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Feb 15, 2016 09:03:46
Visit to property expo

First property expo in 2016 was encouraging
Over the weekend, we visited a property expo in Jakarta, organized by
Bank Tabungan Negara (BBTN IJ). During the event, BTN offered a
promotional mortgage rate of 6.6% fixed for one year. We found that a
large number of visitors to the expo showed enthusiasm regarding the
event. Besides BTN, we note that other big banks are also starting to
lower their rates to single digits. We see this trend as positive for
property sector especially for BSDE and CTRA.

Interesting mortgage rate promotion by BTN
As the organizer of the expo, Bank Tabungan Negara ($BBTN) specializes
in the mortgage segment and is the anchor bank for the Government
subsidized mortgage program. As of FY15, BTN had a market share of
~30% in mortgage lending. To boost its mortgage portfolio by ~20% in
FY16, during the expo, BTN offered a promotional non-subsidized
mortgage rate of 6.6% fixed for one year. For subsidized mortgages, BTN
offered a flat 5.0% for 20 years and LTV of 99%.

Targeting the low-middle segment
There were 209 developers participating in the event offering about 660
projects mainly in the Greater Jakarta area and several other cities in
Indonesia. Listed developers that participated in the expo were $CTRA,
$ASRI, $PPRO and $MTLA. Based on our visit to most of the exhibition
booths, we note that most of the properties offered were mainly
targeting the low-middle market segment with price tags starting from
IDR100m/unit (USD7,500). Further, many private developers offered low
cost housing that can be eligible to be financed by subsidized mortgage.

Other banks also starting to offer lower rates
Besides BTN, we also note that other big banks, such as BCA, Bank
Mandiri, BNI, BRI and CIMB Niaga offered promotional mortgage rates
below 10% starting in Feb’15. We view this positively for the property
sector, especially for $BSDE and $CTRA as most of their buyers use
mortgages for their purchases.

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