Property in Indonesia: Meikarta's Land Acquisition at 16.8%
So far the Lippo Group only managed to acquire 16.8% of the total land that is required to develop the ambitious Meikarta township project. Meikarta is designed to become a full-fledged township, equipped with high-class and modern residential, commercial, industrial, cultural and educational centers, located on a 500-hectare plot of land 34 kilometers to the east of Jakarta, including 100 hectares of open green space, 250,000 units of prime residential property, and 1,500,000 m2 of prime commercial space.
Although the land acquisition process is far from completed, while in various local media it is speculated that Lippo Cikarang, the developer of the Meikarta project, still has not obtained all necessary permits on the provincial level to start construction, the Lippo Group has been marketing its Meikarta township project aggressively to Indonesian consumers.
Ketut Budi Wijaya, President Director of Meikarta, said the company has already obtained part of the permits and land since 2012. However, these permits are for the development of an industrial estate, thus Lippo is currently busy altering the permits into permits for residential purposes. He added that the Meikarta project will be developed in stages over the next five years and therefore it is not necessary to have acquired all land from the start. Those properties that are already being offered to consumers involve those sub-projects for which permits have already been collected.
In the first stage the Lippo Group offers 225,000 apartment units to consumers. At the grand launching of Meikarta earlier this week Wijaya said 99,300 units have already been sold. If development goes according to schedule then these first stage apartments are ready by 2018. It offers various types of apartments with the price ranging between IDR 127 million and IDR 560 million (between approx. USD $9,500 and USD $42,000) per unit.
In the first stage (apart from down-payments from buyers) the company will use internal cash reserves of Lippo Group members for the development of Meikarta (mostly originating from Lippo Cikarang, Lippo Karawaci, Matahari Department Store, and Siloam International Hospitals). In later stages the Lippo Group will seek foreign loans or will sell stakes in subsidiaries. It is estimated the whole Meikarta project will require IDR 278 trillion (approx. USD $21 billion) worth of investment.
