Mall Glut Results in More Vacant Jakarta Stores
Jakarta. Central Jakarta is saturated with high-end shopping malls, leading to falling occupancy rates and a shift away from the central business district and toward smaller, “concept” malls by developers, local property analysts say.
As elite malls such as Grand Indonesia and Pacific Place have sprung up in recent years, the occupancy rate for malls in the CBD has declined accordingly, from 90 percent in 2005 to just 70 percent now, according to data from Jones Lang Lasalle Indonesia.
Likewise, headlines in recent weeks have offered sobering indicators about the flagging strength of the premium retail and shopping mall sectors.
Last month the Jakarta Globe reported that Harvey Nichols, one of the capital’s most prestigious retailers, would close its outlet at the Grand Indonesia mall, leaving the mall short a major tenant.
And on Tuesday, Lippo Karawaci, the nation’s biggest property developer and a company affiliated with the Jakarta Globe, said it was planning to sell some of the malls in its portfolio.
Regarding Lippo Karawaci’s plan, Amcapital Indonesia analyst Janson Nasrial, said the mall market was “very saturated.”
Lippo Karawaci spokesman Danang Kemayan Jati said the company’s decision to sell some of its properties was not a response to conditions in the Jakarta market, adding that he expected other developers to shift toward a sale-and-lease strategy in the coming years.
But as the mall market appears to be cannibalizing itself, retailers may actually find themselves benefiting.
Ferry Salanto, an analyst at Colliers International, said the recent proliferation of big shopping malls was giving retailers more bargaining power.
“Malls are now offering tenants cheaper leases, because they are struggling to attract tenants. That is evident with the decreasing retail occupancy rate,” Ferry said.
With the high-end market softening, retailers and developers alike have focused on middle- and low-income consumers.
This phenomenon, Ferry said, is due to an alarming amount of high-end “one-stop” malls encompassing food, retail and entertainment venues, that the market simply can’t support.
“Just look at Plaza Indonesia, Grand Indonesia, Pacific Place — they all have this concept.”