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Indonesian property firms eye slow growth in 'political year'

Publication Date : 09-01-2014

 

Publicly listed property developers, PT Sentul City (BKSL) and PT Alam Sutera Realty (ASRI), are setting conservative growth targets in 2014 in anticipation of the “political year” when consumer spending is expected to fluctuate.

According to Sentul City vice president director Andrian Budi Utama, the company will pay close attention to consumer behavior in 2014 when the nation will hold a general election.

“We want to see how consumer spending fluctuates. We estimate that they will still be wise consumers, but we would like to be cautious nonetheless,” he said.

With the cautious approach, Sentul City has set a 20 percent growth target and expects to derive most of its revenues from its residential and commercial segments. By the end of 2014, the developer expects to book 1.74 trillion rupiah (US$142.28 million) in total marketing sales and 900 billion rupiah in revenues.

At the moment, the company runs an upscale housing and business complex in Sentul, Bogor, West Java province. The complex also consists of an apartment building and a theme park.

Despite its conservative target, Andrian said that Sentul City was looking to venture into new projects in 2014. They will include a five-star condominium hotel (condotel), a new apartment building and several cluster housing sites. The condotel will have 200 units and the apartment building will have around 600 units.

Meanwhile, the new housing clusters will bring the number new houses to 550 units in 2014. However, this year’s housing construction rate will be slower than it was in 2013, when the company managed to build around 478 new units, up 50 percent from 2012.

Sentul City has not released its 2013 full year financial results, but its latest report, dated September, shows that its sales and revenues rose by 12 percent to 612.9 billion rupiah from a year ago.

Its bottom line surged more than four times to 751.5 billion rupiah, thanks to investment earnings within an associated entity.

Separately, Alam Sutera corporate secretary Hendra Kurniawan said the firm’s business would likely be flat this year. “We will restrain ourselves from expanding aggressively and choose a wait-and-see approach just like we did during previous election years,” he said.

“We don’t really have any big projects in 2014. This year, we plan to focus more on developing the projects that we launched last year,” he added.

The projects launched last year include the construction of a central business district (CBD) complex on Jl. Gatot Subroto, South Jakarta, and an office tower in Tangerang, Banten province.

Meanwhile, as the company expects business to be flat, Alam Sutera’s marketing sales are predicted to hover around 5 trillion rupiah, the same level it achieved in 2013.

Hendra said that two-thirds of the sales would come from its development areas in Serpong and Pasar Kemis, Tangerang, and one-third from projects scattered across other areas, such as Jakarta and Bali. Alam Sutera has set aside about 1.5 trillion rupiah for its capital expenditure in 2014, some of which will be used to acquire new land.

Similar to Sentul City, Alam Sutera has not published its full-year report either. According to its January-September 2013 report, the firm posted 3.04 trillion rupiah in sales, services and other revenues, a 77-percent rise from the same period in 2012. At the same time, its net profits climbed 16.7 percent to 876.67 billion rupiah.

On Wednesday, Sentul City’s shares rose 1.3 percent to 153 rupiah apiece from the previous day, while those of Alam Sutera increased 5.4 percent to 448 rupiah per share.

 

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