Research &
Forecast Report
Jakarta | Industrial
Q4 2015
Ferry Salanto | Associate Director - Research
Industrial Estate
Sector
Industrial Land Supply
During the year, one industrial estate in Bekasi introduced
several parcels of industrial land totaling almost 20 hectares.
In line with sluggish economy activity this year, developers
seemed to slow down land preparation activities. On the
other hand, several industrial estates are still rushing to finish
construction work to meet the delivery commitment for presales transactions they made. There is generally limited new
land that can be made available as industrial lots, particularly
in the Bekasi area. Although there are certain industrial estates
with expansion plans, the number would not be significant in
the short term.
Industrial Land Stock Status in Some Active and
Future Industrial Estates
4,000
3,500
3,000
2,500
Hectares
“During 2015, only one industrial estate in Bekasi added to the supply
of industrial land with 20 additional hectares. Nevertheless, a large
amount of additional industrial land is expected to be available over the
next two years in Jabodetabek, Serang and Karawang. Total land sales
for the whole of 2015 were 347.51 ha or about 79% of the total sales in
2014. Of this, almost 50% of industrial land sales was underpinned by
substantial sales concluded at Modern Cikande Industrial Estate. None
of the operating industrial estates made price adjustments this quarter.
Quite a few developers said that their sales targets for 2015 were
unachievable and thus they preferred to maintain the current prices.”
Accelerating success.
2,000
1,500
1,000
500
0
Bogor
Existing Stock
Tangerang
Karawang
Remaining Unsold Land
Source: Colliers International Indonesia - Research
Bekasi
Serang
Potential Land To Be Developed
Karawang seemed to have a large industrial land expansion in the
future, not only from the development of several future industrial
estates in the Trans Hexa Karawang consortium, but also from
the expansion plans of existing industrial estates.
In line with the growing number of companies operating in
industrial locations in the eastern part of the Greater Jakarta area
and the growing middle-class population, land in Bekasi and
Karawang is becoming commercially valuable. In some cases,
vacant land allocated for industrial use could be transformed into
more expensive land for commercial or residential uses. A few
industrial estates have already started commercial development
benefitting from the increasing number of operating companies.
Land Sales Activities
The last quarter of 2015 saw a low for the industrial market
after having a dismal year. During 2015, the industrial market,
in general, weakened and only looked almost as good as 2014’s
full year performance. Total land sales for the whole of 2015 was
347.51 ha or about 79% lower than the total sales in 2014. Of this,
almost 50% of industrial land sales in the Greater Jakarta area
was underpinned by remarkable sales concluded at Modern
Cikande Industrial Estate.
This quarter, the greatest number of transactions occurred at the
end of 2015 at Bekasi Fajar Industrial Estate (BFIE) with a total
of almost 10 ha of land mainly concluded by automotive related
companies, and the building material and food industries.On
the contrary, other active industrial estates in the Bekasi region
revealed that they had zero sales this quarter including industrial
estates with regular sales like Greenland (GIIC) at Kota Deltamas
Land Absorption During 4Q 2015
and MM2100. Other active industrial estates, like Delta Silicon at
Lippo Cikarang only sold 0.1 ha this quarter for warehouse use.
Despite this, Bekasi was the second most active region in selling
industrial land during 2015 with a total of 141.49 ha, representing
65% of the total sales in 2014.
Despite the smaller number of transaction, the Serang region
still had the most upbeat performance with two prominent
industrial estates registering middling sales. Krakatau Industrial
Estate Cilegon (KIEC) saw the expansion of a chemical related
company of 5,000 sq m and Pertamina, the national oil company
for the gas retailer business, took around 7,000 sq m. Nevertheless,
this quarter was an anticlimactic period for Modern Cikande
Industrial Estate that recorded the lowest amount of land sales
throughout 2015. From one Japanese company in the material
recycling business taking 2 ha and a local food processing
company, total sales in this reviewed quarter was only 2.42 ha,
far less than the total sales in the previous quarters. Nonetheless,
total sales at Modern Cikande during 2015 were tremendous,
at more than 165 ha. Total industrial land being transacted in
Serang during 2015 was registered at 182.73 ha, higher by 13.3%
compared to the total sales in 2014.
For the last two years, the amount of land sold in Karawang was
relatively low, an average of 4.3 ha land quarterly. This quarter
was the second worst quarter after 3Q 2014 (when none of the
industrial estates reported sales) with only KIIC registering a
marginal 0.4 ha sale to a new Japanese industrial gas company.
Thus far only Millennium continued to sell land and warehouse
buildings in Tangerang. Millennium reported sales of three
warehouse units and one parcel of land totaling 1.24 ha.
Land Absorption During 2015
Modern Cikande
Bekasi Fajar
Greenland International Industrial …
Delta Silicon
Modern Cikande
Bekasi Fajar
Krakatau Industrial Estate Cilegon
Jababeka
Jababeka
Millenium
Suryacipta
KIIC
Krakatau Industrial Estate Cilegon
Millenium
MM2100 Industrial Town
KIIC
CCIE
Delta Silicon
Kota Bukit Indah (Besland Pertiwi)
0
2
4
6
8
10
0
12
40
2
120
160
hectares
hectares
Source: Colliers International Indonesia - Research
80
Source: Colliers International Indonesia - Research
Research & Forecast Report | Q4 2015 | Industrial Estate | Colliers International
200
Types of Activities Industries During 2015
Land Price
Logistics/ Packaging
Chemicals
Oil & Gas Warehousing 0.95% Metal Heavy
Electronics 2.89%
5.76% Equipment
Related
7.17%
0.58%
4.81%
0.32%
Steel-related
Machinery Clothing
0.40%
3.15% 0.05%
Plastics
Building
0.29%
Material
Consumer
7.26%
Goods
6.62%
Medical
0.29%
Others
1.53%
Corresponding to the sluggish industrial market in 2015, none
of the operating industrial estate made price adjustments this
quarter. The weakening of the local currency against the US
dollar has been a challenging issue in the pricing of land apart
from the main cause, the slowing economy. In general, industrial
developers have been much focused on achieving sales targets
as buyers become less active during the year. In fact, quite a few
developers said that sales targets for 2015 were unachievable
and thus they preferred to maintain prices.
Greater Jakarta Industrial Land Prices
USD240.00
USD210.00
Automotive
26.56%
USD/sq m
USD180.00
USD120.00
USD90.00
USD60.00
USD30.00
Bogor
Tangerang
Karawang
Bekasi
2015
2014
2013
2012
2011
2010
2009
USD0.00
2008
For the last three years, the industrial trend has been shifting
from the automotive industry to food, logistics and consumer
goods. Until the end of 2013, the industrial market had been
dominated by the automotive sector. In 2013, the domination
of this sector reached 55% of the total industrial transactions for
the year. The automotive industry then shared about the same
percentage as other sectors like food industry and logistics in
2014. Again in 2015, the food industry dominated most of the
transactions, surpassing the amount of land being absorbed by
the automotive industry.
USD150.00
2006
Source: Colliers International Indonesia - Research
2007
Food &
Beverage
31.39%
Serang
Source: Colliers International Indonesia - Research
Annual Industrial Land Absorption
1,400
Industrial land quoted in US dollars will be converted to
Indonesian rupiah when a transaction occurs. This has been
implemented by most industrial estates with pricing in US
dollars in complying with the Central Bank regulation to use
rupiah in any transaction in Indonesia.
1,200
1,000
Hectares
800
600
Industrial Land Prices and Maintenance Costs*
400
region
200
Jakarta
Bogor
Bekasi
Tangerang
Source: Colliers International Indonesia - Research
3
Karawang
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
0
Serang
Land price (in USD/sq m)
maintenance costs
(in usd/sq m/month)
lowest
highest
average
lowest
highest
average
Bogor
120.00
203.30
161.60
0.06
0.06
0.06
Bekasi
195.00
254.10
221.10
0.06
0.08
0.07
Tangerang
138.00
145.20
141.60
0.03
0.08
0.06
Karawang
170.00
200.00
185.00
0.05
0.10
0.06
Serang
123.40
138.00
130.70
0.03
0.05
0.04
*1USD = Rp 13,773
Source: Colliers International Indonesia - Research
Research & Forecast Report | Q4 2015 | Industrial Estate | Colliers International
Minimum Wages in Jakarta
Maintenance Costs
Of all the industrial estates in our coverage, only CCIE introduced
a new maintenance tariff, a 6.3% increase to IDR850/sq m/
month. Most industrial estates preferred to keep their tariffs as
they were. For the last two years, maintenance costs in all regions
in the Greater Jakarta area have been stable. In compliance with
the Bank Indonesia regulation, several industrial estates are
anticipating converting their maintenance charges from US
dollars to rupiah.
IDR3,500,000
IDR3,000,000
IDR2,500,000
IDR2,000,000
IDR1,500,000
Greater Jakarta Industrial Maintenance Costs
IDR1,000,000
USD0.10
IDR500,000
USD0.08
IDR0
2009 2010
2011 2012
2013 2014
USD/sq m/month
USD0.06
1Q
2015
4Q
2015
Source: Colliers International Indonesia - Research
USD0.04
Jakarta Province saw a 27% YoY increase in the minimum wage
to IDR3,100,000.
USD0.02
Minimum Wages in Western Greater Jakarta
Bogor
Bekasi
Tangerang
Karawang
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
USD0.00
Serang
Source: Colliers International Indonesia - Research
Minimum Wages
Another issue noted by investors was the new minimum wage
policy. The new formula was introduced to calculate wage
increases using each province’s inflation rate and economic
growth, therefore enabling businesses to better approximate the
costs they are expected to incur.
Government Regulation (PP) No. 78/2015 concerning wages
stipulates a measured annual wage increase that takes into
account the current fiscal year’s inflation and Gross Domestic
Product (GDP) growth rates. The PP states that minimum wages
that were multiplied by the inflation rate would ensure steady
purchasing power, while multiplication by GDP rates would
guarantee increases in overall productivity.
IDR 3,500,000
IDR 3,000,000
IDR 2,500,000
IDR 2,000,000
IDR 1,500,000
IDR 1,000,000
IDR 500,000
IDR 0
2009 2010 2011 2012 2013 2014
1Q
4Q
2015 2015
Kota Serang
Kabupaten Serang
Kota Tangerang
Kabupaten Tangerang
Source: Colliers International Indonesia - Research
In general, the four regencies in the western part of the Greater
Jakarta area registered an average 24.8% increase compared to
the same period last year.
4
Research & Forecast Report | Q4 2015 | Industrial Estate | Colliers International
Minimum Wages in Eastern Greater Jakarta
Minimum Wages in Central Java and East Java
IDR 3,500,000
IDR3,500,000
IDR 3,000,000
IDR3,000,000
IDR 2,500,000
IDR2,500,000
IDR 2,000,000
IDR2,000,000
IDR 1,500,000
IDR1,500,000
IDR 1,000,000
IDR 500,000
IDR1,000,000
IDR 0
IDR500,000
2009 2010
2011 2012
2013 2014
IDR0
2009 2010 2011 2012 2013 2014
1Q
4Q
2015 2015
1Q
4Q
2015 2015
Kota Semarang
Kota Surabaya
Kabupaten Gresik
Kabupaten Sidoarjo
Kota Bekasi
Kabupaten Bekasi
Kota Pasuruan
Kabupaten Pasuruan
Kabupaten Karawang
Kabupaten Purwakarta
Kota Mojokerto
Kabupaten Mojokerto
Source: Colliers International Indonesia - Research
Source: Colliers International Indonesia - Research
The most expensive wages are mainly found in the eastern
Greater Jakarta areas, such as Bekasi and Karawang. These
locations have the highest increase compared to the other areas
at 36.3% YoY.
In several cities located in Central Java and East Java Provinces,
the minimum wages increase significantly YoY by 37.1%.
Minimum Wages in Southern Greater Jakarta
IDR 3,500,000
IDR 3,000,000
IDR 2,500,000
IDR 2,000,000
IDR 1,500,000
IDR 1,000,000
IDR 500,000
IDR 0
2009 2010
2011 2012
Kota Bogor
2013 2014
1Q
4Q
2015 2015
Kabupaten Bogor
Source: Colliers International Indonesia - Research
With only two regencies in the Bogor area, the minimum wage
increase was registered at 30.3%.
5
Concluding Thought
In an attempt to spread industrial development across the
archipelago, the government is preparing a number of fiscal
incentives, aiming to attract investment and speed up the
construction of industrial estates in these regions. At least 14
industrial estates outside the main island of Java, that cover
an area of 22,484 ha, will be prepared in the five years to spur
economic growth in all parts of the country. The Ministry of
Industry is currently revising Government Regulation No.
24/2009 concerning industrial estates in assisting investors
who intend to develop industrial estates to be able to receive
tax reductions both from the central government and local
administrations.
Power supply is one of the main issues concerning most industrial
investors. Other than preparing fiscal incentives, the government
will also ease the procedures and requirements for obtaining
electricity. Indonesia’s competitiveness in doing business has
been challenged by other ASEAN countries that have been
more successful at attracting foreign investors. Indonesia is now
improving efficiency by reducing the number of licenses and
the time to issue permits in order to become competitive and
a more appealing country in which to do business. In order to
cope with such issues and to spur more industrial investment
into the country, the government recently announced a series
of economic policy stimulus packages incorporating aspects
of industrial estate development like the availability of a threehour licensing policy for investors intending to start projects that
are worth at least IDR100 billion, employ a minimum of 1,000
employees and are located inside industrial estates designated
by the Investment Coordinating Board (BKPM).
Research & Forecast Report | Q4 2015 | Industrial Estate | Colliers International
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Primary Authors:
Ferry Salanto
Associate Director | Jakarta
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Ferry.Salanto@colliers.com
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Accelerating success.