Booming Demand in Indonesia for Serviced Offices

By webadmin on 10:00 pm Sep 12, 2010
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Irvan Tisnabudi

Jakarta. Jakarta’s serviced-office market is booming as more foreign companies enter Indonesia, attracting companies eager to invest in the sector.

While still only a fraction of the market, the number of serviced offices on the market in central Jakarta has risen 50 percent in the past year and could rise a further 30 percent in the second half of this year, according to Jones Lang LaSalle Indonesia.

Jones Lang LaSalle estimates there are 30,000 square meters of serviced office space, less than 1 percent of the total office market in the central business district. But property consultants expect the robust growth to continue along with Indonesia’s economy.

Globally, about 5 percent of office space is serviced.

Anton Sitorus, head of research at Jones Lang LaSalle, said 70 percent of tenants of serviced offices in Jakarta were international companies.

“With the Indonesian economy performing solidly, companies are expanding, thus the occupancy rate and total space of both the office and serviced-office sectors in Jakarta’s CBD, are increasing,” Anton said.

The economy grew 5.9 percent in the first half and it is expected to continue at a healthy clip.

Serviced offices offer flexible rental rates based on length of stay and facilities required. They provide shared reception areas and other resources, resulting in lower costs.

Anton said such offices were the perfect way for a company to make its initial move into the city or for firms that wanted to avoid the hassle and time involved in setting up a permanent office.

According to William Willems, regional vice president of Regus, which offers serviced offices at three locations in Jakarta, business is thriving.

“Currently the occupancy rate of Regus’s three branch offices in Jakarta is about 95 percent, up from 85 percent at the end of last year,” Willems said.

Among Regus’s clients in Jakarta are international IT company Symantec and international bank ICICI. It also hosts local law firms and travel agencies.

CEO Suite, another company providing serviced offices, counts among its clients the Bank of America, Ernst & Young and Merrill Lynch.

The broader market for office rentals is also seeing increased demand.

Anton said Jones Lang LaSalle recorded an increase of 93,000 square meters of office space in Jakarta’s CBD in the second half compared to the same period last year.

After the first quarter of the year, the occupancy rate in the CBD was 80 percent, compared with 78 percent in the same period in 2009.