Industry Outlook Indonesia Real Estate (Retail)

Transcription

1 Hong Kong Sydney Shanghai Singapore New Delhi Jakarta Bangkok Manila Industry Outlook Refer to important disclaimers at the end of this report DBS Group Research Asian Insights Office 31 August 2016 Overall Outlook Remains the preferred segment for exposure The outlook for Greater Jakarta retail space market remains bright due to the following reasons: 1) low retail density in Jakarta (at 04x) and suburbs (at 01x), 2) rents are among the lowest in the region (implying high growth potential), and 3) retail space can act as stable and recurring income generator for developers Retail space density m sqm Retail space (LHS) Density (RHS) x Bodetabek is the abbreviation of suburbs (ie Bogor, Depok, Tangerang, Bekasi) surrounding Jakarta Jakarta Bodetabek Bangkok Singapore Source: CBRE, Colliers, DBS Bank Retail rental rate across regions as of end2q16 1,400 US$ psm pm 1,200 1, Source: JLL Asia Pacific, DBS Bank 1 The rental rate sample is taken from specific regions: Hong Kong (Central) Sydney (CBD) Shanghai (West Nanjing) Singapore (Orchard / District 9) New Delhi (Prime South) Jakarta (CBD) Bangkok (Central) Manila (Makati CBD) Page 1

2 Key Trends Minimal supply in Jakarta inner city to continue given the moratorium imposed by local government The moratorium for new retail malls (with more than 5,000 sqm leasable area) licence issuance in Jakarta was imposed since 2011, as part of the local government s efforts to ease traffic congestion and improve city planning After the addition of 164,981 sqm and 107,100 sqm of new retail space in 2012 and 2013, respectively, there were only two new major retail shopping centres Lippo Mall Puri (in 2014) and Bassura City (in 1H16) opened between 2014 and now As both largescale retailers (department stores, hypermarkets, supermarkets) and smallerscale retailers (mostly fashion and F&B) are still actively looking for retail space in Jakarta city, we are anticipating occupancy rates to remain high in the foreseeable future Retail mall space cumulative supply and occupancy rates in Jakarta 6,000 '000 sqm Cumulative supply (LHS) Occupancy rate (RHS) 5,000 4,000 3,000 2,000 1, F 2017F 2018F 2019F 90% 89% 88% 87% 86% 85% 84% 1 After a period of high growth in retail space prior to 2010 (c14% pa), Jakarta saw modest 25% CAGR in retail space supply over Looking at the supply pipeline, we expect a similar growth profile in the next four years 2 Occupancy rate should hover around the 86% level Retail mall annual supply in Jakarta 250,000 sqm Annual supply Under construction 200, ,000 Supply YTD Under planning 1 Low number of new licences for constructing retail malls given out after ,000 50, F 2017F 2018F 2019F Page 2

3 Modern retailers sales value still appealing 1,200,000 1,000, , , , ,000 Rp bn Modern ret ailers sales value (excl sales t ax) LHS 25% 20% 15% 10% 5% 1 Modern retailers include convenience stores, supermarkets, hypermarkets, department stores and specialist retailers F 2017F 2018F 2019F 0% Source: Euromonitor, DBS Bank Developers with retail malls in their portfolio still possess the upper hand and better bargaining power when negotiating rents (ie base rents and service charges) in view of the limited supply This trend has started since 2013 and will continue to benefit such developers Jakarta s retail mall space base rent registered 58% growth YTD and a CAGR of 93% between 2011 and 2015, after a period of flat growth from 2009 to 2011 Jakarta retail malls asking base rent 900,000 Rp psm pm Jakarta CBD Outside CBD 800, , , , ,000 1 Retail malls base rent is still on the uptrend given the minimal supply, and is projected to deliver c7% annual growth 2 Most of middle to upperclass malls are located in South and West Jakarta 300, Q16 The improvement in infrastructure and transportation around Jakarta in the next few years may prompt the local government to repeal the moratorium Page 3

4 Suburb retail malls continue to mushroom, given the growing population (and the resultant higher purchasing power) in the Jakarta suburbs area, limited retail space supply in Jakarta (due to the moratorium effect explained in the previous segment) and significant monthly rental gap with Jakarta s retail space Despite emerging as alternatives to Jakarta s retail malls in 2011, Jakarta suburbs retail malls base rent registered slower growth (with 22% growth YTD and a CAGR of 83% between 2010 and 2015) compared to Jakarta s This is mainly due to new supply of space (which leads to more discounts for tenants), weaker purchasing power and the different tenantmix between the two areas Jakarta suburbs retail malls asking base rent (and discount to Jakarta s) 400, , , , , ,000 Rp psm pm 40% 33% 38% 42% 40% 36% 38% 45% 40% 35% 30% 25% 20% 15% 1 Base rent gap with Jakarta s might stay around the 3540% range 100,000 10% 50,000 5% Q16 % below Jakarta's (RHS) Rent (LHS) 0% Retail mall space cumulative supply and occupancy rates in Jakarta suburbs 3,500 '000 sqm Cumulative supply (LHS) 845% 3,000 Occupancy rate (RHS) 840% 2,500 2, % 1 Developers will continue to develop retail malls in Jakarta suburbs at a 75% pace of supply growth in the next four years 1,500 1, F2017F2018F2019F 830% 825% 820% 2 Most of the Jakarta suburbs retail malls are located within Bekasi and Tangerang areas, with the proportion at 32% and 40% respectively Page 4

5 Retail mall annual supply in Jakarta suburbs 350,000 sqm Annual supply 300,000 Under construction 250, , ,000 Supply YTD Under planning 1 Massive retail mall space supply came online between 2013 and 2016F Given the current pipeline, the next wave of supply cycle should start after ,000 50, F 2017F 2018F 2019F Risks Economic slowdown A prolonged sluggishness in the economy may affect consumers ability to spend and this could indirectly impact developers ability to increase the monthly rental rates of their retail properties Furthermore, this may lead to lower occupancy rates (given the higher probability of tenants not renewing their leases) Page 5

6 Appendix Greater Jakarta retail malls in the pipeline Jakarta Bodetabek Mall Region NLA (sqm) Expected completion Pantai Indah Kapuk North Jakarta 30, Under construction Shopping Pancoran South Jakarta 8, Under construction Neo SOHO Mall (Podomoro City) West Jakarta 40, Under construction New Harco Plaza West Jakarta 60, Under construction AEON Mall Garden City East Jakarta 71, Under construction Status Green Pramuka City North Jakarta 30, In planning Mal Puri Indah West Jakarta 50, In planning Shopping Mall at Podomoro Park East Jakarta 40, In planning Holland Village Mall Central Jakarta 40, In planning Mall at The City Center CBD 65, In planning Grand Metro Cipulir South Jakarta 30, In planning Pondok Indah Mall 3 South Jakarta 60, In planning Bekasi Trade Center 2 Bekasi 56, Under construction Q Big Tangerang 69, Under construction Grand Dhika City Mall Bekasi 24, Under construction Plaza Indonesia Jababeka Bekasi 55, Under construction AEON Mall Deltamas Bekasi 90, In planning AEON Mall Sentul Bogor 15, In planning Living World Jababeka Bekasi 18, In planning Vivo Shopping Mall Bogor 20, Under construction Vivo Trademall Bogor 13, In planning Embarcadero Tangerang 30, In planning Hollywood Central Bekasi 25, In planning Kota Harapan Indah Bekasi 51, In planning Lippo Grand Mall Tangerang 120, In planning Mall at Pesona Square Depok 30, In planning Mall at Green Lake Depok 20, In planning Page 6

7 Companies We Cover Agung Podomoro Land Alam Sutera Realty Bumi Serpong Damai Ciputra Development Kawasan Industri Jababeka Lippo Karawaci Metropolitan Kentjana Metropolitan Land Pakuwon Jati Plaza Indonesia Summarecon Agung Our InHouse Expert Edward Ariadi Tanuwijaya Please note that DBS Bank Ltd may have research coverage in the companies mentioned in this industry report, that have been produced prior to or subsequent to its publication Please refer to the links below for the latest specific equity research reports published on belowmentioned companies and the accompanying disclaimer/disclosure of DBS interest in the companies mentioned in the respective reports Page 7

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