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Ciputra Residence sees brighter outlook for 2016
Property developer Ciputra Residence expects an improvement in the property sector and the countryâs overall economy next year, and plans a 33 percent increase in capital expenditure (capex) in 2016
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roperty developer Ciputra Residence expects an improvement in the property sector and the country's overall economy next year, and plans a 33 percent increase in capital expenditure (capex) in 2016.
Ciputra Residence might allocate around Rp 2 trillion (US$136.57 million) in capex next year, compared with Rp 1.5 trillion earmarked for this year, with an improvement in business conditions expected in 2016, president director Budiarsa Sastrawinata told a news conference on Wednesday.
He believed that the country's overall economy would pick up in 2016, and that the central bank's move to ease downpayment requirements in its loan-to-value (LTV) regulations would benefit the property sector.
'Also, there is a huge potential to explore in marketing our products to middle-to-lower income customers, because most customers in that category purchase their property because of an imminent need rather than for investment purposes,' Budiarsa explained.
'From our observation of our sales, middle-to-upper class consumers tend to hold off purchasing at a time like this, while lower-income consumers still show a strong purchasing trend.' Hence, the property developer is planning to explore the middle-to-lower income segment of the market.
He said that Ciputra Residence, which is part of property giant Ciputra Development, was looking to develop two new projects in Malang, East Java, as well as in Balikpapan, East Kalimantan, next year.
The company's projects are mostly planned communities located in a number of cities across the nation including in Jakarta, Pontianak in West Kalimantan, Samarinda in East Kalimantan and Mendalo in Jambi, according to the company's official website.
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'We did not rely on the IPO plan from the very start, especially given the current market situation. We still have a lot of room to seek loans.'
It has, however, begun to add high-rise projects to its portfolio, including office property Citra Tower in Kemayoran.
Budiarsa said that his company was previously planning to source money for its expansion needs from an initial public offering (IPO), but now that it had canceled the plan, the company might resort to other means of financing, including from its own internal cash reserves or new loans.
Ciputra Residence submitted its IPO proposal in early August, however, it called off the plan later in the next month, citing the sluggish stock market as the reason.
The Jakarta Composite Index (JCI) has lost nearly 20 percent of its value so far this year, with foreign net sales amounting to Rp 13.1 trillion.
'We did not rely on the IPO plan from the very start, especially given the current market situation. We still have a lot of room to seek loans,' Budiarsa explained.
The company's total assets stood at Rp 5.44 trillion as of June. It managed to book a 20.25 percent increase in revenue to Rp 909.91 billion in the first six months of 2015, compared with same period the previous year.
Its net profits rose by around 13 percent to Rp 276.29 billion during the reported period, up from Rp 236.5 billion between January and June last year.
Early last year, the company issued a series of bonds amounting to Rp 500 billion, with coupons set at between 11.75 percent and 12.75 percent.
