Commercial & Industrial Property News Update

Indonesia - Skyscrapers To Go Up And Up

July 24, 2012

With land prices shooting up, Jakarta will more than double its number of skyscrapers in three years, with up to 250 predicted by 2020.

The total number of skyscrapers in Jakarta will reach 150 by 2015, more than double the 70 that is currently in the city. This was according to figures researched by Jones Lang LaSalle (JLL), which took into account the number of property projects under construction.

JLL said that Indonesia's booming economy and the desire of rich individuals to stamp their mark is encouraging the rise of skyscrapers. "Now we have 70. Considering several planned projects, the number will be 75 by the year end, and 150 by 2015," said JLL head of research Anton Sitorus.

By the end of 2020, the figure could reach 250 in total.

"Land prices have become increasingly expensive in Jakarta. Therefore, developers want to maximize the use of their land. Besides, they also want to make an iconic building on which they can put their names," he explained.

Notable upcoming skyscraper projects include Tower Ciputra World, named after Indonesian entrepreneurship guru Ciputra, the founder of the country's largest publicly listed property company. Tower Ciputra World is nearing completion, and some office space is already available for rent.

Menara Jakarta, the brainchild of former president Soeharto, took the headlines when it was announced as the tallest building in Asia at 558 m. Although development was derailed following the 1997-98 Asian Financial Crisis, the property has since won funding and would soon begin construction, aiming for completion in 2015, said consortium PT Persada Japa Pamudja.

However, Menera Jakarta would hold the honour of being Asia's tallest building for only five years. The newly announced Signature Tower is a 638 m high building expected to cost about USD 2 billion and with an anticipated completion date in 2020. The Signature Tower project will be overseen by PT Danayasa Arthatama, a subsidiary of the Artha Graha Network.

"Jakarta will continue to evolve and become a megalopolis, just like other big cities in the world, with skyscrapers colouring the city's skyline. In the past we talked about buildings with 30 to 40 floors, now it has become 80 to 100 floors," said JLL chairman Lucy Rumantir.

Demand for commercial properties in Indonesia has increased on the back of economic growth, heightened purchasing power and corporate expansion.

JLL said that net take-up of office space in the Sudirman CBD reached 86,000 sq m in Q2 2012. This was an 18% increase q-o-q. Office rents also appreciated by 5% to 8% in Q2 over Q1.

Incoming office supply up till 2014 totals only 617,000 sq m, a relatively small figure, noted Anton, considering the 400,000 sq m of take-up seen last year.

In non-CBD areas, net take-up of office space increased by 23% q-o-q. Incoming supply till 2014 is expected to total only about 384,000 sq m.

"Over the next five years, Jakarta is expected to receive a massive amount of supply in commercial office sectors. The first wave of supply influx is expected no earlier than 2015," Anton said.

Tags: Office for rent, Office for sale, Business space, Commercial space, Indonesia

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