Fitch: Bumi Serpong's 1Q16 Sales Marred by Slower Demand for Pricier Homes
OREANDA-NEWS. Indonesia-based homebuilder PT Bumi Serpong Damai Tbk's (BSD, BB-/Stable) 1Q16 sales performance was weakened by lower demand for pricier homes, Fitch Ratings says. Its property sales fell 46% to IDR1.2trn in 1Q16, from the IDR2.2tn in 1Q15. The average price of a home fell to IDR1.3bn in 1Q16 from IDR1.9bn in 1Q15, and reflects the larger proportion of higher-end homes sold in the prior period.
Sales were exceptionally strong in 1Q15 because BSD started selling cheaper homes in its BSD City township priced at around IDR1bn each (around USD75,000). Consequently, strong sales of cheaper homes supplemented existing demand for higher-end products in 1Q15. In 1Q16, though, demand for cheaper homes continued to be robust, while demand for higher-priced properties fell.
Demand for cheaper homes is less discretionary, as these homes cater more to first-time home buyers than to speculative investors. First-time home buyers are also more dependent on mortgage financing, and were the main beneficiaries of the relaxation of property mortgage regulations in mid-2015. Fitch expects demand in this segment to continue to be robust over the near term as domestic interest rates have fallen over the last year, which should start to translate into lower mortgage interest rates.
We have maintained our full-year presales expectation for BSD at IDR6.4trn because, overall, demand for BSD's properties remains robust, and the company has a strong pipeline of property launches for the remainder of the year. BSD continued to enjoy a high take-up rate on properties that were launched for sale in 1Q16, with 80%-100% sold on the same day. Average selling prices also continued to increase across its various products, including commercial plots, shophouses and residential properties, after adjusting for different price points within these segments. Demand for BSD's products is supported by its franchise as one of the largest Indonesian homebuilders, and good asset quality.