Indonesia is one of the largest countries in the world with a total of 17,508 islands populated by more than 250 million people, of which half live on the island of Java.
Amidst global economic slowdown and uncertainty in the global financial market, Indonesia’s economy remains relatively strong. Indonesia’s robust economic growth has been primarily driven by buoyant private consumption and investment. Better consumer confidence as result of Indonesia’s economy and modest inflation are the reasons behind the growth in private consumption. Investment also remains strong, reflecting business confidence in the economic outlook, strong consumption and supportive investment financing. Furthermore, exports are also expected to advance modestly in line with better prospects in some of Indonesia’s main trading partners, although risks from the global economic slowdown will remain a concern. With the relatively high GDP growth, stable inflation and interest rates, and the strong performance of the stock market, the general economy of Indonesia continues to improve, which results in the improvement in general purchasing power, which has a positive impact on the retail industry.
Jakarta, the capital city of Indonesia, is the centre of lifestyle, dining, and entertainment in the country.
|GDP growth||4.6||6.1||6.5||6.5||6.3 - 6.7||5.1||5.4-5.8|
|Unemployment rate (%)||8.1||7.4||6.8||6.3||N/A||N/A||N/A|
|Interest rates 3-month (%)||6.5||6.5||6.0||5.8||N/A||N/A||N/A|
|Interest rates 10-year (%)||N/A||N/A||N/A||N/A||N/A||N/A||N/A|
NOTE: *annual % growth rate unless otherwise indicated. E estimate F forecast
Source: Bank Indonesia, June 2015 http://www.bi.go.id/sdds/
|Population||252.2 MILLION (2014)|
|GDP||US$ 868.4 billion (2014)|
|Public sector balance||N/A|
|Vice President||Muhammad Jusuf Kalla|
|Election date||October 2019|
|RETAIL SALES GROWTH: % CHANGE ON PREVIOUS YEAR|
|LARGEST CITIES (2015)|
MAJOR DOMESTIC FOOD RETAILERS
Hypermart, Foodmart, Ramayana, Ranch Market, Farmers Market, Grand Lucky, Alfa Midi, Alfamart, Indomaret
MAJOR INTERNATIONAL FOOD RETAILERS
Carrefour, Lotte, Giant, Hero, Superindo, Circle K, 7-Eleven, Lawson, Family Mart
MAJOR DOMESTIC non-FOOD RETAILERS
Ramayana, Matahari, Sarinah, Pasaraya, Lotus, Electronic City, Electronic Solution, Home Solution, Ace Hardware, Informa, Gramedia, Toko Gunung Agung, Karisma
INTERNATIONAL RETAILERS in country
Metro, Sogo, Debenhams, Seibu, Centro, Hermes, Louis Vuitton, Bottega Veneta, Balenciaga, Gucci, Prada, Miu Miu, Tod’s, Aigner, Coach, Best Denki, Brioni, Celio, Hugo Boss, Francesco Biasia, Jimmy Choo, Canali, Mango, BSBGMaxazria, Bershka, Camper, Desigual, Diva, DKNY, Dorothy Perkins, H.E. by Mango, Hoss Intropia, Kipling, Lacoste, Linea, Loewe, Mark & Spencer, Massimo Dutti, Maxmara, Max & Co, Meetoo, Miss Selfridge, Nautica, New Look, Next, Nine West, Pandora, Pretty Fit / Beetle Bug, Pull & Bear, Spanx, Staccato, Steve madden, Stradivarius, Topman, Topshop, Warehouse, Zara, Kinokuniya,
Food & Beverage Operators
Kentucky Fried Chicken, McDonald, Pizza Hut, Burger King, Domino’s Pizza, Pizza Marzano, Starbucks, Coffee Bean and Tea Leaf, Baskin Robbins
|MONDAY - FRIDAY||SATURDAY||SUNDAY|
The total existing stock of retail space in Jakarta, the capital city of Indonesia, is 4.0 million sq.m, comprising 72% retail centres for lease and 28% strata-title (multiple-ownership) retail centres as of March 2015. CBD Jakarta contributes the largest portion of retail supply of 21.7%, followed by South Jakarta of 21.5%, North Jakarta of 20.0%, and West Jakarta of 17.5%. The remainder spreads in Central and East Jakarta.
As the population in Jakarta is still growing in terms of numbers and wealth distribution, the retail market will see further new foreign as well as domestic retailers opening new outlets. Leasing transactions are a mix of food and beverage and other retail sectors, such as super/hypermarket, department store, fashion, electronics, household appliances, entertainment, etc.
One-stop retail centres (with super/hypermarket and department store-anchored schemes) continue to be the dominant format. Other types of retail centres existing in Jakarta are strata-title centres and specialized retail centres. Strata-title centres comprise hundreds of small kiosks, which are sold to the individual owners. As the motives of the owners (kiosks buyers) differ from investors to the real retailers, the performance of strata-title centres is considered moderate with average occupancy rate of only 70.8%. Meanwhile, the specialized retail centre ranges from the lifestyle (F&B and entertainment) centres, supporting retail centres within the mixed-use development, to specialized automotive / hardware / electronics centres, etc.
The most common way to enter the Indonesian retail market is via a partnership with an Indonesian local partner or via a franchise arrangement. Direct entrance is still perceived as a risk by foreign companies.
Department store and/or supermarket/hypermarket are the most common major tenants in a mall. With the status as anchor, they normally enjoy lower gross rental rate and able to secure longer lease period of 10 to 20 years. Meanwhile, the common lease period for specialty tenants is 3 to 5 years.
Retail spaces are normally in a shell condition with a centralised AC system, no ceiling and bare floor (concrete). Tenants are responsible for their own fit-out and ducting installations and other utility fixtures within the rental unit.
The service charge paid by the tenants is to cover the maintenance and utility consumptions within the common area of the retail centre only. Utility costs for the business operation within the store is payable separately by the tenant, with the exception of electricity cost for AC operation which is usually included in the service charge.
In addition, the tenants may also pay a refundable security deposit of 3 months gross rent. The security deposit is generally paid before handover of the rental unit to the tenant and will be refunded to the tenant at no interest at the end of the lease period.
New Entrants to the Market
|Central Department Store||Parkson||Galeries Lafayette||Ikea||H&M|
|TOP SHOPPING CENTERS BY SIZE|
|NAME||CITY||SIZE (GLA SQM)||YEAR OPENED|
|Pondok Indah Mall||Jakarta||111,900||1991|
|Taman Anggrek Mall||Jakarta||97,000||1996|
|Kelapa Gading Mall||Jakarta||90,300||1989|
|Mall of Indonesia||Jakarta||90,000||2008|
|KEY FEATURES OF LEASE|
|Lease Terms||The standard lease term for a specialty shop is 3 or 5 years and for anchor tenant is 5 or 10 years lease period.|
|Rental Payment||Rents are quoted in Indonesian Rupiah, and are typically payable monthly in advance. Down Payment: 20% x the area leased x agreed base rent x number of months in the contract. For the remaining 80% rent: In 48 equal monthly installments for 5 years lease period or 24 equal monthly installments for 3 years lease period, starting from Lease Commencement Date. A security deposit of equivalent to 3 months base rent & service charge is payable upon signing of Lease Agreement or before hand over of the premises, whichever is earlier. The security deposit is fully refundable at the end of the Lease Period, but subject to deductions for any breach by the Lessee if any and free of interest.|
|Rent Review||Rental rate is always fixed during the lease period. Review is only implemented when the lease period is over and the lease is extended.|
|Service Charges, Repairs and Insurance||Service charge covers building and common area expenses, including management fees, security, cleaning, landscaping, internal maintenance of common parts, external maintenance and insurance, servicing of elevators, water, air conditioning, and property tax. It excludes internal maintenance and insurance of rented space, utilities charges, and VAT. In Indonesia, most shopping centres provide air conditioning system in tenants units, so that the service charge also covers the electricity expense for the air conditioning.|
|Property Taxes and other costs||Base rent, service charge and promotion levy are subject to VAT prevailing rate.|
|Disposal of a Lease||Sub-letting is usually possible under the terms of the lease, subject to landlord’s approval. Early termination occurs only by break of clause, to be negotiated by mutual consent upon negotiation. Break option is negotiable. Termination can occur when the tenant cannot pay the base rent and/or service charge for several times. Landlord should give notice or warning letter prior to termination of the lease. Down payment, as the certain amount of non-refundable deposit usually could be treated as penalty, as well as the security deposit. At the end of the lease, the tenant is responsible for re-instating the premises to the same condition as at the time of it was handed over, subject to normal wear and tear.|
|Valuation Methods||Shops are valued based on sales floor and the shop size. Ground Floor is the most valuable in rental terms, and upper sales floors have lower rental rates per square meter. There is also variation, which depends on the position of the shop, i.e. near the main entrance / lobby / atrium / escalator / elevator vs in the secondary corridor.|
|Legislation||The lease agreement is only based on the landlord and tenants’ settlement.|
Cushman and Wakefield Indonesia
Indonesia Stock Exchange Building 2, 15/F
Tel: +62 21 2550 9560