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Intiland targets modest growth as industry outlook dims
Publicly listed developer Intiland Development said it set a âmoderateâ annual marketing sales growth of 10 percent as a response to a cautious market during the election year
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ublicly listed developer Intiland Development said it set a 'moderate' annual marketing sales growth of 10 percent as a response to a cautious market during the election year.
Intiland director of capital management and investment Archied Noto Pradono told a press conference on Wednesday that the company expected to generate Rp 2.8 trillion (US$233.40 million) in marketing sales this year, compared to the Rp 2.53 trillion it booked last year.
The targeted growth is far below the company's 53.3 percent marketing sales growth last year, which surpassed its initial Rp 2.2 trillion target.
'We understand that our customers choose to wait and see before purchasing property ahead of the election, and people tend to postpone their investment,' Archied explained. 'For that reason, we decided to set a modest target this year.'
The developer's careful approach is in accordance with the projected slowdown in the country's property market on hold-ups during the political year and following the implementation of the loan-to-value (LTV) rule that imposes stricter down-payment requirements for property purchases.
The country's property developers have been facing difficulties in keeping on track with their projected marketing sales this year, even after lowering their targets.
During the first quarter of this year, Intiland generated 22.67 percent of its targeted market sales, or around Rp 635 billion ' mostly from residential sales in Jakarta and Surabaya, East Java.
'We are, however, still upbeat about booking growth because there is still high demand for residential and industrial estates. We will focus on developing residential projects and will concentrate on Jakarta and Surabaya markets,' Archied explained.
To secure sustainable growth, Intiland is also planning to build five new hotels this year to boost its recurring income, looking at Balikpapan, East Kalimantan, as well as Bogor, West Java. One hotel would require about Rp 50 billion investment, hence, the company's plans this year would need a total of Rp 250 billion, according to Archied.
Intiland has developed six hotels under the brand Intiwhiz. 'Currently, our recurring income contributes to only around 1 percent of the company's total revenue,' Archied added.
Intiland plans to disburse a total of Rp 1.8 trillion of capital expenditure (capex) this year, about 70 percent of which will be sourced from the developer's internal cash while the rest will be from bank loans.
Intiland corporate secretary Theresia Rustandi explained that about 25 percent of the capex would be allocated to land acquisition, while the remainder would be used to fund the company's existing projects.
The developer recorded a 8.11 percent year-on-year increase in its revenue in the first quarter of this year, of Rp 452.59 billion, while its net profit rose by 44.38 percent to Rp 122.67 billion during the same period. Apartment sales made up 54.22 percent of Intiland's revenue, while industrial estate and house sales contributed 33.81 and 11.96 percent respectively.
