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Too Good To Be Missed
Corporate Digest | 01 August 2008
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By: Xavier Lim
Articles (51) Profile

While all eyes are on China and India as promising markets for the future, there is however another huge market that also offers interesting opportunities – Indonesia with a population of 222m people. Local and foreign retailers are developing modern retail structures at a rapid pace, especially in the urbanised areas where a middle-to-upper-middle class is emerging. Carrefour and Dairy Farm are actively engaged, while there is speculation of other foreign retailers’ interest in Indonesia. Like other markets in South-East Asia, Indonesia is a transitional market where modern retail structures are on the rise while traditional distribution networks are still the dominant channels, catering to the majority of people. Especially in the large cities of the Indonesian archipelago, modern retailing is developing fast.

Lippo-Mapletree Indonesia Retail Trust (LMIR) is established with the principal investment objective of owning and investing, on a long-term basis, in a diversified portfolio of income-producing real estates in Indonesia that are primarily used for retail and retail-related purposes.


LMIR’s asset portfolio comprises 8 retail mall properties and 7 retail spaces and is centered on the island of Java, the most populated island in Indonesia. LMIR’s malls are located in high catchment middle-to-upper-middle-income residential areas, which it is targeting at. It is estimated that the middle class population totals around 66m people and is emerging at a growth rate of some 10%.

LMIR’s malls have a large combined tenant base that includes leading domestic names such as Matari, Centro and Rimo Department Stores and Giant Hypermarket. International tenants include Starbucks, Carrefour, Bata and SOGO etc. As at 30 Jun-08, LMIR has a strong occupancy of 96.5% versus industry average of 85.9%.

For 1H08, LMIR reported a total gross revenue $53.8m and distribution to unit holders of $39.3m, both higher than the forecasted figures. This was due mainly to the contribution from the Sun Plaza in Medan, a cosmopolitan city with a population of over 2m, which was acquired on 31 Mar-08. The retail mall is the biggest and only up-market shopping centre and is strategically located in Medan’s commercial district. LMIR is also actively doing tenant remixing and seeking “favourite” brands in all of the malls. LMIR has also identified 2 asset enhancement initiatives at Istana Plaza and Mal Lippo Cikarang with targeted Return of Investment of between 25% to 35%.

Shares Investment (Singapore) believes that the white-collar youths (many of them hold several credit cards), newly-urbanized migrant populations and the new rich who are spending on big ticket items in the automotive, housing, and luxury markets will keep retail spending high in Indonesia. Besides, increased capital inflow to penetrate and develop retail market in Indonesia in 2008 and lower borrowing costs from the bank will further encourage spending particularly from the working and middle class.

One of the leading international names in LMIR’s tenant base
One of the leading international names in LMIR’s tenant base
Armed with an arsenal of investment knowledge, Xavier is the Senior Research Editor at Shares Investment.

Please click here for more information about this author.

Lippo Malls Indonesia Retail Trust  0.220 -0.005 -2.22%   
Business: REIT that is engaged in invs in retail ppties in Indonesia.

Insight: Apr-19, 1Q19 gross rental income slid 7.1% due to ... Read More

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