Success Follows Summarecon’s Coveted Townships


JANUARY 12, 2015

Johanes Mardjuki, president director of Summarecon Agung, shares the secrets of the township’s success.

What started off with a 10-hectare property development project founded by Soetjipto Nagaria back in the 1970s, Kelapa Gading Permai has sprawled into a township of over 500 hectares that goes by the name Summarecon Kelapa Gading.

Located in the northeastern part of Jakarta, the area where Summarecon Kelapa Gading now sits was once marshland. Today it is home to more than 30,000 houses, over 1,500 apartment units, and more than 2,000 shop houses. The turnover of Kelapa Gading reportedly reaches Rp 25 trillion ($2 billion) annually, according to the company’s reports.

Summarecon Agung has successfully expanded its township business model into two other Jakarta suburbs. In 1991 the company began to develop the 750-hectare Summarecon Serpong, located 21 kilometers west of the capital. Summarecon Serpong is among the powerhouse townships, along with BSD City and Alam Sutera, which make Serpong Greater Jakarta’s new “it” address for residential and business development. Then in 2010 the company expanded 21 kilometers east of Jakarta, where it is set to develop the 240-hectare township Summarecon Bekasi.

“Throughout the years our projects have increased and the business landscape has changed dramatically, but what stays the same until this day is our prudence in planning,” said Johanes Mardjuki, who has held various positions in finance and accounting since joining Summarecon in 1993. “Our vision is to be the crown jewel of the country’s property industry.”

Frenzied demand

Business has been good for Summarecon in the past few years. In 2010 the company booked Rp 1,695 billion in net revenue, and in 2014 it passed the Rp 4.5 billion mark after initially forecasting revenue of just Rp 4 trillion. The company had projected that with the economic decline in 2013 — which continued into last year — and tighter property purchase regulations from Bank Indonesia, would lower consumer purchasing power.

The company addressed this challenge by focusing more on the middle market rather than the middle-up. With the right mix of branding, solid product development, and clever marketing strategies, Summarecon has always seen more demand than supply, with some buyers complaining that the company’s new property launches have become somewhat of a feeding frenzy. Just because a buyer is first in line, it won’t guarantee him or her a piece of real estate.

If Summarecon is set to market a new 500-unit housing project, prospective clients sign up two days before a launch. All potential buyers get a lottery number and on launch day all of them — easily twice as many as the number of houses to be sold — can only hope they have lucky digits to purchase a house.

Instead of promoting the success of a new cluster launch, Summarecon put out a one-page newspaper advertisement in 2010, apologizing for those who were unable to acquire a piece of new Summarecon property.

Although the townships in Serpong and Bekasi are now major contributors to the company’s growing profits, Kelapa Gading is still an important asset for Summarecon. Sensing a great deal of demand for Kelapa Gading property, the company has built new apartments and commercial buildings. By the end of 2013, Kelapa Gading contributed Rp 770 billion, or 21 percent of the company’s total sales.

Building up

“With property prices skyrocketing, apartments have become the go-to choice for our customers,” said Johanes, who was appointed president director in 2006. “Not just in Kelapa Gading — we have been struggling to keep up with apartment demand even in our developments in Bekasi and Serpong.”

May 29 last year proved to be a good day for Summarecon as the company launched the three-tower Spring Lake apartment project in Bekasi, of which over 2,000 units were sold immediately, accounting for revenue of more than Rp 1 trillion. In November, the company launched another three-tower project: Serpong Midtown. Demand was so overwhelming, three more towers were added to the project.

In addition to property development, Summarecon has successfully built shopping malls that have proven to be a profitable source of consistent recurring income. The property investment and management portfolio contribute a fifth of the company’s total revenue.

Moving forward, the company is already eying other parts of Indonesia with not just townships, but also mixed-use urban developments in major cities. In Jimbaran, Bali, Summarecon is building the five-star Movenpick Resort & Spa, scheduled to open by the end of this year.

Sharing the concerns of his fellow property industry colleagues, Johanes sees Indonesia’s full potential for progress is challenged by lack of transparency in licensing, a major contributor to the high-cost economy. He is confident that the new government will seriously tackle this issue, in addition to its much-needed infrastructure development.

“The biggest challenge Indonesia is facing today I think is the question whether Indonesia can truly take off and become a developed country,” the 55-year-old said. “Can we soar like South Korea, or get stuck like other developing countries?”