The property industry really prepare for the world steel price hikes

The property industry really prepare for the world steel price hikes. Monday (26 / 4) and, together IISIA Krakatau Steel (Indonesia Iron and Steel Industry Association) predicts an increase in steel prices will continue to happen until the third quarter of 2010. Increase an average of Rp 200 per kilogram per month.

Because of this, many wearing industrial property prices had planned to raise steel prices. "Increase steel significantly, so the increase in property is also bound to happen," said Chairman of Real Estate Indonesia (REI) Teguh Satria, Tuesday (27 / 4).

Recognizing these conditions, the fair if some developers have started to put the horses. "There must be the impact on property prices, but we still have to count again a big effect," said Danang Kemayan Jati, Head of Corporate Communications PT Lippo Karawaci Tbk.

Similar disclosed developer Great Podomoro Group. "We were fortunate to establish contracts with suppliers of steel up to three months ahead. But after that, willy-nilly have to swallow that steel prices have gone up," said Alvin Andronicus, General Marketing Manager of the Great Podomoro.

Executive developers working on superblock superblock Brass City while completing this City Podomoro mention the effects of steel price increases will vary for each project. For example, for Podomoro City project in the finishing stage, the use of steel components is not large. "Thus, the impact of steel price increases barely felt this project," said Alvin.

As with the Brass City project. In the new project starts, the steel is still the main expenditure components.

Strategy developer
Despite the increase in steel virtually impossible negotiable, both Lippo and Podomoro promised to avoid a drastic increase in property prices. "If the mere increase in the fair, all property is definitely going up in value. What we need to do is to keep the price increase not to shake the demand," said Danang.

Alvin adds that if under normal conditions, the trend of price increases could enlarge the margin, the margin in such a condition that must be suppressed. According to Alvin, the normal growth in property prices in Indonesia ranges from 15 percent to 20 percent per year. "That could be diverted in part to reduce the selling price because of production costs to swell," he said.

However, if the increase in property prices can not be avoided, Danang said, the developer must have a marketing strategy to keep telling the consumer does not lose the passion. "The packages should be packed with interesting sales, and how payments can be commuted by any means of cooperation with various banks and financial institutions," said Danang. "Moreover, quite a thin margin of apartment sales, so price increases become inevitable," he added

Marina Bay Sands Singapura Lauching

Marina Bay Sands, Singapore's second integrated resort, which opened officially on Tuesday (27/4/10), will refresh the country's tourism sector. Marina Bay Sands, worth 5.5 billion dollars which was built by owner Sheldon Adelson of Las Vegas Sands was opened at 15:13 pm Singapore time, which, according to China's fengshui, the time associated with welfare.

Marina Bay Sands is the first casino in Asia outside Macau, operated by Las Vegas Sands. Las Vegas Sands Chairman Sheldon Adelson expects its investment in Singapore to return in the next five years, and describe the Marina Bay Sands, as by far the most valuable property.

70 000 Sheldon hopes to 80,000 people will visit this area every day when all facilities are opened.

Singapore gives green light for gambling business in 2005. Marina Bay continue to be built even though Singapore had sunk in the recession of 2008 caused by the global financial crisis.

Singapore's first casino, Resorts World Sentosa worth 4.4 billion U.S. dollars, was built by Genting Group of Malaysia, and opened on February 14 last. Regions Resorts World which is located in Sentosa Island, consisting of Universal Studios, hotels, restaurants and convention facilities.

Marina Bay Sands, originally scheduled to open in late 2009, but has been delayed repeatedly due to a number of factors, including the matter of building materials and labor, and financial problems.

Marina Bay Sands, which opened this Tuesday, including casinos and 963 rooms (of 2650 beds), part shopping mall, several restaurants, exhibition centers and plazas for events. Hotel rooms and suites as well as a number of stores will be opened on June 23, while the museums, theaters, and numerous other shops will start operating a few months later this year as well.

Singaporean officials hope the casino will help Singapore achieve the target 17 million tourists who generate 21 billion dollars in 2015.

"Marina Bay Sands, which operates a second casino in Singapore, which can boost the economy," said economist David Cohen. "This will support the arrival of tourists and retail sectors have benefited, especially in the current global economy started to recover," he said.

CIMB economist Song Seng Wun said the two casinos will add to the depth of the hospitality industry in Singapore.

"Singapore is not the cheapest place to visit, but Singapore offers something different for tourists who come, whether for leisure or for business," said Song told AFP.

Having fallen 2 percent last year, Singapore's economy depends on trade, is projected to grow to 9 percent this year, the government said in a statement. But economists said the addition of the service sector, including tourism, can make Singapore exceeded its target.

Marina Bay Sands, was designed for corporate events and conventions, while Resorts World Sentosa is intended for the family.

Marina Bay Sands casino has 600 gaming tables, and more than 1,500 gaming machines, and more than 30 private room for gambling. This four-story casino, two floors down to the mass games, while two floors above for premium players.

Sheldon said the two integrated resorts will work together to bring more tourists to Singapore. "Our successes (Marina Bay Sands) do not depend on their failure (Sentosa Resorts), and vice versa, their success does not depend on our failures," he said.

Lee Carter (60) who flew from Hawaii, United States, was among dozens of passengers, who want to get the first chance to try the casino. "If lucky, I'll spend more. Otherwise, I'll be home," he told AFP.

Superblok with Steel Price

Krakatau Steel with IISIA (Indonesia Iron and Steel Industry Association) predicts an increase in steel prices will continue to happen until the third quarter of 2010. Increase an average of Rp 200 per kilogram per month. The property industry is also ready on standby.

"We are fortunate to establish contracts with suppliers of steel up to three months in advance. But after that, willy-nilly have to swallow the price of steel has gone up," said Alvin Andronicus, Marketing General Manager of Great Podomoro.

Executive developers working on superblock superblock Brass City while completing this City Podomoro mention the effects of steel price increases will vary for each project.

For example, for projects Podomoro City, which is in the finishing stage, the use of steel components is not large. "Thus, the impact of steel price increases barely felt this project," said Alvin.

As with the Brass City project. In the new project starts, the steel is still the main expenditure components.

Company property developer PT Intiland Development Tbk (Intiland)

Company property developer PT Intiland Development Tbk (Intiland) succeeded in recording a significant growth in financial performance in the year 2009. Net income at the end of 2009 the company recorded reaching Rp25, 61 billion, up 81% compared to 2008 amounting to Rp14, 16 billion.

President Director Lennard Ho Kian Guan Intiland explain the jump in net profit was mainly due to significant improvement in overall sales performance results. The Company recorded record net sales value amounted to Rp386, 82 billions, up 16.4% compared to the previous period amounted to Rp332, 22 billions.

The increase in net income was also caused operational performance Intiland grow quite high. This can be seen from the acquisition of operating profit shot 50% from Rp40, 91 billion in 2008 to Rp61, 31 billion in 2009.

"Due to sales jump in net profit in the housing sector is improving, especially from the project Graha Famili Surabaya and Parks Semanan Indah, Jakarta. We also get very good results from rapid sales strategy against a number of inventory in both projects, "said Lennard Ho.

Throughout 2009, housing sales are still the largest contribution to revenue Intiland, which reached 69.5%. The next largest contributor, ie from rental services (11.7%), the means by sport (9.1%), maintenance services and resources (6.7%), and the rest from other revenue amounted to 2.7%.

Lennard Ho expressed throughout the second half of 2009, sales value of residesial sector relatively improved compared to the previous period. This is in addition to the increasing demand of society-as the declining trend in interest rates, bank credit is also triggered by the launch of a new house types in the number of housing projects owned by the company.

The improved financial performance in 2009 gave confidence to the management Intiland to achieve better results this year. Optimistic managerial achievement of a positive performance throughout 2009, becoming a solid foundation for creating long-term growth patterns and be able to increase profits in a sustainable manner.

Business transformation
Intiland management this year is still focused on efforts to make strategic business transformation process. Company formulate the four pillars of the long-term growth as the main strategy that includes organic growth, acquisition opportunities, expand the strategic cooperation, and optimize capital management and investment.

Lennard According to Ho, the transformation process is carried out massive effort to anticipate the rapid growth in national property industry. Company as well have been the target peg to become the third largest property company listed on the Indonesia Stock Exchange.

In conducting the business transformation process, Intiland have translated into goals and targets are very clear, both related to performance, capital structure, or changes in its organizational structure. Company trying to reach that goal through innovative ways, carefully and cautiously, both organic and non-organic, such as acquisition of land and property companies. The Company also will continue its strategy to sell the inventory quickly to inventory non-core, mature, and provide a low return rate.

Property prices in China rose

Property prices in China roseProperty prices in China rose to a record in March. This indicates that government efforts to stem the price increase is not running. Required more drastic measures amid concerns that the bubble in the national housing market. Price of residential and commercial real estate in 70 cities in China increased 11.7 percent compared to last year, according to official figures from National Statistics Bureau.

Haikou, capital city of Hainan Province, south China's island, the biggest gain, with a jump of 53.9 percent of the overall property prices. Sanya, on Hainan is also the host of the Miss World beauty pageant, followed by an increase of 52.1 percent. Both cities are also at the peak in profitability over the price of new houses built, d ith prices rose 65 percent in Haikou and Sanya rose 58 percent.

Property prices in Hainan, which is located in the South China Sea, China surged after the government announced plans to convert the island into an international tourist destination.

China has raised the value of the mortgage and back taxes on home sales in the first two months to reduce the risk of asset bubbles. The Government announced in March that the developers are required to pay more for the purchase of land and prohibit banks provide loans to those who buy land only to pile up the soil, as a step to anticipate higher prices.

"This data is bad news. This means that the monthly profits back up quickly after a time to slow down by 0.9 percent in February. We expect the next policy of the Government of China to slow the real estate market," said Dariusz Kowalczyk, Chief Investment Strategy Markets in SJS Hong Kong.

Interest rates must rise, said Brian Jackson, an expert on marketing strategy Royal Bank of Canada is headquartered in Hong Kong. "To convince home buyers that the government had a commitment to overcome the overheating property market and reduce the risk of the property bubble, Beijing should use its policy of all devices, and particularly raising interest rates," he said.

Meanwhile, Lee Wee Liat, an analyst at Nomura Holdings said that property taxes can help, but it takes more steps to overcome this.

This can be tried in a number of cities that experienced the bubble properties such as Beijing, Shanghai, Chongqing, and Shenzhen. But the situation is serious enough, according to hedge fund managers James Chanos who declared that "China is currently engaged to hell." Last week he declared, "They were not able to lower property development has become a kind of opiate. It was merely to maintain the economic growth that continues to grow."

According to Lee, some developers skeptical kenaikana property prices and delaying the development until the fourth quarter of this year so there was no supply in the market.

It is the developer of China announced the increase of sales in the first quarter of this year. Evergrande Real Estate Group said penjaualan leap as much as 175 percent in the first three years rather than 2010, while China Overseas Land & Investment sebear reported 48.3 percent increase.

Commercial Property

Impact on the state property sector in two years ago tend to slow down. Decline in purchasing power and higher lending rates to curb consumer wants, namely households and firms, bought the property.

Look at the trend growth of housing loans (mortgage) which describes the occupancy demand, which slowed from 37.8 percent in July 2008 to 10.6 percent in September 2009. At that time the average consumption rate perched on 16-16,8 percent level.

For consumers, rising mortgage interest credit means extra costs, which make the cost of increasingly expensive homes.

Not only residential property, the slowdown also hit the commercial property, ie units of offices, apartments, commercial units, and industry. Slowing economic growth led many businesses delaying the expansion of its business. The delay is clearly slowing growth in commercial property units sold or rented.

This can be seen on the lower level of occupancy (occupancy rate) of office and retail commercial units. Bank Indonesia data shows, in the Jakarta area, office occupancy rate decreased from 87.5 percent in December 2008 to 85.7 percent in September 2009. Similar conditions experienced by the retail trade units, from 89 percent to become 87.8 percent.

"Quiet" impact on the rental of commercial property depressed rents and selling prices of commercial units. Just look at rental prices per month office unit in the second quarter 2009 are down 2.9 percent and fell again in the third quarter of 2009 to 2.1 percent. Selling price (per square meter) also dropped to 7.2 percent and 3.5 percent in the same period. For the retail unit, the monthly rental price contracted from 2.6 percent to minus 0.7 percent.

Could this year's performance of the property back up?

Fortunately, as the improvement in global and domestic economic wheels of this year, property sector business people can come back smiling. Several factors seem conducive to help support the achievement of commercial property sales again shine.

Cheaper
The lower interest rates to support crucial property sector growth. Application of low interest rates certainly encouraging signal for the process of economic recovery.

Steps taken by monetary authorities, by cutting its benchmark interest rate, which started in December 2008, is expected to jump-start effective way for national economic recovery. The hope is, the transmission of this policy is visible in lower lending rates.

Entering the third quarter of 2009, interest working capital loans and investments are gradually shed despite the relatively slow acceleration. For example average interest working capital loans of commercial banks that had crept up, from 13 percent (June 2008) to 15.2 percent (January 2009), now move down to the level of 13.8 percent (January 2010).

Investment loan interest becomes lower, ie from 14.4 percent in January 2009 to 13.2 percent in January 2010.

Cheaper funding costs is certainly a cool breeze for property entrepreneurs who want to develop its business wing.

This can be seen in Figure 2, which indicates the relationship between changes in the commercial building license and the trend of lending rates for working capital.

When interest rates move down the working capital loans, the issuance of building permits moved higher commercial property. That is, when the pressure eased interest rates, developers are re-boost the development of new commercial property.

Rising confidence
Prospects are bright economic and industrial businesses also strengthen expectations will perform better. This is reflected in the Business Sentiment Index increased (ISB) Danareksa Research Institute (DRI) to 12.9 percent, from the level of 117.4 (March 2009) to the level of 132.5 (January 2010).

ISB increase indicates a more optimistic view of the CEO of industry and business conditions. This optimism will encourage more innovative and daring them to expand business to the area.

Furthermore, unpredictable, impact of business expansion through the development of new branches will grow the demand for commercial property, both at central and regional trade.

In the same period, expectations of sector CEOs showed the same real estate, which rose by 31.7 percent, from a level of 96.3 to 126.9 level.

Back view of the rise of property business also supported increasing the sales expectations, which looks at Sales Expectations Index (IEP).

IEP indeed been declining in the year 2009, but rebound in 2010. IEP in January 2010 moved to a level of 138.9 or an increase of 9.1 percent.

Rising sales of course positive effect on cash flows for the benefit of creditors and shareholders. Figure 3 shows the change in stock index return of property, representing investors' expectations about the prospects of growth in property companies that move along with changes in IEP.

Rising IEP is believed to be an important capital boost corporate financial performance, which will enhance shareholder value.

On the other hand, consumer confidence over the economy are also important in raising the performance of commercial property business. Households that optimistic about future income flows tend not resistant to increase spending and lending.

Current conditions indicate that household confidence in the economy and earnings on future increases, as shown in the Consumer Confidence Index (IKK) DRI. DRI IKK grow faster 3.9 percent, up from a level of 82.9 (February 2009) to level 86.8 (March 2010).

When consumer confidence over the economy increases (including on national and local economic prospects, employment opportunities and revenue streams), the potential of business sectors to move forward will be higher.

This condition triggers the increasing demand for commercial property to land new business. At that time, expectations of profitability and liquidity of the new commercial property development is also increasing and, ultimately, commercial property values fueled.

In addition, the rapid flow of income, which supported rising property values, support the decline in the probability of default property developers.

In addition, when the demand for residential properties is high, demand for commercial property also tends to strengthen. Economic attractiveness of residential areas causing the branches of a business or a new shopping center mushrooming.

On the other hand, expanding business wheel in the housing area provide added value which makes it more desirable consumers. Support infrastructure and commercial facilities that will hoist the full investment value of the area.

The discussion above shows the prospects for commercial property business is still kinclong. Strong capital from the strengthening of business and consumer optimism, the prospects of high demand for housing, and the trend decline in mortgage interest became the backbone of this sector. However, it will not be successful without the strong support of banking.

In addition to the downward trend of interest rates continues, banks are expected to open a larger credit tap into the real estate sector. Although the perception of risk in this sector is still high, the potential increase in value of investments that provide benefits also can not be underestimated.

Apartments For No One Selected as Living Places

House is a palace for the owner. Similarly, flats or apartments that more and more popping up in Jakarta could replace the role of houses in this global era.

However, satisfaction with the comfort factor that can not be answered by an apartment facilities, such as house in general, can cause a negative impression of the occupants. That is one reason the family is still burdensome option on the home rather than another type of housing as a place for living.

"I felt there was no transparency to financial problems." he said. According Hengki, maintenance costs, electricity, and water has been big enough without known whether or not the allotment in accordance with their nominal values.

For example the cost of electricity, residents of the apartments are subject to high costs and almost equivalent to the cost of manufacturing electricity consumption is calculated based on per kilowatt hour (kWh). In addition, residents have been subjected to treatment costs for each month, but still asked for more cost for maintenance of water pipes that should have been included in medical expenses each month.

"This financial problem is not transparent. We (the residents) once asked the manager, but did not get a good response so we thought, yes, well because we also need to stay here." Hengki said.

Therefore, Hengki hoping to rally residents association which took place at its factory located in this can be a good way to make complaints and get a detailed explanation.