Property: KTA from meeting with JLL: Landed Housing and Retails as Key Growth Driver in Greater Jakarta (OVERWEIGHT)

Stock Code	Last Price	Change	Change %
TPIA	8,625	750	9.52%
DSSA	46,175	675	1.48%
CITA	4,040	560	16.09%
LIFE	6,550	550	9.17%
ADES	11,600	500	4.50%
CUAN	7,600	475	6.67%
CBDK	7,150	450	6.72%
KONI	1,635	325	24.81%

Property

KTA from meeting with JLL: Landed Housing and Retails as Key Growth Driver in Greater Jakarta

According to JLL, office markets still face occupancy issues; Retail rental rates booked healthy growth while Condos remain challenging.
JLL sees landed housing to remain as FY24F demand drivers; Tangerang as favorite area. We see CitraSerpong as a strong alternative for BSDE.
We maintain our OW rating on the sector, as 1H24 marketing sales remain healthy, depicting stable demand. CTRA remains our top pick.

Office: Lingering Pressure on Occupancy and Rental Rates

JLL noted that overall office market remains facing occupancy and rental rate pressure. 2Q24 CBD office rental rates still declined by -1.2%qoq; yet slower than 1Q24’s -1.6%qoq, partly due to slight improvement in the SCBD area occupancy and asking rental rates, depicting new demand tendency towards grade-A buildings. New supply will only be completed as early as ~FY26 (Indonesia One) and ~FY29 (Taspen Property). We believe that despite the slowing decline in market rates, it will take more time for overall office to see growth, as companies are generally in cost-saving measures.

Retails: Tenants racing to secure spaces; Condo: remain challenging

JLL noted that rents started to rise in 2Q24 (+1.2%qoq vs. 0.9%qoq in 1Q24) as occupancy in shopping malls especially those located in prime areas started to peak (avg.~89% in Jakarta), while tenants remain actively looking for space. Meanwhile, Jakarta condo market appeared to remain challenging, due to unattractive rental yields (~5%) and capital gain outlook among investors. Buyers also lean towards near-completion projects and reputable brands. PWON wins in the race of malls through higher NLA of 785k sqm across Indonesia, followed by SMRA of 337k sqm. PWON’s mall occupancy in Jakarta also better at ~97% per 1Q24 vs. SMRA’s of ~96%.

Landed Housing: Stable, End-Users Driven, Affordability as Key Factors
JLL deem Greater Jakarta landed-houses demand to be stable, driven by end-users with new launches (5-yr. avg) at par with new demand (exh.4). Key purchase decisions factor especially among younger generations are: 1) Affordability (JLL sees key demand rooted in Rp<0.6-1.3bn market post ’98 crisis-now); 2) proximity to public transport, with Tangerang as favorite area. We noted that competition is quite tight in Serpong-Tangerang area, yet we see CitraSerpong (CGS) as a potential contender for BSDE’s products for entry-level buyer. CGS offered Rp1-2bn vs. BSD City’s floor price of ~Rp1.6bn vs. SummareconSerpong (SMS) ASP of ~Rp2.5bn. CGS recorded marketing sales of Rp676bn in 1H24 vs. SMS‘ at Rp550bn.

Maintain OW rating; Landed-Residential and Retails as Growth Proxy

We maintain our OW rating on the sector as marketing sales achievements in 1H24 remain healthy, depicting a stable demand (exh.2). We believe that market growth will be driven by landed-residentials and retails rent, while office and condos growth remain muted. CTRA remains our top pick in the sector (resilient landed marketing sales), followed by PWON as malls growth proxy, then BSDE (laggard share price increases YTD, possible NAV increases from SMDM’s acquisition) and SMRA (cheapest in the sector). Key risks: 1) declining purchasing power 2) discontinuation of gov’t incentives.

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