The government announced on Wednesday (24/08) it will cut out unnecessary processes and reduce 70 percent of the costs involved in building low-cost housing. (ID Photo/David Gita Roza)
Homebuilders Saw Lackluster Pre-Sales in 2015 Amid Harsh Economic Conditions: Fitch
BY :VANESHA MANUTURI
FEBRUARY 04, 2016
Jakarta. Indonesia's property firms reported modest marketing sales performances last year due to several project postponements amid muted consumer demand and a challenging macroeconomic environment, rating agency Fitch Ratings has said.
Marketing sales, also referred to as pre-sales, is a practice in which property is sold before it is built, a move that provides developers with a cash flow but puts customers at a grave risk should the project fail.
In a statement released Thursday, Fitch reported the consolidated pre-sales of the seven major homebuilders under its radar fell 10.4 percent in the fourth quarter last year compared to the year before. This led to a 12 percent decline during the entire year of 2015 to Rp 29.9 trillion ($2.2 billion).
"We continue to expect modest growth within a range of 0 percent to 10 percent in 2016, coming off a low base in 2015, as per our 2016 Outlook: Indonesian Homebuilders' report," the rating agency said in a statement.
Fitch keeps track of seven major property companies in Indonesia: Alam Sutera Realty, Bumi Serpong Damai, Ciputra Development, Lippo Karawaci, Modernland Realty, Pakuwon Jati and Summarecon.
Among the seven companies, Fitch singled out Bumi Serpong Damai, an entity under Indonesian tycoon Eka Tjipta Widjaja's Sinar Mas Group, as well as Ciputra Group's Ciputra Development as two developers with positive pre-sales growth last year.
"Bumi Serpong Damai has outperformed its peers with stronger 2015 presales than our expectations, and 5 percent higher than in 2014. We expect flat pre-sales in 2016," the rating agency said.
Bumi Serpong Damai, who owns the BSD City township in Serpong, reported Rp 6.8 trillion in marketing sales from Rp 6.5 trillion in the year before, however the company still fell below its initial target of Rp 7.5 trillion after postponing three projects last year.
On the other hand, Lippo Karawaci, whose holding group is affiliated with the Jakarta Globe, and Alam Sutera Realty, reported "considerably weaker 2015 pre-sales than we expected," Fitch added.