Sinar Mas Land Expects Flat Sales This Year as Consumers Remain in 'Wait and See' Mode

Sinar Mas Land projects the value of Indonesian property to remain stagnant during the election year as consumers are still taking a wait-and-see approach ahead of potential political turmoil, despite the country's higher economic growth.(Reuters Photo/Darren Whiteside)

By : Sarah Yuniarni | on 9:20 PM February 14, 2018
Category : Business, Property

Jakarta. Sinar Mas Land projects the growth of property sales in Indonesia to remain stagnant during the election year as consumers are still taking a wait-and-see approach ahead of potential political turmoil, despite the country's higher economic growth.

"Historically, during election years, Indonesian consumers will hold their appetite to buy property units. But six months after an election, consumers' appetites will improve and that will show an upward trend," Sinar Mas Land strategic development and services chief executive Ishak Chandra said on Tuesday (13/02).
Sinar Mas Land, a holding company for residential property developer Bumi Serpong Damai and industrial estate developer Puradelta Lestari, also unveiled its subsidiaries' targets and outlook performance for this year, which as follows:
Bumi Serpong Damai (BSD)
Bumi Serpong Damai has set a marketing sales target, or the sales of property yet to be built, at Rp 7.2 trillion ($527 million) this year on the back of numerous projects expected to launch in the coming months.
The company's marketing sales target is similar to last year’s target.
BSD secured Rp $7.2 trillion in marketing sales for a full year in 2017, up 4.34 percent compared to the year prior.
"We are confident there will be a pick up for property demand this year as it is in line with the country's strong economic growth," said BSD director Hermawan Wijaya.
BSD marketing sales targets this year will be derived from commercial properties (Rp 3.55 trillion) and the residential business segment (Rp 3.65 trillion). To achieve its marketing sales targets, the company will launch several projects, including the SouthGate apartment on Jl. TB Simatupang in South Jakarta and the Klaska Residence in Surabaya, East Java.
The company has also set aside Rp 4 trillion for capital expenditures (capex) that will be allocated to acquire new land and to develop some of its planned projects.
Last year, BSD acquired 13 floors of the Bakrie Tower skyscraper in Jakarta, equivalent to 17,000 cubic meters, in an effort to increase its recurring income and meet a growing demand for office space.
Harmon said the area is worth Rp 26 million per cubic meter, in which the total acquisition was about Rp 442 billion.
The company targets the occupancy rate of the office floors to reach 90 percent by 2019. As of January this year, the occupancy rate in Bakrie Tower has reached about 23 percent.
The company also acquired Sinar Mas MSIG tower on Jl. Jend Sudirman in Central Jakarta for an undisclosed amount.
Puradelta Lestari
Puradelta Lestari targets Rp 1.25 trillion in marketing sales this year, also close to its targets last year.
The company booked Rp 1.2 trillion for its full-year marketing sales last year by selling industrial land area (Rp 1.02 trillion), commercial land (Rp 160 billion) and residential area (Rp 16 billion).
Aside from those business segments, the company also secured income after selling its industrial area to its joint-venture Panahome Deltamas Indonesia for Rp 213 billion.
Established in June last year, Panahome Deltamas Indonesia is a joint venture between Puradelta and Panahome Gobel Indonesia, a property developer affiliated with home appliances company Panasonic Group.
A joint venture will develop a residential housing complex with a smart city concept inside the Deltamas industrial estate.
"We will keep focusing our business on the industrial property segment, but we will also gradually increase the revenue from residential businesses due to the rising number of people who live in the vicinity of industrial areas," Puradelta Lestari director Tondy Suwanto said.