Jakarta’s Mall Boom Driven by Foreign Retailers
Just when you thought Jakarta may sink beneath the combined mass of the city’s 130-plus malls, a further 313,500 square meters of retail space has been announced, with just three large malls contributing 83 percent of the increase.
The largest of them is St. Moritz in West Jakarta with 129,200 square meters, followed by Ciputra World in South Jakarta and Green Bay Mall in West Jakarta, with 78,000 and 52,000 square meters respectively. St. Moritz is being built by Lippo Karawaci, while Agung Podomoro is the developer of Green Bay Mall.
Ferry Salanto, the director of research at Colliers International Indonesia, said that the developers of those three malls have strategies in place to secure tenants for their malls.
“If they hadn’t secured tenants they would not build the malls,” Ferry said last week.
Local developers have their own flagship tenants when opening up new malls, such as Lippo’s deal with Debenhams and Parkson, and Ciputra’s with Lotte.
Artadinata Djangkar, a director at Ciputra Property, which is responsible for Ciputra World, said the entrance of foreign retailers has increased demand for more retailing space in Jakarta.
In the past two years alone, several international retailers have set sail for Indonesia. Besides South Korea’s Lotte, there is Parkson from Malaysia, Japan’s Aeon and Thailand’s Sentral Group.
The presence of these chains creates lucrative business opportunities for local developers. Ciputra World 1 will cost its developer Ciputra $130 million, while Lippo’s St. Moritz mall is a part of the $1.2 billion mixed-use St. Mortiz Penthouses & Residences project.
Setyo Maharso, the chairman of Indonesian Real Estate Association (REI), said that the strong demand for retailing space is tracking a steadily growing property market. “It is because [malls] are the supporting facilities of neighborhoods and cities,” he added.
With strong economic growth and rising purchasing power, Setyo predicted that the property market will grow between 10 percent and 15 percent this year.
Colliers’ Ferry said that property developers still needed to advance their understanding of mall management in order to generate more revenue.
He said that there are two types of mall in operation in Jakarta, the first being “community malls,” whose visitors are mostly people from the surrounding area, and “destination malls,” which hope to attract visitors from distant areas.
Ferry said that mall construction will slow next year, due to the Jakarta government’s ongoing moratorium on mall construction, introduced in 2011.
He added the policy would encourage more malls to be constructed in regions surrounding Jakarta.
Ferry said that the four regions surrounding Jakarta tended to take turns to host new malls.
“This year, there are more new malls in Bekasi [then the other three regions]. We predict that in 2014, there will be more new malls in Tangerang,” Ferry said.