Potential Rental Growth in Malls Poised to Boost LPKR’s Revenue

Jakarta, 15 September 2023 - P T Lippo Karawaci Tbk. (LPKR), Indonesia’s leading real estate and healthcare platform, is poised to see an increase in revenue from its mall business, supported by rising visitor numbers and rental rate adjustments.

According to research by Colliers Indonesia, the retail mall sector in Jakarta is expected to grow, driven by increasing demand from electronics retailers, entertainment providers, and operators focusing on children’s games and play areas. For mall owners, evolving their retail environments has become essential, particularly by consistently offering fresh and engaging shopping experiences to attract and retain visitors. Selecting the right tenants and retail concepts that foster excitement and deeper customer engagement is increasingly critical.

The ability to secure anchor tenants that draw significant footfall is a key factor for success. This optimistic outlook is reflected in the rising visitor traffic, stronger retail space demand, and improved sales performance. Colliers notes that mall owners in Jakarta, particularly those with high foot traffic, are becoming more confident in adjusting rental rates, with average rents projected to rise by approximately 5% annually between 2023 and 2025.

This positive trend is also being experienced by PT Lippo Karawaci Tbk., through its subsidiary PT Lippo Malls Indonesia (LMI), which manages 59 malls across 17 provinces in Indonesia, encompassing a total Gross Floor Area (GFA) of 3.60 million square meters and attracting as many as 165.8 million visitors annually.

In the first half of 2023, LPKR recorded mall revenues of IDR 275 billion, representing a 59% year-on-year increase. This growth was supported by a rise in average foot traffic to 69% in H1 2023, compared to 61% in H1 2022. Looking ahead, LPKR is revitalizing its mall assets to further stimulate growth, including the near-complete revitalization of the iconic Gajah Mada Plaza and ongoing renovation of Plaza Semanggi, located in the heart of Jakarta’s central business district.

Group CEO of LPKR, John Riady, noted that the company’s lifestyle segment performance has been supported by the recovery of its mall and hotel businesses, in line with the easing of travel and public activity restrictions. He added that LPKR expects a full recovery of its lifestyle segment post-pandemic by 2024.