Property Market Overview

Transcription

1 colliers international JAKARTA, BALI, SURABAYA MARKET OVERVIEW AUGUST 2008 Property Market Overview ECONOMIC INDICATORS INDONESIAN ECONOMIC INDICATOR Q08 Economic Growth (% YoY) Inflation Rate (%) Exchange Rate (Rp/US$) 8,934 9,695 8,980 9,124 9,245 1 Interest Rate - Central Bank Rate (%) Notes: 1 January - July August 2008 Source: Statistics Indonesia, Finance Department, Bank Indonesia OFFICE SECTOR SUPPLY None of the under-construction office buildings in the CBD were launched in the reviewed quarter; however, future supply in the remainder of the year will be quite significant. THE CBD In the early quarter of 2008, the CBD office market saw additional space of more than 100,000 sq m. Nevertheless, from the total projection of more than 200,000 sq m of space this year, none came onto the market during the quarter under review. Buildings that are expected to be completed in the near future are The Energy, UOB Tower, Prudential Tower, City Tower and Menara DEA 2. Some other under-construction buildings with projected completion dates in are listed in the table. Several planned buildings were introduced in this quarter, including Menara Bidakara 2, Graha 18, Setiabudi Tower, Republic Plaza and Sentral Senayan 3. These buildings are expected to add a total of around 160,000 sq m to the market. In the quarter, we saw changes in building names due to tenant movements. The space vacated by Standard Chartered Bank has been acquired by ANZ Bank, which moved from Panin building. The building s name was, therefore, changed to ANZ Tower. Meanwhile, after signing a sizeable transaction deal, the under-construction Sudirman Tower was renamed Prudential Tower after its anchor tenant. To date, total office supply in the CBD remained at 3.71 million sq m, which represents around 70% of the total office stock in the whole Jakarta area. Our Knowledge is your Property

2 LIST OF UNDER CONSTRUCTION OFFICE BUILDING IN THE CBD AREA building name LOCATION EXPECTED COMPLETION The Energy SCBD 2008 City Tower MH Thamrin 2008 UOB Plaza MH Thamrin 2008 Boutique City Senayan 2008 Menara DEA II Mega Kuningan 2008 Menara Palma Rasuna Said 2008 Prudential Tower Sudirman 2009 Cyber 2 Rasuna Said 2009 Bakrie Tower Rasuna Said 2009 The Plaza MH Thamrin 2009 Eighty Kasablanka Casablanca 2009 Menara Bidakara 2 Graha 18 Republic Plaza Kuningan City Office Tower Sentral Senayan 3 Equity Tower Tower Total Space Gatot Subroto SCBD Rasuna Said Satrio Senayan SCBD Satrio ,779 sq m. ANNUAL SUPPLY IN THE CBD & PROJECTION UP TO , , , , ,000 50,000 sq m 0 (50,000) P 2009P 2010P For Lease For Sale 2 Colliers International

3 OUTSIDE THE CBD Three buildings became ready for operation in the quarter, including Recapital in Kebayoran Baru, The Boulevard in Tanah Abang and Treva in Kebayoran Baru. The latter was offered for en-bloc sale. This boosted space in the area outside the CBD by another 22,678 sq m, bringing the cumulative office stock in the non-cbd area to 1.59 million sq m. Another building, Talavera, is expected to come into operation in 3Q08. Around 127,518 sq m of office space is in the pipeline and scheduled for completion in Menara 165 is working fast to finish the podium for their training facilities and other buildings listed in the table below are now progressing with their development phases. It is interesting to note is that most of these buildings are located in South Jakarta. Meanwhile, on Jalan S.Parman, construction is progressing on the sizeable Central Park Office Tower, which is offered for strata-title sale. Also in the Kemayoran area, KEM Tower is finalising construction. In the quarter, new office buildings were introduced, i.e. Area 24. This project is located on Jalan Pasar Minggu Raya, Pancoran and projected for completion in Sitting on 2.5 hectares of land, this mixed-use development will provide around 48,000 sq m of office space. LIST OF UNDER CONSTRUCTION OFFICE BUILDING OUTSIDE THE CBD building name LOCATION EXPECTED COMPLETION Talavera TB Simatupang 2008 Grand Kebon Sirih Kebon Sirih 2008 Three new buildings outside the CBD area came into operation, adding another 22,678 sq m of space. Menara 165 TB Simatupang 2009 Arcadia Tower F TB Simatupang 2009 Gandaria Office Arteri Pondok Indah 2009 MT Haryono Office MT Haryono 2009 MT Haryono Square Otista 2009 KEM Tower Central Park Office Tower Kemayoran Grogol, S Parman Total Space 242,293 sq m DEMAND THE CBD Some of the significant transactions we recorded include those from Prudential and Ace Ina in Menara Cakrawala, ABN Amro in Wisma Nusantara, Global TV in Ariobimo, Sari Jaya Group in Permata Bank Tower, LG in Pacific Place and other small transactions in other office buildings. Furthermore, significant relocations to newer buildings included those by such tenants as Standard Chartered Bank and BCA. The movement of large tenants left sizeable vacant spaces in their previous buildings. Thus, the combination of tenant movements stabilised the occupancy rate this quarter at 88.76%, which reflects a slight downturn compared to the previous quarter. Colliers International 3

4 CUMULATIVE SUPPLY, DEMAND AND OCCUPANCY RATE 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, P 2009P 2010P Supply Demand Occupancy Rate 100% 97% 94% 91% 88% 85% 82% 79% 76% 73% 70% Several buildings quoted US$ rate in the CBD adjusted the rental upward bringing the average rental buildings rate to increase significantly. Although most of the leasing activity generated so far this year has come from existing users relocating within the marketplace, the good news is that very few of these moves has involved downsizing. Space consolidation has, in most cases, resulted in an increase, rather than a decrease, in the size of the space occupied. We have managed to record some significant deals during the quarter, including an investment holding company that relocated and expanded from Menara BCD to a newer building, Sentral Senayan 2, taking up around 5,900 sq m. Another large deal inked in the second quarter was the 7,200 sq m deal signed by an engineering company and poultry feed companies in BRI 2. Other deals signed within this quarter with a size of more than 1,500 sq m included space in Ariobimo Sentral taken by a leading local bank, space in Menara Anugrah taken by a flavours and fragrance company, space in Menara Mulia taken by an advertising company and space in Menara Prima taken by a local bank. Menara Prima has so far concluded around 6,736 sq m in this quarter alone. Several sizeable transactions of between 1,500 and 3,100 sq m occurred in The Energy, involving such companies as oil and mining enterprises, law firms, banks and financial institutions, with a total space of around 12,281 sq m. On other fronts, sizeable strata-title transactions were concluded in The East, with the relocation and expansion of the CPO Plantation company, which took around 6,600 sq m, and a telecommunication company that took around 2,000 sq m. Meanwhile, commitment levels for underconstruction projects were quite high. Of the office buildings that are under construction and scheduled to come into operation in 2008, about 125,724 sq m, or 67% of the total space, has been pre-committed by several tenants. Up to now, several under-construction office buildings projected to be completed in 2009 have captured pre-committed tenants, despite their being small. Of the total potential supply in 2009, around 16% has been committed. Continuing the trend of a stronger strata-title office market, some 80% of all strata-title office buildings in the remainder of 2008 have been sold. The trend continues next year, with some 91% of the 86,026 sq m office space available in 2009 already sold. OUTSIDE THE CBD Leasing transactions outside the CBD area were not as active as within the CBD area. Several transactions on our records included the expansion of Barito Group in their own building. Another sizeable transaction occurred in Graha Atrium by finance companies and law firms. Nevertheless, the amount of vacated space was higher than the newly occupied space, which pushed occupancy down modestly to 88.36% from the previous 90.09%. In the southern area, particularly along Jl. TB Simatupang, the pre-commitment level was quite high. The Talavera building, which is scheduled to come into operation in the next quarter, has made a commitment with several tenants, among them a big oil company; oil-related companies, such as drilling providers and contractors; pharmaceutical companies; banks; and service office providers. Another building that is currently under construction, Arcadia Tower F, was reported to have engaged a large telecommunication company, although this has not been officially confirmed. 4 Colliers International

5 ASKING BASE RENTAL RATES THE CBD The adjustment in base rental rates continued in this quarter. This time, several buildings with Rupiah rental rates moved their base rentals upwards at rates ranging between Rp5,000 and Rp10,000, or an increase of around 6% to 15% compared to the previous quarter. Similarly, after a significant climb last quarter, some buildings with US$ rates introduced new rental tariffs ranging from US$0.50 to US$2.00, reflecting an increase of around 10% compared to the previous quarter. Overall, the reasons for introducing new rental rates were mainly cited as the build ings having achieved high occupancy rates and the need to adjust to the current market level. With all these changes taking place in the quarter, the overall average base rentals for office buildings in the CBD area rose to Rp87,268/sq m/month, up from the previous Rp85,176/sq m/month. An upward trend in average rentals also occurred in the buildings offering US$ rates with this quarter s average asking rental recorded at US$15.71/sq m/ month, a slight increase of 3.3% compared to the previous quarter. AVERAGE ASKING GROSS RENT (ALL CLASSES) FOR CBD OFFICE SPACE Rp150,000 $24.00 Rp140,000 Rp130,000 $22.00 $20.00 $18.00 Base rentals in the CBD continued to climb this quarter, but remained steady outside the CBD area. Rp120,000 Rp110,000 Rp100,000 $16.00 $14.00 $12.00 $ Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Rupiah US$ OUTSIDE THE CBD Rental rates in this area remained flat, with a few adjustments in two buildings, thus stabilising the average asking rental rate at Rp59,450/sq m/month. Both buildings offer ing Rupiah rates and those with US$ rates maintained their current rate at the same level as in the previous quarter. Mounting operational costs will likely push rentals upward in the next period. SERVICE CHARGES THE CBD Despite the fuel price adjustment in the quarter, most developers still declined to introduce new tariffs for service charge. However, 114 projects introduced a new maintenance tariff as a result of increased operational costs. The increases ranged from Rp3,000 to Rp5,000/ sq m/month, while one building with a US$ rate pushed the service charge upward by US$2.00/sq m/month. However, on average, the overall service charge tariff remained stable at Rp47,429/sq m/month. Meanwhile, the average service charge for US$ buildings was registered at US$6.06/sq m/month. OUTSIDE THE CBD We saw only four buildings outside the CBD area that increased their service charge tariff. Three buildings increased the charge by Rp10,000, while the remaining building raised the rate by just Rp2,500. All in all, the average service charge did not register a wide discrepancy compared to the previous quarter, standing at Rp33.543/sq m/month. Meanwhile, the average service charge for US$ buildings within the non-cbd area was an average of US$4.30/sq m/month. Colliers International 5

6 OUTLOOK The short-term outlook for the office market remains bright. Much of this optimism is due to continued inquiries from existing tenants who plan to expand and the modest growth in supply over the next two years. We also continue to see activity generated by the legal, finance-related, oil and mining, education, and telecommunication sectors. Fuel price hikes might have an impact in the coming consecutive quarters, resulting in mounting operational costs. Thus far, many developers are consolidating in anticipation of these increases. Newer buildings have applied a different strategy toward service charge costs so that the whole rental package (base rent plus service charge) will not be high. Several newer buildings have implemented a separate electricity meter for tenants in order to curb service charge costs and allow tenants to control their own electricity costs. This system has made overall rental packages more attractive. 6 Colliers International

7 APARTMENT SECTOR APARTMENT STRATA-TITLE FOR SALE Additional supply from seven projects invigorated the market within the quarter. SUPPLY Despite tough sales, supply is still vibrant, as indicated by the introduction of new apartment developments with a total of around 7,500 units. Some of the newly introduced apartment projects are part of integrated developments that include two towers of Casa Grande Apartments at Kota Kasablanka, Denpasar Residence at Kuningan City, a three-tower apartment project at The St. Moritz Penthouse and Residence in Puri Indah West Jakarta, and Ancol Mansion in Ancol, North Jakarta. Meanwhile the under-construction mixed-use project of Kemang Village in Kemang, South Jakarta, opened its new Tiffany tower, while Central Park in West Jakarta introduced its new tower, Alaina. Other projects were also introduced, among them The Stupa apartments in Menteng, Central Jakarta, which is aimed at upperclass buyers, and those targeting mid-to-lower class buyers, such as The Tamansari Residence in the CBD, Intan apartments in TB Simatupang and Permata Regency apartments in West Jakarta. The lower-class apartment market is also growing following the government s decision to offer incentives for low-cost apartments (Rusunami, an abbreviation of Rumah Susun Sederhana Milik). Thus far, projects such as Casablanca East Residence, Tanjung Kalibata and Gading Nias Residence have been introduced to the market. A 2.8% growth in supply came from an additional 1,593 units that entered the market in eight projects, boosting the total supply to 60,838 units. This quarter, seven projects came into operation, namely Salemba Residence (Tower A), Patria Park, Sahid Metropolitan Residence, Cik Ditiro Residence, Hamptons Park (Tower D) and fx Residence. The growth in apartment supply is enormous, with the expectation of another 11,107 new units coming online in the remainder of Most of the new supply will be provided by such massive developments as Seasons City and two low-cost apartment developments, Menara Cawang and East Park Apartments. The apartment market will continue to grow with another 50,613 units over the next quarter (within the period of ) and, by end of 2010, the total number of apartment units for sale will be around 120,000, which is almost double the current stock! SUPPLY GROWTH OF APARTMENTS FOR STRATA-TITLE SALE 140, , ,000 80,000 60,000 40,000 20, Total Unit Q (p) 2009(p) 2010(p) Colliers International 7

8 Significant supply in the quarter did not change the overall pattern of apartment distribution in Jakarta. North Jakarta, the CBD and West Jakarta are the largest providers of apartments in terms of numbers of units. As seen in the graph, a large number of the units available on the market are middle-class, with an asking price per sq m of between Rp6 million and Rp15 million. APARTMENTS FOR STRATA-TITLE SALE based on location and market segmentration West Jakarta 21% East Jakarta 1% CBD 26% 10,000 8,000 6,000 4,000 2,000 North Jakarta 25% South Jakarta 9% Central Jakarta 18% - CBD Central Jakarta East Jakarta North Jakarta South Jakarta West Jakarta Low Middle-Low Middle-Up Upper Luxury The trend in preferred apartments has not changed for several periods. The emphasis on more greenery would boost the image of a development, as would its proximity to such facilities as international schools, retail centres, hospitals, business centres and entertainment areas. Meeting these criteria, South Jakarta continues to be the preferred location for residential areas primarily aiming at the middleto-upper market. This will continue in the future, with more than 22,000 units planned for development in the South Jakarta area.. FUTURE SUPPLY BASED ON LOCATION West Jakarta 16.0% CBD 8.6% Central Jakarta 7.4% East Jakarta 20.7% North Jakarta 12.6% South Jakarta 34.6% 8 Colliers International

9 DEMAND External factors, such as increasing interest rates, are not reinforcing demand and growth in demand was relatively low, at 72.3%, this quarter, leaving around 16,800 units unsold. Amid negative indicators, sales of government-subsidised projects, which set the maximum price of Rp144 million per unit, were quite vibrant. Projects such as Menara Cawang, Tanjung Kalibata and Kalibata Residence recorded a take-up rate of more than 80% within the quarter. TAKE-UP RATE FOR STRATA-TITLE APARTMENTS More low-cost, governmentsubsidised projects are being built in response to the need for affordable accommodation. Take Up Rate 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 Cost concerns have also driven demand for private residences at an affordable price. In a metropolitan city such as Jakarta, the need for decent accommodation with easy access to the business district has grown. In response to enquiries, projects such as Sahid Metropolitan Residence and such under-construction projects as The Tamansari Residence and Setiabudi Royal Residence are trying to capture this market, particularly targeting young executives. As of the quarter under review, Sahid Metropolitan Residence has managed to record an 80% take-up rate, while the under-construction projects have sold around 30% of the total number of units. Prices remained stable, but will possibly increase due to mounting construction costs. PRICE With the current tight competition, the offer prices for Jakarta apartments in the period remained relatively stable, with the average price steady at around Rp10.7 million/sq m. Projects in the CBD area were offered at an average of around Rp15.4 million/sq m. In South Jakarta, where a mixture of projects are located, offered lower prices of about Rp10.7 million/sq m. Outside the CBD area, the average offer price was Rp8.3 million/sq m. Colliers International 9

10 AVERAGE ASKING PRICE PER SQM for STRATA-TITLE SALE APARTMENT 18,000,000 16,000,000 Price/sq m (in Rp) 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 CBD South Jakarta Non CBD Average APARTMENT FOR LEASE (SERVICED AND NON SERVICED) SUPPLY There were no significant changes in the stock of apartments for lease in Jakarta, with the small increment of 2.4% QoQ coming from the completion of the re-construction of Shangri-La Residence. This apartment building located in the CBD comprises 168 units. To captivate a wider market, the project offers such leasing options as providing both serviced and non-serviced units. With these additional units, the cumulative supply of apartments for lease and serviced apartments was 7,133 units, with the proportion of units for lease and serviced units equal. By the end of 2008, the market anticipates a growth of 14% YoY, with the addition of 600 serviced units. This will be the highest growth for the past 10 years. Further, up to year 2010, new supply will come mainly from serviced apartments. Non-serviced units be provided only by the completion of such under-construction projects as Golf Pondok Indah Apartment (Tower 3). 168 units from the Shangri- La Residence boosted the total supply of apartments for lease (both serviced and non-serviced apartment) to 7,133 units. CUMULATIVE SUPPLY OF APARTMENTS FOR SERVICED AND NON-SERVICED 9,000 8,000 7,000 6,000 Total Unit 5,000 4,000 3,000 2,000 1, Q (p) 2009(p) 2010(p) 10 Colliers International

11 The upcoming serviced units are mostly offered as a serviced unit for sale. This concept allows consumers to get a guaranteed return from the operator. We noted that some projects have shifted a portion of units for sale into serviced units for sale to lure buyers. The Aston International chain currently is the largest operator managing serviced apartments. Grand Aston SOHO Hotel and Residence in Slipi, West Jakarta, provides about 50% of its serviced units (out of a total of 96 apartments) for sale. Apart from apartments, this project features hotel rooms and office space within one tower. Further north, City Loft Gajahmada in the Kota area provides around 26% of its total of 600 units as serviced apartments. City Loft Gajahmada, managed by Aston International, is an integrated development comprising apartments and a retail centre. Serviced apartments are found mostly in the CBD and South Jakarta, since both areas are preferred by expatriates. By nature, serviced apartments are best suited to those looking for relatively longer-term accommodation but who need hotel service during their stay. The market is anticipating another 600 units by the end of SUPPLY OF APARTMENTS FOR lease (SERVICED AND NON-SERVICED) 3,500 3,000 2,500 2,000 1,500 1, CBD Central Jakarta East Jakarta North Jakarta South Jakarta West Jakarta Middle-Low Middle-Up Occupancy was basically stable, dropping only modestly. The market for apartments for lease is becoming tougher and facing competition from strata-title apartments offered for lease. DEMAND Despite continued enquiries for apartments for lease, with a number of apartment units for strata-title sale converted into units for lease, competition became tougher, which led to a lower occupancy rate for apartments for lease (non-serviced units), falling to 71.9%. On the other hand, benefiting from daily guests, serviced units experienced a small rise in occupancy to 70.1% in the quarter, bringing the overall average occupancy of apartments for lease, serviced and non-serviced units to 71.6%. In order to survive in the competitive leasing market, offering an option of serviced facilities at an additional charge was applied commonly to increase occupancy rates. Projects also offered package rates in addition to this serviced concept. Under current market conditions, it is predicted that the occupancy rate will further decline to around 69% over the next six months. Colliers International 11

12 OCCUPANCY RATE OF APARTMENTS FOR lease (SERVICED AND NON-SERVICED) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q2008 RENTAL RATES The overall rental rates for apartments for lease were steady at an average of US$13.40/ sq m/month. A small increment was contributed by projects in the CBD area, where rentals grew to US$17.30/sq m/month. This growth came particularly from serviced units that charged a higher rate for daily guests. However, on another front, other areas largely experienced a decrease in rates as a result of a tariff campaign among apartment projects. Rental rates between apartments located in South Jakarta and other areas outside the CBD were quite competitive, at US$11.00 to $12.00/sq m/month. In the CBD, rental rates remained stable at around US$17.00/sq m/ month. Rental rates were stable. AVERAGE RENTAL RATES OF APARTMENTS FOR lease (SERVICED AND NON-SERVICED) $18.00 Rental Rate (US$/sq m/month) $17.00 $16.00 $15.00 $14.00 $13.00 $12.00 $11.00 $ Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 CBD South Non CBD Average 12 Colliers International

13 OUTLOOK A gloomy outlook for the apartment sector is threatening the market. From a demand perspective, apartments are mostly absorbed by non-resident buyers. Further, buyers are primarily domestic, with only a few overseas buyers who make their purchase by nominating an Indonesian citizen or through a company. We see that local capacity is quite limited and, since the investment motive is still dominant, the local market will focus more on leasing the units they have bought. Furthermore, there are many upcoming developments due over the next two years. Therefore, a revised regulation that is now in parliament should be released soon to protect the market from oversupply. Under this regulation, the apartment market will become more attractive to overseas buyers since it will provide an ownership guarantee. In the Asia Pacific region, apartment prices in Indonesia (for the same development standard) are very competitive compared to the other countries. Having said that, there is a need for accommodation for local Indonesians. The only constraint on the sale of existing apartment developments is the price. With a large and relatively low-priced land bank available in the greater Jakarta area (Bekasi, Tangerang and Bogor regions), small and simple landed houses are affordable to most domestic buyers. However, since Jakarta is the centre of business activity, it is common for those living in the greater Jakarta area to work in the city. Then, transportation becomes a problem, particularly if it takes more than two hours to reach the workplace. As we mentioned in an earlier publication, the government has been promoting the development of low-cost multi-family housing located within easy reach of Jakarta. These government-subsidised projects have received a good response from the market, particularly since they offer proximity to the workplace at an affordable price and flexible payment terms. Colliers International 13

14 EXPATRIATE HOUSING AND APARTMENTS EXPATRIATE HOUSING RENTAL RATES Average rentals for expatriate housing were relatively stable during the first semester of 2008, as was multinational companies budgets for their expatriate housing. From a company perspective, middle-level management has a budget of between US$3,000 and US$3,500 per month, while higher ranking officers budget is up to US$5,000/month. From market availability, houses in Menteng (Central Jakarta), Kuningan, Kebayoran Baru, Pondok Indah and Kemang fetched high rental rates due to limited stock of expatriatestandard housing. Lower rates were found in the southern Simatupang area, such as in Lebak Bulus and Cilandak, with average offering rentals of around US$2,000/month. EXPATRIATE HOUSING RENTAL RATES (1H2008) AREA ASKING RATES (US$/Unit/month)* average size (sq m) low high average building land Menteng $3,000 $12,000 $4, Kuningan $2,000 $10,000 $3, Kebayoran $2,000 $12,000 $3, Kemang $1,500 $11,000 $2, Pondok Indah $2,000 $8,500 $3, Permata Hijau $1,500 $5,500 $2, Lebak Bulus $1,500 $4,500 $2, ,158 Pejaten $1,500 $7,000 $2, ,000 Cilandak $1,500 $6,000 $2, Cipete $1,500 $7,000 $2, *Majority unfurnished DEMAND On the demand side, there were no changes in the type of industry that were looking for expatriate-standard housing. As of the current period, enquiries came largely from banking, mining, oil and gas companies. Requirements for housing did not change and most expatriates demanded well-maintained and relatively new houses. This kind of relatively new housing was not immediately available in the mar ket due to a lack of land within the prestigious areas. Kemang, which was once well-known as an expatriate area, is now perceived as an area with an unsolved traffic problem. Pondok Indah and Kebayoran Baru remain the most sought-after areas for expatriates, despite the limited supply of expatriate-standard housing in this area. The Kemang border area, such as Cipete and Pejaten, was a preferred secondary location. 14 Colliers International

15 EXPATRIATES APARTMENTS RENTAL RATES Developers are now becoming more flexible in offering rental schemes. Previously, oneyear leases were not common but, currently, several apartment buildings welcome such a scheme, due mostly to tight competition. In general, asking rental rates increased slightly over the previous half, with two- and threebedroom apartments offered for lease at between US$2,000 and US$3,500/unit/month. Projects with comprehensive facilities were offering higher rentals of up to US$5,000/ month and asking for a longer lease period of a minimum of two years. SELECTED EXPATRIATE APARTMENTS apartment AVERAGE US$ ASKING RENT/MONTH 2BR 3BR 4BR average OCCUPANCY Darmawangsa, Sailendra NA 5,000 3,500-5, % Four Seasons Plaza Senayan, The Plaza Residence The Residence, Golf Pondok Indah, Bukit Golf, Ascott, Menteng Executive Aston, Batavia, Pavillion Park, Permata Hijau, Puri Casablanca, Casablanca Taman Rasuna, Semanggi, Slipi, Kintamani, Taman Pasadenia, Puri Imperium NA 2,150-4,500 3,275-5,000 4,750-5, % 2,200-3,400 2,400-3,800 4,600-5, % 1,100-2,400 1,300-2,600 2,500-3, % 500-1, ,000 3,000-3, % All 500-4, ,000 2,500-5, % OCCUPANCY The overall occupancy rate of apartments for lease experienced a further reduction to an average of 71.6%. Similar to the previous half, serviced apartments performed better than non-serviced units. In this slowing market, selected expatriate apartments managed to maintain their performance, with occupancy rates of between 80% and 88%. SUPPLY AND DEMAND Unlike demand for houses, demand for apartment accommodation comes mostly from single expatriates, those living in Jakarta without a family or couples with no kids who have a minimum requirement of a three-bedroom apartment. In most cases, if the resident occupies only one bedroom, the remaining bedrooms are converted into guest rooms, offices and/or libraries. In terms of location, the focus remains on the CBD and surrounding area, and South Jakarta. The Pakubuwono Residence in South Jakarta is one of the most sought-after apartment buildings as it provides comprehensive facilities and larger unit sizes. SELECTED APARTMENTS marketed for sale name location units price range/unit completion year Hampton s Park South Jakarta 646 Rp0.8 - Rp2.0billion 2008 Kempinski Private Residence CBD 203 Rp1.8 - Rp3.9 billion 2008 Nirvana Boutique Residence South Jakarta 56 Rp4.0 - Rp11.0 billion 2008 Regatta (3 towers) North Jakarta 186 Rp4.0 - Rp5.0 billion 2008 Permata Hijau Residence South Jakarta 196 Rp1.1 - Rp1.3 billion 2009 Kemang Village (3 towers) South Jakarta 728 Rp1.1 - Rp4.0 billion 2009 The Stupa Residence Central Jakarta 59 Rp1.7 - Rp2.9 billion 2010 Colliers International 15

16 OUTLOOK The availability of good housing that meets expatriate requirements is becoming limited. A significant number of houses are not being built in the preferred locations, nor are older houses being refurbished. The requirements are clear: a house needs to be well maintained, offer good accessibility to the workplace and feature such amenities as proximity to an international school, international clubs, medical services and shopping centres; most also prefer that the house is relatively new. More expatriates coming to Jakarta with their families means more demand for landed houses, particularly those with such facilities as a private swimming pool and a backyard garden to cater to small parties. The apartment market may benefit from the scarcity of good expatriate houses. A development type such as Pakubowono apartments could absorb quite a few expatriates, mainly because the project offers comprehensive facilities and more greenery, which is a luxury in a busy city such as Jakarta. 16 Colliers International

17 RETAIL SECTOR Given the two-year supply projection, the retail market is in a negative stage. Competition has become tougher since quite a few new shopping centres are looking for good tenants. This creates a tenant market where big tenants (in particular the anchor, sub anchor and junior anchor) have more bargaining power than the landlords. Amidst the sluggish indications, the market recognised the operation of new shopping centres this quarter which includes the rejuvenation and re-conceptualisation of fx Life style X nter in Jalan Jendral Sudirman. After the fiasco of the previous Sudirman Place, the project was taken over by Plaza Indonesia management which converted it into a new shopping centre bringing a different concept to the market. Another retail space entering the market is Citywalk shopping arcade which is part of the apartment development, City Loft Sudirman. In the Pluit area, North Jakarta, Pluit Junction came onto the market. With these three shopping centres, the retail market in Jakarta received another 82,094 sq m which brings the cumulative supply to 3.21 million sq m. cumulative retail supply in jakarta Three projects in Jakarta and one project in the greater area of Jakarta entered the market this quarter. 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Q2008 2Q P 2009P 2010P for Lease for Strata-title Sale Colliers International 17

18 LIST OF UNDER CONSTRUCTION RETAIL CENTERS IN JAKARTA building name LOCATION MARKETING SCHEME EXPECTED COMPLETION Season City Jl. Latumenten for Strata-title Sale 2008 Grand Paragon Jl. Gajah Mada for Lease 2008 Blok M Square Jl. Melawai Raya for Strata-title Sale 2008 Mal of Indonesia Jl. Bulevard Barat for Lease 2008 Emporium Pluit Jl. Pluit Selatan Raya for Lease 2008 Pulogadung Central Business Jl. Raya Penggilingan for Strata-title Sale 2008 Mall Pejaten Village Jl. Margasatwa for Lease 2008 Koja Trade Mall Jl. Kramat Jaya for Strata-title Sale 2009 Shopping Jl. Gandaria for Lease 2009 Pusat Grosir Senen Jaya Jl. Senen Raya for Strata-title Sale 2009 With supply projection over the next two years, the market should be cautious particularly in anticipating tougher competition to get good brand tenants. MT Haryono Sentral Bisnis Jl. MT Haryono for Strata-title Sale 2009 Galeria Glodok Jl. Gajah Mada for Lease 2009 Central Park Mall Jl. S. Parman for Lease 2009 Kota Kasablanka Jl. Casablanca for Lease 2010 Kuningan City Jl. Prof. Dr. Satrio for Lease 2010 Total Space 731,322 sq m From the table above, a number of retail centres are expected to finalise in the rest of this year. Thus far around 70% of space of the under-construction projects in 2008 has been committed by several tenants particularly hypermarkets. The construction activities in the DeBoTa- Bek (Depok, Bogor, Tangerang, Bekasi) area are quite vibrant and a few projects are expected to complete this year such as City Mall Tangerang, Pamulang Square and Taman Topi in Bogor. LIST OF UNDER CONSTRUCTION RETAIL CENTERS IN DEBOTABEK building name LOCATION MARKETING SCHEME EXPECTED COMPLETION Pamulang Square Tangerang for Strata-title Sale 2008 City Mal Tangerang Tangerang for Lease & for Strata-title Sale Plaza Dua Raja Bogor for Strata-title Sale 2008 Tangerang City Tangerang for Strata-title Sale Total Space 88,000 sq m 18 Colliers International

19 DEMAND Additional space in the quarter did not bring the overall occupancy rate down, but it was still stable over the quarter, standing at 87.8%. The newly operating malls in the quarter have succeeded in getting good occupancy at the time of their operation. The fx Lifestyle X nter acquired several branded tenants prior to its operation. Depicting its name as a lifestyle centre the concept will be different from its previous operation like providing MICE (Meeting Incentive Convention Exhibition) facilities. To date, the mall has implemented a fresh concept bringing names like VIP Celebrity Fitness, lifestyle restaurants and F&B outlets, health products, fashion and Bali Deli supermarket. The Citiwalk and Pluit Junction have also been operating with significant occupation mostly with F&B outlets. Furthermore, the occupancy level of existing shopping centres has been quite stable over the quarter. Newly operating shopping centres like Grand Indonesia Shopping Town continued to attract more tenants to take the remaining vacant space. During the quarter, a significant leasing transaction was made by Gramedia bookstore acquiring around 4,000 sq m of space in this mall. A similar pattern also occurred in the Debotabek area which registered a slight downturn in occupancy from the previous to only 86.02% this quarter. Overall, the occupancy rate of shopping centres within this area was relatively stable with no significant fluctuation. The only significant take-up that we recorded for this quarter was the space acquisition by Star Department Store at Sumarecon Mall Serpong of around 7,500 sq m. Nevertheless, the latter transaction cannot lift up the overall occupancy since the newly operating shopping centre is operating with a lot of vacant space. Further, Bekasi Square which is operating with major tenants like Carrefour, Electronic City and Amazone (game and entertainment centre) still has some vacant space. Hypermarkets have consistently penetrated to the future malls. Carrefour hypermarket has committed as the anchor for future shopping centres like Seasons City, Blok M Square, Emporium Mall and Central Park Mall. Meanwhile, Hypermart always follows into the new malls of its group company, Lippo. The future Pejaten Mall and Kemang Village Mall are most likely to capture Hypermart as their anchor tenant. Meanwhile, in Pamulang Square, Giant hypermarket has committed as the anchor tenant. CUMULATIVE SUPPLY, DEMAND AND OCCUPANCY RATE 3,500,000 3,150,000 2,800,000 2,450,000 2,100,000 1,750,000 1,400,000 1,050, , , Q2008 2Q2008 Cumulative Supply (sq m) Cumulative Demand (sq m) Occupancy (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% AVERAGE ASKING RENTAL RATES (OF TYPICAL FLOOR) AND SERVICE CHARGES Changes to the average rental rates from ter. Meanwhile, being well-positioned in the Rp319,597/sq m/month to Rp333,384 this market, Cilandak Town Square (Citos) whose quarter were largely due to the adjustment of concept is being copied by other retail centres the rental rate in two shopping centres and all over Indonesia, has adjusted the rental rate the adjustment made because of the influx of upward during the period. Another factor that new retail centres in the quarter which affected the overall calculation. In particular, with the pegged rate by Gajah Mada Plaza which drove rental escalation was the adjustment in the operation of fx Lifestyle X nter which set the pegged rate at Rp7,140/US$, up by captures the middle to upper class segment Rp500 compared to last quarter. Overall, the and asks for a higher rental rate, the overall average rental changes this quarter did not really reflect the overall market calculation was somewhat elevated this quar- conditions. Colliers International 19

20 The average rental adjustment in the quarter did not really reflect that the market is reviving because of the calculation adjustment due to the influx of new shopping centres. Despite no changes in rental rate in the DeBoTaBek area, the overall average rental rate in this area for this quarter was down to Rp268,582/sq m/month from Rp271,600/sq m/month. Changes were mostly due to the operation of the new shopping centres which resulted in the change to the overall calculation. As mentioned previously, only Gajah Mada Plaza adjusted the pegged rate this quarter which brought the average pegged rate up slightly to Rp7,140/US$. Despite mounting operational costs, none of the operating shopping centres adjusted service charge tariffs, at least in the reviewed quarter. However, it is quite likely that operational costs will be adjusted following the fuel price hike. This quarter, the average service charge in Jakarta rose from Rp62,328/sq m/ month to Rp64,242/sq m/month. The increase was very especially affected by the addition of new shopping centres like fx Lifestyle X nter and City Walk which applied higher service charge rates compared to the market average. Nonetheless, service charge tariffs in the DeBoTaBek area were down modestly to Rp51,184/sq m/month from the previous Rp52,617/sq m/month. This is again due to the influx of new shopping centres with lower service charge tariffs than the market average which impacts the overall calculation. RENTAL RATES AND SERVICE CHARGES IN JAKARTA Rp350,000 Rp70,000 Service charges were relatively stable but most possibly will be adjusted upward amidst mounting operational costs. Rental Rates Rp300,000 Rp250,000 Rp200,000 Rp150,000 Rp100,000 Rp60,000 Rp50,000 Rp40,000 Rp30,000 Rp20,000 Service Charge Rp50,000 Rp10,000 Rp Q2008 2Q2008 Rp0 Rental Rates Service Charge Due to tough competition, new shopping centres should be more flexible in allowing good tenants to enter. OUTLOOK With conditions where tenants a lot of choice of good shopping malls, the retail market in Jakarta, particularly the newly built shopping centres, have no option except to offering something different to the past. The existence of anchor tenants, sub anchor or junior anchor is crucial for newly built shopping centres particularly in convincing other specialty shops which pay the maximum possible rent. To lure good brand anchor, sub anchor or junior anchor tenants, developers of new shopping malls are normally giving appealing incentives like revenue sharing of the rental rate percentage which depends on business performance. This practice sometimes does not work and therefore, a few landlords grant potential tenants an exemption of paying the base rent (but not service charges). Worse than that, a few landlords are even paying for the fitting-out costs. However the worst case, amidst a very competitive market, is where the landlords become the shareholder/ partner of the business to get a good tenant. This common practice is not applicable to the established malls which attract a lot of shoppers. With strong concepts and solid trade mixes, several established shopping malls have secured full occupancy levels. Another challenge for newly built shopping centres is how to encourage store owners to open in the specified time and in some cases this is facilitated by giving rental incentives to the tenants. This measure is important for landlords to create a good image for their malls, in particular during their early operation. 20 Colliers International

21 INDUSTRIAL ESTATE SECTOR Supply remained stagnant but expansion plans from existing industrial estates might occur next year. SUPPLY No expansion activity from the operating industrial estate and thus industrial land stock remained unchanged quarter-on-quarter (QoQ) i.e. standing at 8,606.8 hectares. There is definitely a plan for fresh supply from a number of industrial estates located in Bekasi and Serang in , measuring a total of about 520 hectares in area. This total DEMAND Thus far, total transactions during the first semester of 2008 were around 88% of the total sales in This gives hope that the total industrial land sales for the whole of 2008 would exceed the total sales in Apart from the automotive and logistics related industries which have been the demand generator for industrial land, in this quarter packaging related industry was quite active in acquiring both Standard Factory Buildings (SFBs) and industrial land. The biggest land acquisition in the quarter was made by local industry which produces plastic for packaging of around 8 hectares in Delta Silicon in Cikarang, Bekasi. Similarly, a significant transaction in Jababeka was done for warehousing purposes. In any case, small transactions made by packaging related industries also occurred during the quarter. Inquiries from logistics related companies have been quite consistent for some period and have remained so in the reviewed quarter. future supply will be contributed by the Green Land IE of about 450 hectares which is part of the next development stage of the total 1,000 hectares area for industrial purposes. Another expansion will be finalised at the end of this year by KIEC of around 70 hectares. Another land expansion will occur in Bekasi by either MM2100 or Bekasi Fajar, but things have not been finalised between the two. Around 6.6 hectares were sold to a company running warehouse business for food and heavy equipment industries. Not to mention other small transactions for warehousing purposes. Auto related industries, as the major demand driver for industrial land sales, continued to perform with several transactions made., There were quite a few transactions made by, in particular, auto-part companies, although they were insignificant in total sales. In our records, several active industries procured either land or SFBs including metal, printing, pharmaceutical, electronic, garment and manufacturing industries. Interesting to note is that the SFB sales were quite active during the reviewed period. A total of 11 units of SFB were sold in this quarter while around 5 units of SFB were leased. Detailed information on the SFB sales this quarter is presented in the table. ANNUAL INDUSTRIAL LAND SALES hectares Q08 Colliers International 21

22 SALES OF STANDARD FACTORY BUILDINGS DURING 2q08 name #sfb sold/ leased sfb size (sq m) industry type Greenland (Deltamas) 3 units sold 685-2,000 Automotive, metal workshop, packaging KIEC 1 unit leased 5,000 Petrochemical related BFIE 3 units sold 1,380-1,403 Warehouse Kota Bukit Indah 5 units leased - Automotive, electronic, garment Delta Silicon 4 units sold 464-1,206 Logistic, packaging, plastic, satellite, communication Sales for the quarter may be smaller than those in the previous quarter; however total sales up to the first semester this year almost accomplished total sales in the last year. In terms of size, Jababeka recorded the highest total sales i.e. 13 hectares followed by Delta Silicon in the second place with 11 hectares land sales. Both industrial estates are located in Bekasi and, combined with other sales from other industrial estates in Bekasi, total sales in this region for the quarter stood at hectares. Significant sales were also recorded in BFIE which also ranked third in terms of sales. Due to the shortage of land, MM2100, which recorded significant sales in the early year, did not register any sales in the reviewed quarter. Despite a high level of inquiries, industrial lots were not immediately available primarily in responding to sizeable requirements. Karawang sales were only represented by KIIC and Suryacipta while industrial building rental transaction occurred in Kota Bukit Indah. Sizeable transaction in Karawang was largely contributed to by KIIC with the acquisition of 5 hectares of land by the coil centre industry of Japan. The 1.7 hectares land sale by Suryacipta was contributed to by two companies in the filtration and aluminium based industries. Two industrial estates in Serang have been quite consistent in contributing the whole sales for the quarter. Both KIEC and Modern Cikande shared an almost similar number of land sales this quarter with around 6 hectares each. Around 5.5 hectares of land was sold to two food processing industries (a local company and a company from Singapore) while the remaining small plot was rented by a local company (petrochemical related industry). For some periods Modern Cikande IE has been receiving inquiries from heavy industry such as the steel and chemical industries. Five hectares of land was sold to the steel industry of China as part of the expansion plan while around 1.2 hectares were sold to new local chemical industry. Still in this industrial estate, a shoes manufacturer from Korea also expanded. With all the total recorded transactions of around 53.5 hectares, the take-up rate as at 2Q08 was 66.8%, leaving around 2,855 hectares of land unsold. For some periods, a large number of the transactions were characterised by the expansion activities from the operating industry. We have witnessed that export-oriented manufacturing industries performed quite well which resulted in increased demand for industrial land for business expansion. Nevertheless, in the quarter we also saw some new businesses opening new industries. Some opening might be derived from the existing business owner creating new business lines but some are truly new industrialists. 22 Colliers International

23 industrial land transactions recorded in 2q08 Jababeka Delta Silicon Bekasi Fajar Modern Cikande KIEC KIIC Suryacipta Kota Bukit Indah Greenland (Kota Delta Mas) hectare cumulative supply, demand and take-up rate hectares 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Q08 Cumulative Supply (ha) Cumulative Demand (ha) Take-up Rate (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Prices and costs are relatively stable. Adjustment in land price was made in one industrial estate while one industrial estate introduced a new maintenance tariff. INDUSTRIAL LAND PRICES AND MAINTENANCE COST KIEC was the only industrial estate to introduce new land prices. The remaining estates Sentul Industrial Estate in Bogor was the only Despite recording zero sales for this quarter, did not register a change over the quarter, industrial estate to introduce a new maintenance cost tariff. The current maintenance however, plans for adjusting land price may be implemented next year. Several factors are tariff now is US$0.065 a slight increase compared to last quarter or up by 8%. Still in the taken into account before introducing new pricing (up by 5-10%) which include continued inquiries for industrial land in this estate, is also planning to put in new maintenance Bogor region, another industrial estate, CCIE judging investors buying capability and increasing land tax value. The land rental rate contract renewal. Overall, besides the above- tariff of around 10% increase, particularly for also remained flat for this period. mentioned, maintenance costs remained stable in the remaining industrial estates. Colliers International 23

24 GREATER JAKARTA INDUSTRIAL LAND VALUES $ $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Bogor Tangerang Karawang Bekasi Serang GREATER JAKARTA AVERAGE MAINTENANCE COSTS $0.08 $0.07 $0.06 $0.05 $0.04 $0.03 $0.02 ` $0.01 $0.00 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Bogor Tangerang Karawang Bekasi Serang Moving ahead, operational challenges will be tougher particularly in facing the power shortage problem. INDUSTRIAL LAND PRICES AND MAINTENANCE COST REGION LAND PRICE (/SQ M) MAINTENANCE COST (/SQ M/MONTH) Lowest highest average (Rp) lowest highest average (rp) Bekasi US$ Rp 750,000 Rp 597,507 US$ 0.05 US$ 0.07 Rp 591 Karawang Rp 300,000 US$ Rp 384,338 US$ 0.05 US$ 0.06 Rp 489 Bogor US$ Rp 650,000 Rp 580,817 Rp 600 US$ Rp 601 Serang Rp 300,000 US$ Rp 487,425 Rp 220 Rp 280 Rp 257 Tangerang Rp 600,000 Rp 1.26 mill Rp 614,677 US$ 0.04 Rp 1,000 Rp Colliers International

25 OUTLOOK In the immediate future, the government will issue a regulation which impels new investors/ industrialists to open or expand only within the industrial estate. This would be positive news for industrial estate landlords. Nevertheless, with the recent power crisis, industrialists are experiencing a difficult situation. While business people busily adjust to the new reality, the government has rushed to introduce an alternative solution by encouraging shifts in workdays for industries. The plan of shifting weekdays to include Saturdays and Sundays was certainly not an ad-hoc measure to solve the current power crisis, but was designed to last a bit longer. Currently, the state-owned electricity company, PLN, can only provide below 200 kva installation for new industry. However, there are some industrial estates in Bekasi which will not be affected by the power crisis issue since they engage with a private electricity company, Cikarang Listrindo which can provide better power supply. On the demand front, there are only a few companies that buy industrial lands for investment. Some big companies with growing business may keep the land for expansion plan purposes. This is mostly due to anticipating the long process in land acquisition particularly when there is an immediate need for expansion. We still expect that industrial sales this year to perform better than last year. From our exploration, quite a few industrial landlords inquiries would still be active in the remaining part of the year particularly from warehouse or logistic related industries. Furthermore, as mentioned earlier, the first semester sales are approximate to last year s sales which promotes the hope of a better year. Colliers International 25

26 HOTEL SECTOR JAKARTA MARKET No new hotels launched in the quarter, and this brought total number of hotel rooms in Jakarta to stabilize at 21,521. SUPPLY No new hotels started operations during the second quarter of However, our tailored hotel research during this quarter suggested a minor adjustment to the calculation of 3, 4 and 5-star hotels. With this adjustment, total stock within 3, 4 and 5-star hotels in Jakarta, as of 2Q08, was 21,521 rooms from 88 hotels. Of these 88 hotels, the number of 3-star hotels dominated the market with 42%. 4 and 5-star hotels shared the balance with 34% and 24%, respectively. Yet, in terms of numbers of hotel rooms, 5-star hotels had the highest percentage with 39%, followed very closely by 4-star hotels with 38%. DISTRIBUTION OF STAR-RATED HOTELS BY NUMBER OF ROOMS BY NUMBER OF DEVELOPMENTS 5 star 24% 3 star 42% 5 star 39% 3 star 23% Two hotels, Sahid Jaya and Mandarin, are having major refurbishments done to stay competitive in the market. 4 star 34% 4 star 38% In the rest of 2008, four hotels are approaching completion stage which includes 3-star Harris Hotel in Kelapa Gading and 4-star Grand Aston Soho, Hotel & Residence. In the 5-star category, two hotels are almost in operation and projected to finish this year. The Belezza mixed-use complex in Permata Hijau, South Jakarta is finalising its hotel tower, The Grand Aston Albergo, after the operation of other components like retail, office and apartment. The Grand Aston Albergo will be operated as a 5-star hotel standard. Another 5-star hotel finishing construction and refurbishment is the legendary Hotel Indonesia which will be run by Kempinski. Kempinski Hotel Indonesia is part of an integrated development called Grand Indonesia. 26 Colliers International

27 LIST OF FUTURE HOTELS IN JAKARTA 3-star name YEAR OF OPERATION LOCATION Harris 2008 North Jakarta Patria Park - Ibis 2010 East Jakarta Permata Gunung Sahari - Best Western 2010 Central Jakarta 4-star Grand Aston Soho, Hotel & Residence September 2008 West Jakarta Aston Marina Ancol (Mediterania Marina Residences, Tower A) 2009 North Jakarta Aston Mangga Dua, Hotel & Residence 2009 Central Jakarta Raffles Hotels chain will manage their first hotel in Indonesia after signing an agreement with Ciputra Property. Pluit 2009 North Jakarta Four Points Said 2009 South Jakarta Hotel by Menteng Group 2009 South Jakarta Novotel Simatupang 2009 South Jakarta Main Street 2009 South Jakarta 5-star Kempinski Hotel Indonesia 2008 CBD The Grand Aston Albergo in Bellezza 2008 South Jakarta Kasablanka 2009 South Jakarta The Aryaduta Regency 2009 South Jakarta Premier Ancol - Best Western 2010 North Jakarta World, managed by Raffles Hotels 2011 CBD St Regis Hotel and Residence 2011 CBD Total Rooms 5,230 sqm TOURISM PERFORMANCE The total number of visitor arrivals to Jakarta in the first quarter of 2008 recorded at 683,883 growing by 23.43% compared to the same period of The half year figures represent about 60% of the total figure last year. Looking at historical data where second quarter figures normally exceed first quarter figure, the outlook for a positive trend is possible. Colliers International 27

28 VISITOR ARRIVALS TO JAKARTA AND OTHER PORTS 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , until June'08 Soekarno Hatta Other Ports Source: BPS Our data indicated that up until 1H08, the majority of foreign visitors to Jakarta were Asian (66.10%), of which were dominated by Malaysian, Singaporean, Japanese, China and Korean. FOREIGN TOURIST TO JAKARTA Others 28% Malaysia 25% Korea 8% Japan 12% China 12% Singapore 15% Source: BPS AVERAGE OCCUPANCY RATE (AOR) Most 3-star hotels experienced a positive trend over the quarter, and only a few hotels recorded a minor drop in occupancy. Some of the 3-star hotels which registered significant occupancy quarter-on quarter (QoQ) are Sanna Hotel, Willtop and Sentral. The upward trend has brought the AOR for 3-star hotels from 77.11% to 81.21%. Similarly, AOR for 4-star hotels climbed from 65.77% to 73.67%. Although a small number of 4-star hotels experienced a drop in occupancy, a large number of hotels recorded a significant jump in occupancy; they were Santika, Ciputra, Nikko, Sari San Pacific, Atlet Century Park, Le Grandeur, Batavia, Sun Lake, Acacia and Novotel Mangga Dua. Like the other two hotel categories, AOR for 5-star hotels also posed a positive trend. Last quarter the AOR was at 55.81% and in this quarter AOR was up moderately to 58.89%. Around six 5-star hotels experienced significant increases in occupancy, i.e. Sheraton Media, Shangri-La, The Dharmawangsa, Gran Mahakam, Aryaduta and JW Marriott. 28 Colliers International

29 AVERAGE OCCUPANCY RATE (AOR) OF STAR-RATED HOTELS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q08 2Q08 Both AOR and ARR posed a moderately positive trend over the quarter. AVERAGE ROOM RATE (ARR) ARR figures for 3 and 4-star hotels posed an upward trend, albeit modestly, while 5-star hotels showed a modest drop QoQ. But overall 3 Star 4 Star 5 Star Average the ARR was quite stable over the quarter, and we still expect that a positive trend will continue in the remainder of CUMULATIVE SUPPLY, DEMAND AND TAKE-UP RATE Rp800,000 Rp700,000 Rp600,000 Rp500,000 Rp400,000 Rp300,000 Rp200,000 Rp100,000 Rp Q08 2Q08 3 Star 4 Star 5 Star Average REVENUE PER AVAILABLE ROOM (RevPAR) Fueled by positive trends in occupancy and stable ARR over the quarter, the Revenue Per Available Room went upward accordingly. Colliers International 29

30 REVENUE PER AVAILABLE ROOM (RevPAR) OF STAR-RATED HOTELS Rp450,000 Rp400,000 Rp350,000 Rp300,000 Rp250,000 Rp200,000 Rp150,000 Rp100,000 Rp50,000 Rp Q08 2Q08 3 Star 4 Star 5 Star Average The increase in fuel prices will lead to a strong adjustment in the room rates. OUTLOOK The performance of the hotel market in Jakarta was quite good, although moderate, particularly as indicated by the growing trend in occupancy and room rates. Further, the supply projection over the next couple of years also suggests that confidence in this market is quite strong. The upcoming election in 2009 can be perceived from two different angles. Firstly, concerning the security issue which would restrain foreigners visits to Indonesia, this should not have much of an effect on the Jakarta hotel market since domestic business travellers will continue to be the main demand generator. Secondly, there would be opportunities as preparations for the election campaign and general election in 2009 will increase demand for meeting facilities as well as hotel rooms. BALI MARKET This first issue on the Bali Hotel Market presented by Colliers International Indonesia will be regularly published for our clients, colleagues and readers who are interested in the tourism trends in Bali. In reviewing the hotel market in Bali, we try to categorise the area based on its market characteristics and by region as depicted in the table below. The following seven market areas are located in the southern part of Bali. Additionally, there are several areas such as Lovina Beach (Singaraja Regency) and Candidasa Beach (Karangasem Regency) which have been developed as tourist areas. 1. Nusa Dua 2. Tanjung Benoa 3. Sanur 4. Kuta, Legian 5. Jimbaran, Ungasan, Uluwatu 6. Seminyak, Canggu, Tanah Lot 7. Ubud 8. Others: Denpasar, Singaraja, Lovina, Candidasa, etc. 30 Colliers International

31 TOURISM OVERVIEW 2,500,000 NUMBER OF FOREIGN AND DOMESTIC VISITORS TO BALI (THROUGH NGURAH RAI INTERNATIONAL AIRPORT) 2,000,000 1,500,000 1,000, , Jan - April 2008 Foreign Domestic Source: Ngurah Rai Airport Statictics Both foreign and domestic visitors to Bali from Ngurah Rai International Airport are about the same in terms of numbers. The figure we recorded up to April this year suggests that the total number of visitors this year would exceed those of The total number of visitors up to April 2008 represented around 70% of the total visitors of Positive projection is possible since peak seasons in Bali occur in the second quarter every year. Colliers International 31