Supply

List of Completed Apartment Projects as of Q2 2016NAme of developmeNt locAtioN regioN developer uNitS

The Green Pramuka (Tower Orchid & Penelope) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 2,000

The Royal Springhill (Tower Bouvardia & Bulgari) Jl. Spring Hill Residence Kemayoran Central Jakarta Springhill Golf Group 312

Bassura City (Tower Edelweiss) Jl. Basuki Rahmat East Jakarta Synthesis Development 1,000

Casablanca East Residence (Tower Dallas & Casablanca)

Jl. Pahlawan Revolusi East Jakarta Binakarya Propertindo 1,127

19 Avenue Apartment (Tower A) Daan Mogot West Jakarta Margahayu Land 338

Total 4,777


Newly Launched ProjectsDuring this quarter, Jakarta’s apartment market saw a moderate addition of newly launched/introduced projects. Four brand-new projects with 5,946 units initiated pre-sale activities in Q2 2016 and are expected to be completed in the next four years. The number of units being introduced/launched is 20% lower than the

List of New Introduced/Launched Projects in Q2 2016

NAme of developmeNt locAtioN regioN expected completioN time

eStimAted price (idr/Sq m)* totAl uNitS

Prajawangsa City (8 towers) Jl. Raya Bogor, Cijantung East Jakarta 2020 IDR 11,350,000 4,000

East 8 (2 towers) Jl. Raya Lap. Tembak, Cibubur East Jakarta 2020 IDR 13,500,000 1,172

Samara Suites Jl. Gatot Subroto South Jakarta 2019 IDR 26,350,000 300

Lavish Kemang Residence Jl. Kemang Raya No.78A South Jakarta 2019 IDR 35,000,000 474

*) Price based on hard cash excludes VAT 10%Source: Colliers International Indonesia - Research

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The total number of apartment units launched during 2Q 2016 was 5,946.

The mood in the apartment market has been subdued, as re-flected in the limited number of newly introduced/launched projects in recent quarters. In general, some developers have opted to postpone the launch date of their projects due to a lack of confidence in the current market situation. Moreover, the overall Indonesian economy faces a number of downside risks, such as slow economic growth and lowered consumer confi-dence, which impacts project decisions by developers.


Number of Apartment units and projects being introduced/launched every quarter

New PipelineApArtmeNt NAme locAtioN regioN developer #uNitS StAtuS

2016

The Green Pramuka (Tower Orchid) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Built

The Green Pramuka (Tower Penelope) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Built

The Royal Springhill (Bouvardia Tower) Jl. Spring Hill Residence Ke-mayoran

Central Jakarta Springhill Golf Group 120 Built

The Royal Springhill (Bulgari Tower) Jl. Spring Hill Residence Ke-mayoran

Central Jakarta Springhill Golf Group 192 Built

Casablanca East Residence (Tower Dallas) Jl. Pahlawan Revolusi East Jakarta Binakarya Proper-tindo Group

408 Built

Casablanca East Residence (Tower Casa-blanca)

Jl. Pahlawan Revolusi East Jakarta Binakarya Proper-tindo Group

719 Built

Bassura City (Tower Edelweiss) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment

1,000 Built

Bassura City (Tower Dahlia) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment

1,000 Built

Green Bay Pluit (Sea View) Jl. Pluit Karang Ayu North Jakarta Agung Podomoro Group

2,072 Built

Kemang Village (The Bloomington) Jl. P Antasari South Jakarta Lippo Karawaci 150 Built

Four Winds Jl. Permata Hijau Raya No.1 South Jakarta PT. Tri Tirta Permata 140 Built

Metro Park Residence Kebon Jeruk West Jakarta Agung Podomoro Group

1,451 Built

Madison Park Tanjung Duren West Jakarta Agung Podomoro Group

1,200 Built

19 Avenue Apartment 9 (Tower A) Daan Mogot West Jakarta Margahayu Land 338 Built

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The Grove (Empyreal + Masterpiece) Jl. HR Rasuna Said CBD Bakriland Develop-ment

438 Under-construction

The Residence (CWJ 2) Jl. Prov Dr Satrio Kav 6, Kun-ingan

CBD Ciputra 119 Under-construction

The Orchad Satrio (CWJ 2) Jl. Prov Dr Satrio Kav 6, Kun-ingan

CBD Ciputra 349 Under-construction

T - Plaza Residence (Tower A) Jl. Penjernihan I Kav.1 Pejom-pongan

Central Jakarta PT. Prima Kencana 321 Under-construction

Elpis Residence Gunung Sahari Central Jakarta Sioeng Group 790 Under-construction

The Green Pramuka (Tower Scarlet) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Under-construction

The H Residence Kemayoran (Amethyst) Jl. Rajawali Selatan Central Jakarta Hutama Karya Realtindo


Bassura City (Tower Cattleya) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Bassura City (Tower Alamanda) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Sentra Timur Residence (Tower Tosca) Pulo Gebang East Jakarta Bakriland Develop-ment


East Park Apartment (Tower C) Jl. KRT Radjiman East Jakarta PT. Cakra Sarana Persada


Teluk Intan (Tower Saphire) Jl. Teluk Gong North Jakarta PT Trika Bumi Pertiwi

1,100 Under-construction

Pluit Seaview (Tower Belize) Pluit North Jakarta Binakarya Proper-tindo Group


Senopati Suites 2 Jl. Senopati South Jakarta Mahkota Asia Graha 81 Under-construction

LA City Apartment (Tower A) Jl. Raya Lenteng Agung, Jaga-karsa

South Jakarta Pancanaka Samaktha 980 Under-construction

Nine Residence Warung Buncit South Jakarta Lippo Karawaci 246 Under-construction

La Venue - North Tower Jl. Pasar Minggu South Jakarta PT Bintang Rajawali (Sinar Mas Group)


Senopati Suites 3 Jl. Senopati South Jakarta Mahkota Asia Graha 54 Under-construction

1 Park Avenue (3 Towers) Jl. KHM Syafi'I Hadzami (terusan gandaria)

South Jakarta Intiland 279 Under-construction

Izzara Apartment (South and North Tower) TB. Simatupang South Jakarta Grage Group 542 Under-construction

Apartment Pejaten Park Residence Jl. Warung Buncit Raya No.21 South Jakarta Bahama Group 560 Under-construction

Kebayoran Icon Jl. Ciledug Raya South Jakarta Tamara Land 256 Under-construction

One Casablanca Residence Jl. Pal Batu South Jakarta Forza Land 215 Under-construction

Woodland Park (Mahogany Tower) Jl. Pahlawan Kalibata South Jakarta PT. Pardika Wisthi Sarana


St Moritz (The New Ambassador Suite Tower)

Jl. Puri Indah Kembangan West Jakarta Lippo Karawaci 200 Under-construction

St. Moritz (New Presidential Tower) Jl. Puri Indah West Jakarta Lippo Karawaci 159 Under-construction

The Nest Apartment Jl. Raden Saleh Raya, Meruya Utara

West Jakarta PT. Karya Cipta Sukses Selaras


Green Park View (Tower Gardenia) Jl. Daan Mogot West Jakarta PT. Inten Cipta Sejati, Cempaka Group


Belmont Residence (TowerAthena) Jl. Meruya Ilir West Jakarta Gapura Prima 193 Under-construction

Puri Mansion Apartment (Tower Amethyst) Jl. Lingkar Luar Barat, Puri Kembangan

West Jakarta Agung Sedayu Group 900 Under-construction

Paradise Mansion (2 tower) Jl. Paradise Boulevard Selatan West Jakarta Palm Group 1,000 Under-construction

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2017

Sudirman Suites Jl. Sudirman CBD Pikko Group 380 Under-construction

Domaine Jl. Jend. Sudirman Kav 1 CBD Lyman Group 186 Under-construction

Verde Two (Tower East) Jl. Rasuna Said CBD Farpoint Realty 182 Under-construction

Anandamaya Residences (3 towers) Jl. Jend Sudirman CBD Hongkong Land 500 Under-construction

Menteng Park Jl. Cikini Raya No.79 Central Jakarta Agung Sedayu Group 756 Under-construction

Holland Village Cempaka Putih Central Jakarta Lippo Karawaci 400 Under-construction

Royal Suites Kemayoran Central Jakarta Springhill Golf Group 450 Under-construction

The Green Pramuka (Tower Nerine) Jl. Jenderal Ahmad Yani Central Jakarta PT Duta Paramindo 1,000 Under-construction

Green Signature Apartment Jl. MT. Haryono East Jakarta KSO Fortuna Indone-sia (Pikko)


Podomoro Park Jl. I Gusti Ngurah Rai, Klender East Jakarta Agung Podomoro Group


Sentra Timur Residence (Tower Brown) Pulo Gebang East Jakarta Bakriland Develop-ment


Bassura City (Tower Jasmine) 2 tower Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Bassura City (Tower Heliconia) Jl. Basuki Rahmat East Jakarta Synthesis Develop-ment


Pluit Seaview (Tower Ibiza) Pluit North Jakarta Binakarya Proper-tindo Group


Pluit Seaview (Tower Bahama) Pluit North Jakarta Binakarya Proper-tindo Group


Regatta London Tower Jl. Pantai Mutiara North Jakarta Intiland 186 Under-construction

Pakubuwono Terrace Grand Tower Kebayoran Lama South Jakarta PT. Selaras Mitra Sejati


District 8 (Tower Eternity) Jl. Senopati South Jakarta Agung Sedayu 400 Under-construction

District 8 (Tower Infinity) Jl. Senopati South Jakarta Agung Sedayu 280 Under-construction

Lexington Rersidence Pondok Pinang South Jakarta Cowwel Develop-ment


The Aspen Peak at Admiralty (Tower C) Jl. Fatmawati South Jakarta PT. Harmas Jalas-veva


Sapphire Residence Lebak Bulus South Jakarta PT. Bangun Lintas Shafira


La Terrasse Jl. Deplu Raya No.12 South Jakarta Cowell Development 111 Under-construction

The Foresque Pasar Minggu, Ragunan South Jakarta PT Griya Karunia Sejahtera (Binakarya Propertindo Group)


The Langham Residences Senopati South Jakarta Agung Sedayu Group 57 Under-construction

Antasari Heights (One Otium Residence) Jl. Pangeran Antasari No.8 South Jakarta PT Radinka Quatro Land


The Batik @ Pejaten Jl. Siaga Raya South Jakarta Alam Kencana 137 Under-construction

La Foret Vivante Jl. Limo, Permata Hijau South Jakarta PT. Mahkota Properti Indo Permata


Selatan 8 (Tower Sultan) Kebayoran Lama South Jakarta Karya Cipta Group 336 Under-construction

The Hamilton Jl. KHM Syafi'I Hadzami South Jakarta Intiland 112 Under-construction

Puri Mansion Apartment (Tower Amethyst) Jl. Lingkar Luar Barat, Puri Kembangan


Puri Orchad (3 Tower) Jl Raya Adicipta West Jakarta PT Adicipta Graha Kencana (Serenity Group)


Maqna Residence Jl. Meruya Ilir No. 88 West Jakarta PT. Graha Meruya 312 Under-construction

Veranda Jl. Pesanggrahan Raya, Kem-bangan

West Jakarta PT. Mutirara Puri Indah


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Vittoria Residence (3 tower) Jl. Daan Mogot West Jakarta PT. Duta Indah Kencana


Wang Residence Jl. Panjang No 18 West Jakarta PT. Citicon Proper-tindo


Taman Anggrek Residence (6 towers) Tanjung Duren West Jakarta Agung Sedayu 3,000 Under-construction

19 Avenue Apartment (Tower B) Daan Mogot West Jakarta Margahayu Land 416 Under-construction

Sycamore Suite Puri Botanical, Joglo West Jakarta Jakarta Setiabudi International

125 Under-planning

2018

Gayanti City (2 Towers) Jl. Gatot Subroto CBD PT Buana Pasifik International


Verde Two (Tower West) Jl. Rasuna Said CBD Farpoint Realty 152 Under-construction

Lavie Jl. Denpasar Raya CBD Wilsor Group 302 Under-construction

South Hill Jl. Denpasar Raya CBD Tan Kian 611 Under-construction

Le' Parc Jl. Thamrin CBD PT. Putragaya Wahana


Regent Residences (tower 1) Semanggi CBD PT. Kencana Graha Global


The Hundred Residence Mega Kuningan CBD PT. Farpoint Realty Indoneasia


The Elements Epicentrum (2 Towers) Rasuna Said CBD Sinar Mas Land 372 Under-construction

Capitol Suites Jl. Prapatan Raya Central Jakarta The Capitol Group 327 Under-construction

Holland Village (Phase II) Cempaka Putih Central Jakarta Lippo Karawaci 230 Under-construction

Signature Park Grande Jl. MT. Haryono East Jakarta KSO Fortuna Indone-sia (Pikko)


Sahid Garden Residence Ciracas East Jakarta Sahid Group 476 Under-planning

Gold Coast Apartment (Atlantic Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 568 Under-construction

Regatta Apartment (Tower New York) Pantai Mutiara North Jakarta Intiland 186 Under-construction

Sedayu City (Tower Melbourne) Jl. Pegangsaan Dua Raya North Jakarta Agung Sedayu 912 Under-planning

Sedayu City (Tower Darwin) Jl. Pegangsaan Dua Raya North Jakarta Agung Sedayu 936 Under-planning

The Kensington Royal Suites (4 Tower) Kelapa Gading North Jakarta Summarecon 790 Under-construction

Gold Coast Apartment (Bahama Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under-construction

Gold Coast Apartment (Carribean Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under-construction

Gold Coast Apartment (Honolulu Tower) Pantai Indah Kapuk North Jakarta Agung Sedayu 600 Under-construction

Grand Marina Ancol Ancol North Jakarta PT. Bangun Setia Cipta (Jaya Ancol)

672 Under-planning

Bellevue Place MT Haryono, Tebet South Jakarta Gapura Prima 240 Under-construction

The Aspen Peak at Admiralty (Tower D) Jl. Fatmawati South Jakarta PT. Harmas Jalas-veva


Casa Grande Residence 2 (Tower Angelo) Jl. Casablanca South Jakarta Pakuwon Group 350 Under-construction

Casa Grande Residence 2 (Tower Bella) Jl. Casablanca South Jakarta Pakuwon Group 350 Under-construction

Casa Grande Residence 2 (Tower Chianti) Jl. Casablanca South Jakarta Pakuwon Group 350 Under-construction

Pondok Indah Residences (3 Towers) Pondok Indah South Jakarta Metro Pondok Indah 880 Under-construction

Selatan 8 (Tower Prabu) Jl. Raya Ulujami South Jakarta Karya Cipta Group 344 Under-construction

45 Antasari (2 Tower) Antasari South Jakarta Cowell Development 1,924 Under-construction

Arzuria Apartment Jl. Tendean South Jakarta Tolaram Group 210 Under-construction

Pakubuwono Spring (2 towers) Jl. Teuku Nyak Arief No.9 South Jakarta PT. Simprug Mah-kota Indah (Agung Podomoro Group)


Branz Simatupang (2 tower) TB. Simatupang South Jakarta Tokyuland 381 Under-construction

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Synthesis Residence Kemang (3 towers) Jl. Ampera Raya No.17 South Jakarta PT. Synthesis Devel-opment


The Ease Brawijaya Jl. Taman Brawijaya III Kebay-oran Baru

South Jakarta PT. Bhakti Usaha Dinamika

54 Under-planning

Gianetti Apartment Jl. Kebon Jeruk Raya, Kemang-gisan

West Jakarta Bangun Investa Graha


Gallery West Jl. Panjang No 5 West Jakarta AKR 280 Under-construction

Ciputra International Puri Indah (Tower Amsterdam)

Jl. Lingkar Luar Barat West Jakarta Ciputra 412 Under-construction

Grand Madison Park Tanjung Duren West Jakarta Agung Podomoro Group


Citra Lake Suites (Tower Rosewood) Jl. Raya Kresek West Jakarta Ciputra Group 104 Under-construction

Citra Lake Suites (Tower Greenwood) Jl. Raya Kresek West Jakarta Ciputra Group 126 Under-construction

Citra Lake Suites (Tower Oakwood) Jl. Raya Kresek West Jakarta Ciputra Group 117 Under-construction

Citra Lake Suites (Tower Sherwood) Jl. Raya Kresek West Jakarta Ciputra Group 122 Under-construction

Aerium Taman Permata Buana (2 towers) Taman Permata Buana West Jakarta Sinar Mas Land and Itochu

491 Under-planning

Ciputra International Puri Indah (Tower Barcelona)

Jl. Lingkar Luar Barat West Jakarta Ciputra 335 Under-construction

Puri Mansion Apartment (Tower Crystal) Jl. Lingkar Luar Barat, Puri Kembangan


West Vista (2 towers) Jl. Lingkar Luar Barat No.8, Duri Kosambi

West Jakarta PT. Harapan Global Niaga


Citra Living Apartment (Somerset Tower) Jl. Citra 7, Kalideres West Jakarta Citra Mitra Graha KSO


Citra Living Apartment (Orchad Tower) Jl. Citra 7, Kalideres West Jakarta Citra Mitra Graha KSO


Citra Living Apartment (Newton Tower) Jl. Citra 7, Kalideres West Jakarta Citra Mitra Graha KSO


2019

The Suite (W Hotel Tower) Jl. Prof. Dr. Satrio CBD Ciputra 200 Under-planning

The Residences at The St. Regis Jakarta Jl. H.R Rasuna Said CBD Rajawali Property Group


Arandra Residence (was Sentosa Resi-dence)

Jl. Cempaka Putih Raya No.1 Central Jakarta Gamaland 687 Under-construction

Menara Jakarta (Tower Equinox) Kemayoran Central Jakarta Agung Sedayu 396 Under-construction

Menara Jakarta (Tower Azure) Kemayoran Central Jakarta Agung Sedayu 860 Under-construction

The Linq Kemayoran (2 towers) Kemayoran Central Jakarta KG Global 1,020 Under-planning

Menteng 37 Jl. Menteng 37 Central Jakarta Pikko Group & Wijaya Wisesa (JV)

99 Under-planning

The H Residence Kemayoran (Lotus) Jl. Rajawali Selatan Central Jakarta PT Hutama Karya Realtindo

252 Under-planning

Jaya Ancol Seafront - Oceana Tower Pademangan, Ancol North Jakarta Jaya Ancol 524 Under-construction

Orient Residence Jl. Yos Sudarso, No 76 North Jakarta PT Tri Raton Mega 225 Under-planning

Fatmawati City Center - Corona Park Suite Tower

Fatmawati South Jakarta Agung Sedayu 620 Under-planning

Royal Park at Kebayoran (Arlington Tower) Jl. Cileduk Raya 18, Cipulir South Jakarta PT. Trixindo Selaras 630 Under-planning

Ratu Prabu 3 Residences TB. Simatupang South Jakarta PT Ratu Prabu Tiga 61 Under-construction

Samara Suites (was The Residence Gatot Subroto)

Jl. Gatot Subroto South Jakarta Synthesis Develop-ment

300 Under-planning

Lavish Kemang Residence Jl. Kemang Raya No.3, Bangka South Jakarta PT Kemang Karya Utama

474 Under-planning

Green Sedayu Apartment (Tower Pasadena)

Jl. Kamal Raya, Cengkareng West Jakarta Agung Sedayu 644 Under-planning

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2020

Regatta Tokyo Tower Jl. Pantai Mutiara North Jakarta Intiland 276 Under-planning

Prajawangsa City (8 towers) Jl. Raya Bogor, Cijantung East Jakarta Synthesis Develop-ment

4,000 Under-planning

East 8 (2 towers) Cibubur East Jakarta Karya Cipta Group 1,172 Under-planning

Fatmawati City Center(5 towers) Fatmawati South Jakarta Agung Sedayu 2,080 Under-planning

Green Sedayu Apartment (Tower New York)

Jl. Kamal Raya, Cengkareng West Jakarta Agung Sedayu 920 Under-planning


DemandNo significant changes in the apartment market were noted in 2Q 2016. Although the market saw some improvement in launching activity, buying sentiment remained lukewarm. Sales remained quiet as investors and end-users have put their plans to buy apartments on hold in view of economic conditions. Pro-spective buyers continued to tread with caution and be mindful with their purchases in light of recent market conditions, partic-ularly delays in construction progress and project cancellations, which were further worsened by the lack of regulations protect-ing buyer and developer rights. Overall, the average take-up rate only rose by less than 1% QoQ and YoY. A combination of creative marketing strategies (with gimmicks, etc.) and a limited number of newly introduced/newly launched projects have helped lift, or at least maintain, the overall take-up rate performance of the apartment market in Jakarta. The un-revealed fact behind the vigorous sales performance in certain projects is insider trading with buyers who could be sharehold-ers or top executives of the company. Though small in number, such transactions helped lift overall sales performance. Another way to boost sales is to offer buy-back and cash-back guaran-tees, i.e. refunding the money to the buyer when the handover schedule does not meet the agreed timeline.

Developers have collaborated with insurance companies to provide protection for their apartment units with the benefit of 100% cash-back after 15 claim-free years. As long as buyers don’t make a claim on their apartment insurance (also called Building Insurance) policy for 15 years, they will receive a full refund of all of the Building Insurance premiums that they have paid.

In terms of area, under-construction projects in the CBD re-corded the highest increase in overall take-up rate, at 2.5%, compared to 1.1% and 1% in South Jakarta and non-prime areas, respectively.


Take-up Comparison between Existing and Under- Construction Projects

Q2 2015 Q1 2016 Q2 2016 QoQ YoY

Existing 95.80% 96.20% 96.20% 0.00% 0.40%

Under-construction 69.00% 67.00% 68.10% 1.10% -0.90%

Average (all) 85.90% 86.20% 86.70% 0.50% 0.90%


Take-up Rate Changes in Different Locations in JakartaQ2 2015 Q1 2016 Q2 2016 QoQ YoY

CBD 96.00% 94.00% 94.50% 0.50% -1.50%

South Jakarta 88.00% 85.30% 85.90% 0.60% -2.10%

Non-prime area 83.40% 85.40% 85.90% 0.50% 2.50%

Thus far, foreign ownership regulations have not changed dras-tically because they still have to comply with the Agrarian Law, which limits the scope of ownership. Foreigners can only buy property under a Hak Pakai (Right to Use) title, and in order to do that they have to hold a legal stay permit in Indonesia. Recently, after the issuance of revised Government Regulation number 103/2015, the government (Head of the National Land Agency) introduced the implementation of the regulation No. 13 of 2016 on Procedures for Granting, Relinquishing and Trans-ferring Ownership of Residential Property for Foreign Citizens Domiciled in Indonesia. This new regulation makes it clearer that foreign citizens are only allowed to own high-end residen-tial properties (either apartment or landed house) with various minimum thresholds based on the property type and location. Previously, Indonesian authorities announced in 2Q 2015 that foreigners would be allowed to purchase apartments or houses which cost at least IDR10 billion/unit (roughly US$740,000) under a right-to-use title. Nonetheless, even with these govern-ment efforts to ease regulations on foreign ownership, the main challenge facing apartment sales remains: they have to be built on Right to Use land that is unconventional in the local market.





The Price Threshold for Foreign-Owned Houses and Apartments in Indonesia

locAtioNSelliNg price (iN idr)

HouSe (>) APARTMENT (>)

Jakarta 10 billion 5 billion

Banten 5 billion 1 billion

West Java 5 billion 1 billion

Central Java 3 billion 1 billion

Yogyakarta 3 billion 1 billion

East Java 5 billion 1.5 billion

Bali 3 billion 2 billion

NTB 2 billion 1 billion

North Sumatera 2 billion 1 billion

East Kalimantan 2 billion 1 billion

South Sumatera 2 billion 1 billion

Other location 1 billion 750 million

Source: Ministerial Regulation No.13 of 2016

Another appealing effort to bolster the current sluggish market has come through relaxation of LTV regulations. The Central Bank (Bank Indonesia) has stepped in to support the domestic economy and property market and, in particular, is likely to boost apartment sales going forward. Bank Indonesia is planning to review loan-to-value (LTV) regulations to boost the property market in 3Q 2016. Under the easing policy, the Central Bank will reduce the amount of down payments in a bid to spur credit growth and boost economic growth. Another possible measure would let homeowners take out loans to purchase a second home “off the plan”, or one that is under pre-construction. This relaxation would provide a tailwind to the property sector, par-ticularly the apartment market, if it is fully materialised. Never-theless, Bank Indonesia has repeatedly emphasised that it will continue to closely monitor the market and enforce policies to prevent the property market from overheating, which could lead to a bubble. It will also maintain a prudent policy to keep non-performing loans below 5% of total loans.

Asking PriceOverall, the prices of apartments in Jakarta have been relatively flat, as most projects have maintained prices in order to attract buyers in this softening market situation. Newly launched or introduced projects are offered at a lower price compared to the average market price, which may hamper further price growth. To a greater extent, developers are quite concerned over the weakened purchasing power of general consumers, which is reflected in the latest data from the Statistics Bureau Indonesia, where GDP only grew 4.92% in the first quarter of 2016, slower than the estimate of slightly above 5%. Therefore, in order to cope with such a situation, developers have mainly played the role of a bank by providing installment schemes as their default payment method. Moreover, in some cases, developers have of-fered additional discounts, ranging from 3% to 5%, depending on the installment period, meaning that longer installments re-ceive a smaller discount.


Quarterly Asking Prices of Apartments in Three Regions

As of Q2 2016, the average asking price of apartments in Ja-karta was recorded at IDR31 million/sq m (excluding VAT), a modest increase of 0.5% QoQ and 9% YoY. In South Jakarta, apartment prices rose by 1.1% QoQ and 11.3% YoY, the highest rate compared to the CBD and other non-prime areas. South Jakarta remains a desirable location to live in, as indicated by the sales improvement during the reviewed quarter. In addition, some developers raised selling prices because their projects are approaching handover. The CBD still has the highest apartment prices, at IDR48.3 million/sq m, an increase of 0.9% compared to the previous quarter, while non-prime areas posted the low-est QoQ growth, 0.7%, to IDR23.3 million/sq m, mainly because the newly introduced projects in East Jakarta are offered at a lower price than the market average.


Apartment Price Changes in Jakarta Based on Area (in IDR/sq m)

Q2 2015 Q1 2016 Q2 2016 QoQ YoY

CBD 44,135,684 47,816,125 48,246,435 0.90% 9.30%

South Jakarta 32,713,013 36,028,156 36,421,523 1.10% 11.30%

Non-prime Area 21,285,155 23,147,612 23,300,386 0.70% 9.50%

Average 28,442,570 30,840,637 31,008,439 0.50% 9.00%

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

Q1 2

012

Q3

2012

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013

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2013

Q1 2

014

Q3

2014

Q1 2

015

Q3

2015

Q1 2

016

IDR

/sq

m

CBD South Jakarta Non-Prime Area





APARTMENT FOR LEASE

SupplyNo new supply was launched in Q2 2016, and the total stock of Jakarta’s apartments for lease remained at 8,780 units. Nonetheless, the market is expecting to receive at least 890 new serviced apartment units in the next four years. The new projects will be largely operated by global serviced apartment operators such as Oakwood Worldwide, Frasers Hospitality and The Ascott Limited. The only local apartment operator is Lavish Kemang Residence Serviced Apartment.

List of Future Supply Serviced Apartment in Jakarta

NAme of developmeNt BegiNNiNg YeAr of operAtioN locAtioN AreA #uNit

Fraser Suites at Ciputra World 2 2017 Jl. Prof. Dr. Satrio CBD 200

Oakwood Premiere Jakarta at District 8 Senopati 2017 Senopati South Jakarta 378

Ascott Menteng Jakarta 2019 Menteng Central Jakarta 150

Fraser Residence Serenia Hills 2019 Cilandak, Lebak Bulus South Jakarta TBA

Fraser Suites Kebon Melati 2019 Kebon Melati, Tanah Abang South Jakarta TBA

Serviced Apartment at Lavish Kemang Residence 2020 Jl. Kemang Raya No.78 A South Jakarta 162


As there was no change in the number of existing apartments for lease, the distribution composition remains the same as well, with the majority of projects concentrated in the CBD and South Jakarta, representing around 44% and 35%, respectively. By grade, most apartments for lease in Jakarta are classified as middle-upper grade projects, followed by middle-lower grade, with 73% and 14%, respectively. The middle-upper class seg-ment, which is mostly dominated by serviced apartments, typi-cally features projects with better building maintenance and high rental rates, while middle-lower class buildings mostly consist of old non-serviced apartment projects located in non-prime areas


distribution of existing Apartments for lease (by Number of units)

OccupancyThe falling number of mid- to junior-level expatriates relocating to Jakarta has created a challenge for apartments on the lease market. On the other hand, in order to keep demand steady, some serviced apartments have collaborated with Online Travel Agents (OTA) such as Agoda and Booking.com to offset the number of expats leaving the city. During the reviewed period, the occupancy of serviced apartments increased modestly by 0.2%, while that of non-serviced apartments declined by 0.8%, to 62.8% and 76.2%, respectively.

CBD44%

Central Jakarta

10%

South Jakarta

35%

North Jakarta

5%

West Jakarta

6%





The traditionally slow month of Ramadan (this June – July) saw a weakened number of inquiries on apartments for lease, mainly because expatriates are the main market and their num-bers have fallen. The underlying issues behind this are longer visa processing times and tightened housing allowances for multinational companies. A number of multinational compa-nies have decided to rationalise their expenses by streamlin-ing costs for housing allowances. In addition, the expiration of existing work contracts for a number of expatriates continued to bring the average occupancy rate down by 0.45% compared to the previous quarter, settling at 71.5%. This quarter, some newly completed serviced apartments in the CBD have report-edly achieved relatively good occupancy performance as a re-sult of various promotional efforts to attract tenants. Moreover, some non-serviced apartments have had new inquiries from e- commerce businesses coming to Jakarta. Meanwhile, since most of the apartments for lease in South Jakarta and non-prime areas are old projects, tenants have been presented with alternative options, like renting in newly operating strata-title apartments belonging to the individual owner. In this gloomy rental market, most individual unit owners have come up with more flexible payment terms at more competitive rental rates compared to both serviced and non-serviced apartments.


Average occupancy rate of Apartment for lease in Jakarta

Average Rental RateThe majority of apartment for lease projects maintained rent tariffs at the same level this quarter. In general, new rental rates introduced early in the year are valid until the end of the year. Rental rates quoted in rupiah remained flat, while changes only took place in apartments which still quote rent in US dollars due to the strengthening Indonesian rupiah against the US dollar during the period. As a result, the average rental rate of apart-ments for lease in the CBD stayed at IDR374,061/sq m/month, while rental tariffs for apartments for lease in South Jakarta, including non-prime areas, decreased by 1.4% from the previ-ous period to IDR224,178/sq m/month.

All in all, the average asking rental rate will be relatively stable throughout the year, although the rental rate may fluctuate due to rupiah depreciation/appreciation, since some operators still use the floating rate conversion.


Average Rental Rate (in IDR/sq m) of Apartment for Lease Based on Region

Q1 2016 Q2 2016 QoQ

CBD 374,061 374,061 0.00%

South Jakarta (including non-prime areas)

227,296 224,178 -1.40%

0%

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80%

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100%

Q1 2

014

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014

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015

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Q4

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Q1 2

016

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Serviced Apartment Non-Serviced Apartment


Occupancy Rates of Apartment for LeaseQ2 2015 Q1 2016 Q2 2016 QoQ YoY

CBD 79.40% 69.10% 76.10% 6.90% -3.40%

South Jakarta 76.40% 72.00% 70.40% -1.60% -6.10%

Non-Prime area 70.00% 69.60% 68.00% -1.50% -2.00%




Copyright © 2016 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Accelerating success.

For more information:Ferry SalantoSenior Asociate Director | Research+62 21 3043 [email protected]

Contributors:Hern Rizal GobiAssistant Manager | Research

Concluding ThoughtThe outlook for Indonesia’s economy is expected to remain lack-lustre in 2016, with growth forecast to range from 5% to 5.2%, down from previous estimates of 5.2% to 5.6%. On the other hand, Standard & Poor’s (S&P) rating agency affirmed Indo-nesia’s sovereign credit rating of BB+ with a positive outlook, leaving the economy one notch below investment grade. This means that an upgrade is still likely in the near future.

In our opinion, the apartment market will see gradual improve-ment in the upcoming quarters since the economic fundamen-tals show signs of stabilisation, inflation remains low and we are anticipating the tax amnesty law coming into effect. In addition, Bank Indonesia has launched easing moves, including cutting the BI rate by 25 bps to 6.5%, as well as macro prudential poli-cies that will relax the loan-to-value ratio for landed houses and apartments and are expected to boost credit demand and spur economic activity. Nevertheless, the expectation of huge supply going forward is the other main challenge for the apartment market in general. At the very least, the positive outlooks dis-cussed above will not materialise in the short-term. The apart-ment market will need some time to stabilise and find equilib-rium before taking off in the next one-two years.

Q2 2016-researchand forecastreport-jakarta-apartment

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