Indonesia's Lippo to shift REITs from Singapore to Indonesia

Lippo Malls at Kemang Village

JAKARTA: Indonesian conglomerate Lippo Group plans to shift two real estate investment trusts (REITs) with 35 trillion rupiah ($2.6 billion) in assets from Singapore to Indonesia next year in order to benefit from new tax breaks offered by Jakarta.

Lippo's move could be followed by at least two other property companies in Indonesia that say they are exploring spinning off assets worth hundreds of millions of dollars into REITs, potentially creating a REIT market that could rival Singapore's if Jakarta executes its policy pledges.

Indonesia's government last week announced incentives aimed at spurring firms to set up REITs by ending double taxation that may apply to such businesses. "Because of the government policy, we think Indonesia has very good potential for REITs," Lippo Group CEO James Riady told reporters on Wednesday.

The property-to-retail group aims to boost the asset value of its REITs to more than 100 trillion rupiah in three to four years, he added. Its two Singapore-listed REITs are Lippo Malls Indonesia Retail Trust and First Real Estate Investment Trust.

Other Indonesian firms are already sizing up possibilities for setting up REITs, which typically own or operate commercial property such as shopping malls and office buildings and pay regular dividends to investors.

PT Ciputra Development Tbk, an Indonesian property developer, is seeking more details on the government's plans, Corporate Secretary Tulus Santoso Brotosiswojo told Reuters by phone.

"Our asset (value) is around 15 trillion rupiah, probably around half of it has the potential to (be placed in a) REIT," Brotosiswojo said, citing "our commercial assets that have recurring income such as shopping malls, hotels and offices."

Meanwhile Hermawan Wijaya, a director at property developer PT Bumi Serpong Damai Tbk, said Indonesia can compete with Singapore for REITS if the government successfully executes its policy.

"The domestic REIT potential is there," Wijaya said. - Reuters