The Jakarta Property Market Won’t Be Affected by the Capital Move

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The imminent relocation of Indonesia’s capital city status from DKI Jakarta to IKN Nusantara has stirred concerns across various sectors, particularly the property market. Nevertheless, there is a prevailing optimism that this significant shift may not have a profound impact on Jakarta’s property market.

Yunus Karim, the Head of Research at Jones Lang LaSalle (JLL) Indonesia, reassures that the prospects for the property market in the greater Jakarta area, known as Jabodetabek, will remain steadfast. Jakarta will persist as the nation’s economic nucleus, despite relinquishing its administrative capital status.

“We are aware that the government has designated Jakarta as the economic epicenter of Indonesia. Consequently, the administrative and capital functions will be transferred to Kalimantan Nusantara, yet Jakarta will continue to be the economic hub,” Yunus explained during a media briefing in Jakarta on October 18, 2023.

Furthermore, Yunus underscores that this upbeat outlook for Jakarta’s property market is underpinned by the substantial concentration of business activities within Jakarta and its contiguous regions, encompassing areas such as Bogor, Depok, Tangerang, and Bekasi.

He notes that as of 304 days before the capital relocation effort to Nusantara, the property market in Jakarta is displaying encouraging signs. Notably, the occupancy rate for office properties in Jakarta remains steady at 70% throughout the third quarter of 2023.

In the retail sector, shopping center occupancy rates remain robust at 88%. The predominant trend in market demand continues to be influenced by retailers specializing in the food and beverage sector.

The dominance of other sectors in market demand throughout this quarter includes fast fashion, beauty, and entertainment facilities. Additionally, there is a discernible presence of new foreign retailers inaugurating their initial outlets in various shopping centers.

Turning to the industrial and logistics sector, the occupancy rate of modern warehouses in the Jabodetabek area is holding steady at 88%, mirroring the rate from the preceding quarter. Notably, the occupancy rate indicates robust health, even in light of the introduction of three new supply sources in the Jakarta and Bekasi regions. The predominant source of demand arises from logistics service providers.

Farazia Basarah, the Country Head and Head of Logistics & Industrial at JLL, elucidates, “The demand for warehousing and logistics typically emanates from the automotive sector and electric vehicle vendors, which are witnessing an upswing. This is closely followed by the manufacturing sector, fast-moving consumer goods (FMCG), and pharmaceuticals.”

In addition to their storage functions, Farazia emphasizes that tenants and the manufacturing sector frequently employ warehouse spaces for assembly or workshop activities. Notably, as of September 2023, two projects are currently under construction, situated in Cikarang and Depok. Both projects are slated for full operational status by the close of 2023, signifying continued developments in the realm of property and logistics infrastructure in the greater Jakarta area.