Property market remains bleak<\/p>\n
By I. Christianto<\/p>\n
There are no promising signs yet that there is even a slow
\nrecovery in the property and real estate sector. Meanwhile, in
\nthe stock market, concerns over weak consumer demand has dragged
\ndown property and real estate heavyweights.<\/p>\n
JAKARTA (JP): Market analyst Yenny Fadjar of PT Harita Kencana
\nSecurities said the property sector had been generally stagnant.<\/p>\n
\"Since 1998, the sector has been stagnant. This is partly due
\nto our weak banking sector. Since the banking sector hasn't
\nrecovered, the property sector will not be able to recover
\neither,\" she said.<\/p>\n
She said in the stock market, the property and real estate
\nheavyweights had been dragged down by plans to reduce government
\nsubsidies for low-cost houses (36-square-meter and below).<\/p>\n
\"Though there's is also a plan for nonbudgetary subsidies for
\nlow-cost housing projects, the issue will affect the overall
\ndevelopment of and demand for the property sector,\" she said.<\/p>\n
This shows the economy will continue to struggle with
\nshrinking demands and negative consumer sentiments, she said.<\/p>\n
She said the recent increase in fuel prices had also affected
\nthe property and real estate sector.<\/p>\n
\"Many developers are facing difficulties completing their
\nprojects. The fuel price increase will significantly affect the
\nprice of raw material. The cost of the projects will then
\nincrease,\" she said.<\/p>\n
However, she added, the prospects for primary and secondary
\nhouses would be better as the demand for them was still high.<\/p>\n
The property and real estate shares traded at the Jakarta
\nStock Exchange (JSX) last week were stagnant. However, there was
\nselected buying for short trading based on speculation.<\/p>\n
\"Speculation is the only way under the present circumstances,\"
\nsaid Yenny.<\/p>\n
Last week, out of 31 property and real estate companies listed
\non the JSX, 19 gained, one suffered a loss and the remaining were
\nstagnant. The speculation during the week raised the property and
\nreal estate index on the JSX to 24.917 by last Friday, compared
\nto 23.52 on June 15. On June 22, the JSX Composite Index closed
\nat 437.59, slightly higher than the 435.21 the previous day.<\/p>\n
Yenny said she would not recommend buying property and real
\nestate shares.<\/p>\n
However, there are still some shares that frequently traded
\nwith good volumes such as PT Kridaperdana Indahgraha, PT Kawasan
\nIndustri Jababeka, PT Ciputra Development and PT Suryainti
\nPermata, she said.<\/p>\n
The others include PT Jakarta International Hotels and
\nDevelopment (JIHD), PT Duta Pertiwi and PT Ciptojaya
\nKontrindoreksa, she added.<\/p>\n
\"This sector will be stagnant at least until 2002. But if
\nthere's no recovery in the banking sector, the property and real
\nestate sector will continue to suffer,\" she said.<\/p>\n
Loss<\/p>\n
By Friday, among the top 20 losers, three were property and
\nreal estate companies, including Jababeka, PT Dharmala Intiland
\nand PT Duta Pertiwi.<\/p>\n
There was only one property and real estate player,
\nKridaperdana, among the top gainers.<\/p>\n
In a related development, Jababeka reported a total loss of Rp
\n1.9 trillion in 2000, a further loss of 260 percent compared to
\nits Rp 549.52 billion loss in 1999.<\/p>\n
Last year, Jababeka's saw Rp 146 billion and Rp 23 billion in
\nsales and operational profits, respectively, the company's
\npresident Budianto Liman said as quoted by Bisnis Indonesia.<\/p>\n
The company suffered the huge loss due to a drop in its total
\nasset value to Rp 2.6 trillion from Rp 3.5 trillion in 1999. Its
\nliabilities also increased to Rp 3 trillion from 2.3 trillion in
\n1999 due to currency conversion of its loan. There was also an
\ninterest of Rp 210 billion in 2000.<\/p>\n
Jababeka is the developer of the Cikarang industrial estate in
\nCikarang, east of here.<\/p>\n
JIHD reported to its shareholders on Friday a total loss of Rp
\n347.8 billion in 2000. The company saw a profit of Rp 3.9 billion
\nin 1999.<\/p>\n
JIHD, which owns the five-star Hotel Borobudur in Central
\nJakarta, said the significant loss was due to the depreciation of
\nrupiah exchange rate against the greenback from Rp 7,100 in 1999
\nto Rp 9,595 in 2000. The loss from the exchange rate amounted to
\nRp 794.2 billion. There was also a significant increase in
\ninterest to be paid from Rp 166.1 billion in 1999 to Rp 266.1
\nbillion in 2000.<\/p>\n
The company admitted that the real estate sector had not shown
\nany prospective movement.<\/p>\n
\"Though there were some improvement in small scale residential
\nand shop house development projects, there were still many
\nexternal factors such as political uncertainties, lack of foreign
\ninvestment, tight money policy, volatility in the rupiah exchange
\nrate and low demand which affected major development, said JIHD's
\npresident Jusuf Indradewa.<\/p>\n
Hotel Borobudur, actually, saw an increase of 47.7 percent in
\nrevenue last year, while its occupancy rate and gross operating
\nprofit surged by 10.6 percent and 195 percent, respectively, he
\nsaid.<\/p>\n
New projects<\/p>\n
The gloomy state of the stock market, and the property and
\nreal estate sector in general have not hindered the players from
\ndeveloping new strategies to survive.<\/p>\n
A private company based in Surabaya, PT Lamicitra Nusantara,
\nwill launch its initial public offering (IPO) next month at the
\nJSX and Surabaya Stock Exchange.<\/p>\n
Lamicitra runs the largest retails in Surabaya, Jembatan Merah
\nPlaza and Jembatan Merah Shop-house. The company also has some
\nsubsidiaries running hotels, container parks and housing
\ncomplexes. The company earned a Rp 9.14 billion profit in 2000,
\nan increase from its Rp 8.43 billion profit in 1999.<\/p>\n
Yenny said there were reasons why companies launched IPOs,
\nespecially under this unpromising conditions.<\/p>\n
\"The company can gain funds from an IPO, and therefore use it
\nto develop new projects. In the case of Lamicitra, it has
\npromising projects,\" she said.<\/p>\n
New projects are also in the pipeline for publicly listed PT
\nLippo Cikarang, which operates an industrial zone in Cikarang.<\/p>\n
The company will soon develop a new 150-hectare industrial
\nzone called the Delta Silicon 2. Lippo currently runs the 270-
\nhectare Delta Silicon 1.<\/p>\n
The director of industrial and commercial sales and investment
\nof property consultant Colliers Jardine, Riko Perlambang, said,
\n\"It's hard to believe that a company would dare to develop a new
\nindustrial area in a such a hard time, when there is a lack of
\nforeign investors interested in investing in the manufacturing
\nsector in Indonesia,\" he said.<\/p>\n
Lippo Cikarang plans to offer Delta Silicon 2, whose
\ndevelopment will begin next month, at US$45 per square meter. The
\nrate is US$60 per square meter at Delta Silicon 1.<\/p>\n
\"Developers have a trick. They peg the rupiah to the US dollar
\nat a certain exchange rate, but we never know what the conversion
\nrate is.<\/p>\n
So they can set very competitive rates. A price war then takes
\nplace,\" Riko said.<\/p>\n
In addition to the new industrial zone, Lippo Cikarang will
\nalso develop a new housing complex called Orchard Hill, which is
\ndesigned in the American style. The price of the units range
\nbetween Rp 200 million and Rp 220 million each.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/property-market-remains-bleak-1447893297",
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