Michael Widjaja, Group CEO, Sinar Mas Land: Interview

Interview: Michael Widjaja

What segments are driving growth in the sector?

MICHAEL WIDJAJA: The housing segment is the most important because there is a large market of burgeoning young middle-class buyers who are yet to realise the dream of owning their first home. As a developer, we have to position ourselves to accommodate this group by offering alternatives that meet their needs.

To cope with the currently vast backlog of first-home buyers, Indonesia should follow what has been done in other countries, such as Malaysia, Thailand and Singapore. We need to not only address these first-home buyers, but also speak with the government regarding how to introduce incentives that will solve the issue, such as entry-level housing or five-year fixed rates for first-home buyers, for example. There are a lot of people entering the middle class, a large portion of which is composed of tech-savvy millennials who are well informed and have high expectations.

In what ways can smart cities play a role in advancing the digital ecosystem in Indonesia?

WIDJAJA: Smart cities are about making life easier, for instance, by allowing customers to book a parking space at a mall in advance, instead of wasting time searching for one. Today’s consumers are used to everything being digital and fast-paced, so if we do not foresee emerging demands, we will have more work catching up later. Property developers can participate in this growth by attracting more investment in IT.

We are currently developing a “digital hub” concept in BSD City, which will essentially be a job-creation cluster. Every city needs job creation, and digital companies are the biggest receivers of foreign investment, creating employment opportunities in their surrounding areas. However, Indonesia’s human resources are still lagging in many ways, particularly in IT. Therefore, the best way to attract IT companies – which are needed to create a digital hub – is not only to provide hard infrastructure, such as data centres, but, more importantly, provide them with access to a skilled talent pool with appropriate capabilities. The country’s future is in creative businesses, meaning that traditional academic disciplines need to be replaced or complemented by courses that will develop new skills related to programming and computers. In the near future, not only IT companies will need people with skills in command centres, the internet of things, smart cities and similar areas – those in real estate and other sectors will as well. We want to have a Silicon Valley in Indonesia, partly to help develop an attractive talent pool in the country.

How can property developers overcome development challenges in secondary cities?

WIDJAJA: Increased infrastructure would be very beneficial. Development of the property sector will be especially felt in cities outside of Jabotedabek, with infrastructure being developed in Sumatra, Sulawesi and Java itself. The multiplier effect of this will be huge, helping to improve the situation in Jakarta by making people more comfortable in their respective areas. Having opportunities that are not only concentrated in the capital will be very beneficial for Indonesia as a whole. As soon as infrastructure is ready and the economy is stronger we will be looking increasingly at cities like Banjarmasin, Semarang and Surabaya. In fact, the latter is on the agenda for the next five years, as infrastructure there is quickly catching up.

We also see huge potential in the development of outer cities, and expect that opportunities around Jabodetabek will be explored as additional spending is allocated. Its tourism, for example, could be further developed, in turn driving up demand for real estate.

Coming after infrastructure, the second-largest challenge to growing secondary cities is understanding customers. Outside of Jakarta and Java, customers have a different way of thinking. In order to provide products that are well received in new markets, we must first improve our understanding of their needs.