Office Rents Skyrocketing As Firms Pour Into Jakarta
Aggressive corporate expansion helped push up rents for office space in the Indonesian capital at the fastest pace in the Asia Pacific last quarter, a property consultant says.
Jakarta saw the strongest increase in average rents in the region, up 7.9 percent in the first quarter from the fourth quarter of 2011, caused by the “rapid expansion of tenants capitalizing on domestic economic growth,” Jones Lang LaSalle said in a report released on Friday. Todd Lauchlan, country head for Jones Lang LaSalle Indonesia, said demand in the Jakarta office market, both in the central business district and in non-CBD areas, continued to be robust in the first quarter.
“This has confirmed a trend that we have seen through all of 2011, which has put significant pressure on the available supply within high quality or premium projects, with numerous buildings now nearly 100 percent occupied,” Lauchlan said.
Of 27 cities surveyed in the Asia-Pacific region for the January-March period, 13 cities, including Jakarta, showed growth in rent from the previous quarter, while 11 cities saw declines and prices were stagnant in three. Beijing followed Jakarta with a 5.3 percent increase in average rents.
Hong Kong and Singapore saw declines of 5 percent to 6 percent as landlords lowered asking prices “in view of an ongoing contraction in the financial sector,” combined with a trend of firms moving outside those cities’ central business districts.
“Continuing global economic uncertainties, particularly in the euro zone, impacted corporate hiring and office leasing demand in the Asia Pacific in the first few months of 2012,” said Jane Murray, head of Asia-Pacific research at Jones Lang LaSalle.
She still expects Asia-Pacific economies to grow “significantly faster” than the rest of the world this year, though most countries in the region are likely to see a moderate economic slowdown.
“This,” she said, “should result in a similar slowdown in aggregate leasing volumes during 2012, following a record year for take-up of space across the Asia Pacific in 2011.”