Deep-dive 2021-20: Pakuwon Jati

Pakuwon Jati (PWON IJ) is an Indonesian property developer focusing on so-called “superblocks”. It acquires land around a centrally located area, builds a shopping mall, and then adds surrounding properties such as condos, serviced apartments, offices, hotels, etc.

Half of Pakuwon’s revenues are recurring (retail mall leasing, office leasing, hotels). The other half comes from property development (condos, landed houses).

I’m impressed with Pakuwon’s management team. Alexander Tedja is brilliant. During the pandemic, Pakuwon took the opportunity to acquire a competitor’s mall at a normalised 13% cap rate. Whereas most other Indonesian developers accumulate massive landbanks, Pakuwon is going for an asset-light model. It only acquires the land required for near-to-medium term developments.

The industry backdrop for high-rise construction is excellent. Only 6% of Jakarta’s population lives in high-rises, compared to over 90% in China. With many professionals living in suburban townships…