Industrial estates lure developers

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Indonesia’s strong economic growth has made several residential developers such as Agung Podomoro Group and Gajah Tunggal Group enter the industrial estate sector according to recent data from property analysts.

Colliers International associate research director Ferry Salanto said these companies and another smaller group of corporations have procured lands allocated for industrial use this year.

“Agung Podomoro Group for instance are planning to develop a total of 342 hectares of land for the industrial sector in Karawang [West Java],” Ferry said.

He said other property conglomerates that would try to enter this sector would be the Bakrie Group, Jababeka and Lippo Group.

Agung Podomoro, Lippo Group and Bakrie Group are known more for their residential, office and shopping center projects.

“The economy is going strong and these developers see a good opportunity to develop the industrial estate sector to expand their businesses,” he said.

In Java, Karawang remains the area with the most land being sold in the second quarter compared to other industrial areas like Bekasi in West Java and Serang in Banten.

In total, the Karawang area sold a total of 118.63 hectares in the second quarter of this year, higher than the 106.86 hectares of land recorded in the first quarter this year.

Meanwhile, Bekasi only sold 49.16 hectares of land, 71 percent of total sales in the first quarter of this year due to the limited amount of land to sell.

In addition, he said that the southern part of Semarang, the capital of Central Java, was going to sell a plot of land for industrial use to a foreign company this year. He declined to specify the size of the plot and the name of the company.

“Semarang is strategic because it is located between Jakarta and Surabaya, the main drivers of the island’s economy,” he added.

Besides Semarang, Kalimantan is seen as a promising market for industrial use and a new unit of the Bakrie Group is planning to develop a project in East Kalimantan to support the operations of companies affiliated with the Bakrie family business. The Bakrie Group owns coal mining company Kaltim Prima Coal in the province.

The industrial estate would cover a 30,000-hectare area, Ferry said.

According to Colliers senior associate director Sutrisno Soetarmo, Java remains the most preferred place to build industrial areas because the island’s infrastructure is suitable to support newly opened businesses.

“When a company plans to expand its business, it will think about infrastructure to support its new plant, such as the electricity and transportation access,” Sutrisno said.

He said Sumatra was not that attractive for investors when compared to Java.

“I think Batam is the most attractive place for investment in Sumatra because of its strategic location, which is close to Malaysia and Singapore,” he said.

Regions in eastern Indonesia like Bali, Lombok, Maluku and Papua were more suitable for hotel and resort development for they were the gates of tourism, he said.

— JP/Nurfika Osman