Dzulfiqar Fathur Rahman, Jakarta – The retail property market recorded no new openings of shopping centers or leasing activities in April and May in Jakarta as shopping malls across the country temporarily closed to prevent further spread of COVID-19.Data compiled by the Indonesian Shopping Center Association (APPBI) show that 190 shopping malls across the country temporarily closed.
Stefanus Ridwan, the chairman of the association, said Tuesday that some shopping malls had negotiated a one-month rent deferment deal with tenants to ease the financial hardship as a result of the pandemic. Some also offered large discounts on rent or service charge.
"We are dying, much less able to survive," Stefanus, who also serves as president director of publicly listed real estate developer PT Pakuwon Jati, told The Jakarta Post on Tuesday. "We had hoped to make a profit during Idul Fitri, but in these conditions, we did not."
The government has planned to gradually reopen the economy under health protocols to establish a "new normal" amid the continued rise of confirmed COVID-19 cases in Indonesia. President Joko "Jokowi" Widodo visited Summarecon Mall in Bekasi, West Java, on Tuesday to take a look at the mall's preparations for its upcoming reopening.
Arief Rahardjo, the director of research and strategic consulting at real estate services firm Cushman & Wakefield, said the coronavirus restrictions in Jakarta, which were extended to June 4, forced newly developed shopping centers to delay their opening longer.
The market was projected to see a total of 205,000 square meters of new projects being developed this year, according to a quarterly report released on April 20 by Cushman & Wakefield, which operates in 60 countries. But Arief expected no new openings of shopping centers in the second quarter.
"If the pandemic does not abate soon, then the occupancy rate of shopping centers in Jakarta is projected to decline," Arief told The Jakarta Post on Wednesday. "It was because there were no tenants opening new stores in shopping centers, and many tenants that failed due to COVID-19 were forced to close their stores."
Cushman & Wakefield noted at least seven key lease transactions in the first quarter of the year – excluding lease renewal.
The largest transaction in terms of area was by movie theater chain FLIX Cinema with 7,500 sq m of space at Mall of Indonesia, followed by clothing retail company H&M with 6,000 sq m of space at Mall Kelapa Gading, both in North Jakarta.
"Many tenants are temporarily suspending their business expansion and postponing their fit-out work," said Arief.
Prior to the social restrictions in Jakarta, the national epicenter of the coronavirus pandemic, the occupancy rate of shopping centers remained relatively stable at 80.8 percent in the January to March period, a decline of 0.3 percentage points from the previous quarter.
Wendy Haryanto, the executive director of Jakarta Property Institute (JPI), a non-profit organization advising developers, said on May 15 that owners of retail property needed an elimination of the minimum utility bill to cut costs in order to survive the pandemic.
For example, Grand Indonesia, a 17.5-hectare shopping center in Central Jakarta, may have to face a minimum monthly utility bill of Rp 4 billion, although its electricity consumption is estimated to be drastically lower because temporary closure is in place.
"This is very difficult," Wendy said in an online talk on May 15. "Eliminating the minimum utility bill for the property is a must."
Naomi Santosa, the head of property and asset management at real estate services firm Jones Lang LaSalle (JLL), expected shopping centers to see shorter customer visits of between 2 and 3 hours a day as they mainly come for basic shopping needs in the early days after the restriction is lifted.
"So people may not hang out with their friends for an entire day," Naomi said in an online talk on May 15. "I do not see that happening in this particular time."