CLSA Indonesia – a compelling case for property

What’s new?
The recent price paid for a sqm of land by a developer in HK is equivalent to 120 sqm house in Jakarta.
Indonesia remains a compelling story for the property sector given its young population, urbanisation growth, and rising household income.
We remain “Overweight” the sector, with SMRA and BSDE as top picks.

Indonesia – a compelling case for property
This week, Nan Fung & Wharf paid an equivalent of US$43,000 psm for a developable land area of 3ha on the Peak in Hong Kong, a city with a population of 7m people with 110,000 ha area. This is the first government site on the Peak up for auction and has attracted fierce biddings during the auction. Down south in Jakarta, US$43,000 will buy you a three bedrooms house of 120sqm land area in Serpong, West Jakarta.

Indonesia remains a compelling story for the property sector:
As a country, Indonesia is the fourth most populous nation in the world, with over 240m people growing by 4m a year. 44% are below 24yrs old.
More than half of Indonesians live in Java. It is the on the most populated island in the world with more than 130m people.
Greater Jakarta holds 10% of the total Indonesia population, and the suburbs are still very under-populated compared to the city. The suburbs of Jakarta are 10x larger than the Jakarta city, which is slightly larger than Singapore (664km2).
Greater Jakarta is growing by 2,000 people a day and by 2030, will be the biggest city on this crowded planet.
Indonesian household income has doubled in five years and land values in Jakarta have risen by 20% compound over the same period; as verified by independent third party valuers.

BUY – SMRA, BSDE as top picks which are most leveraged to rising land values and trade at half the NAV.