200 developers may go bust

JAKARTA (JP): Property baron Ciputra predicted yesterday about 200 developers would go bust because of the property market slump.

Ciputra told a seminar yesterday these property developers had built their projects at the wrong time.

"They started acquiring land and building their properties when the sector was booming. Thus, when they finished their property projects, the sector had started to get gloomy," Ciputra said.

Most of the soon-to-go-bankrupt developers were small or medium companies, Ciputra said.

He said the property market was weakening because of oversupply. It was a good time to buy houses.

Despite the gloom, Ciputra said most property developers, especially those with strong financial support, would make profits this year and next year.

Property analyst Panangian Simanungkalit predicted earlier that about 625 developers would go bankrupt next year because of their liabilities, legal problems and the weakening market.

Panangian also predicted that problems loans in the property sector would reach Rp 5.6 trillion (US$2.41 billion) next year, up from Rp 5.25 trillion this year.

Ciputra disagreed with Panangian's figures, saying that problems loans in the sector would not exceed Rp 1.5 trillion.

He said the 20 publicly listed property developers did not have problem loans.

Ciputra said the market would remain dull next year because of oversupply and the government's tight monetary policy.

But if lending rates, especially for housing loans, could drop 3 percent the market would start booming again in the middle of next year, he said. (rid)