P

roperty developer Agung Podomoro Land saw its net profits slip by more than 28 percent in the first half (H1) of this year as property developers across the country saw slowing demand on higher interest rates, tighter down-payment rules and the usual '€œwait-and-see'€ attitude of an election year.

Agung Podomoro pocketed a Rp 359.66 billion (US$30.99 million) net profit in the January to June period, down by 28.67 percent compared to Rp 504.24 billion in the same period last year, according to the company'€™s financial report submitted to the Indonesia Stock Exchange (IDX) website on Tuesday.

Lower sales and increased expenses put pressure on the publicly listed developer'€™s finances in the first semester of this year.

Agung Podomoro booked a 5.76 percent year-on-year (y-o-y) drop in its sales and revenue to Rp 2.29 trillion during the period.

Operational and financial expenses rose by 28.9 percent and 21.46 percent, respectively, to Rp 341.86 billion and Rp 267.86 billion.

Agung Podomoro corporate secretary Justini Omas told reporters recently that H1 was challenging for property businesses and his company found it difficult in keeping up with its annual marketing target.

'€œOverall, the property business has experienced a slowdown this year. We hope that business will recover in H2 [second half],'€ Justini said.

Most of the country'€™s publicly listed developers saw net profits slide in the first quarter (Q1) as a result of regulatory tightening, including new loan-to-value (LTV) ratios and higher interest rates.

They also found difficulty in coping up with their marketing sales this year due to the tightened regulations and delays in projects prior to legislative and presidential elections, as some chose to wait for a more stable political and economic condition to start new projects.

This year, Agung Podomoro targeted a 5 to 10 percent revenue increase from Rp 4.9 trillion generated last year. It aims to pocket Rp 6.5 trillion in marketing sales this year, slightly up from Rp 6.3 trillion last year.

However, marketing sales were down by 8.76 percent y-o-y to Rp 2.29 trillion up to May, or only about 35 percent of its annual target.

Harco Glodok electronic shopping center (West Jakarta) contributed 32.9 percent to the total figure, followed by '€” among others '€” Orchard Park with 24.5 percent; and superblocks Podomoro City Deli Medan (North Sumatera) and Podomoro City extension (West Jakarta) with 12.8 percent and 6.5 percent, respectively.

Apartment sales made the biggest contribution to APL'€™s total revenue and sales with 43.22 percent, followed by rental income with 14.94 percent 12.34 percent and home office with 12.34 percent, the company'€™s financial report shows.

Agung Podomoro is currently working on several projects '€” mostly hotels and shopping malls '€” including Podomoro City extension; small office home office (SOHO) Pancoran in South Jakarta; Metro Park apartments and Harco Glodok; and Kenari Mas mall in Central Jakarta.

It is also working on the Grand Taruma township in Karawang; Vimala Hills Resort, Bandung International Convention Center and Bandung Parahyangan Residences, all in West Java; two resorts in Bali; Orchard Park Batam housing complex in the Riau Islands; and superblock Podomoro City Deli Medan in North Sumatra.

To cope with market slowdown and generate more sustainable income, APL said in a previous report that it aimed to increase recurring income by 40 percent to Rp 1.4 trillion this year, up from around Rp 1 trillion in 2013, by developing more malls and hotels.

The developer currently has 1,500 hotel rooms '€” a figure that is expected to double by 2016 '€” to help the company secure Rp 2 trillion in recurring income by year-end.