Triandy Gunawan, Soekotjo’s third child, has proved to be a quick learner.
Now just 33, he is managing the family property business in home-town Surabaya. The Gunawangsa Group has managed to break through the opposition to become an important player in the industry in eastern Java over the past four years.
“I learned a lot from at least two property groups in Indonesia,” says Triandy.
“One is the Lippo Group of Mochtar Riady, which in the past worked on our City of Tomorrow project with us and impressed us with the group’s financing strategy expertise.
The second is Trihatma K Haliman’s Agung Podomoro Land, which has a smart strategy to reach different classes of customers, particularly medium- to low-end buyers.”
Triandy, who studied computer science in Australia, was particularly impressed by the Lippo Group (owner of this magazine).
“Lippo Group’s strength in property financing strategy derives from their long experience and expertise in the financial and banking sector,” he said.
On about 25 hectares of land, the group has now sold about 5,000 apartment units of their own and another 1,000 units built in partnerships with groups such as Puncak Group, another significant player in Surabaya.
Concept plus pricing
Triandy believes that the development concept is important, along with price. At about Rp300 to Rp400 million per unit, the group offers customers facilities close to high-end hotel and apartment standard.
In one of their towers they also operate their own Gunawangsa Hotel, with a swimming pool, education and sports center, entertainment centers, small to medium stores and good views.
“I learned a lot from Agung Podomoro about how to build apartments with enough facilities, then moved up to premium products,” Triandy recounts.
As materials are also a concern of customers, since day one the developer has specified the materials and brands used in construction.
“Many developers don’t fulfill their promises in advertisements and that has caused many customers to be disappointed.” Triandy adds that his firm hires qualified architects and mechanical engineers of the standard used by the largest developers.
Another factor is the pace of project completion. Triandy always pushes his contractors to complete the project on schedule and in some cases completion is faster than planned. On one project, a contractor promised completion in 42 months but the job was finished in 30 months.
“We try to manage our projects to take into account the inflation rate, and our contractors are also happy to get the project finished quickly to anticipate price increases,” he added.
Partnerships are an important part of the strategy in developing new projects. Gunawangsa Group has worked together with a number of interests, including the personal investment vehicle of Alim Prakarsa and Alim Muliasastra, members of the Maspion Group family, in building premium apartments.
Property market research group Colliers international in a 2014 report said that the pairing of Gunawangsa Group and Puncak Group has become the biggest property developer in Surabaya with market share of about 30%, followed by the Pakuwon Group of Alexander Tedja in second place.
“In terms of the number of units sold, the group is number one,” says Collier Indonesia head of research Ferry Salanto, who adds that the city’s apartment market has been growing by 9 percent in the past three years.
The government says Indonesia needs at least 700,000 units of housing per year, but developers can only fulfill half of that amount.
Ferry says that many problems impede the program, including tax issues, land clearing and other structural problems.
He suggests that if the government purchased the land developers could then construct enough houses to end the shortage.
Telco and media
In the past Gunawangsa Group was a big player in telecommunication towers but now, out of a total of some 500 towers, only 30 remain.
“We sold the business to Djarum Group, and only have a few left. The telco business is not prospective any more due to low prices and, most importantly, we want to focus on our property business,” said Triandy.
“The tower business is no longer interesting, mainly because of thin revenues because of lower tariffs compared to other countries.”
The family’s Warna Warni advertising company is no longer blooming as competition has become very tight. While transforming into digital outdoor media is an option, Soekotjo Gunawan believes that his company remains one of the big players in the industry in terms of coverage.
In the past the company had strong client relationships with telco operators, consumer goods makers and the banking sector.
“Sadly a lot of players have already given up due to fierce competition and due to the transformation of media for promotion, and my family is among the few that remain,” says Triandy.
The family is developing online digital-based media advertising as well as a call-center business for businesses including banks and insurance companies and other businesses with large number of customers.
Triandy believes that family businesses like the Gunawangsa Group can also grow in a professional way as long as the family members don’t get tripped up by their own egos.
The group relies on internal sources for financing and believes that the prospect for middle- to low-end apartments is still big. “Our group is still growing and usually 95% of our projects are sold out by the time of launching,” said Triandy.
Along with siblings Junaidy Gunawan, 36, Effendy Gunawan, 34, and Dingly Olivia, 23, he works together with their parents to run property, media, telco and third-party agency (TPA) business, with the emphasis on professional operations.
“Not every student in a class gets an A for a test, and it is the same in a family but I believe each member of the family has strengths that can be orchestrated to reach the family business goal,” he stated.
Now the group is preparing another two apartment projects that will be built over the next two years. Thanks to its media business, the group is able to trim its advertising expenditure.
The success that has come in a short time does not tempt the family to list shares on the stock market for the time being. They are waiting until the value and size of the company grow.
In this case Triandy has learned from Ciputra Group about keeping pace with the industry while maintaining strong fundamentals.
“If you see Ciputra’s financial results, year by year the revenue grows steadily and the trend is always up, while other groups can make money in a short time but then cease to exist,” he stated. An IPO is a possibility two to three years from now.
“You have to be big enough to create more value for your company in terms of financial and market value,” he noted.