Research

Jakarta: the year ahead

We are already one month into 2019 and throughout January many of our research clients have been asking about our views on what’s in store for the coming year

February 15, 2019

Here is what we think you should be paying close attention to:

Infrastructure development to boost accessibility:

Indonesia’s first Mass Rapid Transit (MRT) network will be operational before the end of this quarter, providing improved access to numerous commercial and residential developments in the CBD and South Jakarta. The MRT will connect with the airport rail link and, later, with the Light Rail Transit (LRT) system which will connect the center of the city with locations further afield to east and south.

Sectoral drivers and trends to watch:

Office demand, driven by co-working and technology companies, is expected to remain strong while more new supply is likely to continue to put pressure on occupancy levels and rents. Retail landlords are likely to continue to adapt to changing consumer preferences by making room for food & beverage tenants, fast fashion retailers and entertainment occupiers. Mobile payment platforms are likely to continue to aggressively expand and retailers with strong on-line as well as off-line presences will be best place to capture consumer demand.

Real estate to benefit from infrastructural investment:

Transit Oriented Developments (TODs) represent a unique opportunity for residential and commercial developers as new infrastructure opens up previously less accessible areas of the city. However, in the short term, investor sentiment, as well as that of residential buyers, is likely to be impacted by the presidential election in April. After a seasonal slowdown during Ramadan and the subsequent Lebaran holiday, we would expect a quick return to normal business activity in the third quarter.

Logistics set to shine:

We expect the modern logistics warehouse market to continue to be a stand-out sector as developers continue building high specification facilities and occupiers look to increase the sophistication of their supply chains with last-mile delivery centers. We will also keep an eye on other emerging asset classes (in Indonesia) such as data centers and co-living which are likely to attract the attention of investors.

We are cautiously optimistic on the year ahead and, on a personal note, I am very hopeful on the positive impact the MRT and LRT will have on Jakarta’s infamous traffic congestion.

Greater Jakarta Region Infrastructure Connectivity – Existing and Future Rail Infrastructure Map

Source: JLL / Google Maps

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