Tuan Sing hops on Batam bandwagon

Batam is becoming a hot spot for investors, with a flurry of high-profile property developments earmarked for the island.

One of the latest to venture into what has long been seen as an industrial zone is listed developer Tuan Sing, which announced last week that it was developing an 85ha site in Marina City into an integrated mixed-development township.

The resort-style development will comprise close to 2,000 apartments, a hotel, as well as retail and entertainment zones. Tuan Sing added it was interested in making Batam a hot spot for tourism and meetings, incentives, conferences and exhibitions.

The announcement follows several other developments on Batam.

The most high profile is the Meisterstadt project launched early this year by the company of former Indonesian president B.J. Habibie. The 9ha project will feature 11 towers of luxury apartments, offices, hotel rooms and a hospital.

Dr Ilham Akbar Habibie, son of the former president and commisioner of his firm, Pollux Habibie International, told The Jakarta Post at the January launch that the project aimed to draw Singaporean buyers. Apartment prices reportedly start at 400 million rupiah (S$40,500).

Singapore-listed Sinarmas Land will launch between 150 and 200 apartments and landed housing units by the end of this year at its 228ha Nuvasa Bay project. The studio and one-bedroom apartments with a view of the golf course will be priced from $40,000, said a spokesman. It plans to invest a minimum of 4 trillion rupiah over the next few years to develop Nuvasa Bay, he added, citing Batam's competitive land prices, property price escalation, good infrastructure development and population growth.

Mr Donald Han, managing director of consultancy Chesterton Singapore, said there was more interest in Batam. "One obvious reason is that the Indonesian President is looking at revamping land laws for foreign investors. "

He added that developers were likely offering buyers the idea that Batam will be more vibrant and liveable and have more tourist attractions, as opposed to popular perception that Batam is an industrial area.

But he cautioned that Singaporean buyers may not bite: "There will always be first-mover investors, but Singaporean investors are discerning... They will be more interested if the land law issues are addressed."

He said the pool of first-mover investors is finite, citing as an example Malaysia's Iskandar, which he described as being "quiet" for the past few years. This is in spite of the fact that Singaporeans can drive to Iskandar any time, unlike Batam, where they would have to follow a ferry schedule, said Mr Han.

However, corporate investors have been flocking to Batam. Foreign direct investment in Batam in the first quarter jumped 93 per cent from the same period last year, climbing to US$391.7 million (S$529 million) from US$204.2 million, according to the Batam Indonesia Free Zone Authority (Bifza).

Singapore is Batam's biggest source of investment, making up almost half of the total amount.

Mr Purba Robert Sianipar, deputy to the Bifza chairman, told The Straits Times the Indonesian government had plans to change the status of Batam from a free trade zone to a special economic zone, although it will take some time to process the change. "New rules regarding investment in Batam are related to making the licensing process faster, to be completed in three hours... Hopefully, it can be implemented before the end of this year," he said.

xinen@sph.com.sg

This article was first published on June 18, 2016.
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