Property will remain bearish

JAKARTA. Property sector moved slowly as of the end of 2016. This reflects on marketing sales revenues. Some issuers even had to revised the last year’s target.

For an example, a property issuer PT Ciputra Development Tbk (CTRA) admitted that the company could not achieve the marketing sales target of the last year. “As of the end of December, the marketing sales only amounted to about Rp 7 trillion, or 75% of the target,” said Tulus Santosa.

As much as 75% and 25% of CTRA’s marketing sales revenues were derived from landed house and hugh rise building segment. This performance has led CTRA’s shares prices to drop by 8.6% along 2016. The decrease in the shares prices was also affected by the plan of Ciputra Group to merge its three issuers in the upcoming 19 January.

CTRA is targeting to book 15% growth in marketing sales revenues to Rp 8.05 trillion compared to the last year.

Another property issuer PT Summarecon Agung Tbk (SMRA) has also to revise the marketing sales target. Last year, SMRA gas revised down the target of marketing sales revenues from Rp 4.5 trillion to Rp 3 trillion, said President Director of SMRA Adrianto Adhi.

SMRA is targeting to reach as much as Rp 4.5 trillion marketing sales revenues, mainly from the constructions of some townships.

Similar with CTRA, SMRA’s shares prices were corrected along 2016. The shares prices of SMRA dropped by 19.6% along 2016.

PT PP Properti TBK (PPRO) booked better performance than those three property issuers. The state owned issuer recorded a 21% increase in marketing sales revenues from Rp 1.9 trillion to Rp 2.3 trillion.

PPRO even became one of the issuers with the highest increase in the share price. In 2016, the share price of PPRO had skyrocketed by more than seven times.

This year, PPRO is eager to set a higher target. “We are targeting to increase the marketing sales revenues by 25%-30% to Rp 2.9 trillion,” said Financial Director of PT PP Property Indaryanto.

Analyst at Mirae Sekuritas Indonesia Franky Rivan reminded, marketing sales is one important factor, which can drive the price of property share.

According to Franky, property sector will remain bearish in 2017, due to several challenges. For an example, BI (the Central Bank) will likely increase the benchmark interest rate to balance the potential increase in The Fed’s rate, as weel as the stronger US dollar against rupiah. In this case, the increase in BI’s benchmark interest rate may raise mortgage interest rate.

In fact, about 70% of property payment was supported by mortgage. The increase in mortgage interest rate may suppress property sales. (Muhammad Farid/Translator)