A time to buy
A
healthy macroeconomic outlook combined with a huge domestic market
will propel solid growth in the property sector in 2011, reports
Albertus Weldison Nonto.
Single-digit
interest rates, healthy domestic growth and macroeconomic conditions
are all conducive to a positive outlook for Indonesia’s property
sector this year. A manageable inflation rate of 6% will create room
for developers to launch new projects and consolidate further
expansion in the sector.
Harun
Hajadi, director of Ciputra Development, predicts that Indonesia’s
property market will soar over the next three years, especially in
the commercial and middle to lower income housing sector.
“The
current interest rate is the lowest in the history of this country,”
he says.
Growing
sector
In the eyes
of Anton Sitorus, senior manager at Jones Lang La Salle, the property
sector will be among the top 10 fastest growing sectors in 2011.
From the
perspective of investors, residential properties, condominiums and
office and retail space all offer promising returns. Residential
properties are the safest investment as land prices will remain
stable, says Anton.
In
terms of condominiums, Jakarta’s golden triangle represents a safe
bet as reflected by the number of people swapping the suburbs for the
city, he adds.
In this
sector, the Agung Podomoro Group will remain the major player, while
Duta Pertiwi of Sinar Mas and the Bakrie and Lippo groups will also
benefit from the strong growth.
The
office sector is also looking healthy, experiencing the highest
growth in the last decade in 2010. In this field established players
such as Mulia still lead the sector while new players such as
Bakrieland and the Lippo Group will also capitalize on sizeable
demand.
In
the retail sector Lippo will lead the market, says Anton, despite the
possibility of oversupply.
“I believe the consumer sector will
slow down a bit in the first three months of 2011 due to the
government’s decision to stop subsidizing fuel for cars, but it
will recover and continue to grow,” he says.
For
developers, notes Anton, there is ample opportunity in residential
properties too given strong demand from first-home buyers and for
shop-houses (ruko).
While supply in the central business district (CBD) is still low,
competition remains tight. Groups backed by banks have an obvious
advantage.
Growth in the retail sector, however, is expected to be
minimal considering massive expansion over the past three years.
With
Indonesia’s property prices still comparatively low in the region,
investors and foreign business groups are keenly watching the
potential margins. Investors in Indonesia are seeking shares as well
as tangible assets in construction and property, notes Anton, citing
developers from Korea who have recently inked property deals in
Indonesia.
Budhy
Siallagan, a property analyst from E-trading Securities, confirms the
international attention Indonesian property is currently receiving.
“Indonesia’s property market is the darling of international
investors right now,” he says.
International
banks such as Standard Chartered and ANZ are also looking at
financing local developers. “Some developers have liquidity
problems, but demand is soaring so they need funding to get in on the
expansion,” explains Anton.
Related
sectors
“I
am optimistic the property sector will grow next year. Macroeconomic
indicators are positive, inflation is only 6% and interest rates are
very low, even related sectors such as iron and steel and cement for
example, are still low,” says Budhy.
Demand for
middle to lower-end residences is still high and supply remains
moderate, while for the high-end market conditions are stable as
developers are using their liquidity prudently, says Budhy.
In terms of
the commercial property market, the CBD is the golden location.
“This is a
sign of strong demand in the sector and Indonesia is lucky as the
property crash in US has made developers more prudent about their
expansion plans,” he notes, adding that earnings per share have
touched 80% over the past two years.
The
giants
For the big
players such as the Agung Podomoro Group, owned by tycoon Trihatma K
Haliman, Aburizal Bakrie’s Bakrieland and Mochtar Riady’s Lippo
Group, the coming year is being equated with expectations of solid
growth.
“Lippo
Karawaci is a major player in the industry and its strong interest in
public utility projects such as hospitals and residential
developments such as Kemang Village and St Moritz will target the
middle- to high-end market,” says Budhy.
In the
pipeline for Bakrieland are projects in the CBD, including in the
Kuningan and Sudirman area. With its huge land bank, the group is set
to woo investors attracted by the soaring value of its assets.
The
group’s development plans linked to its toll road, such as its
Bogor Nirwana Resort (BNR) that will connect with Ciawi-Tasikmalaya
(both in West Java), are also likely to boost its accounts.
Agung
Podomoro Group is focusing on some prestigious projects, including
its Central Park project, to be completed this year using funds from
its IPO. GA
bystander: 
twostellas: 
TalkingEid: 
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