Sinar Mas Land’s ‘Moving Quickly’ a big hit among millennials
The company also saw a spike in interest for high-end projects Nava Park and The Zora.
Indonesian developer Sinar Mas Land has seen a spike in interest in landed housing, as demand has grown relative to condos in Indonesia's housing market, says managing director Alim Gunadi. “The type of properties experiencing an increase in the property sector in Indonesia is the landed housing. At the end of 2020, the supply for the newly- launched landed houses increased as compared to those in 2019 or 2018,” he said.
“Now, everybody is concerned about the living space, those what we call daily houses where they can stay, work, and play in the same place. I think that is the condition for the landed house and currently the landed house is the only sector that can be rising in 2021,” he added.
Alim Gunadi said that there is currently an oversupply of apartments in Jakarta as many expatriates have yet to come back to the country.
Whilst this has impacted spaces allotted as rentals, the apartments also saw a decline in pricing.
“First, there is the oversupply of apartments in Jakarta. The second one is that many renters come from the expatriate group who are still in their countries. So, the behavior of these renters also impacts the supply and demand of the economy,” he said.
“If we see the property market in Indonesia overall and based on the research from the central bank, especially for the property pricing, the trend is increase in price after COVID-19 came into Indonesia in March or April of last year, ” he added.
Gunadi told Real Estate Asia that they launched ‘Moving Quickly’ after observing that the market looking for residential properties are mostly millennials where buyers may immediately move in upon purchasing the property. The innovation with the “moving quickly” properties was to help millennials move into ready-made landed properties quickly. An extensive ad campaign on social media offered sweeteners such as a discount of up to 25%, and free BPHTB, which is a land transfer tax usually paid by the purchaser.
Costing only around US$100,000 (Rp 1.5b) for every landed house, Sinar Mas Land was able to sell 350 units in the beginning of 2020 alone.
“One of the key successful launches from Sinar Mas Land is Moving Quickly. We offer the landed houses which are ready to live in as these are available stock. We operate also through many social media channels and digital channels like YouTube and Instagram, and we have been on Facebook, etcetera. That is why for the first period in 2020 we sold 350 units,” he said.
“The behavior and the interest of the market is changing, mostly with the market of millennials. That is why we must be adaptive and do some innovations with the design and offering to the market. Ready houses covered 89% in 2020, especially in the city. The pricing that we offer is mostly under 1.5 billion rupiah, and that is an affordable price there. The market can be absorbed, and it is fit for the millennial condition and income,” he added.
Partnerships on high-end properties
Gunadi said that not whilst the demand for budget housing is increasing, the same can be said for high-end properties. Sinar Mas Land partnered with the likes of Hong Kong Land and Mitsubishi Corporation to bring new innovative options to the market.
Sinar Mas entered a joint venture with Hong Kong Land to create the 68-hectare Nava Park. This luxury property project is priced at $2m for every 600 square meter unit.
“The high-end models that we have is a joint venture with Hong Kong Land that has approximately 68 hectares. We launched this last year and the size is around 600 sqm per unit. It’s very expensive for the Indonesian market as it costs at least US$2m but I think the demand is there,” he said.
A JV with Mitsubishi Corporation to create The Zora, a 20-hectare development located in the Bumi Serpong Damai (BSD) City, was also launched with a price tag of $300,000 for each unit.
“The Zora is what we call high technology with all the basic needs for the house equipped with a certain technology. The price is mostly around 4.5 billion IDR. In US dollars, around US$300,000 and above. It's a very unique development,” he added.
Gunadi said that recent policies enacted by the Indonesian government helped them in growing in terms of selling more properties despite an ongoing pandemic. With low interest rates and reasonable mortgage terms have become attractive to the different income brackets that comprise the market.
“In 2021, the Indonesian government released some policies about the down payment and rates enforced in the property market. We can see that the market now has a very low interest rate, compared to the last 10 years,” he said.
“I think this helps us as a developer to have more customers because about 60-70% choose mortgage loan as a term of payment. I think it is very good for us. Our market itself is, based on the income breakup, is mostly the millennial and Gen X. Hopefully, our products can be a fit with the market,” he added.
Another project the company is investing in is in the Transit-Oriented Development (TOD) in BSD City.
“As you know, the Mitbana is the joint venture company between Mitsubishi Corporation and Surbana Jurong and they have a partnership with us to develop the TOD in the BSD city. They will develop 100 hectares. In the near future we will also cooperate with some foreign partners from Japan like Sumitomo for an office building in the CBD area,” he said.
Artist's Impression of the township which Sinar Mas Land and Mitbana will co-develop. (Photo courtesy of Sinar Mas Land)
Sinar Mas Land has been working with property technology (PropTech) companies to promote their properties during the past year.
As movement became limited, the company decided to shift to newer ways of reaching their intended market.
Having their properties available through property listings and tech aggregators helped them target their properties to a wider market, not only to those physically in Indonesia. Options made available through financial technology (FinTech) financing options also made it easier for their customers to invest in these properties.
“In terms of technology, property technology or prop tech has been around for a few years now and is quite maturing. Then in terms of the way we interact with our customers, tech aggregators or property listing technologies will play a bigger role. They already have a very big role in the way we interact with our customers,” said Djemi Lim, Head of Business Development and Research.
“To reach out to our customers, we collaborate with them and then I think they're already in a mature state where they will bring more convenience to the customer to find the property, either as primary or secondary property,” he added.
Lim said that they have integrated more technology-based tools and changes to their properties, so as to make them more modern and adaptive to the changing times. Automation and improvements in managing townships have been set in place by Sinar Mas Land in its many property developments.
“As a township operator and building operators, we have been using a lot of technology as well. Because we are managing townships, we also manage the traffic lights, we manage the water, and some supplies of utilities. We use a lot of technology here to make sure it's more automated, even using AI to control some of them. Then, in terms of building automations, we use these to operate offices and malls,” he said.
In order to make the experience more holistic, Sinar Mas recently launched the “One Smile” app which will make payments and other services readily available to their customers.
Alongside is the e-Catalog which is a marketplace where customers may browse through their offerings from their own gadget.
“We also developed the e-Catalog which is a marketplace like 99 dotcom but only for our products. Restriction of the movement of the people is still applied in Indonesia and it's how we try to reach our customers. They can look for houses that we offer from all around Indonesia, look for promos, programs, prices, and discounts. The market is becoming more borderless because of the technology behavior,” Gudani said.
Photo courtesy of Sinar Mas Land.
(L-R: Alim Gunadi, Sinar Mas Land Managing Director; Djemi Lim, Head of Business Development and Research)