Strong in stores, but less liquid

Demand for retail space in Jakarta is increasing. Last year leasing in the retail market was very active with annual take-up of 210,000 square meters according to Cushman & Wakefield, commercial real estate brokers and consultants. Most of this take-up was contributed by the occupation of tenants in those newly completed centers, including Central Park, Gandaria City, and Epicentrum Walk. Cushman & Wakefield data is heavily focused on Jakarta due to frequent transactions in the city compared to any 29 provinces in which they operate.

David Cheadle, managing director Cushman & Wakefield Indonesia, expected retailers will continue making pre-commitments within the under-construction centers. “Leasing activity is expected to remain buoyant in 2011,” he says. With the prospect of continue growth in population size and wealth demographics in Jakarta, he also expect new foreign retailers entering the market this year, as well as the opening of additional outlets by existing players. He said hypermarket from US, supermarket from Europe, and Asia, including some fashion brands is eyeing some retail space in the city. They wish to be here to enjoy the growing of middle-income populations.

In the stock market, recently retail stocks are looking very attractive too. Well, its not as hot as commodities stocks but it has surged significantly over the last year. If you see stocks like PT Mitra Adiperkasa Tbk (MAPI) or PT Sumber Alfaria Trijaya (AMRT) are less liquid for at least in the last four years, it shows a dramatic reversal since mid last year. MAPI which moves around Rp600 to Rp1,000 start to climb last year to be closed today [in midday transaction] to Rp2,800, that’s nearly tripled to fivefold. While AMRT, which often illiquid for years, also began to move higher following a buyback actions undertaken by the owner from previously held by Northstar, as part of the debt settlement agreement.

Retail stocks in the Indonesia Stock Exchange (IDX) is classified into a group of trade companies, services, and investment companies. The bourse classifies their listed companies into nine groups of companies. Even though retail stocks are atractive, it is quite hard to find analyst who focus in this specific sector since they are not big compared to other industries, and are not good performers on the stock market. Not to mention many major retails players are not listed e.g. Metro, Lotte, and Carrefour. “Although I believe the fundamental of the retail industry in Indonesia remain good due to the strong Indonesian economy, large domestic population, and rising consumer purchasing power,” says David Chang, research director of UOB Kayhian Securities based in Jakarta.

For March edition, Forbes Indonesia take a good close look at some retail companies and those who benefited from the retail growth. We wrote about Nestle Indonesia, Ramayana, Mitra 10, Alfamart, Mandom, Matahari, 7-Eleven. All of them are listed companies, except Nestle. I managed to wrote two out of seven articles in the package. For copy rights matter, I will only published my articles in here. Maybe with some other stuffs that I found out interesting during my research to write the articles.

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