Not all of Indonesia’s leading developers are publicly traded, but at present there are 21 stocks listed in the property, real estate and construction sector on the main trading board at the Indonesia Stock Exchange. This, alongside several other factors, means the outlook for 2011 is good. The group’s performance has been slightly less robust than that of the overall market in the first half of 2011, but was expected to do some catching up in the latter half of the year, according to research from Bahana Securities, as mortgage financing, growing demand and land supply combine to create this positive outlook. Trends are generally consumer-driven, including malls spreading from the Jakarta core to suburbs and other cities, as well as major mixed-use developments that are called independent cities. These are usually located in a Jakarta suburb or bedroom community surrounding the capital. Many of the listings are on the smaller side, however, offering about 5trn shares to trade. The following five companies have more than 10trn shares outstanding.
LIPPO KARAWACI: Lippo has the largest number of shares outstanding, with just over 23trn shares according to data from the Indonesian Stock Exchange (IDX) web site. It is also the largest property developer on the island archipelago as measured by assets, land bank, revenue and net profit, according to the firm’s website. Lippo was formed through a merger of eight companies in 2004, and its portfolio includes a diverse list of projects in several countries. Lippo also has several urban developments, which include malls, hospitals, hotel and leisure properties, as well as a sizeable portfolio of income-generating properties throughout the country. Lippo Village, which is located 30 km west of Jakarta, was an early bedroom community developed in the early 1990s. Another development from Lippo is the San Diego Hills Memorial Park, an expanded take on the concept of a cemetery, includes a chapel, convention centre, restaurants and recreation facilities.
Lippo Karawaci is a part of the diversified Lippo Group conglomerate, which was founded by Mochtar Riady, a Javanese entrepreneur known for his success in leading banks. Lippo Karawaci today is known among Indonesian developers for its financial innovation. One example is its use of real estate investment trusts (REITs), a vehicle commonly suited to mature properties in which capital appreciation has already taken place and investment opportunities are more about monthly income. These are a conservative investment that is often favoured by retirees who are looking for a reliable income stream.
For developers, the advantage is in the fees collected for managing the REIT and in the money it collects in shares, which can then be used on opportunities for capital appreciation. REITs are not allowed to be traded on the IDX, so Lippo completes trading in Singapore. Lippo listed the first health-care-themed REIT in south-east Asia in 2006, and its retail properties REIT was the first in Singapore.
Earnings in 2010 rose to Rp525bn ($63m), up from approximately Rp388bn ($46.56m) in 2009.
The annual profit figure had ranged from Rp325bn ($39m) to Rp388bn ($46.56m) from 2006 to 2009.
AGUNG PODOMORO: The second-largest developer by shares outstanding, at 20.5trn, is Agung Podomoro, which was established in 1969 and has a total of 50 ha of developed real estate in its portfolio, according to the company’s website. The company’s first project was a residential development in south Jakarta, and it has developed a good reputation among Indonesians. It was the only developer that did not have to abandon any of its projects when the 1997-98 Asian Financial Crisis hit Indonesia, according to Mandiri Securities’ real estate analyst, Octavious Prakarsa. Agung Podomoro is fondly regarded due to that performance and also due to its reputation for offering well-tended condominiums that offer residents a more lived-in feel than many buildings in Jakarta, in which ownership appears to be tilted more towards investors than owner occupants. Agung Podomoro is also known as one of the few developers interested in targeting the lowincome housing segment of the market, which is difficult due to thinner profit margins but is the most underserved. Agung Podomoro’s projects are concentrated in Bandung, a bedroom community to Jakarta, and Samarinda, the capital of the province of East Kalimantan, on Indonesian Borneo.
In September 2011 Agung Podomoro completed two smaller acquisitions, buying Putra Adhi Prima and Karya Gemilang Perkasa for about Rp300bn ($36m) each. Putra Adhi Prima is a developer that is concentrated on Bogor, located 60 km south of Jakarta, where it owns 85 ha of land. Karya Gemilang Perkasa is the majority owner of the Emporium Pluit Mall in Jakarta. Podomoro sold Rp1.2trn ($144m) in bonds in August, and said it would use the money for these and other acquisitions.
ALAM SUTERA: With 17.9trn shares trading, this property developer is controlled by Argo Manunggal Group. It is a diversified developer with a portfolio of residential, commercial, retail, industrial and recreational properties. Its flagship development, however, is a residential area of the same name, Alam Sutera, located in Tangerang, a satellite city located 20 km west of Jakarta. The 700-ha project is still in development, with the current total of 3500 families in residence expected to grow to 10,000 within a decade. Other residential projects are in Bekasi, Cianjur and Tanjung Pinang.
Future plans include a 790-ha, mixed-use development in Pasar Kemis, which is about 18 km away from Alam Sutera and would be a similar type of project. Sutera officials told local media they planned to sell 400 to 1000 houses and would be targeting the middle-class market. “While global market conditions have not had a major impact on the real estate market, its volatility has resulted in a less-than-optimal time to issue bonds. Therefore, companies have to find alternative sources of financing to fuel their expansion and be more selective in terms of what type of projects they decide to take on,” said Tri Ramadi, the president director of Alam Sutera.
The namesake Alam Sutera development accounted for about 60% of a robust sales month in August 2011, valued at some Rp600bn ($72m) according to local media. Based on that strong performance, the company said in September 2011 that it would likely increase its sales target for 2011 to around Rp2.2trn ($264m), an increase of 29.4% from the original expectation of Rp1.7trn ($204m).
Bahana Securities, a leading financial security firm in Indonesia, considers Alam Sutera its top stock pick in the sector among large developers. In a research note, analyst Natalia Sutanto cited the company’s earnings-per-share growth as a key factor when giving their recommendation.
BUMI SERPONG DAMAI: Bumi Serpong has 17.5trn shares outstanding and had the highest sales in the first half of 2011, Sutanto told OBG. The company is also among the most cash-rich among those she covers. According to her report, Bumi Serpong had a net cash position of about Rp2.5bn ($300,000) as of March 2011. The company operates in the industrial, residential and office segments of the market, and its signature development is a mixed-use development called BSD City, a development that is half the size of Paris (5950 ha) and has been under way since 1989, according to the company’s website.
BSD City hopes to attract people who will both live and work within the development, and makes that proposed easy commute a part of its sales pitch to potential residents and office tenants. The sales pitch is built on five qualities: BSD’s South Jakarta location makes it close to two toll roads; facilities include a golf course and a water park; reliable infrastructure; parks; and its unique scale. Homes have already been built and residents have moved in, while the one-third of the development that was allocated for office space is expected to see its first take-up in late 2011 or sometime early 2012.
Marketing sales in 2010 – potential sales to be booked as revenue in the next reporting period – reached approximately Rp2.35bn ($282,000), exceeding the company’s target of Rp2bn ($240,000).
CIPUTRA DEVELOPMENT: Ciputra’s portfolio of completed projects includes 30 residential and commercial buildings spread across 18 Indonesian cities, as well as one international venture in China. It has 15.1trn shares outstanding on the IDX. Ciputra also has built several cities similar to BSD City, which are billed as independent cities because they offer residents the potential to work, shop and relax without leaving the development.
According to a study released by Tarumanegara University in Jakarta, there are 28 such cities in the greater Jakarta area. Ciputra reported a profit of around Rp217.2trn ($26.06bn) in the first six months of 2011, up 42.1% from the Rp152.8trn ($18.34bn) recorded in the same time period the previous year.
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