GIC invests in Jakarta’s booming real estate market
SINGAPORE — The Republic’s sovereign wealth fund GIC is buying a Grade A office tower under development in Jakarta’s central business district, adding to its portfolio of assets in South-east Asia’s largest economy.
The 47-storey building is part of a mixed-use development being built by Indonesian conglomerate Rajawali Group and due for completion at the end of 2015. The property includes an arm of The St Regis Hotel and retail podium for food-and-beverage outlets.
GIC declined to comment on the cost of the deal, but said in a statement that the office tower “is poised to become the premium address for multinational corporations, local conglomerates and financial institutions”.
“It is a welcome addition to our portfolio of quality assets in prime locations of major cities. Demand for high-quality office space in the Jakarta CBD offers significant growth opportunities,” said Mr Lee Kok Sun, Asia Co-Head at GIC Real Estate.
Demand for office space in Jakarta has remained robust despite subdued activity across the rest of the region, mainly due to limited supply in the CBD area and strong demand from existing tenants seeking to expand their businesses.
Grade A offices in the Indonesian city continued to see the highest rental growth of 9.5 per cent quarter-on-quarter from April to June, compared with 5.2 and 6.8 per cent for Grade B and C offices respectively, according to a report by real estate consultancy and brokerage firm Cushman & Wakefield, which added that overall occupancy level stood at 92.8 per cent.
Aggregate rental growth across the Asia-Pacific region averaged 0.2 per cent quarter-on-quarter, slowing further from the 0.4 per cent growth from January to March, according to the latest Jones Lang LaSalle Asia Pacific Office Index.
“The continuing rental increment in Grade A offices (in Jakarta) has resulted from very limited vacancy within both existing buildings and even within those under-construction projects nearing their completion, providing landlords with the confidence to further increase their base rents,” said Cushman & Wakefield.
The consultancy also said demand for offices is expected to remain “favourable” in the coming quarters.