Property sector to get worst next year, REI says<\/p>\n
JAKARTA (JP): The country's property sector, which had been
\nseverely bruised by the monetary crisis, could see a worse market
\nsituation next year, a speaker at a seminar said here yesterday.<\/p>\n
Chief of the honorary board of the Indonesian Association of
\nReal Estate Developers (REI) Moch. S. Hidayat said yesterday the
\ncountry's property business would see its worst day next year due
\nto the combination of high inflation, lower economic growth and a
\ndecrease in the public's purchasing power.<\/p>\n
He said many weak property developers and contractors could go
\nbust and be forced to lay off a large number of workers.<\/p>\n
\"From 800,000 to one million workers in property development
\nwill lose their jobs next year,\" he said at a seminar on
\nnonperforming loans in the property sector and their solution,
\norganized by Pusat Studi Properti Indonesia (PSPI) property
\nconsulting agency.<\/p>\n
The seminar, which was opened by State Minister of Public
\nHousing Akbar Tanjung, also featured REI chairman Edwin A.
\nKawilarang, property analyst Panangian Simanungkalit, economist
\nPande Radja Silalahi and president of Bank Tabungan Negara Tito
\nSoetalaksana.<\/p>\n
Akbar also said the monetary crisis, which had befell East
\nAsian countries since July, had greatly affected the country's
\nproperty sector, decreasing sales and forcing many developers out
\nof business.<\/p>\n
The minister estimated that only 1,660 of the 2,446 company
\nmembers of REI would remain active next year.<\/p>\n
He said the impact of the monetary crisis was especially felt
\nby the developers of middle-upper income housing, which was in
\noversupply.<\/p>\n
Developers of middle-lower income housing were less affected
\ndue to strong demand and they would continue to see a strong
\nmarket next year, Akbar said.<\/p>\n
\"The oversupply in the middle-upper income housing market is
\ntoo high. According to one source, the current housing available
\nis enough to supply the market for the next three years,\" Akbar
\nsaid.<\/p>\n
Developers prefer to develop middle-upper income housing for
\nthe higher profit margin.<\/p>\n
Panangian said although the property market had been depressed
\nover the past several years, banks kept pumping credit to the
\nproperty sector. Credit climbed to Rp 19.42 billion this year, up
\n21 percent from last year.<\/p>\n
He predicted that credit to the property sector would further
\nrise to Rp 20.4 trillion next year, which would be mainly used by
\ndevelopers to service their debt.<\/p>\n
The credit funneled to the property sector had thus the
\npotential to become nonperforming debt, and as such would further
\nweaken the country's financial sector, said Panangian.<\/p>\n
Hidayat said several foreign investors had showed interest in
\nthe country's ailing development companies and Indonesian
\ndevelopers also saw it as a solution to their current and future
\nliquidity problems.<\/p>\n
Panangian agreed with Hidayat, saying foreign investors could
\n\"help\" the country's ailing developers by buying their shares in
\nthe capital market, through private placement, acquisition or
\nothers.<\/p>\n
However, Hidayat said foreign investors were still reluctant
\nto make buys now because they expected the shares to bottom out
\nand also they were wary about the country's political situation.<\/p>\n
Developers could also merge to improve their liquidity,
\nPanangian said.<\/p>\n
Developers should also cut their prices and intensify
\nmarketing to increase sales next year, he added. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/property-sector-to-get-worst-next-year-rei-says-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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