Property firms told to merger

JAKARTA (JP): Property analyst and chairman of the Indonesian Property Study Center, Panangian Simanungkalit, has recommendations for those in real estate trying to weather the current tough times:

First of all, managers should bear in mind that they will not make good profits during the recession in the next two years. They will have to be satisfied with breaking even to survive.

Companies, and particularly those in the property sector, which are likely to default on debts should back off and sell all their assets. They should be ready for liquidation.

I suggest mergers for those that can still continue but are weak in capital. This can strengthen their capitalization.

Property companies should not buy land during the next two years.

What they need to do is restructurization. Mergers is one way of doing it. The others include sharpening their marketing targets. Now, only houses below Rp 50 million in price can sell on the market.

"Sweeteners" in marketing is increasingly essential to attract buyers. For example, houses buyers are given discounts or preferences to pay down payments in installments.

I hope our businessmen will learn something from the current situation and later become wiser and mature in doing their business.

And one way to do that is to come to our Indonesian Property Study Center. Ha, ha. (bst)