Foreign Retailers, Traffic Fuel Superblock Developments in Jakarta

By Edo Rusyanto on 09:21 am Apr 22, 2013
Kemang Village, an apartment and shopping center, springs from the concrete in South Jakarta. The development is owned by Lippo Karawaci. (The Peak Photo/Kresna)

Kemang Village, an apartment and shopping center, springs from the concrete in South Jakarta. The development is owned by Lippo Karawaci. (The Peak Photo/Kresna)

The influx of foreign retailers have been credited with encouraging the growth of major building projects in Indonesia, with complexes that combine retail, office and residential space in a single building proving popular in the Greater Jakarta region.

“Malls and residential buildings are facilities that support the city,” said Setyo Maharso, chairman of industry group Indonesian Real Estate (REI), adding that so-called superblocks were a response to road congestion and would fuel lifestyle changes among the city’s residents.

Superblocks are a form of high-density urban development in which the footprint of a building is much larger than a traditional city block. Developers seek to attract tenants and consumers who wish to beat traffic jams and reduce travel times.

Among the new superblocks emerging in Jakarta are Lippo Karawaci’s St. Moritz Mall Lippo in Puri, West Jakarta; Agung Podomoro’s Green Bay in North Jakarta; and Ciputra’s Ciputra World 1 Jakarta in South Jakarta. East Jakarta will soon be home to Pulomas Xventure and Cipitnang Indah Mall.

Ferry Salanto, and associate director at property company Colliers International Indonesia, said developers adopt a range of strategies to sell properties, but all have one thing in common. “If there is an assurance from a big anchor tenant, there is a way for developers to develop the malls they want,” he said.

Several famous foreign retailers, including South Korea’s Lotte Group, Malaysia’s Parkson Retail Group, Thailand’s Central Group, Sweden’s IKEA, and Japan’s Aeron, are racing to tap Indonesia’s market potential.

Lotte Shopping Avenue, soon to be opened in Jakarta, is already aiming to hit $100 million in retail sales by its third year, its director said last Thursday. The announcement comes amid growing buying power from middle-class consumers in Indonesia.

Suh Chang Suk, president director of Lotte Shopping Avenue, said Lotte Group has been considering opening a mall in Indonesia for 10 years because of the country’s robust consumer sector.

Parkson last year announced plans to invest $15 million to open up to five new stores in Indonesia each year.

Central Retail Corporation, part of Central Group, last year announced plans to open the first Jakarta branch of its Central Department Store in Central Jakarta’s Grand Indonesia shopping mall in 2014.

Meanwhile, the property development arm of Sinar Mas Group has inked a deal with Japan’s largest mall developer and operator to build 20 shopping malls in Indonesia over the next eight years.

Michael Widjaja, chief executive of Sinar Mas Land, announced in March that Sinar Mas and Aeon Mall would form a joint venture called Aeon Mall Sinar Mas Land Indonesia.

Record low interest rates have also encouraged development activity.

Lippo Karawaci and the Jakarta Globe are both part of the Lippo Group.