PROPERTY INSIDE – Although the role of PT Hanson International Tbk in the property industry is relatively new, but the captain of this company, Benny Tjokrosaputro is not a new figure in the industry. He has abundants experience in the property industry for decades.
As noted, his families play an important role in the residential development of Solo Baru. This project was developed since 1984, with size 400 ha in Solo. Currently, the residential housing is still listed as the largest in Central Java. The residential area is equipped with commercial facilities, hospitals, hyper markets, and hotels.
The role of PT Hanson International Tbk begins with the acquisition of PT Mandiri Mega Jaya from Benny Tjokrosaputro in 2013. PT Mandiri Mega Jaya is a holding company owned by Benny Tjokrosaputro’s family that has nearly 3,000 ha of reserved land bank in Greater Jakarta area. Blessed with a vision and strong business instincts, Benny saw the potential synergies between PT Hanson International Tbk as a public company with access to Indonesian capital markets and PT Mandiri Mega Jaya as the company who owns those land banks, to form Hanson Land.
Since that time, Hanson Land has restructured the company and brought in a reliable management team in property industry. Although Hanson Land may not be as famous as top developers like Ciputra Group, Agung Podomoro, nor Sinarmas, but the company has a qualify management and a fantastic number of reserved land banks.
Before 2013, Benny Tjokrosaputro and his family had a role as a land supplier for big developers. As recorded that Benny and his family have been supplying at least 10 thousand ha of land for the homeland big developers. The lands supplied from them are at potential locations and even today, many of which developed into a prestigious area.
After a role as big developers land supplier for a long time, Benny saw great potential in property for people from lower-mid class and decided to come back to property industry. Benny sees the needs of property, especially residential housing, is very high while the land is scarce.
“Since the property boom in the year 2009, looking for land has been hard as it has become the number one thing people are looking for. Hence, we are began on planning to develop our reserved land banks, be it by joint ventures with other developers, or simply develop it ourselves.”
Benny also explained that his company is currently focusing on targeting the middle-lower segment as the current ‘trend-setting’ market in property business. However, the current number of residentials provided are not enough to comply with the increasing market’s needs. The main reason is due to developers having difficulty obtaining the lands inexpensively to be able to build affordable residentials.
“Building an low cost home is not a matter of whether the developer wants to or not. There may be plenty of developers who would like to build low cost residentials, but are they capable? To build a low cost house, the essential material has to be inexpensive as well, which in this case, the land, and we cant just get any inexpensive land. If the location is too far and there are no supporting facilities or infrastructures, nobody will be interested to buy the house,” he explained.
According to Benny, Hanson Land are able to build low cost residentials with good qualities at a strategic locations, because he has aimed for the locations that are situated near the railway stations. Benny has projected that in the near future, most developed residentials will be based on transit-oriented development system, which has been implemented in most developed countries for its community development.
Speaking further about Hanson Land’s business plan, Property Inside has the opportunity to conduct a special interview with the grandson of Kasoem Tjokrosaputro (the founder of Batik Keris- red).
What are priorities for the property business development of Hanson Land?
For the short term, Hanson Land is focusing on acquiring the mid-low property markets and we are commited in the projects. From our 8.000 units of residential and commercial products, not a single one is priced above Rp 1 billion. We also hope to help the Government solving the backlog issues. Our backlog is 15-17 million units and increasing. So both the Government and developers has to cooperate to overcome this particular issue.
In Maja, the Government itself is pushing the region to be a Satellite City, a sub-urban to Jakarta. Since the Government has supported in infrastructures development, as the developer, we must commit in building a qualified low cost houses. The Government has planned to provide housing for 15 million people from South Serpong up to Maja area. We share the same vision and mission with the Government. In addition, if the Government planned on a balanced residential consisting a ratio of 1 luxurious house to 2 affordable houses to 3 low cost houses, ours consists of a ratio of 1 to 5 to 20.
How do you plan the medium and long term?
The point is we want to develop the area, building cities, not just building real estate. Building a township needs a careful planning. Like in Maja, even as of now we support the low cost houses, when the ‘demand’ of the township arises, other property products such as hospitals, schools, malls, etcetera, will also need ‘supply’. Of course we want our township to help reduce the weight of Jakarta’s overpopulation.
Many big developers are not interested in targeting low-cost housing market, then why Hanson Land wants to do that?
The largest potential market is in that segment. The problem is not whether they want to build low cost houses or not, but whether they are capable or not. To build a low cost house, the essential material has to be inexpensive as well, which in this case, the land, and we cant just get any inexpensive land. If the location is too far and there are no supporting facilities or infrastructures, nobody will be interested to buy the house.
Why Hanson Land can do that?
We already have reserved land banks since 20 years ago, of course we get a much cheaper price. And we are targeting strategic locations, adjacent to mass transit facilities such as train stations. Because we believe in the future, the development of the Jakarta area will be spreading. And the residential area that will thrive is the one that has integrated transportation system.
This has been done by the developed countries. In the past, I often asked my parents while they took me around to the major cities of the world, and I see the character of these towns is alike, such as Jakarta. Only the wealthy can stay in the city, the rest remains in the buffer area. Certainly the mobility needs of people living in the buffer zone should be supported by transit-oriented development.
Therefore, we always choose the locations close to the train station. Maybe once, choose a location away from the city center and the stations look so bad, inadequate. But now, the government has realized that the burden of Jakarta has been very severe. So the infrastructures have been improved. And then, the region becomes very strategic.
Reserved land banks owned by Hanson Land are very large. What is the reason for the company to collect so much land?
Any kinds of industry requires essential raw materials. Garment industry’s essential materials are fabrics and yarns, property industry’s essential material is the land. If we do not have the raw materials, then what will we produce? With the raw materials, we are ready anytime. My background comes from a family that dwells in the garment industry, so I apply the same way of thinking in acquiring the essential materials. Most developers forgot about this most important part, while focusing on creating more buildings and houses, instead of also obtaining more lands. We, on the other hand, still continuously increasing our land banks while developing at the same time.
What is strategy Hanson Land, as a public company, facing the era of AFTA (Asean Free Trade Area)?
We strive to be the leader in this segment of the property market separately middle class and below. We want to be the host. Moreover, the Indonesian market is very big, cities such as in Kalimantan, for example, the growth is remarkable. All the provincial capital is also potential, and this is a potential for development.
How do you see the business potential of Indonesian property in the future, and how the potential shares of property companies?
For the middle and lower segment, the chances are very good, as the needs are also high. However, people need a place they can call ‘home’. Even investors and speculators are now starting to target cheap property. Because low cost properties are easily rented out and there will always be the next tennant to occupy the house. Overall the property business will be good.
I think the shares of property companies will be good, especially if we see the potential result on the Government’s tax amnesty program will aim at the property business sector. The investment choice certainly will be on property business, thus affecting the shares on property business. As we can see, the manufacturing and commodities sectors are moving slowly, but property business is still moving steadily, dominantly on middle-lower segment. Coincidentally, we are the only property developer that focuses on that particular segment. As proven, currently there are 12 securities companies that releases the MYRX’s potential’s analysis.