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Mini-malls plan to beat big squeeze on Jakarta retail space

Straits Times - October 8, 2001

Robert Go, Jakarta – Trader Dani Hermawan wants to open shop in Jakarta but cannot find space in a decent location. "Kiosks in malls are tough to get into,' he said. "I've waited three months but I know people who have waited more than half a year for one."

Consumer activity has been a boon for crisis-stricken Indonesia. Experts credit a consistent growth in the retail sector with helping to keep the economy afloat.

Ironically, property developers stopped building after their financing dried up during the crisis years which began in 1997. Now, Jakarta's 1.7 million square metres of retail space is almost fully occupied. "Traders have difficulty securing space. Most shopping centres are filled to the brim," said Colliers Jardine Indonesia research and consultancy manager Adhitya Wisesa.

Mr Jay Smith of the PricewaterhouseCoopers Property Group reported waiting lists comprising hundreds of would-be traders at existing and planned shopping centres.

Developers are beginning to respond to the cries for more space but most are limited by financing difficulties. "A lot of developers are starting to look at the possibility of developing new retail centres," said developer Harun Hajadi. "But it's not an easy task, given financing limits and higher construction costs." His company, Ciputra, was "seriously considering" building small malls located within its residential developments around Jakarta and throughout Java.

Other developers say they have similar plans for adopting a "build small" strategy. Instead of mega-malls, their focus is on more modest complexes filled with kiosks as small as 6 square metres designed to appeal to and be affordable for Indonesia's middle-class traders.

Each new shopping centre would also aim to attract traders who sell the same type of goods, following the recent successes of existing goods-specific complexes in Jakarta.

Rebuilding for a portion of the 200,000 square metres lost in Glodok Chinatown during the May, 1998 riots is based on these lines. Developers benefit from the reduced-risk aspect of the new strategy. Most offer the kiosks for sale before foundations are laid, allowing incoming traders to help finance the projects. As traders then own the shops they occupy, developers spend less money on maintenance.

Prices for the kiosks reach as high as US$4,000 (S$7,100) per square metre.

Retailers think it's a win-win arrangement – the set-up benefits small businesses and stimulates competition. "The smaller kiosks are the way to go.

There are lots of new retailers who cannot afford big spaces and want to start small," said Mr Surya Kencana. He owns six electronics outlets around town.

Analysts predict Jakarta's retail space is set for a 10-per-cent growth as developers fire up the cranes and bulldozers that fell idle during the crisis.