Metropolitan Land, a property developer, better known as Metland, has set its capital expenditure at Rp 660 billion ($54 million) for next year, a figure lower than the Rp 850 billion it had set aside for this year.
Olivia Surodjo, the director and corporate secretary of Metland, declined to give a reason for the significant expenditure cut in the company’s investment plan for 2014.
She did add, however, that the company has received a loan from Bank Mandiri, which would be equivalent to 30 percent of next year’s capital expenditure.
The remaining Rp 462 billion, or 70 percent, of the budget will come from internal financial resources.
She remarked that Metland would focus on the acquisition of 110 hectares of land in Karawang in Bekasi, and 205 hectares in Cibitung, West Java, for the purpose of developing an integrated mixed-use and residential area.
The company will spend Rp 105 billion to finance the acquisition.
Metland plans to spend Rp 205 billion on building infrastructure, including roads, while the remaining Rp 350 billion will be used to fund existing property projects, such as Metland Menteng in central Jakarta, Metropolitan Mall in Bekasi, and Horison Hotel, in Bali.
Metland posted a 25.9 percent increase in net income to Rp 165.3 billion in the first nine months this year compared to the same period last year.
Revenue increased to Rp 424 billion from Rp 335 billion a year ago.
Nanda Widya, the president director of Metland, forecasts profits may slow down next year.
Still, Nanda said the depreciation of the rupiah would affect the company significantly next year, because it uses domestically made materials.
On top of that, profit at Metland will be affected after the central bank tightened policies to curb loan growth.
Indonesia’s central bank introduced new regulations on mortgage loans this year that requires first-time home buyers to pay 30 percent of the house value, 40 percent for second-house buyers, and increasing increments of 10 percent for each additional house purchase.
Such banking rules would negatively affect the appetite of Indonesian consumers in purchasing houses.
Metropolitan Land, established in 1994, is a property development company, which develops both residential and commercial properties, including hotels and shopping centers.
Shares of the company fell 3.8 percent to Rp 385 on the Indonesia Stock Exchange on Friday. They have fallen 27 percent so far this year.