REI encourages IPO developers: Bank financing dependence alone is not enough
JAKARTA - The DKI Jakarta Regional Board of Directors (DPD) of Realestate Indonesia (REI) revealed that developers can no longer rely on bank financing for housing development expansion.
Chairman of the General Association of REI Jakarta DPD Arvin F. Iskandar explained that his party was encouraging developers to carry out initial public offerings or Initial Public Offering (IPO).
"The dependence on conventional bank financing alone is not enough to support the long-term growth of developers," said Arvin in the Go Public Workshop entitled 'Solutions for Accelerating Non-bank Funding through the Capital Market' at the Indonesia Stock Exchange (IDX) office, Jakarta, Monday, February 23.
Moreover, according to Arvin, the current property market is facing a not-so-light challenge, namely the long project cycle which encourages the need for working capital tends to be large.
However, the realization is considered not easy because many subsidized house developers are still hesitant to start marketing their shares to the public.
"The developer of DPD REI DKI Jakarta members has reduced more now that there are 100 already. And we at REI DKI will continue to seek efforts so that all of them can become Tbk. The number of REI DKI members reaches 500 companies," he explained.
Meanwhile, REI DKI Jakarta is preparing 25 REI member developers to be able to immediately conduct a initial public offering or Initial Public Offering (IPO) until 2028.
Arvin explained that this figure is expected to be able to collect fresh funds from the capital market with a target of at least IDR 5 trillion, which includes debt management initiatives and the addition of capital for property companies in Jakarta.
"Maybe at least 5-10 percent (new IPO developers), yes. Five percent is about 25 developers. We hope that these 25 medium-sized developers can work together to run or get funds in the capital market," he explained.
According to Arvin, the target is currently focused on the start of the administrative process and technical preparations, not the target of listing directly.
He also explained that the focus of the REI DPD is currently ensuring that members begin to carry out procedures to enter the capital market. The strategic plan for funding is projected to run gradually in the period 2026, 2027 to 2028.
"One company Rp200 billion times 25, how much is it, right? (Total about) Rp5 trillion. So, we target for that property at least Rp5 trillion," said Arvin.