Jakarta. Gading Development, a property developer, is seeking a Rp 455 billion ($38.3 million) loan to finance the construction of an apartment tower in Ciputat, Tangerang.
The project is estimated to cost Rp 650 billion, or roughly 70 percent of the loan.
Cahyo Satrio Prakoso, a director at Gading Development, said the company has recently secured Rp 30 billion in funds, which will also be used towards the apartment project. “Financing will be done gradually over the course of two years,” Cahyo said.
In addition to the bank loans, the listed property developer also plans to use pre-sales proceeds to finance its investments.
The practice of pre-sales refers to marketing activities prior to the completion of a property project. Buyers can place a down payment or pay for an apartment unit in full before the building’s groundbreaking — a common procedure of property investors in Indonesia.
The Ciputat apartment project will cover some 2.3 hectares of land and house 2,800 units.
“We’re planning to organize a few events soon to boost sales,” Cahyo added.
Jakarta-based Gading Development develops residential housing, hotels, apartment complexes, shops and town homes, including The Boutique Apartment in Central Jakarta.
The listed property developer has prepared Rp 100 billion for this year’s capital expenditure, which will primarily be used for land acquisitions and construction guarantees. About 70 billion of the capex will is funded through bank loans, while the remaining comes from the company’s internal funds.
Gading Development aims to fetch approximately Rp 138 billion in revenue this year, a 15 percent increase from earnings gained a year before.
The company is also building a hotel in Cirebon, West Java, this year that’s estimated to cost around Rp 70 billion. Both projects are scheduled to start operation in 2016, Cahyo said, adding that the Cirebon hotel is expected to jump start the company’s recurring income.
This stable source of revenue is expected to contribute up to 30 percent of Gading Development’s total earnings by 2016, Cahyo said.Rp138b projected revenue for 2014 is a 15 percent increase from Gading Development’s earnings in 2013