_6 future projects triggering optimism for the Indonesian retail market

Following the re-opening of retail malls and stores after the temporary closures in July to mid-August 2021 due to the Delta-variant cases, the Jakarta retail market managed to recover with increased mall foot traffic and improved private consumption during the fourth quarter of 2021. The relaxed policy of micro-scale activity restrictions (PPKM Mikro) to level 1 had allowed retail shopping malls to open until 10 pm with 100% of capacity, dine-in for a maximum mealtime and permit visitors under 12 years old accompanied by a parent.

The Jakarta retail market only added one new retail mall project (AEON Southgate – Tanjung Barat) during the second half of 2021. With the continued temporary delay of construction and openings in 2021, the projected pipeline of future retail supply in Jakarta with completion between 2022 and 2024 is expected to be 261,545 square meters, coming from six retail centers.

Several new retail projects located in the non-CBD area were also suspended until the market improves. Projected five new leased malls are located within mixed-use developments while one new strata-title mall is located in a freestanding premise. 

Notably, several retailers have expanded their offline footprint in the second half of 2021, including Kids Station, Atmos and Index Living Mall in Plaza Senayan; Wearing Klamby in Plaza Indonesia; Hyundai City Store and Etude in Pondok Indah Mall 3; Yoji by JD.ID and Paris Baguette in ASHTA District 8; AEON Store, Uniqlo, H&M in AEON Mall - Tanjung Barat; Subway in Cilandak Town Square; Decathlon and Index Living Mall in Kota Kasablanka and others. On the other hand, several large grocery and department store retailers continued to announce closures of their other stores permanently or changes in business models.

Despite the pandemic, international food and beverage retailers expanded their presence into Indonesia, considering its large and growing middle-income population.

The food and beverage, beauty and fast fashion and e-commerce sectors are expected to continue active in 2022, while the entertainment industry remains to wait for the situation to improve before resuming full operations. Moreover, the Indonesian government plans to raise the Valued-Added Tax (VAT/PPN) from 10% to 11% in April 2022 and to 12% in 2025 as well as multi-tariff taxes (5% to 25%) in 2022 in an effort to expand the tax base and finding new sources of revenue.

View our latest Jakarta Retail Market Overview H2 2021 here.