Sinar Mas Land aims for Rp 6 trillion sales
One of the largest property developers in Indonesia, PT Bumi Serpong Damai (BSDE), has announced that it is targeting marketing-sales growth of 11 percent to Rp 6 trillion (US$527 million) this year.
It is boosting its commercial property business to meet the target.
BSDE is a subsidiary of PT Sinar Mas Land, a unit under the conglomerate Sinar Mas Group.
“Our marketing sales target in 2013 was Rp 5 trillion, and we ended up collecting Rp 5.4 trillion, excluding the roughly Rp 1.9 trillion one-time marketing sales we scored through our joint ventures with Aeon Mall and Hong Kong Land,” BSDE director Hermawan Wijaya said on Monday.
When taking these joint ventures into consideration, the developer ended 2013 with an overall marketing sales figure of Rp 7.3 trillion, 72 percent higher than the previous year.
BSDE has sold roughly 68 hectares of land to Hong Kong Land, on which the latter seeks to build premium residences. BSDE is also collaborating with a Japanese retailer, Aeon Mall, to construct the flagship mall in BSD City, BSDE’s township.
“As for this year, we aim to raise our marketing sales earnings by 11 percent, to Rp 6 trillion. We consider this our conservative target,” Hermawan said.
He added that 52 percent, or equivalent to Rp 3 trillion, of marketing sales this year would come from residential property.
“However, the proportion contributed by residences will decline by 20 percent compared to 2013, during which residences accounted for 72 percent of marketing sales,” he pointed out.
He added that the marketing sales from residences this year would weaken as buyers hold off on purchases in light of new loan-to-value (LTV) regulations and general election jitters.
Sinar Mas Land managing director for corporate strategy and services, Ishak Chandra, further said that the developer would concentrate on smaller houses to keep up sales.
According to him, smaller houses at lower prices would be more attractive to investors, who have become more cautious of property investments in 2014.
“Previously, plenty of our residential projects involved houses measuring 200-300 square meters,” he said, adding that these houses could cost upward of Rp 2 billion.
“This year, we would like to focus on houses [...] below 200 square meters,” he said, pointing out that the houses would carry prices of at least Rp 1.2 billion.
Hermawan added that, to meet the marketing sales growth target, the developer would push its commercial property business instead.
“Last year, commercial property, such as offices and shop rows, contributed 28 percent to our marketing sales,” he said.
“This year, we want commercial property to deliver 48 percent to marketing sales, equivalent to a 90 percent addition,” he added.
He pointed out that, this year, the developer would be working on commercial projects involving Malaysia-based electronics and furniture retailer, Courts Sdn Bhd, and Foresta Business Loft, among others.
The developer is also planning a mixed-use project, which would include a condominium targeted for launch by the end of the second half of the year, located on the 5.5-hectare piece of land it acquired in the Rasuna Epicentrum commercial complex near Jl. HR Rasuna Said.
Ishak added that the presence of commercial properties would entice buyers to purchase residences in the vicinity of the projects.
“These commercial projects will act as our economic base,” he said.
Meanwhile, Hermawan noted that the developer would allocate roughly Rp 3 trillion to fund its capital expenses this year.
“A majority of the budget will go to constructing the necessary infrastructure, land clearance and construction of houses,” he said.
He added that the developer owned approximately Rp 3.8 trillion in cash as of September last year from previous sales, which it could use for its capital expenditure (capex).
“We also expect additional cash from our Rp 6 trillion marketing sales this year, which we can use for cash inflow,” Hermawan added.