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Foreign developers eye local prospects
Popular district: Mega Kuningan is one of the most sought-after business districts in Jakarta by both local and international developers
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span class="inline inline-center">Popular district: Mega Kuningan is one of the most sought-after business districts in Jakarta by both local and international developers. JP/Wendra Ajistyatama
Indonesia's huge population provides potential market for various property products.
Several foreign developers have set their eyes on Indonesia's property market due to the country's huge population and economic growth of 5.5 percent, deemed the highest in Southeast Asia.
Foreign investors from Singapore, China, Korea and Malaysia have reportedly expressed their interests to expand their property businesses to Indonesia. The types of property projects they are interested in range from residential projects such as apartments and commercial ones, including shopping centers, malls and industrial estates.
The Singaporean-based Pacific Star Holdings Pte Ltd., for example, plans to manage two property projects, one in the Sudirman Central Business District (SCBD) in Jakarta and another one in Bali.
The developer cited data from the United States Trade Department that said Indonesia was the world's fourth-most populous country with 253.60 million people as its reason for investing in the country's property sector. It selected Jakarta as the site of its project due to the city's lucrative nature for property development, kompas.com reported.
Pacific Star adds to a list of Singaporean property developers with a keen interest in expanding their business to Indonesia.
Keppel Land and Capita Land are among Singaporean developers companies that have developed property projects in Indonesia.
Keppel Land's property projects are namely the Financial Tower in Sudirman, the Taman Pasadenia apartments in East Jakarta, the BG Junction in Surabaya, Ria Bintan Golf in Bintan and Nongsa Point Marina in Batam.
The Soilbuild Group Holdings is collaborating with prominent local developers to develop a supermall project in Surabaya.
Ascendas, a business wing of the Singaporean government, offers a partnership scheme with local land owners to develop various kinds of property projects, including industrial estates.
Commercial property
Meanwhile, Japan-based developer Tokyu Land plans to manage a property project in the Mega Kuningan area, South Jakarta. It is focusing on the development of commercial properties, such as retail and shopping centers as well as high-rise residential projects.
The company's marketing head, Ardian Fatkoer, said the company had long targeted Mega Kuningan as a potential site for its property project development due to the area's strategic function as the heart of Jakarta's business activities.
'Mega Kuningan suits our development concept. So far, we have developed high-class commercial property projects in the Setiabudi area, in cooperation with PT Jakarta Setiabudi International. So now we intend to expand our business to Mega Kuningan,' Ardian said.
Mega Kuningan is, without a doubt, one of the most sought-after business districts in Jakarta by both local and international developers. There are still a plenty of available land at competitive prices in the area. Actual land prices range from Rp 50 million (US$ 4,217) to Rp 70 million per square meter while the price of land in the Sudirman and Thamrin corridors in Jakarta is around Rp 100 million per square meter.
Pacific Star has invested US$300 million to develop a mixed use property project in the Sudirman Central Business District in Jakarta. The company has also invested US$100 million to develop a hotel, villa and resort project in Bali.
Pacific Star chief operating officer and president Glen Chan said that his company was cooperating with local partners to penetrate the Indonesian market.
In the next three or four months, the company would sign a memorandum of understanding (MoU) with its local partners, he said.
'We cooperate with Indonesia's medium-sized developers. We plan to develop mixed-use property, which contains office buildings, apartments and hotels,' he said.
Ardian said that Tokyu Land planned to build condominiums and serviced apartments in Mega Kuningan.
'We already have a land bank here. However, due to some concerns, we can't publicize the width of the land,' he remarked.
Aside from the residential and commercial property projects that the two developers are keenly interested in, apparently Jakarta also holds other potential for the property business: office building development.
According to data from Colliers International Indonesia, the business of developing office buildings in Jakarta has reaped great profits, as the business shows positive performance seen from high occupancy rates and rental prices. The occupancy rate of office buildings in Jakarta has reached 95 percent and rental prices have reached Rp 60 million per square meter.
Given the fact that 29 million Indonesians are in their productive age, Indonesia's property sector will continue to show positive growth, according to Indonesian Stock Exchange executive director Ito Warsito.
'The huge productive age population provides huge market potential for developers to develop residential, apartment and office building projects, although we face a lot of economic challenges, such as tight monetary policy and an economic condition that remains tough,' he said.
'Although our economy is forecast to grow 5 percent and the rupiah depreciated, I am confident that the huge market potential will continue to propel the property sector forward,' he pointed out.
Aside from the huge productive age population, Indonesia was a lucrative market for property projects due to its relatively stable and secure political climate, he added. (JP)
