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Ciputra Development prepares to release REITs

JAKARTA: PT Ciputra Development Tbk (CTRA) is preparing to release real estate investment trust (REITs), while waiting for the investors and the removal of the double tax policy in the country.Corporate Secreatry of Ciputra Development Tulus Santoso

JAKARTA: PT Ciputra Development Tbk (CTRA) is preparing to release real estate investment trust (REITs), while waiting for the investors and the removal of the double tax policy in the country.Corporate Secreatry of Ciputra Development Tulus Santoso said that the company still has to closely watch the market condition and the investors interest on the REITs issuance. Previously, the management targeted IDR500 billion of proceeds from the instruments.We still keep the REITs issuance plan. Now, we are waiting for the conviction of the double tax removal and the local investors willingness to invest on the instrument, he said to Bisnis.The company, as he said, is intended to release the instruments in Indonesia, though other property companies such as PT Lippo Karawaci Tbk have released two similar instuments in Singapore with a market cap amounted US$804.4 million.Since 2008, Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) imposed four regulations on the real estate investment in form of real estate investment trust (REIT) and collective investment contract (Dire KIK).However, no one has realized it, though three property companies had expressed their interests including Ciputra Development Tbk, PT Perdana Gapuraprima Tbk, and Malaysian property company AmanahRaya Real Estate Investment Trust.Beside REITs, the management of Ciputra has prepared a bank loan to finance the capital expenditure in this year amounted IDR2 trillion. This option is a priority in the midst of high inflation rate which has a strong potency to boost the BI rate and the yield of debt securities in the market.Related to the impact of inflation and interest rate on the property business, Tulus is optimistic that property sales will not be affected significantly since the increase in the BI Rate is estimated to increase by 1% and it will indirectly cause an increase on the interest rate.The optimism is in line with projection of Executive Director of Indonesian Center for Property Studies Panangian Simanungkalit. The property consultant saw property credit in this year will grow 16%, with an average mortgage interest below 10%."Although there is the possibility of a high inflation, Bank Indonesia has set a target to keep the benchmark interest rate remained lower at 6.5%, or plus minus of 1%," he said in a research report.Average rental yields of property in Jakarta, as he added, is still an attractive investment which promising high return reached 11.3%, or higher than Manila (11%), Kuala Lumpur (9.2%) , and Bangkok (8%).In yesterdays trading, the stock price (CTRA-coded stock) posted a 4.76% loss or dropped IDR15 per share to as low as IDR300. The market capitalization was IDR4.55 trillion.(wiw/t03)

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