Tuesday, October 2, 2012

Bekasi project to benefit from the surrounding industrial estates

by DBS

Bumi Serpong Damai : BUY; Rp1,130;
Price Target : Rp1,800; BSDE IJ

Visit note: Bekasi project to benefit from the surrounding industrial estates
We visited BSDE’s project in Bekasi, Grand Wisata. The landbank is quite big with 800+ha remaining although much smaller compared to BSD City in Serpong. The project caters to the population in Bekasi area as well as those who are working in the nearby industrial estates. Within the Bekasi-Karawang area, there are a number of large industrial estates such as Bekasi Fajar, Jababeka, Lippo Cikarang, Delta Mas and Surya Semesta. The selling points of Grand Wisata is direct access from Cikampek toll road, distance from Jakarta is one of the closest and the development is solely residential while other projects could be mixed with industrial.

We expect Grand Wisata to benefit from the expansion of industrial estates in Bekasi-Karawang area in 2013 and beyond. Demand for industrial land started to pick up in late 2011 and generally, this will drive residential demand once the factories are built. The closest major industrial estate to Grand Wisata is Bekasi Fajar and we believe Grand Wisata could benefit since Bekasi Fajar does not have a residential project within the estate.

In term of ASP, Bekasi is approximately half of that in the Serpong area but prices have started to increase as well. The ASP for the most recent launch, the Water Spring cluster, has increased by c.30% to Rp3.5m per sqm compared to the end of 2011 and there is good potential for further upside as the price in Bekasi has lagged Serpong in the past few years. While Serpong remains the largest contributor for BSDE, Bekasi could be next in 2013 and beyond albeit at a smaller scale due to size of landbank and ASP per sqm. We maintain our Buy recommendation on BSDE.

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