|
INDONESIA
Targeting wealthy Indonesians Indonesia
is
a market that offers potential - and challenges - to Singapore banks.
Yesterday,
DBS Group Holdings announced the launch of its priority banking in Jakarta
aimed at wealthy customers with a minimum of US$50,000 or 500 million rupiah
(S$85,000) in assets.
It said
its 99 per cent owned PT Bank DBS Indonesia will start with one 'Treasures'
centre at its branch in Thamrin in Jakarta's central business district that
will offer a wide range of services to foreign and local customers. More
Treasures centres will quickly follow. The plan is to have at least five
more centres within three months or so.
One
centre is planned for Bandung, an affluent city situated just one-and-a-half
hours' drive from Jakarta.
What a
change from less than ten years ago, when wealthy Indonesians - many of them
ethnic Chinese - had to be discreet with their wealth.
These
rich Indonesians came to Singapore regularly to live it up because under
former president Suharto, whose 32-year authoritarian regime ended in 1998,
they could not flaunt their wealth. The flashiest cars seen then were
Mercedes or BMWs. Now, Rolls-Royces, Jaguars and Ferraris roar downtown. One
can also be as ostentatious as one likes, and the only unwanted attention
that such a lifestyle might attract is scrutiny from the taxman.
While
some recent social developments might make Singaporeans uncomfortable - such
as the recent rulings, or fatwas, issued by Indonesia's highest Islamic
authority against liberalism - bankers are confident of the economic
prospects of the country.
Economic
growth
In its
annual review, the International Monetary Fund (IMF) forecast that
Indonesia's economy would expand 6 per cent this year.
It also
expects the country's gross domestic product (GDP) to grow 6-7 per cent a
year over the medium term, assuming that the government's economic policies
are implemented as planned.
DBS,
which till now has focussed on corporate and wholesale banking in Indonesia,
is expanding its activities there. But it is not alone in this. Rivals
United Overseas Bank and OCBC Bank have also moved to raise their presence
there.
UOB
yesterday said it was moving to complete the purchase of Bank Buana,
Indonesia's twelfth largest bank. It has executed sale-and-purchase
agreements for a 30 per cent stake in the bank from a number of
shareholders, a move that will lift its stake to 53 per cent stake. UOB will
make a tender offer for the rest of the shares upon completion of the
transactions.
Earlier
this year, OCBC Bank raised its stake in Bank Nisp, the eleventh largest
lender, to 71 per cent.
Bank
Buana and Bank Nisp have been bankers to Indonesia's small and medium
enterprises.
UOB and
OCBC have both said one of their immediate priorities is to develop the
consumer business of their Indonesian acquisitions.
The
growing middle class is a big market for Indonesian banks, which have been
transformed and professionalised by their new foreign owners.
Previously,
many of the banks channelled funds towards shareholder loans, one of the
reasons behind the bank collapses during the Asian financial crisis.
Niggling
issue
Now,
with new owners, the banks have to turn a profit, and consumer banking will
be a key source of earnings. DBS estimates that in Jakarta alone, there are
500,000 mass-affluent residents. In a country of about 230 million people,
with steady growth, banks should have little problem selling their consumer
products.
But one
niggling issue comes to mind. One long-time resident of Jakarta says that
banks selling platinum credit cards and companies selling luxury cars have
to disclose the names of their customers to the authorities. While there are
obviously many who pay their taxes and do not mind the scrutiny, there is a
bigger group who might be deterred.
Bankers
in their pursuit of affluent customers will have to find a way to reassure
their customers - otherwise a major segment of the market will remain out of
their reach. - by Siow Li Sen BUSINESS
TIMES 4 Aug 2005
14 Oct 2002 - Indonesia's benchmark stock index suffered its biggest
one-day drop in more than four years yesterday on concern that Saturday's
bomb explosions on the resort island of Bali might damage the country's
economic recovery.
Singapore players still cautious about Indonesia
Developers like Keppel Land and City Developments are
monitoring the market
The Indonesian property market may be showing signs of a revival, but
Singapore developers are adopting a wait-and-see attitude.
Since the Asian financial crisis hit, several Singapore developers have
halted their projects. Now, after five years of being in the doldrums, the
Indonesian market has shown some signs of picking up.
A BT story last week reported that the pick-up in activity was due to
falling interest rates, the entry of new players, and the move by the
Indonesian Bank Restructuring Agency (Ibra) to offload some 1,700 units
worth about 600 billion rupiah (S$119 million) in a nation-wide auction.
Work on some projects are also expected to begin in the next six to nine
months.
But for Singapore developers, caution is the watchword.
Keppel Land, which has a fairly large presence in Indonesia, agreed there
were 'some early indications of a revival of interest in real estate sectors
that are domestically driven, for example, retail and local residential
housing.'
'These are positive signals of a nascent recovery in the face of the many
challenges Indonesia is still facing,' Keppel Land said. 'We will continue
to monitor the market.'
The group, however, stopped short of saying if it would speed up
development plans.
Keppel Land has put on hold Phase Two of Taman Pasadenia, a residential
project in Jakarta's Pulomas estate. The land has been leased out to an
investor who is operating a temporary 40-bay golf driving range.
In Yogyakarta, Keppel Land is planning 500 waterfront resort homes
adjacent to the Club Med Resort. The development of the first phase of 64
homes is subject to market conditions, according to the group's annual
report. The opening of the 247-room Hotel Sedona Manado will also hinge on
market conditions.
A locally listed developer who aborted plans to enter the Indonesian
market in 1996 said: 'It's best to be certain that the recovery can be
sustained. Also, you never know when the rules can change and work against
you. Indonesia's a very difficult market to be in; you not only have to
worry about the economy, but there's also the political environment to think
about.'
City Developments, which has a 30 per cent stake in the Oseania Resort
Condominium in Jakarta, said it has been keeping tabs on the economy as well
as the property market.
CityDev entered the Indonesia market towards the end of 1996, joining a
long line of foreign investors after the government liberalised rules
allowing foreigners to buy local property.
However, the Asian financial crisis struck months later and Indonesia was
among the worst hit. Many of the bulldozers and cranes stopped work and
buildings were left half built. The US$80 million Oseania waterfront condo
in Ancol, in north Jakarta, was one of them.
'We are also reviewing the project with our partners from time to time,'
a CityDev spokeswoman said. Oseania is a CityDev joint venture with Mitsui
& Co and PT Bunan Land and units in parent Hong Leong Holdings. CityDev
said it was keeping its options open at this stage when asked if it or the
joint venture has plans to sell out to another party.
Yet others such as CapitaLand have pulled out of Indonesia. Earlier this
year, CapitaLand announced the disposal of its stakes in two
Indonesia-incorporated units for a total of $49 million as part of its
strategy to focus on key cities outside of Indonesia. One firm owned a
vacant site in Kebayoran, in south Jakarta, while the other owns a
development comprising two uncompleted condominium towers in Permata Hijau,
also in south Jakarta. - by Andrea Tan
Business
Times 03 Oct 2002
SNAPSHOT: JAKARTA
Jakarta's residential property market will remain
deeply asleep for some time to come, awaiting political stability and
economic recovery. "A lot of investors--the mom-and-pop kind--would
rather buy in Singapore and Australia, where their children go to
study," says Adhitya Wisesa, research manager at property consultant
Colliers Jardine Indonesia.
What it boils down to is this: Indonesians buying property in Singapore
or Australia have confidence in the rule of law in those places. During the
heady days of the construction boom, when credit was easy, a large number of
Indonesians put their money in property which had not yet been built. But
developers then collapsed or absconded in the wake of the 1998 crisis, and
they were left with no redress.
The enthusiasm shown by Indonesians for property overseas is in stark
contrast with zero demand in their own backyard. "Despite increasing
numbers of inquiries from local investors over the past 12 months, the
strong level of interest expressed by them has failed to translate into
bona-fide transactions," Colliers Jardine Indonesia said in a recent
report.
Some 6,300 apartment units, accounting for 24% of total supply in
Jakarta, are still unsold, according to the report. And it looks as if
foreign buyers are no more enthusiastic. Attempts by the government in 1998
to revitalize the market by allowing certain categories of foreigners to buy
apartments foundered amid the riots and instability two years later. The
expatriate community--which numbered 48,000 before 1997--has shrunk to about
11,000. And government moves to double a value-added tax--which is
applicable to apartments bigger than 150 square metres--has put another nail
in the coffin. Developers have slammed the proposed 20% tax rate as
detrimental to sales of luxury apartments. The PWC Property Group said in a
recent report that "only a few preferred apartment projects with good
locations will be able to maintain sales, and there may still be tight
competition with the secondary-sales market."
Amid the gloom, the residential-leasing market is offering some signs of
hope as personal safety and security concerns prompt expatriates to lease
apartments rather than houses, a trend visible in growing demand for leased
apartments in the last 12 months, according to Colliers Jardine Indonesia.
Leased apartments, it says, registered a 65% occupancy rate in the second
quarter of this year, compared with 64% at the end of last year.
Premium-grade serviced apartments were 95% occupied in the second quarter of
this year, compared with 92% in the fourth quarter of last year. Rental
rates average $17.8 per square metre per month for premium-grade serviced
apartments and $14.7 per square metre for nonserviced, luxury apartments.
Despite the slight uptick in apartment leasing, the overall residential
market is not going to change much unless the accession of Megawati
Sukarnoputri to the presidency has a considerable effect on consumer
confidence. "We hope market confidence will improve next year, provided
the government can maintain stability and its economic policies bear
fruit," says Wisesa. Only then will Indonesians consider buying at
home. Far
Eastern Economic Review
PROJECT: Four Seasons Regency
DEVELOPER: Dewata Wibawa
Located in the heart of Jakarta's central business district, these four
residential towers comprise 472 units, ranging from198 square metres to 871
square metres. Three- and four-bedroom flats are available. They are for
sale at $550,000 to $1.1 million, or for lease at around $3,500 a month for
a minimum of 12 months. The development features a sophisticated security
system, a state-of-the-art fitness centre and a children's playground.
PROJECT: Eksekutif Menteng Apartment
DEVELOPER: Indofica Housing & Saranapratama Artamandiri
Comprising four residential towers, this prime development is located in the
Menteng area close to the central business district of Jakarta. It offers
240 units ranging from 86 square metres to 539 square metres, with
one-bedroom apartments and penthouse units available. The complex is
equipped with sports and luxury entertainment facilities. Apartments rent
for $15 per square metre per month.
PROJECT: Casablanca Apartment
DEVELOPER: Suryaraya Prawira
Featuring two towers of 16 storeys and 24 storeys respectively, this
condominium is located on Casablanca Road in the central business district.
Units in sizes ranging from 81 square metres to 347 square metres are
offered for rental, with average rent ranging from 7.7 million rupiah ($855)
to 25 million ($2,780) per month. Sports facilities, including swimming
pools, gymnasium, fitness club, squash court and sauna are built to
international standards.
Far
East Economic Review
|
