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Jakarta Post

Intiland to boost recurring income amid slow property sector

  • Anggi M. Lubis

    The Jakarta Post

Jakarta   /   Wed, June 10, 2015   /  09:40 am

Publicly listed developer Intiland Development is looking to boost its fixed income amid a domestic economic slowdown that has weakened the property sector.

The company hopes to more than double the contributions from its recurring income to its overall revenues to 20 percent within five years from only 9 percent at present, according to executive director Archied Notopradono said Tuesday.

In doing so, Intiland would expand its superblock portfolio projects, he added.

'€œWe are working on several projects that are expected to significantly boost our recurring income by around 2016 and once the projects fully run we expect to see our recurring income contributions to revenues to go up to around 20 percent and 30 percent,'€ Archied told reporters after the company'€™s public exposé.

'€œWe are optimistic that at least by five years we can see recurring income make up around 20 percent of our revenues,'€ he added.

Intiland is currently developing several projects in Jakarta and Surabaya (East Java), mostly superblocks, which are expected to provide the bulk of the company'€™s recurring income in the next five years.

The projects are the South Quarter in South Jakarta, Kebon Melati I and II in Central Jakarta and Praxis and Spazio, both in Surabaya.

The construction of the South Quarter office and retail towers '€” occupying 7.2 hectares plot of land '€” was launched in the second quarter of 2012. It is currently 91 percent complete.

Superblock Praxis, meanwhile, will occupy 103,390 square meters (sqm) of land and will consist of offices, condominiums, retail outlets and a hotel. The project is set to be complete in 2017 and is currently 13 percent finished. The construction was started in early 2014.

Meanwhile, Spazio is an office compound, with an under-construction mixed-use tower projected to be the latest addition late next year.

The company'€™s investment income currently comes from Intiland Tower Surabaya and Jakarta, Spazio, and its Intiwhiz Hotel chain that has eight hotels operating and 10 others in the pipeline.

As for this year, the company has allocated Rp 2 trillion (US$150 million) to finance its project development.

Archied said that the company had only used 22 percent of the allocated capital to finance existing projects as of the first quarter.

'€œThroughout this year, the domestic property industry has been facing great pressure. We are currently evaluating the growth direction of the industry and the domestic economic conditions and are preparing for new strategies related to products that will be developed and for when to launch the projects,'€ he explained.

The property sector has been pinched by an economic slowdown and a high interest rate environment, as well as by the central bank'€™s tight mortgage regulations and the government'€™s recently revised higher property taxes.

Intiland corporate secretary Theresia Rustandi said that the developer had yet to launch any projects in the first quarter and relied solely in its existing projects.

'€œWe tried to hold expansion in the first quarter because it would have been of no use since our economic situation was really not favorable. We keep on evaluating,'€ Theresia said.

Intiland wrapped up the first three months of the year with around Rp 252 billion in marketing sales, or roughly 8.4 percent of its targeted marketing sales of around Rp 3 trillion this year.

The company'€™s revenues were up by around 33 percent to Rp 603.31 billion, while its net profits remained flat at around Rp 121 billion.

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