First Came the Pioneers

Can you tell us more about your recent acquisition of Hokindo Properti Investama?

RIMO was once one of the largest retail department stores in the country back in the 1990s. Fierce competition from other retailers and online shops caused us to suffer big losses. After listing on the Indonesia Stock Exchange (IDX), a change of ownership and management was inevitable. In March 2017, new management changed the business strategy by acquiring PT Hokindo Properti Investama, an integrated property landbanker and developer, by issuing new shares in the public valued at USD300 million. In December 2017, from a loss-suffering company, RIMO made approximately IDR430 billion in total revenue and IDR145 billion in net profit, while our stock price increased by 50% in a mere nine-month period.

Would you give us a brief overview of RIMO’s current projects?

In Jakarta, we have two projects: the first is an apartment building in Kuningan and the second in Gandaria is still in the planning stage. We are preparing the master plan and applying for the development permits at present. We also have one project in Cianjur, West Java, a 200-ha plot of land where we will build villas, a golf course designed by Jack Nicklaus, and a five-star hotel.

Will the golf course development in West Java be your biggest investment?

No. Low-cost housing is in fact the largest investment because we will build 30,000 houses for a housing project in West Kalimantan in Pontianak. It is a 800-ha development site for which we will acquire more land to bring it up to 1,000ha. We will build affordable, low-cost housing to support the government’s One Million Houses program.

Will low-cost housing projects become a major profit center given that this is an ongoing government program?

We do want to make a profit; however, we also want to develop the region because once we build in West Kalimantan, the area will become more developed and we can sell higher-priced houses there as well, which will reap greater profits.

How does the financing work for the government’s One Million Houses program?

There are in fact no government loans for the construction of these projects, though there are subsidized loans for consumers who want to buy houses. They receive government-subsidized interest rates on their loans with a down payment of only 1%. Homebuyers only pay around half the usual mortgage interest rate under this scheme.

Why did you choose West Kalimantan as the region for this development?

West Kalimantan is strategically important for the government because it is close to Singapore and Malaysia. Given its strategic location, the government intends to build many projects there. In fact, the government wants to move the capital to West Kalimantan and build a large port, new bridges, schools, toll roads, railways, and other infrastructure there, not to mention develop new infrastructure to support all the palm oil plantations in the region. When we chose West Kalimantan for this low-cost housing development, it was purely on our own initiative; however, we directed it specifically at the government’s housing program. We have to be involved in building this low-cost housing.

What is the timeline for building these 30,000 low-cost houses?

In December 2017, we started Phase I and built 1,000 houses, and not just for locals in West Kalimantan, but personnel from the army, navy, and police force who also need housing and qualify for government loans. We have a number of other smaller projects around the country as well.

How would you compare the real estate opportunities in Jakarta compared to other parts of Indonesia?

It is only possible to build apartment buildings in Jakarta because land there is extremely expensive. However, outside Jakarta there are still great opportunities to build houses, especially low-cost homes.