Singapore’s Metro, CT Corp Tie Up on Residential Towers Project

Metro Store in China (Image credit : Metro Holdings)

JAKARTA (TheInsiderStories) – Singapore’s retail group Metro Holdings and Lee Kim Tah Group’s wholly-owned Shawco, have inked a master agreement with Indonesian-based company Trans Corp, a subsidiary of diversified group CT Corp found by tycoon Chairul Tanjung, to jointly develop, market and sell five 32-storey residential towers in Bekasi in the outskirt of Jakarta for a total investment value of Rp1.99 trillion (S$200.4 million).

“The proposed Investment will enable Metro to expand its retail interests in Indonesia, to Metro’s core property business,” Metro Holdings said in a statement.

The project is situated in Bekasi, south-east of Jakarta along Jalan Insinyur Haji Juanda, in close proximity to the bus station and railway station and the upcoming light train station, which is expected to be completed in 2018. The infrastructure is expected to offer seamless connectivity between cities in the country which will drive more economic growth.

Metro considers Trans Corp as a strategic partner with more than a decade of partnership since 2008, when Trans Corp took up its initial stake in Metro Indonesia to operate the retail department stores in Indonesia.

The Investment will serve as the start of a strategic alliance between Trans Corp, Metro and Lee Kim Tah where each can contribute its expertise and complement each other particularly in the Indonesian real-estate sector.

“The Investment is in line with the Company’s stated intention to build Metro and its group of companies’ presence and investment in the region through a selective positioning, new investments in property development and strategic alliances with a view to broadening the revenue stream of the Metro Group and facilitating sustained profitability for the Metro Group moving forward,” it said.

The Metro Group’s 90 percent commitment for the Investment is approximately Rp1.79 trillion (including VAT) (approximately S$180.4 million), and was arrived at based on arm’s length negotiations. The group will fund the investment from internal cash sources.

On Oct. 19, 2017, Metro has incorporated a new subsidiary in Indonesia, PT Metro Bekasi Investment (MBI), where MBI is 90 per cent owned by MCPL and 10 percent by SPL.

SPL is a wholly owned subsidiary of the Lee Kim Tah Group. MBI will undertake the transactions envisaged under the MA. The Investment is in the ordinary course of the Metro Group’s property development business.

Metro operates retail stores in several cities in China such as Shanghai and Guangzhou, three Metro department stores in Singapore and over nine department stores in Indonesia.

Remains Upbeat

The investment plan came as the country’s retail sector is facing tough situation as reflected by the closure of a number of upscale retail stores such as LOTUS, Debenhams, certain Matahari department and few others.

Nielsen said in recent report that, overall the economy condition is providing stable fundamental for the consumer purchasing power.

Price on basic needs are more controllable thus release some of the price pressure.They high level of consumer confidence is driven by future expectation, while in current condition consumer expectation is just at the average level.

Indonesia’s Consumer Confidence Index slowly increased since early of this year until slightly drop in June. Gap between the future and current confidence is still generally wider, compared to 2014.

Metro Holdings, however, remains confident about the vast potential of Indonesia, the largest economy in Southeast Asia.

Indonesia’s real estate is underpinned by sound fundamentals such as country’s steady economic growth, rapid urbanization, increasing domestic consumption, a rising affluent middle class and a young population.

Project Summary:

Name                         : Bekasi Mixed Development Project

Total Investment         : Rp1.987 trillion (S$200.4 million)

Total Area                   : 4.5 hectares

The Project Comprises of :

  • 32-story residential towers (about 5,600 units)
  • Hotel
  • School
  • SOHO Apartments,
  • Shop Houses
  • Office Building
  • Transmart Mall
  • Groundbreaking ceremony : Nov 3, 2017
  • Project Completion              : 3 Years

S$1 = Rp9,909