Gensler Indonesia - A Feasibility Market Research

BU3102 Multi-Disciplinary Project
Final Report
Gensler Indonesia
Phuvadol Uewongtrakoon 12877726
Lintang Sekar Langit 12752741
Xiao Yao 12848201
Chen Yiyi 12658745
Xing Chen 12659056
Lecturer : Dr Adrian Kuah
Supervisor : Dr Wang Pengji

Table of contents
1.0 Executive summary 1
2.0 Country background 2
3.0 Strategic growth plan of Indonesia 5
3.1 MP3EI 5
3.2 Geographic focus – Jabodetabek 11
3.3 Upcoming government projects 12
4.0 Real estate market in Indonesia 14
4.1 Jakarta 14
4.2 Surabaya 17
4.3 Other promising markets 23
5.0 SWOT analysis 24
6.0 Top real estate companies in Indonesian market 26
6.1 Top architectural companies 29
6.2 Top developer companies 29
7.0 Market entry strategies 33
7.1 Collaboration with international developers 30
7.2 Cooperation with major local developers 32
8.0 References 33
9.0 Appendices 37
Appendix 1: Major architectural companies 37
Appendix 2: Major architectural companies 40

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1.0 Executive summary
This report is a feasibility market research tailored for Gensler to enter
Indonesia; six sections are developed mainly based on official statistics, latest real
estate reports and news. Section one provides a macro-environment scan including
political, economic, social-cultural and legislative factors of Indonesia; section two is
focused on the country’s strategic growth plan, several components are highlighted
such as the geographic focus area, relevant industry, big upcoming events and
infrastructure plan because these strategies are directly linked to the development of
real estate industry.
The most important part is section three which is a comprehensive analysis of
Indonesian real estate market by geographic location. A number of major cities on
Java Island have various opportunities: residential and retail segments in outskirts of
Jakarta; retail and hotel segments in Surabaya, residential and retail segments in
Bandung and eco-friendly hotel in Yogyakarta. Moreover, a few government projects
will be developed in central Jakarta for the 2018 Asian Games and some well-known
regional developers are planning to develop integrated projects in central Jakarta.
The SWOT analysis (section four) combines all the insights from previous
sections, together with the developers list in section five, the team has come up with a
few entry strategies (section six). In addition, there is also a list of leading architect
companies in section five which may shed light on the competition of architecture
industry.

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2.0 Country background
Indonesia is a republic country with the largest economy in Southeast Asia. It
is consists of 240 million people with GDP growth of 5.78%. Indonesia was among
the top performers during the global crisis in 2009 due to many factors such as strong
domestic demand and huge amount of natural resources (US Commercial Service,
2012). Located on the world’s major trade routes, has made Indonesia become a good
place for trading and expanding business. Moreover, more than 60 million people
coming from the low-income class are expected to join the middle class in the coming
period that will result in the increase of stronger consumer demand. Also, Indonesia is
currently working on their improvement of infrastructure such as renovation and
construction in the city, military upgrading, safety as well as security systems and
protection of sea-borne traffic.
 Economic environments
Indonesia has a market-based economy where the government takes a big part.
Having a large and youthful population, it leads to huge needs of new infrastructure
projects. Thus, Indonesia is a potential market to the U.S. products and investments.
In addition, having both leader comes from business background have made
Indonesia’s economic environment more comfort to foreign investment. The new
government is planning to decrease fuel subsidies that will result in increase of funds
for infrastructure and social development ("Indonesia: Economy | Asian Development
Bank," n.d.) Similar to the U.S, Indonesia belongs to several international
organizations and forums such as the United Nations, ASEAN Regional Forum and
World Trade Organization. More than that, the Indonesian Government has enhanced
its international peacekeeping capacity, reducing greenhouse gas emissions and
adopted a leadership role in the Global Counterterrorism Forum.

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 Political environments
Indonesia’s Political environment at the moment is stable. Recent election in
June 2014 have been put Mr. Joko Widodo, a former furniture businessman and
exporter become president. He is well known as a humble figure and loved by the
people (BBC News, 2014). Indonesia bureaucracies now have been changing into
more transparent and business friendly. Even though ranked as one of the most
corrupted country, Mr. Joko Widodo slowly changed that (Wartaekonomi.co.id, 2014).
Many investors believed now is a perfect environment for foreign investor to invest in
Indonesia mostly thanks to Indonesia’s leader who are both come from businessman
background.
 Socio-Culture environments
Indonesia has been well known for its agricultural and maritime section. Most
of Indonesian works as farmers. Despite having large variety of ethnics, 300+ ethnics,
they are well-known for its unity under the national motto “Unity in Diversity”.
Indonesian people are also well known for their hospitality toward foreigners.
Indonesia is the fourth most populous nation in the world after China, India and the
United States. Over two thirds of the population resides in Java, the centre of the
country's economic and political power (Merdeka.com, 2014).
 Barriers
Indonesia experiences domestic development challenges, including uneven
benefits from democratic and economic progress, insubstantial institutions caused by
lack of capacity to effectively address its social service needs as well as
environmental degradation. In terms of its economic condition, there is an
implementation of protectionist laws and regulations in Indonesia and unevenly
applied legal structure. The number of corruption rate in Indonesia is also another
factor that should be monitored especially when making business in the country
(“Center for Strategic and International Studies,” n.d.). As mentioned earlier, the

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uneven legal structure has influenced the country’s safety system such as riots happen
for protests regarding the Government’s decision.
Indonesia current economy and political conditions are considered stable, with
the new president Mr. Joko Widodo, the country’s bureaucracies has become more
transparent and business friendly. Although, Indonesia has been known as one of the
most corrupted country, Mr. Joko Widodo is slowly working to change the reputation
of the country. “President Joko Widodo aims to achieve a +7 percent (y/y) growth
figure by 2019 through the implementation of structural reforms” (Indonesia
Investment, 2014). Additionally, many investors believe that Indonesia is now a great
place to make investment. However, there could be some barriers in doing business in
the country such as its corruption rate, law and regulations as well as uneven legal
structure.

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3.0 Strategic growth plan of Indonesia
This section starts with an overview of Indonesian Master Plan (MP3EI), and
then several areas are selected from the national development plan as they are most
likely to impact on Indonesian Real Estate Market, such as the Tourism industry, Java
economic corridor (regional economic development strategy) and The Greater Jakarta
(the plan’s geographic focus area). Other government projects in the major region are
also included.
3.1 MP3EI
The purpose of MP3EI (Acceleration and Expansion of Indonesia Economic
Development 2011-2025) is to support Indonesia’s transformation into a developed
country by 2025, meaning that millions of citizens will be pulled out from poverty,
increasing number of middle class will also represent higher purchasing power, better
access to quality education and higher living standard. The master plan will lead
Indonesia become one of the 10 major economies in the world by 2025 and it requires
7-9% real economic growth per year from now on.
MP3EI includes 8 main programs (i.e. Agriculture, mining, energy, industrial,
marine, tourism, telecommunication, and the development of strategic areas) which
consist of 22 main economic activities (Table 3.1). 2 activities (geographic focus) will
be discussed, namely Jabodetabek Area (3.3 Geographic focus) and Tourism.
Table 3.1: Main economic activities in MP3EI
Palm
Oil
Rubber Cocoa
Animal
Husbandry
Timber Oil & Gas Coal Nickel
Copper Bauxite Fishery Tourism
Food
Agriculture
Jabodetabek Area
Sunda Straits
Strategic Area
Transportation
Equipment
ICT Shipping Textiles Food Beverages Steel Defence Equipment

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 Tourism
Fig. 3.1 Tourism industry in Indonesia
(Source: CEIC Data)
Tourism industry has been promising in Indonesia and it indicates new
investment opportunities for other associated industries, such as hospitality and retail.
In the first 5 months of the year, from January through May 2013, international tourist
arrivals to Indonesia rose by 5.79% although amidst global economic uncertainties.
This means that Indonesia is on track to achieve this year’s target of international
visitors, aimed at 8.6 million visitors. Indonesian international arrivals had a growth
of 7.65% over the same month last year. Indonesia has seen a continued increase in
visitors on account of the many events, concerts, meetings and conventions held in the
past months and are still to be held to the end of the year. On the other hand, the
domestic traveller number is increasing rapidly because of the development of
domestic transportation. As a result, more accommodation and retail space will be
needed.

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 The implementation strategy of MP3EI
1. Economic Corridors
Fig. 3.1 Indonesian economic corridors
(Source: Master plan Acceleration and Expansion of Indonesia Economic Development 2011-2025)
The 6 economic corridors are regional development plans that aim to create an
integrated and sustainable economic base, there are six economic corridors, namely:
Sumatra economic corridor, Java economic corridor, Kalimantan economic corridor,
Sulawesi economic corridor, Bali – Nusa Tenggara economic corridor, and Papua –
Kepulauan Maluku economic corridor. The development gives greater emphasis to
economic development as follows:
 To emphasize the increase of productivity and value-adding on natural resource
management through the expansion and creation of a sustainable upstream and
downstream activity chain;
 To focus on diverse and inclusive economic development, which connects
corridors with other regions to develop opportunities based on local potential and
specialization;
 To emphasize sector and regional development synergies to enhance national,
regional and global comparative and competitive advantages;
 To emphasizes integrated economic development between transportation and
logistics, as well as communications and information systems to open regional

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access;
 Will be supported with fiscal and non-fiscal incentives, ease of regulation,
licensing, and optimum public services from Central and Local Governments.
Fig. 3.1.1 Java Economic Corridor
(Source: Master plan Acceleration and Expansion of Indonesia Economic Development 2011-2025)
Java Corridor has the best economic and social conditions in relevance to
other corridors. As shown in Fig.3.1.2, Java is the most populous island in Indonesia
with a population of 143 million (57% of whole Indonesia) it has become the most
densely populated place in the world. Every region of the Java has numerous
volcanoes so that the remaining land is scarce. High population density will directly
affect the price level and development patterns of property, especially residential,
office and retail sectors (Grether & Mieszkowski, 1974).

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Fig. 3.1.2 Indonesia population density
(Source: Encyclopaedia Britannica, 2009)
Moreover, Java is the most developed region of Indonesia with relatively stronger
transportation system to support its trading economy; the corridor contains 3 sea ports
and 6 economic centres (Jakarta, Surabaya Bandung, Semarang, Yogyakarta, and
Serang). The capital city Jakarta is located in west Java whereas the second largest
city Surabaya is located in East Java. More details about the Greater Jakarta will be
given in the next section. Surabaya--- the second largest city in Indonesia, capital and
economic heart of East Java. With a municipal population of 2.97 million (2010),
Surabaya has emerged as an important centre for business, industry and higher
education. Surabaya has one of the busiest ports in South East Asia and one
international airport, the city also acts as the gateway to the larger Gerbangkertosusila
metropolitan region, which has a population of approximately 9 million (World Bank,
2014).
Therefore Java economic corridor has the potential to serve as the benchmark
for economic changes, evolving from primary-industry focus towards being more
focused on tertiary-industry. The main focus of the Java Economic Corridor

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development will be on Food and Beverage, Textile, and Transportation Equipment.
In addition, there is also desire to develop other economic activities such as Shipping
and Information & Communication Technology (ICT).
2. Strengthening national connectivity
Indonesia’s national connectivity is part of the global connectivity. Therefore,
the strengthening of the national connectivity has to consider Indonesia connectivity
with regional and global economic growth centres in order to enhance national
competitiveness and optimize advantages of Indonesia’s regional and global
connectivity. 4 national policy elements are included i.e. National Logistic System,
National Transportation System, Regional Development and Information &
Communication Technology (ICT). These policies were combined in order to create
an effective, efficient, and integrated national connectivity. The objects of
strengthening national connectivity are:
 To connect the centres of major economic growth through “inter-modal supply
chain systems”.
 To expand economic growth through accessibility improvement from the centres
of growth to the hinterland.
 To distribute the benefits of economic development by improving the quality of
connectivity to the less developed, isolated and border areas in order to achieve
equitable economic development.
3. Supportive human resource capacity, science & technology
Academic education programs are designed to match the fields of the
economic development potential in each economic corridor. Create a network which
contributes to the value added chain for each commodity and sector developed in each
economic corridor. University research centres must be developed nationally as an
important part of national innovation centre.

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3.2 Geographic focus---Jabodetabek (The Greater Jakarta)
Fig. 3.3 Jabodetabek map
The Greater Jakarta area covers three provinces, namely DKI Jakarta, Banten
and West Java (the green area shown in Fig. 3.3), specifically the three regencies of
those provinces which surround Jakarta - Bekasi and Bogor in West Java,
and Tangerang in Banten. This area controls approximately 60% of national
import-export activities, as well as more than 85% of decisions related to national
financial matters. The Greater Jakarta is the largest urban area in Southeast Asia. It is
estimated that more than 30% of Greater Jakarta residence has income of more than
approximately USD 5,000 per year.
However, the development of The Greater Jakarta is facing a series of
problems. One of the main problems in this region is high traffic congestion caused
by the current road capacity, which if far below the capacity required to accommodate
vehicle movement. Another problem is the low availability of clean water, limited
airports and seaports capacity, and hindered access to airports because of flooding
during the rainy season.

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Future development in The Greater Jakarta
 Spread business activity outside of DKI Jakarta to reduce the time of travel
between business centres in the internal Greater Jakarta;
 Development of a mass transportation system that to commute from the
suburb area (to reduce air pollution, reduce fuel consumption)
 Development of interconnected mass transportation network pattern that is
easily accessible to all the activities surrounding the business centres and
government;
 Development of an efficient logistics network of production centres in the
region as well as with other production centres that have a close relationship;
 Development of sewerage and drainage system that can overcome the
problems of environmental quality (accumulation of garbage, slums and
flood).
3.3 Upcoming government projects
Surabaya Urban Transport Corridor Development and MRT system
The Program will be targeted on an East-West corridor, and a North-South
corridor, that integrates improvements in Non-Motorized Transport (NMT), public
transport, traffic management, land-use and urban development strategies. In terms of
public transport, there will be MRT system (monorail and tram) in CBD Surabaya
(World Bank, 2014).
Jakarta-Surabaya Toll Road
Apart from the Tans-Java toll road network, Government is planning a new
project, a 775km-longtoll road along the coast from Jakarta to Surabaya (above the
sea). The aim of this project is reducing congestion on Java`s highways and
facilitating connectivity and economic development of Java Island. The
Jakarta-Surabaya toll road will connect the Tanjung Priok harbour in Jakarta to the
Tanjung Perak harbour in Surabaya. It is also planned to be extended from Jakarta to
Merak on the western tip of Java as Merak is an important trade route to Sumatra

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Island. However, the construction date and completion date of this project is unknown
(Anatara News, 2014).
Stadiums and Athletes’ Village for 2018 Asian Games in Jakarta
The Jakarta administration will cooperate with private developers to build
several new sports stadiums for the 2018 Asian Games; the city administration is in
the process of coordinating with the central government to acquire the plots of land
for the stadiums (Asia One, 2014).
Jakarta Mass Rapid Transit (MRT)
The rail-based Jakarta MRT is expected to stretch across over 108 kilometres,
including 21.7 km for the North-South Line (from Lebak Bulus to Kampung Bandan)
and 87 km for East-West Line (from Balaraja to Cikarang). The phase 1of the project
(Lebak Bulus to Hotel Indonesia Roundabout) will be opened to the public by the first
quarter of 2018 (Jakarta Post, 2014).
6 inner-city toll roads in Jakarta
The toll roads were designed to connect all five of Jakarta’s municipalities, the
Public Works Agency and the city administration recently signed an agreement to
begin the project. 2 of 6 toll roads will start construction in few months (Jakarta Post,
2014).
These infrastructure projects will facilitate the connectivity between Jakarta
and Surabaya as well as the internal connectivity within these two cities. With the
improved transport system, residents can travel more efficiently around the city, from
urban area to suburbs. As a result, the property supply will expand to the outskirts of
Jakarta (Jakarta Post, 2014); the future transport network will also spread more
opportunities into other regions of Surabaya. According to Collier International
Research (2014), currently the occupancy rate and asking base rent in central
Surabaya is much higher than other areas of the city.

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4.0 Real estate market in Indonesia
The real estate market has been growing rapidly in recent few years. The price
for every sector has nearly doubled since the past three years, and that is because of
the expanding middle class, low interest rate regime, national economic growth and
higher consumer confidence towards the presidential elections in 2014. The
Indonesian real estate market consists of five main sectors, i.e., residential,
commercial, retail, hotel and industrial sectors. Data from the Central Statistics
Agency (BPS) showed that the Greater Jakarta area, with a combined population of
22.6 million people, was a big market with huge opportunities that investors should be
interested in; the trend for property development in the retail and condominium
segments would be centred in the suburbs and outskirts of Jakarta (Jakarta Post, 2014).
Furthermore, Surabaya will likely to be another emerging market and an ideal
geographic focus for investors.
4.1 Jakarta
Fig 4.1.a Apartment Strata-tile
Market maintained a stable
performance. Until September 2014,
the take-up rate of existing
apartments in Jakarta reached 95%,
the take-up rate of under construction
projects was 73.2% (Fig 4.1.a). Based
on the market segment, the pre-sales
rate of middle upper class projects
achieved the highest take-up rate of
84%, followed by upper class at 78%.,
there are only two luxury apartment projects under construction, Raffles Residences
and The Langham Residences, which posted an average sales rate of 71%.

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Fig 4.1.b Apartment for lease
Although the overall
occupancy rate of apartments for
lease has remained steady since
2011 despite the lack of new
apartments for lease, This sector is
likely affected by new strata-titled
apartments, since it continue to
offer an option to lease, there is a
wide variety and selection of
apartments at competitive prices
with flexible payments. This is
likely to put pressure on the overall occupancy rate for leased apartments.
Fig 4.1.c Office
The occupancy rate for office
buildings in the CBD showed a
downward trend throughout 2014
YTD (Fig 4.1.c). Almost all
sub-markets showed decreasing
occupancy. Previously, Premium
and Grade A office buildings in
the CBD maintained high
occupancy rates of 97%
throughout 2013 and up to 1Q
2014. A decline in occupancy for
this grade of office building is generally because of high base rents. Central, West and
South Jakarta still have large vacant spaces. However, because of the limited new
additional supply in Central Jakarta, vacant spaces are only found in old office
buildings.

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Fig 4.1.d Retail in Jakarta
The upper class shopping
centres maintains an occupancy
rate of 88.3% in 3Q 2014. Large
additional supply caused
occupancy rates for shopping
centres in Jakarta to go down.
However, this does not reflect a
slowdown in demand. Indonesia
continues to attract foreign
retailers as so to expand the market. Several retail brands have been eyeing this big
market and some have confirmed the opening of their first stores in Indonesia next
year.
Fig 4.1.e Retail in Bodetabek
There was a quite large
additional supply in Bogor in
early 2014, which caused the
occupancy rate to plummet by
7.7% to 81.7% as of 1Q 2014.
Bekasi and Tangerang are the
most active areas to contribute
new shopping centers, the
average occupancy rate for
shopping centres in Bekasi and
Tangerang remained at 80 and 83%, throughout 2014. However, there will be
additional large retail supply in 2015 - 2017 which may create tighter retail
competition in the BoDeTaBek area; the occupancy level will continue to face a
challenge in the BoDeTaBek area.

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4.2 Surabaya
Office
The office market in Surabaya is smaller than Jakarta, but it has started to
grow. In the next several years, the office market will continue to grow (Figure 4.2.a
& 4.2.b). In recent years, new and future office buildings in Surabaya have been
improving by offering modern design. At least three office buildings are currently
pursuing their completion. MNC Tower and Graha Pena II are projected to be
completed and operational in 2014. Skyline Office Tower and Pakuwon Centre
(within Tunjungan Plaza V Project) will be operational in 2015. In addition, some new
office buildings have been announced and most of those projects will be located
within mixed-use developments. However, most of the new office buildings that will
be supplied in next three to four years are already under construction.
Fig 4.2.a Cumulative office supply
in Surabaya
Fig 4.2.b Existing and future office
supply in Surabaya
(Source: Colliers International Indonesia – Research)

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Apartment
At the supply side, in the first half of this year, there were no new additional
apartment units entering the Surabaya market. Thus, the total supply of the strata-title
apartment market in Surabaya stood at 16,380 units. However, there will be two new
apartment projects enter the market in the end of this year to meet the increased
demand of the market. The on-going under-construction projects, two apartment
projects developed by Pakuwon Group, including The Peak and One Icon Residence
achieved good performance.
At the demand side, the take-up rate of pre-sold(new) projects increased
significantly , while there is limited growing space for existing projects (Fig 4.2.c &
4.2.d). Nowadays, the quantity of luxury and high-end style apartment is increasing as
so to cater the demand of growing proportion of high income groups in Surabaya,
This trend fits the business position of Gensler, but not for the immediate market due
to most of new projects are under-construction.
Fig 4.2.c
Fig 4.2.d
(Source: Colliers International Indonesia - Research)

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Retail
The retail sector is dramatically growing currently and will continue to grow
in the next three years. The number of new shopping centres in all market segments
starting from middle-low to upper-class is projected to grow as shown in Fig 4.2.e,
central Surabaya will contribute 31% of total future shopping space supply (Fig 4.2.f).
Fig 4.2.e
Cumulative retail space
supply in Surabaya
Fig 4.2.f
Distribution of future
retail supply in each
region in Surabaya

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Three big developers in Surabaya are in a race to provide new malls in next
three years (Pakuwon Group, Ciputra Development, LIPPO Group). No new future
malls will be completed in 2014, future retail supply seemingly will invigorate in
Surabaya starting in 2015 with the addition of almost 50,000 square metres by 2017.
Overall, the future supply is expected to be 367,750 square metres in Surabaya by
2017 with contributions from 14 new shopping centres. This projected additional
supply will amount to 8.7% annual growth for retail centres in Surabaya from 2014 to
2017.
Furthermore, the occupancy rates for shopping centres in Surabaya jumped
significantly as of 1H 2014. By growing 2.9% in a six-month period, the occupancy
rate has risen to 86.5% in 1H 2014. The occupancy has grown by 5.7% (see Fig 4.2.g).
The increasing demand for middle-upper-class shopping centres has caused rental
rates in Surabaya to grow by 10.2% in 2013 compared to previous years.
Fig 4.2.g Occupancy rates in
different regions in Surabaya

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A growth in rental rates in Surabaya was again recorded in the first half 2014
and saw significant growth of 7.8%. This growth has raised rental rates for shopping
centres in Surabaya to IDR412,679 per square metres / month as of 1H 2014 (Fig
4.2.h). Central Surabaya ranks the highest in terms of occupancy rate and rental rate
(Fig 4.2.i).
Fig 4.2.h Average asking
base rents and occupancy of
retail in Surabaya
Fig 4.2.i Occupancy and
asking base rents for each
region of Surabaya

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Moreover, retailers expect to motivate the other committed and potential
tenants to open their stores, giving the malls confidence to attract more crowds. These
retailers try to accommodate the middle- to upper-income customers, and may attract
branded retailer. These malls need designers with international perspective and
standard therefore Gensler’s capability best fits into this market.
Hotel
Last but not least, the hotel sector of the entire country will see positive
growth, including Surabaya. Frequent business activities in east Indonesia stimulate
hotel market in Surabaya. Five-star hotels are mainly found in the central Surabaya as
well as other ranks of hotels (Fig 4.2.j). Central Surabaya area serves as main
attraction of the region for travellers, and also many business activities and events are
often held here so that most hotels enjoy profits from corporate activities from either
the government or private and international corporations. Therefore, the hotel market
in Surabaya is very much sustained by the economic growth. The East Java local
government set a target to boost foreign and domestic tourist arrivals in 2014 by 8 and
10% respectively, higher than last year. This evidence also supports that the hotel
sector will have good market potential, hotel sector also can be considered as one
major business opportunity for Gensler.
Fig 4.2.j Cumulative Supply of 3, 4, 5-star hotel rooms in Surabaya

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4.3 Other promising markets
Real estate market in Indonesia will remain positive growth. Besides Jakarta
and Surabaya, Bandung has become increasingly attractive; the emerging middle class
in Bandung has propelled the growth of the property sector in the city, ranging from
housing complexes and apartments to malls and hotels. A few developers have already
step into this city, Bandung is also becoming more popular among local tourists as a
lifestyle destination, and the demand for accommodation is on the rise. This has also
prompted several hotel operators to develop accommodation in the area (Jakarta Post,
2014).
Another major city on Java Island, Yogyakarta has been target by a few hotel
groups, such as Melia Hotel and Achipelago. Interestingly, it is reported that a number
of hotels and malls in Yogyakarta have been accused of over-exploiting groundwater
and many have been found to not possess the proper licenses. Thus “Greener”
architect design and construction will be the new trend in this area and entire
Indonesia

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5.0 SWOT analysis
Strengths
 International famous architecture design & planning company with high
reputation.
 Strong R & D capability (e.g. Xia Jun, the Executive Vice-President of Gensler,
has been taken charge of main design work in many famous design company
before join in Gensler. And he has participated in designing the world’s second
highest building - Shanghai Tower).
 Offices across the USA, UK, Asia, Central America and other 30 cities.
Weaknesses
 Digital technology is very important for Design Company (e.g. Aided design,
parametric modelling, simulation of construction, etc.). Young designers proficient
in digital technology, but lack of experience. Senior designers have enough
experiences, but are not skilled in digital technology, and hard to spare time to
study.
 Limited managerial skills and technological stock in Indonesia.
 Non-native company may be trapped in the poor business environment.
 Lack of resources and know-how to enter the market. Usually entering a new
market requires certain regulatory, financial and infrastructural requirements to be
met before they can do business. Companies prefer to partner with local company
so that can lower the barriers to entry.
Opportunities
 Indonesia has some largest construction companies & real estate developers in
Asia, which Gensler could corporate with and exchange knowledge with.
 Resources are rich (e.g. Cheap and sufficient labour).
 Relatively low entry barrier (tariff & non-tariff) as Indonesia is a member of the
Association of South East Asian Nations (ASEAN).
 Positive economic environment since the GDP grows well from 2012 until now.

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 Tourism industry in emerging thereby there will be higher demand of hotels.
 MP3EI—the country’s development plan favours real estate industry as the
infrastructure will be improved to facilitate traffic, logistic and connectivity within
the country.
 Rapid growth of Urbanization and growing population (means more demand for
residential, office and shopping space.
 Fast growing middle-class indicates higher purchasing power.
 Inflation rate is relatively stable, under control as foreign companies do not want
to enter the market when the CPI grows too fast.
Threats
 There are different laws in different parts of Indonesia.
 Income inequality threatens the unity of this nation.
 If Gensler is successful, there might be another foreign company in the same
industry invests in Indonesia and become a strong competitor.
 Corruption in government of Indonesia makes the political environment complex.
 Too many established competitors already - oversupply of architecture and interior
design firms in Jakarta that further drive down prices make the market even less
attractive.
 Not part of “immediate strategy”. Indonesia is considered a high growth but very
low cost market and the company may have decided that it might be more
worthwhile to allocate scarce resources in markets where they can command a
premium.

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Table 6: BCI Rating for Green Certification (BCI Asia, 2013)
6.0 Top real estate companies in Indonesian market
The BCI Asia Top Ten Awards has been awarded to developers and
architecture companies that have the highest value portfolios of projects in each full
year since 2005. For almost ten years, it has been one of the most desire awards for
design and construction industry in Asia. The BCI Asia has provided value
information that allows companies to position themselves with top stakeholders in the
industry in Asia. Since 2013, the judging criteria are based on green building ratings
and the value of projects as illustrated in the Table 6. The BCI Asia awards are
bestowed to the top ten architecture and developer companies that have the greatest
results during the last full year calendar (BCI Asia, 2013).

27
These judging criteria have been used to evaluate and determine the top ten
lists in diverse countries such as Australia, Hong Kong, China, Singapore, Thailand,
US and Indonesia. According to BCI Asia (2014), the Top Ten awards have been
bestowed to these architecture and developer companies that have the greatest
influence in Indonesian market in 2013 as stated in the Table 6.1 and Table 6.2
respectively.

29
6.1 Top ten architectural companies
Since the green and sustainable development agenda within Indonesia is likely
to grow significantly which creates strong opportunities for specialist architects and
construction services companies to provide developments in green and sustainable
buildings. As an indicator of growing interest, a recent seminar on Sustainable
Construction in Indonesia was organised by the Ministry of Public Works. Both
private and public clients are therefore likely to increase their demand for consultancy
services significantly in this sector (UK Trade & Investment, 2011).
According to the BCI criteria, it has shown that Airmas Asri, Anggara and
Arkonin were the top 3 architectural companies that have the most impact to the
market in terms of project value and green buildings in 2013. Their offerings are
likely to be attractive to a wide range of potential customers within Indonesia, both in
the public and private sector. Gensler could therefore classify these 3 architectures as
its main competitors in the Indonesian market in order to be prepared to compete in
the growing market of green buildings, more information about the competitors are
provided in the Appendix 1.
6.2 Top ten developer companies
As mentioned above about the growing trend of green development and
buildings, Gensler should consider the top 3 developer companies which comprising
of Agung Podomoro, Agung Sedayu, Alam Sutera as its major potential partnership
because these developers are currently dominating the market and obtain a lots of
valued and green projects in Indonesia, more information about the developers are
provided in the Appendix 2.
However, Gensler could also look at Intiland, Pakuwon Jati, Sinarmas Land
and Summarecon because one of their key focus areas are the hospitality market
which matches perfectly with the expertise of Gensler in designing the hotel sector.

30
7.0 Market entry strategies
According to the analysis of Indonesia market, Gensler may find difficulty to
set up its company in Indonesia because of laws, regulations and the complex
procedure of Indonesian government. Moreover, Gensler have never had interactions,
relationships or experiences in the Indonesian market before, it may consume a lot of
resources in terms of time and capital if Gensler choose to set up its office in
Indonesia at the first place. By doing so, Gensler might be able to operate its business,
gain awareness and succeed in the market. However, in the worst case scenario,
Gensler might not be able to do so and waste lots of its resources. The failure of
entering Indonesian market may ruin the reputation and image of Gensler
internationally.
According to Gensler, one of the objectives of entering Indonesian market is to
earn profits as fast and much as it could. Hence, it could be better for Gensler to enter
the market by using a Joint Venture or Joint Operation to collaborate with both major
international developers and major local developers that have experienced and
specialised in the Indonesian market. With the cooperation, Gensler would be able to
take advantages of the developers’ experience, expertise and connections in order to
obtain a mega project and operate the business without setting up its own company in
Indonesia.
7.1 Collaboration with international developers
In this case, Gensler should focus on CapitaLand in particular because it has
already entered the market. CapitaLand is one of Asia’s largest real estate companies.
Headquartered and listed in Singapore, the company’s businesses in real estate and
real estate fund management are focused on its core markets of Singapore and China.
The company’s diversified real estate portfolio primarily includes integrated

31
developments, shopping malls, serviced residences, offices and homes. The company
also has one of the largest real estate fund management businesses with assets located
in Asia.
CapitaLand leverages its significant asset base, real estate domain knowledge,
product design and development capabilities, active capital management strategies
and extensive market network to develop real estate products and services.
CapitaLand’s listed real estate investment trusts are Ascott Residence Trust,
CapitaCommercial Trust, CapitaMall Trust, CapitaMalls Malaysia Trust and
CapitaRetail China Trust.
CapitaLand has been operating in Indonesia since 1995 through its
wholly-owned serviced residence business unit, The Ascott Limited (Ascott), which is
the largest international serviced residence owner-operator in the country. Ascott
currently operates eight properties with about 1,800 apartment units in Jakarta,
Surabaya and Bali. Three more serviced residences comprising approximately 700
units are currently under development in Jakarta and Surabaya.
Recently, it has entered a joint venture agreement with a subsidiary of Credo
Group to develop an integrated development in Central Jakarta, Indonesia. The
integrated development, CapitaLand’s first in Indonesia, will comprise a Grade A
office tower, mid- to high-end residential units, serviced residences and supporting
retail space, spanning a total gross floor area of more than 40,000 square metres.
Estimated to be completed in 2018, construction for the development is expected to
commence in 2015. The total development cost is approximately S$220 million
(CapitaLand Limited, 2014).
In addition, most of the CapitaLand’s projects are in the high class of quality
which require high standard of architecture like Gensler. Therefore, there is potential
for Gensler to propose and cooperate with CapitaLand by using the existing
relationship between the two companies that used to collaborate in the past as a

32
referral even though there are many possible challenges and difficulties in
establishing the collaboration with the large multinational organisation.
7.2 Cooperation with major local developers
In the case of local developers, it is very essential to have some cooperation
with major local developers due to the fact that most mega projects and government
projects are acquired by the local major developers. However, since Gensler has no
significant relationship with local developers in Indonesia, it is suggested that Gensler
should propose to all the major developers as stated above in the table of top ten
developers in Indonesia in order to increase the possibility to obtain the projects as
much as it could. This could be able to help Gensler in generating profits in Indonesia.
By the collaboration with both major international and local developers in real
estate industry would be able to create more opportunities for Gensler to operate its
business and create awareness in Indonesia. After gaining enough experiences,
reputations and connections in the market, Gensler might consider setting its
wholly-owned business in order to maximize its revenues and profits in the future.

33
8.0 References
 AGUNG PODOMORO LAND (APL) (n.d.). About Us, Company At Glance.
Retrieved 30 October 2014 from
http://www.agungpodomoroland.com/page/About-Us/Company-At-Glance
 AGUNG PODOMORO LAND (APL) (n.d.). Annual Report 2013, Interactive
Version Online. Retrieved 30 October 2014 from
http://agungpodomoroland.com/resources/areport/apln-2013-interactive/bab02.ht
ml#2b
 AGUNG PODOMORO LAND (APL) (2014, July 22). Financial Statement,
APLN 1H-2014 Financial Statements. Retrieved 30 October 2014 from
http://www.agungpodomoroland.com/pages/download.php?downloadqh=12&file
=1
 Agung Sedayu Group (ASG) (n.d.). Corporate. Retrieved December 26th
2014
from http://www.agungsedayu.com/?page_id=10
 Airmas Asri (n.d.). About Us. Retrieved December 15th
2014 from
http://www.airmasasri.com/information/7/about-us/en
 Alam Sutera (n.d.). About Us. Retrieved December 26th
from
http://www.alam-sutera.com/about-us/4/company-profile
 Anggara (n.d.). Profile. Retrieved December 15th
2014 from
http://www.anggara.co.id/profile.htm
 Arkonin (n.d.). Arkonin. Retrieved December 15th
2014 from
http://www.arkonin-id.com/#/Arkonin
 Anatara News (n.d.). Jakarta-Surabaya toll road plan must move forward: Minister.
Retrieved from
http://www.antaranews.com/en/news/91164/jakarta-surabaya-toll-road-plan-must-
move-forward-minister
 Asia One (n.d.). Jakarta to build new stadiums for Asian Games. Retrieved from
http://news.asiaone.com/news/asia/jakarta-build-new-stadiums-asian-games

34
 BBC News (2014, 22 November). Indonesian president flies economy to son’s
graduation. Retrieved from http://www.bbc.com/news/world-asia-30158409
 BCI Asia (2013). Judging Criteria. Retrieved December 15th
2014 from
http://www.bcitop10.com/index.cfm/-the-award/judging-criteria/
 BCI Asia (2014). Top Ten 2014 Architects – Indonesia. Retrieved December 15th
2014 from
http://www.bcitop10.com/index.cfm/top-10-architects/2014/indonesia/?countryid=
3&year=2014
 BCI Asia (2014). Top Ten 2014 Developers – Indonesia. Retrieved December 15th
2014 from
http://www.bcitop10.com/index.cfm/top-10-developers/2014/indonesia/?countryid
=3&year=2014
 Bradsher, K. (2013, October 15). Real Estate Heating Up in Indonesia.
Retrieved from
http://www.nytimes.com/2013/10/16/business/international/real-estate-heating-up-
in-indonesia.html?pagewanted=all&_r=3&
 CapitaLand Limited (2014, November 17). CapitaLand inks joint venture for its
first integrated development in Indonesia, Media Release. Retrieved from
http://media.corporate-ir.net/media_files/IROL/13/130462/CL_NewsRelease_KSP
rime_17Nov2014.pdf
 CEIC (n.d.). Promising Tourism in Indonesia Presents New Investment
Opportunities. Retrieved from
http://www.ceicdata.com/en/blog/promising-tourism-indonesia-presents-new-inve
stment-opportunities
 Colliers (2014). Jakarta Property Report 3Q 2014. Retrieved from
http://www.colliers.com/-/media/B9E2A35E2D50495FA0F4F49AE99B8AA2.ash
x
 Corruption in Indonesia and the 2014 Elections | Center for Strategic and
International Studies. (n.d.). Retrieved from
http://csis.org/publication/corruption-indonesia-and-2014-elections

35
 Di Hadapan Pemuka Bisnis Eropa, Kadin Ingin Jokowi Hapus Hambatan Investasi
- Warta Ekonomi. (n.d.). Retrieved from
http://wartaekonomi.co.id/news/get_news_by_id/38247/di-hadapan-pemuka-bisni
s-eropa-kadin-ingin-jokowi-hapus-hambatan-investasi.html
 Grether, D. M., & Mieszkowski, P. (1974). Determinants of real estate
values. Journal of Urban Economics, 1(2), 127-145.
 Indonesia: Economy | Asian Development Bank. (n.d.). Retrieved from
http://www.adb.org/countries/indonesia/economy
 Indonesia Investment. (2014). Indonesia Investment Coordination Board Targets
15% Investment Growth | Indonesia Investments. Retrieved from
http://www.indonesia-investments.com/news/todays-headlines/indonesia-investme
nt-coordination-board-targets-15-investment-growth/item2687
 Jakarta Post (n.d.). Bandung brimming with potential. Retrieved from
http://m.thejakartapost.com/news/2014/09/19/bandung-brimming-with-potential.h
tml
 Jakarta Post (n.d.). Property industry to see positive growth in 2015. Retrieved
from
http://www.thejakartapost.com/news/2014/12/26/property-industry-see-positive-gr
owth-2015.html
 Jakarta Post (n.d.). Surabaya gearing up for Rp 8.6 trillion MRT project.
Retrieved from
http://www.thejakartapost.com/news/2013/12/20/surabaya-gearing-rp-86-trillion-
mrt-project.html
 Jawa dan Sumatera masih jadi pusat pertumbuhan ekonomi nasional |
merdeka.com. (n.d.). Retrieved from
http://www.merdeka.com/uang/jawa-dan-sumatera-masih-jadi-pusat-pertumbuhan
-ekonomi-nasional.html
 UK Trade & Investment (2011). Opportunities for UK Construction Sector
Companies in Indonesia. Retrieved from

36
http://www.architecture.com/Files/MembersOnly/MemberUpdate/UKTIIndonesia
ConstrReportAD5046.pdf
 U.S. Commercial Service (2012). Doing Business in Indonesia: 2012 Country
Commercial Guide for U.S. Companies. Retrieved from
http://export.gov/indonesia/static/2012%20CCG%20Indonesia_Latest_eg_id_050
874.pdf
 World Bank (n.d.) Indonesia - Surabaya Urban Transport Corridor Development
Project (English). Retrieved from
http://documents.worldbank.org/curated/en/2014/03/19352500/indonesia-surabaya
-urban-transport-corridor-development-project

37
9.0 Appendices
Appendix 1: Major architectural companies
 Airmas Asri PT
Airmas Asri PT was founded in October 1988 by three principals. It has
prospered and become rapidly one of the Indonesian’s foremost architecture firms that
provide world class services on major projects to its clients by using competitive
conditions as the sole architectural consultant. Airmass has been entrusted to respond
solely for the design and development on numerous mega projects in diverse sectors
such as hospitality, shopping malls and residential. In addition, it also has cooperated
with foreign architecture firms when it is deemed to be the most beneficial to all party
on major projects (Airmas Asri, n.d.).
Philosophy
Airmas has successfully performed to provide a diversity of architectural
services to a wide range of customers. It has operated on the philosophy that
architecture is not only just about designing, it is also about creating value for clients
in order to maximise the value added to the ultimate users.
Mission
Airmas has been working closely with its clients rather than providing the
ready-made or common solutions in order to get a better understanding of their
facility needs such as budget requirements, site conditions and organisation goals.
Hence, Airmas could be able to adjust and develop its services to suit the client
projects. Over the recent years, the company has therefore been able to thrive among
the rapid change of the environment in Indonesian building industry and neighbouring
countries that have affected the market.
Recent projects
 District 8 @ SCBD
 Springhill Residences

38
 The Gianetti at Casa Goya Park Residence
 Anggara Achiteam PT
Anggara Achiteam is an architecture company providing expertise planning
and designing in every project in order to provide the best services to its clients.
Anggara has been striving to understand architectural styles in growing Asian cities
that express the fresh where international movements and domesticated styles have
been interwoven. The buildings designed by Anggara display a perfect balance of the
cohesive image between modernism and technology. Moreover, Anggara have the
experience delivering well designed sites to meet functional requirements from wide
range types of clients. It also serves and retains the long lasting relationships with its
clients in order to help firms manage their real estate portfolios (Anggara, n.d.).
Philosophy
The philosophy of Anggara is to provide a creative, convenient and
economical building design services. All aspects of Anggara architectural design have
followed this principle because Anggara believes that every architecture work is a
living organism. A building therefore is analysed and monitored by specialist staffs in
order to achieve the best outcomes (Anggara, n.d.). Nowadays, the property
development business throughout the world is a delicately tuned profession that all
issues from feasibility to final construction are needed close attentions. Hence,
Anggara has prided itself with a completed range of professional skills required with
all the resources to serve and deliver projects to clients on time and with a limited
budget in order to become one of the world most outstanding architecture companies.
Mission
Anggara aims to provide exceptional standard with the highest possible
services to a wide range of clients, regardless to their business size. It has committed
fully to clients in responding to the challenges in architecture industrial demands in

39
order to achieve its goal which is the customer satisfaction.
Recent projects:
 Astra Hongkong Land Residential Development (Collaborated With
SCDA)
 Bonavista Apartment
 GCNM Apartment (Collaborated With SCDA)
 Gudang Garam Office Tower
 House of Roman Showroom Office
 Arkonin PT
Arkonin was founded in 1961 and established as a design and engineering
company in 1975. Arkonin has become one of the most respected and influential
design companies in Indonesia after it has completed more than thousands of projects
covering more than millions of square meters. It has experienced in many sectors such
as offices, hotels, apartments, industrial buildings, urban design, roads, bridges and
water supply. Arkonin has provided a full range of services as a design and
engineering company (Arkonin, n.d.).
Philosophy
Arkonin has been providing trusted and innovated solutions to clients in order
to be the best design and engineering firm in Indonesia. It has been engaged in
building and environmental design producing high professional quality for both
clients and publics.
Recent projects
 Gresik Sport Hall and Stadium
 Kementerian Dalam Negeri RI

40
Appendix 2: Major developer companies
 Agung Podomoro Land Tbk PT
APLN was established in 2004, it is a leading integrated diversified real estate
developer, mainly focus on commercial and residential segments. APLN is one of the
fastest growing and largest real estate developers in Indonesia. There are more than 70
property projects ranging from low cost to high end with majority in middle class
segment, which have been begun or completed construction by APLN group since
1973 to present (APL, n.d.).
APLN integrates a visionary approach to design with an emphasis on speedy
execution and time to market. A unique business model called Fast Churn concept
allows APLN to acquire land or firms with sizeable land which can be developed into
a 3-5 years project in order to optimise the use of capital and resources instead of
accumulate in huge land bank. The company’s sales and revenues increased from
2012 by 4.5% to reach around IDR4,900 billion in 2013. Moreover, there was an
increase about 5.5% of sales and revenues in the first half of 2014 compared to last
year (APL, 2014). At the end of 2013, the total assets raised from 2012 by 29.5% to
IDR15,195.6 billion.
APLN has succeeded in constructing high quality landmark projects such as
Podomoro City, Kuningan City and Senayan City, it therefore is being known as a
pioneer of the superblock development. The second business strategy of APLN is to
increase contribution from recurring revenues. With this strategy, the company’s
recurring revenues has significantly risen from 5.3% in 2010 to 20.5% in 2013. The
continued extension of the business to second-tier growth cities like Bandung, Bali,
and Makassar and so on is the third strategy of APLN to enlarge its business and
obtain majority of market share (APL, n.d.).
Vision
To continue to grow as an integrated property developer, to optimise value for

41
clients, business partners, shareholders and society.
Mission
 To meet public needs in quality housing and commercial developments
 To optimise return on investment from business partners and
shareholders
 To become a developer that can deliver more value to employees
 To actively support Government programs in promoting urban
development and improving the human development index
Value
 Harmony: in working with clients, business partners, shareholders and
society
 Passion and perseverance: optimising our efforts
 Quality: maintained at every stage of development
 Environmentally conscious: putting care into the environmental aspects of
every project
Recent projects
 Indigo Hotel Seminyak
 Madison Park at Podomoro City
 Agung Sedayu Permai PT
Agung Sedayu Group (ASG) started from a small constructor firm in 1979,
their popularity had spread out through word of mouth in the first 10 years. ASG were
able to extend the business, they have improved their employee standard quality and
become more successful. In 1991, ASG was very well known after achieving the
Harco Mangga Dua, the first electronic mall in Indonesia, followed by another big
scale project in residential and apartments. With good management within the
company, ASG became stronger and managed to avoid the financial crisis in Asia due

42
to their good cooperation and strong internal financial whereas other companies failed
to do so. Since then, ASG started to do more projects including the revolution Kelapa
Gading Square with the one-step-living concept which known as one of the elite
residence in Jakarta. ASG was the one who survived during the crisis in 1997 – 1998;
they kept climbing to the top with financial stability (ASG, n.d.).
Vision
They developed a vision of becoming dynamic and innovative in creating their
product quality as they believe it as a way for developer to compete well in property
industry that keeps changing in Indonesia.
Mission
To be a property developer who gives the best quality of product on time and
cost effective
Value
 Humble, professional, trust and focus
Recent projects
 Bogor Valley Condotel
 Casablanca East Residences 2
 Alam Sutera Realty Tbk PT
PT Alam Sutera Realty Tbk was incorporated on November 3, 1993 under the
name PT Adhihutama Manunggal by Harjanto Tirtohadiguno and their families that
focus its business activities in the field of property. Company changed its name to PT
Alam Sutera Realty Tbk by deed dated 19 September 2007 no. 71 made by Misahardi
Wilamarta, SH, notary in Jakarta. At December 18, 2007 the company became a
public company with a public offering in Indonesia Stock Exchange. After more than
19 years since its founding, the company has become an integrated property developer
that focuses its business activities in the construction and management of residential,

43
commercial and industrial areas, and also the management of shopping centres,
recreation centres and hospitality (mixed used development) (Alam Sutera, n.d.).
Vision
To become the best property developer, that focuses on innovation for better
human quality of life.
Mission
 To provide excellent service and an innovative product of excellent
quality in developing comfortable, safe and healthy environments for the
customer.
 To provide the employee with an opportunity to develop and create
corporate culture and a value based professional working environment in
which all employees may realise their potential thus improve the
productiveness of the company.
 To implement prudent governance allowing for sustainable growth of the
company for the shareholders.
 To maximise the potential of each property being developed by adopting
integrated development to give high returns for the stakeholders.
Recent projects
 Alam Sutera
 Paddington Heights – Apartment Tower

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