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E-commerce firms offer new hope for property market

A growing trend toward expanding office space in Jakarta’s central business district (CBD) and non-CBD areas has arisen among e-commerce firms, a property consultant has said.

The global property consultant Jones Lang LaSalle (JLL) indicated that although office expansion did not necessarily mean that these companies would rent large office spaces or move to prime locations, the trend showed there had been a rapid change in the way e-commerce firms operated.

“E-commerce firms, such as Lazada and Zalora, continue to expand their offices although they still rent small spaces,” JLL research head James Taylor said during an event on Indonesia’s property market on Wednesday.

He further explained that e-commerce firms preferred to rent one or two floors of office space sized between 2,000 and 3,000 square meters (sqm).

The property consultant said e-commerce businesses might reshape the country’s retail landscape in the future as more people would prefer to buy things online rather than go to traditional retail stores. However, he said this would not happen anytime soon.

“Retail space is still needed. Although some people might already buy goods online, they still want to socialize. That’s why they go to shopping malls,” JLL advisory head Vivin Harsanto said.

For the past few years, Indonesia’s office market has been pressured by weak occupancy rates, oversupply and low rent prices. JLL data shows that the average occupancy rate in the CBD stood at 84 percent in the third quarter of 2016, the lowest level in five years.

In the third quarter of this year, the company recorded an existing supply of 5.3 million sqm of office space with an average rental rate of about Rp 210,000 (US$16) per sqm per month within the CBD. (win/ebf)

Source: The Jakarta Post