EPISODE 2:
Bali investment redefined

00:00:01 Bali Business Club Episode 2 and I’m here with Omri Ben-Canaan, CEO of Kosong Satu Group and fund manager of The Kedungu Fund and Ilyas Najim, fund strategist and today we’re talking about The Kedungu Fund. So today I’m sitting with Ilyas Najim and Omri Ben-Canaan and today we specifically dig deep into The Kedungu Fund. Ilyas is the fund strategist so has all the details, deep insights into how the fund works, operates, how the Indonesian property market operates and Omri who’s a 30 year Bali-Indonesian veteran.

00:00:46 So Ilyas, tell me a little bit about yourself, how you got to Bali, what you’ve been doing. Hi all, thank you, Gawain. So I’m a Moroccan French I’ve been let’s say background in finance and international business and management so I’ve been involved in the investment banking industry for about a decade back in Europe working mainly for top tier banks in Europe such as BNP Paribas and other private real estate funds so after a few years you know in this industry I decided to take a little bit of time off and decided to

00:01:27 travel around Southeast Asia. It’s a common Bali story right? It all started like that. It all started like that. And actually I fell in love with the Archipelago, it’s a huge Archipelago, 17,000 islands. We’ve been traveling from Java to Flores in Labuan Bajo and like I got the revelation so I decided to come here, live here and it’s been about five years now that I’m living here and not only I found the place where I really feel comfortable and would like to achieve you know professional and personal

00:02:03 goals but I also met my wife here so you know. Okay so she’s Indonesian? She’s Indonesian. And you live in Jakarta and you travel back and forward Bali here. Jakarta, Bali, a bit of Lombok. Half the time in Jakarta, half the time in Bali, right So how did you guys get together and start this fund? How do you meet another love story I guess? I think the first time was in a networking event. Ah the French staker, yeah yeah yeah. Yeah okay and that was what a year ago? No, a bit less, maybe like seven or eight

00:02:40 months ago or something like that. So you’re the fund strategist, what does that actually mean? What does that day to day look like? What is that title actually? Well basically it’s a bit of a global title. We collaborate a lot with Omri and so we try to find the best strategy to adapt and adopt for the real estate fund. Myself I’ve been involved in let’s say in terms of amount of investment in Europe, I’ve seen figures around five billion in investment management and about one to two billion euros

00:03:20 in fund management and I was involved in different asset classes from office buildings to hospitals, shopping centers etc. So when I met Omri and we started to talk about the fund actually, the synergy went straight away. We had pretty good affinity and we decided to collaborate and see step by step where this can move forward. So the idea like my involvement is to qualify investment opportunities, discuss how we can build a real estate project, what kind of asset classes can fit within the Kedungu area

00:03:55 and try to maximize the KPIs to have the best return possible for our investors. Well that’s what he does. Okay. So you deal 100% focus on property investment, not so much in anything else. So you’ve got developments, well you’ve handled developments in Lombok, in Bali, where else in Indonesia have you kind of tipped your toes? Well basically Lombok here was my first experience in Indonesia. I used to have the asset management and finance of a property group here in Lombok, well to Lombok and Bali and at a personal level here

00:04:40 a few developments in Bali and one kind of substantial development in Nusa Penida. So the playground is basically Bali, Lombok, which are basically the main, well Bali is one of the main touristic hub in Indonesia but, in the world. So Lombok is an upcoming market, Nusa Penida is connected to Bali, it’s part of the Balinese political umbrella. So yeah, I kind of like emerging markets and if we zoom in into Kedungu in Bali, Bali is part of the emerging areas going westwards, you know, the Balinese development up to the

00:05:28 Gilimanuk area so pretty big. For those who don’t know, let’s touch on Kedungu. So what is it, where is it, how big is it, like who’s involved there, what is going on there. I think it might be a good place to start so we can frame Kedungu and what’s happening really. I think we’ve also got some insights on this, knows the area well. I’ll let you answer. I’ll add some ideas or thoughts after you’ve talked. Basically for, I think that we all know this tagline like location, location, location, right?

00:06:03 Sure. So we are investing in an emerging area. This area basically, it’s an upcoming area. There are a few big players that already invest in this basically district a few years ago now, like we have some pretty big names such as Ciputra, Lime Tree Capital, West Indies Capital, etc, etc. So big players in Indonesia. In order to summarize how Bali grew westwards, you know, like it started around the airport like Kuta, Legian area. So basically mechanically it grew naturally towards west. There are a few hotspots in Bali of course

00:06:44 like Ubud area, which is basically center let’s say if we summarize, Bingin area which is around Uluwatu and basically south, Bukit we call it here in Bali and basically the west world area like the natural growth from Seminyak, Kerobokan, Umalas, Canggu, Pererenan where we are today and Nuanu also there’s quite a big development happening there. You know about 40 hectares in this area and the next place where basically there’s surfing happening is Kedungu. So naturally we can see that the growth is

00:07:24 going towards surf spots, nice beach, nice environment, nice communities. So Kedungu is the happening area. So you’ve been in Bali for six years? Yeah, well about five years. What have you seen change over the years? Like what is for you the most prevalent change that you’ve seen happen? You know, I asked this to Omri, on last podcast, but what for you sums up your six years since you arrived? Well there are like of course you always need to look at the destination with the pros and cons. So I will start with the cons, but there are

00:08:03 always solutions happening thanks to the government involvement. So I see that there’s more and more people coming in Bali mainly after this COVID crisis. After COVID when air lifts opened their new destinations and past destination Bali the destinations in the last 20 to 30 years, even before if you look at the “artist” history of Bali and so on. Yeah, like a massive arrival starting from 2022, starting in Bali. So yeah, like you can start to see some traffic jams, etc, etc. So some people complain about it, mainly

00:08:39 people that used to live here like a long time ago and that found like Bali during COVID as being a kind of paradise. That was a COVID time. It was quite quiet. How did you find COVID? I loved it. It was a very unfortunate time for the business, for people and human beings in general. But as far in a very selfish manner, living COVID in Bali was I think the best thing that could happen to us because there was almost no case for a long time. And tourists were barred from entering. So it was just like, you know, you’d go to

00:09:24 any restaurant and you’d see like your friends in there. So it was… Beaches were quiet, no traffic jams. Yeah, zero traffic jams. But the traffic jam thing, it’s interesting that you mentioned it because I mean, I’ve been here for 30 years and it has always been an issue. 30 years ago was a nightmare as well. It was actually worse than that now. Because for example, you didn’t have the Sunset Road. So you used to live in Seminyak. So you only had like Jalan Raya Basang Kasa, which is going from Kuta to Jalan Seminyak.

00:09:56 And that, the old road And that road, and it’s like one lane road, yeah. So I mean, two lanes, like both sides, yeah. And that road, when it’s packed, there’s no way around. And all those roads used to fall apart all the time. Every rainy season, we just… The rainy season, I remember the sidewalks were much higher. They were about that high between the sidewalks and the road. And the rainy season, you literally had your feet in the water. Pushing. Yeah, like the water would come inside the car and you had water up to your knees.

00:10:35 No, not that you knew, but you had water in the car all the time. That was funny. But so yeah, it has always been a problem. I think it’s a problem in many countries. It’s not a bad thing. Everyone complains about it, but seriously, I’m French, I’m from Paris. If you want to go from point A to point B in Paris, it will take you more time than point A to point B in Paris. And I think people seem to forget that, you know. Perhaps because we’re on the scooter and it’s hot, and you have the exhaust pipes from the

00:11:11 cars in front of the scooter in front. It’s not agreeable. It’s not a nice feeling to be in traffic. In France, you’re in traffic, you know, your in a car. You listen to the radio, you don’t care. So I mean, people say it’s horrible, it’s horrible. It’s not as horrible as many other places, you know. And that being said, I mean, there are major infrastructural plans, which you know about really well. In the metro? Metro, yeah. Metro is a massive one. So what are the plans for that? Because I think there’s

00:11:40 a game changer for Bali. So as far as we know, sorry? I think for Kosong Satu was involved. We were involved at one stage. I don’t know if, I mean, they changed the core team a little bit. So we were involved when one dude was the financier. And now they kind of like, you know, open the market to a few different people. So there’s a competition, market competition. That’s tender, yeah. Yeah, it’s tender, yeah. And we’ll know in October, November who will– OK. And then there’s the airport, which–

00:12:21 In Singaraja is where A lot of talks going on at the moment with the government, because it’s a really crucial time. As you know, guys, like the elections, you know, Prabowo is going to be the next president, and will be starting his mandate in October this year. So there are a lot of talks now to facilitate international investment, and FDI’s in Indonesia. For infrastructure purpose, a lot of talks with the Chinese government, actually. So first of all, yes, the metro going up to potentially Tabanan.

00:12:56 I will say the name. No, it’s before that. It’s Munggu. Munggu was the last stop, yeah. We’re trying to sell them a Kedungu, so they sell it again, wait a few years. So yeah, well, hopefully. I think it’s going to be definitely a big game changer actually The second point is the highway. And this one is from Denpasar, more or less up to Gilimanuk. That’s a pretty big also investment. And there are also two other points, the airport at North Bali, Singaraja. And the idea is to deconstitunate a bit the

00:13:30 massive tourists going on on the southern areas, and to facilitate access to Amed or Menjangan. Actually, you love these areas. The only way you can find your own. Yeah, I got it quite often. And the last point is the cruise ships. I don’t know if you’ve seen the last article about the history of my- That’s a double-edged sword bringing cruise ships here. That’s big. But it’s massive tourism. I mean, that’s like 10,000 people, or 5,000, whatever it is, a week. It’s huge. So where’s the port going to be?

00:14:02 In Sanur Yeah, Benoa The Serangan is also developing Serangan pretty heavily. Oh, wow. It’s pretty exciting about that. There’s one of the best schools in Singapore coming to set up shop there. Next year, I think. They reclaim some land south of Serangan, the Kura-Kura Island. There’s this massive development to which you can’t access. And they did it. Friend of mine is working with them on that. And they did it. He told me they did a quite good job, actually. It’s a mix of expats/locals/tourists community

00:14:44 So they have schools, but they also have staff for tourists and for local people. So it’s quite good. I think Serangan is going to be a hit in the next coming years as well. So Sanur, they have this new hospital? Sanur has a new hospital, has a new mall, Icon Bali Oh, yeah. All of these are signs that the government is really, really pushing in the direction of getting more people into the country. I mean, they do that in Bali, so a lot. We know Bali because we live here, but there is also developments outside Bali.

00:15:21 There’s the list of the 10, it’s called the 10 new Balis, which is now narrowed down to five. You have Flores, you have Toba Lake in Sumatra, you have Raja Ampat you have, I forgot, Lombok Yeah, Lombok course, and one west of… What, I think? West of.. Borobodur. Is it Borobodur? And then five, you know, second destination But yeah, so the government, I mean, Jokowi said it in his campaign promises in 2014, he said, “I’m going to double the number of tourists in five years.” And he did it, he almost did it.

00:16:04 COVID hit, so it was short of like, I don’t know, 200,000 or something. But the last year, it’s increased by… Now there’s seven million this year, in Bali alone, seven million. It’s huge. Foreign tourists, you mean? Yeah. Because also the other driver is local tourists. It’s approximately like the target is about 20 million tourists. And we are circa 50-50. Half of the tourism here in Bali is driven by local tourism. And people from Jakarta, Surabaya, Malang, Semarang, Medan, etc., you know, they all gather here.

00:16:38 Like anytime you have a holiday, flights are full. So yeah. Yeah. So noting these infrastructural plans are in place, it’s understandable, the property market is very hot in Bali, thriving. If you were… If you had to give some advice to somebody looking… A foreigner looking to invest, you know, what would you say are some red flags that you would look out for if you’re investing directly in Bali yourself as a foreigner? First of all, due diligence. Strategic. So what would that… What does that mean, that simples?

00:17:16 Well, like when I talk about due diligence, well, first you need to set up what is that you want. And that’s always, you know, a bit complicated because when we say location, location, location, this, let’s say tagline, doesn’t really work when you want to be secluded in the middle of the jungle and, you know, have your private villal of eight bedrooms. You have chosen your own location because you want to make an investment with a purpose that is a second or… A holiday home or retirement or whatever.

00:17:45 Exactly. So first of all, to really think about what you would like to achieve in terms of real estate investment and what are your expectations. And sometimes you need to talk with people to really, you know, narrow down the idea and, you know, even putting the idea on the paper helps you to really fix what you really want. Then once you know what you want, you need to connect with the right professionals. And this is actually a tricky part because usually it’s coming whether from word of mouth or friends that

00:18:17 you have living in Bali, et cetera, that will recommend this company or another company. So to connect with the local professionals is a highly strategic point because they will help you navigate all the legal environment, tax environment, which is not easy to understand. If you go yourself online, you have all the information, but to really assess it and analyze it is complicated. So get surrounded by the right professionals. That will be the second point. Then the due diligence action, the number two.

00:18:49 Because the right professionals, you know, there’s the horror stories of, you know, people, some scams it was buying things that don’t even exist, you know, that kind of thing. So I think most of that market is people who’ve been here once or twice on holiday, love it, they can see the growth from one holiday to the next and they’re like, wow, this is incredible. Property prices doubling year on year. So there is risk and there are stories. How would, what would you do if your cousin was wanting to buy it,

00:19:20 but he was living in Dubai? Like risk mitigation, you know, obviously word of mouth, who’s reputable, credible, et cetera. But what are the steps that you would actually, you know, due diligence, et cetera? Would you have to come here, see where to invest? See the property, talk to the owner, handhold through the whole process? How much time and… Yeah, it’s again, it’s not an easy process. I would, first of all, engage a lawyer to assess how I would like to acquire my property, because there’s different ways to acquire

00:19:54 property in Indonesia, whether it is, we call it a ‘hak sewa’. It’s a basic lease agreement. So you can lease the land, you can lease the land and the building. You have to also make sure that you have all the permits and licenses to run the business. Do you want to leave there? Do you want to rent it out? Like you want to make profit or rental income out of it? So the lawyer will help you navigate the first, you know, ownership status strategy. The second one is creating a PTPMA, which is a foreign investment company in Indonesia.

00:20:25 This requires a minimum capital, you know, to follow the Indonesian regulation, but that allows you to… You have to be here, yeah. No, you don’t have to. You don’t have to be here. Like if you have, again, the right team and the right people, then we recommend whether a resident director, or you can also be, you know, manage your company from abroad, depending on the position you have in the company. So this is the first step in my opinion. And then let’s assume you target the land and you work with professional brokers,

00:20:53 you know, like people that will fulfill all your Christmas lists. Well, you enter the land due diligent phase and for this you coordinate with the lawyer, with the notary, to make sure that the boundaries are clean and clear. You really buy the square meters that are written on the certificate. You have the right zoning for your investment. So sometimes, I don’t know if you discuss this topic, but you have different zonings in Indonesia, green, yellow, pink, orange, red. So what can you build over

00:21:31 the land that you target? And then the last point is, if you want to build something from scratch, to have the right team and to find the right builder. And sometimes that is also a highly risky process. Now, sometimes people make it sound so easy, but it’s not at all, because a friend of mine actually, now just building two villas in Ubud for his own use, actually, two villas. He had an issue with his builder, and the builder just left the project. So you are wasting time, money, energy, motivation.

00:22:05 So these are stories that happen in Bali for sure. I think perhaps, if you don’t mind, I think it’s interesting, you touch a point that deserves a bit of more development. So I think the due diligence, a lot of people do the due diligence on the legal side of things. Zoning, going to the entirety, checking the certifications accurate, and so on and so forth. But I think what needs to be done is due diligence to who they are working with. And that’s the broker, number one, who they are buying the land from,

00:22:38 and how they are buying it. So is it directly to the owner, or is it through an agency? There’s a plethora of independent brokers in Bali. Are there any where in Indonesia, actually? If you go on Marketplace, you will find all these brokers, and a zillion lands for sale, and a house for sale. And a lot of it are absolutely not for sale. Or you contact them, and they bring it to the land. And it’s just a bait to get you, but that specific land, the deal was too good to be true, and it’s actually not true.

00:23:15 So this happens a lot. In Kedungu, there’s a lot of this on marketplace. When I used to do business in Sumba, marketplace didn’t exist back then, but there were a lot of brokers. And believe me, 99% of the land they proposed have an issue, or there’s a problem somewhere. Mainly ith the borders? Mainly of the borders of the land? What was the main issue? Main issue? The land wasn’t for sale. Main issue Because on the sale certificates, in many cases, many instances, the land belonged to a few people.

00:23:48 So like a family. Yeah, it’s usually like brothers, because the land has been inherited from a deceased father, or something like that. And it happens to me so many times. You talk to one guy, and he says, “Okay, this land is for sale, blah blah.” And then you bring the certificate, not how you check with the other brothers, and the other brothers say, “I never heard of this.” You know, the land is not for sale. Yeah. And that happens all the time. So just time wasting, really? Yeah. Yeah, but the problem is like

00:24:21 when people start putting DP, DP is down payments, you know? So they give down payments, and instead of putting in this … to the notary, they give it to the family, and then you get your down payment back. Good luck. You know, so that happens, you know, it happens on a daily basis in the genre, because people don’t do enough due diligence on who they are buying from, and how they are buying, like through which agency. If you have an agency like I was in Kedungu, or like, you know, Propertia, or Kibarer, or

00:24:56 whatever, all these agencies that have, they actually have a shop, yeah. This you can go, you know, it’s… Clean and clear, yeah Absolutely, it’s a clean and clear, yeah. But if you start going on a marketplace and talking to some shady agents that are not agents, actually. So and same goes with your architect, your builder. So builder, okay, here, one advice for everyone building villas and whatnot. You get a quote from the builder, it’s called the BOQ, okay? Build of quantity. And then you find it a bit too expensive.

00:25:28 You ask your builder, okay, reduce it. What is he gonna do? Reduce it. He’s gonna reduce it. No problem, but there will be less sand in your cement. Yeah, for sure. Or your concrete, you know? For sure. So you can reduce it as much as you want, but just you’re losing the quality of the house. So is that the main reason for setting up The Kedungu fund was to take the risk out for investors who are wanting to invest in Bali, you know, get the asset return and the ROI, but without having to do the legwork?

00:25:58 Well, it’s one of the reasons, it’s not the main reason, it’s one of the reasons. And yeah, it’s true, I mean, The Kedungu Fund literally remove entirely that risk. So you’ve been doing this for 15 years, I’m sure, you know, experienced the team that you come with, the builders, the developers, have all been refined and honed over the years. Yeah. But so how did the actual idea come? What was the spark? When was it? What was the creative inspiration? The true story? No, the lie. The lie? So it sounds good.

00:26:34 It started, it all started, so I’ve been doing real estate for 15 years, I’ve been in Bali for 30 years, not full time, but on and off in the beginning, but now full time. And I’ve always been investing differently than other people. I call this pioneer real estate. So I always try to find the location that will become something. I don’t invest in locations that are already happening. You will never,cote be dead, cash been dead, investing in Canggu or Pererenan. That’s that ship I sailed. It’s too late.

00:27:13 It’s way too late. So I always try to find what is the next market? Where is it going to go? And we all know it’s going to go there, and you started touching on that earlier. Why does those areas grow? Very simple. You have political will to bring more and more tourists in Indonesia You have that coconut tree law so no more than 15 meters. So these two combined, you have more people, you need to put them somewhere. You cannot put them in … Skyscrapper buildings. So the development is going horizontal.

00:28:00 Where is it going? Where is it spreading? In which direction? It just follows the coast. Why a fund? I mean, why didn’t you just do a development? So I identified Kedungu as being a region where development are going to be very, very heavy. Following the trend and the example of Pererenan, Canggu, Seminyak and so on. So a historical development? We have all historical, 15 years of historical data. Plus 15 years before where I wasn’t actually in the business, but I could see for myself what was happening here.

00:28:36 So Kedungu was for us, for me, still today. Won’t be the case in two years or three years, but today is the best market in Bali. There’s no better place to invest your money. So with that in mind, the fund started with me investing some of my money in Kedungu. I put half a million dollars. I bought a couple of plots, three plots actually. And then all my friends who know I’ve always been doing good returns on real estate. They’re starting asking me, “Omri, can I give you a hundred? Can I give you 15,000, 200,000, whatever?

00:29:14 Just invest with you, whatever it is. Just put some of my money in it.” So it started as a friend and family investment club. Not even a club. I wasn’t making money on them. It was just as a favor. And I’ve done that before. I was like, “Hey, I’m going to buy this land, You want to come in with me?” Or whatever. I don’t make money on my friends, you know. And then two, three friends become like 10, 11, 12 friends. I told them, “Guys, you’re going to have to do things on your own.” I’m not going to dilute myself

00:29:47 that it’s becoming ridiculous. So I told no to everybody. That was the end of 2022. And I thought, “This is stupid. There’s something there.” I know how to multiply money in that Kedungu area. I have a bunch of people, and those are just my close friends, without me advertising it. There’s a bunch of people that are interested in taking advantage of our expertise in order to make some investments. How can we do that? Back then, I didn’t know that much about the fund, economics and how it works, everything.

00:30:29 So I studied. I read and I learned by hard all the investopedia. I took some mentors. I watched a gazillion videos on YouTube and so on and so forth. Read some books, whatever. And I studied some specific funds in the States, in other places. Let’s open a fund. It’s called The Kedungu Fund, because it’s in Kedungu and it’s a fund. And start there. So you did all the research, found out what was the most suitable structure. I remember you were looking at fractionalization and tokenizing. Yeah, we went into that.

00:31:05 All those kinds of options. So I presume you then found something similar and copied the structure, really. Yeah. Or took bits and parts, maybe. I took bits and parts from different funds. The current interest, it copied on the funding in the States. The way we break it down 8% and so on and so forth. And then just take a little bit here, a little bit there, and try to assemble it to make it the fund that is the most logical and safe for the investors. And this is how we came up with The Kedungu Fund.

00:31:43 We changed things along the way, actually. We did change. Originally, the fund was just about land banking in the very, very early days. It was just about free-paying land. Okay, you buy your land today, you save it in four years, you’re going to make 5x, 6x, whatever. And then once we started the fund after a couple of months, we’re like, “This is stupid. We have an architecture company in the house. We have a construction company in the house, interior design. We know how to build. And we have all this

00:32:13 land that we are sitting on. Let’s develop it.” So this is where development started. So let’s get back to the fund strategy, land banking, commercial, residential. Let’s talk about fund structure. So we’ve got Singapore, Indonesia, manco (management co), operations. How does that all work? And why? Why is it done? We want to keep things simple. We realized that we have most of our investors, they are international investors, like based in Europe, Singapore, Hong Kong, like expats, etc. Would like to have an exposure in Indonesia,

00:32:47 but we still would like to benefit from a Singaporean legal environment. So we have a holding company in Singapore that hosts basically all the shareholders of the fund that invest capital into the SPV in Indonesia. Before we get to that, so Singaporean environment, why? Why is it so invest friendly? Singapore is a financial hub all over the world. Basically, I think that everybody knows now that Singapore is pushing a lot to attract international investors. And Singapore is really well known in

00:33:23 Southeast Asia to attract FDIs. So basically, the environment in Singapore have this aura of safety, welcoming regulation, less taxes as well. So this is one of the reasons why we have chosen Singapore. And you can onboard remotely, obviously. You can onboard most of the international citizens. Of course, what we do in Singapore is we have a KYC procedure. So again, to bring a safe environment to all our investors, we are working with a partner called SLIK (Sistem Layanan Informasi Keuangan) So anytime we onboard a new investor,

00:34:01 basically, we have to run some checking on the ID, on previous investments, etc., etc. SLIK takes care of this process. So once the investor is onboarded in Singapore, we send this fund flow as capital into the Indonesian SPV, Special Purpose Vehicle. So the Indonesian SPV is called The Kedungu Fund. Thanks to the capital that we receive in Indonesia, we invest in diverse real estate holdings, such as land, but also as Omri was stating before, few developments. And to close this question and to answer

00:34:38 properly to the whole fund structure in assessment, we have a management co, as you stated as well, called Kosong Satu Capital, that is handling all the operational aspects of the SPV, The Kedungu Fund. Okay. So let’s put a diagram here of the structure, I think, that will help people. So then the assets that are invested from the assets, you said land banking, residential commercial. I know you love the 80-20 split, but I mean, is there any form or what’s the thinking behind this? And why, you know, those three things, like

00:35:16 what percentage is and how do you split that as far as asset allocation? Sure, sure. There’s the asset allocation is always a really important point in fund and portfolio management. So basically, the investment thesis of this fund is to initially, as Omri said, was to focus mainly on land banking. However, in order to create value on the land that we bank, we need to develop around it. So we did an assessment according to the objectives that we have for this year. For example, I can share that we are planning

00:35:51 to fundraise about 20 million USD before the end of 2024 This objective might increase through the next months, depending on the people we are talking to, actually, and their will to invest within the next quarter. So looking at this sum of capital that we intend to achieve, we came through different assessments and analysis. We studied different options. And the main assumption that we keep today as a direction for the investment thesis is 60% of the funds we receive will be targeted to land banking.

00:36:30 So acquiring more land. When we say land banking, it’s not just take the land and keep it somewhere and just wait. We also plan to have a light infrastructure to make it more appealing in terms of financials and we say. And on the other side, we have 40% of the funds and can be more, of course, depending on how the market is evolving in the area, that is targeting retail development, commercial real estate. So we have a range of asset classes that we are looking to invest in. It goes from Kedungu Plaza, which is a retail

00:37:08 center, mainly targeting high street shops. We have also a medicare center that we are looking at to provide all and to answer all the needs of people that will live in the area of Kedungu. Of course, the first investment that we launched was a school, an international school, international school slash learning center. So basically, this will attract families to live in the area of Kedungu. And of course, when you have education, you have health and safety, you want to also shop and buy a plethora

00:37:49 of different products. It can go from clothing to cosmetics. This is why we intend to create the plaza. And the last days, actually, I think that we can share this information. We are looking at. Which one? We can do this one. It’s the NDA. NDA. Yeah, NDA. I think this one we can share the info. Actually, one of them. That one. Yeah, this one. We are looking intensely to develop mixed used commercial assets. Residential and commercial. Yeah, residential. We connect different asset classes within the

00:38:33 same location in order to create the destination. So basically, what we are working on at the moment is to connect maybe a Kedungu plaza with a service residences, branded service residences with the top tier player in Indonesia or even international top player and business center. So we will connect all these to really create the destination with the main focus on wellness and support facilities. So we are still writing the road map for this investment. But that might be something that can come

00:39:07 earlier than the end of the year. Okay. We’re aiming at 2025. Beginning of construction. Yeah, but the school launched. The school launches August 2025. It’s already open. For operation. Sorry. Yeah, yeah. Yeah, we started the construction a month ago, a bit, I think, like five weeks ago now. And I should be finished around 2025 Q two, let’s say. Who actually chooses the land? Like, what is that process like? So it’s like, okay, you’ve identified a plot or piece of land. What’s the upside? What’s the downside to

00:39:46 that specific piece of land? What do we do to get to the point where we acquire it? And we’ve made a decision that this is what we find is going to select. Okay, on the first phase, so the acquisition phase, we had a postulate that we adopted at the inception of the fund, which is basically to acquire as many high streets, retail shops, land, sorry, in Kedungu on the main street. So if any piece of land that we could get our hands on, we acquired them. Why? Because those are the land, those are the investments, sorry,

00:40:31 on which we will make the most returns. Whether we develop or we don’t develop doesn’t matter. We will make massive returns on those plots because you have way more the multiplier between year number one and year number X, which is like five, usually, is much higher with commercial real estate than residential real estate. So in the beginning of the fund, the message was very clear. Every piece of land that we could acquire in Kedungu, which is Jalan Pantai Kedungu, street going to the beach, we got them.

00:41:07 And we have like 11 plots now. So we didn’t go at all for any residential. We don’t have, as of today, we do not hold any residential plots, only commercial. So that will change in the next few months and years. But we wanted to secure as many commercial lands as possible. And yeah, so we did exactly the same in Pererenan. Five, six years ago, when we moved in our office, we bought some, we acquired some land, was leased, sorry, did not bought. And then we didn’t develop that. We developed, actually, that

00:41:46 very office we are sitting in, was a land we developed. We are, for those who don’t know, don’t see it, of course, is we are sitting on the third floor of a building that we developed in Pererenan two, three years back. So that’s for the acquisition part. And for the development parts or strategy, it’s a lot of people coming to play here. Because in our last podcast, we touched on why the school, why the health center, why this, I mean, I know you’ve had to look influence and play in those decisions.

00:42:24 Why the developments we have on our books? What is the thinking behind it? What does it bring to the area? So, of course, you have these strategic discussions when we see what can be done here and there, etc., about the location. So these are more qualitative analysis, let’s say. But then we enter into the quantity analysis. For the quantity, we work closely with Paul as well, who is the CFO of the company. For example, I will go pitch Omri about an idea as well. So when I go pitch Omri, first of all, we look at the figures.

00:42:58 So we come with the first assessment of basic data. How many square meters we need? How much would the land cost? How many years of these we have? How much would be the development cost of this specifically development, our construction? And then once we have a bottom line, top line, bottom line, we run some figures and cash flow and we do some financial modeling. And then we, OK, this makes sense for our investors. So then we start to move forward with the technical advisory team that we have around us.

00:43:33 And as Omri said, we will move directly to build it. We have about potentially two to three years development phase because most of our buildings, like the school started, but we anticipate to have most of our buildings started in 2025. And average building time, if you build a villa, is about eight to 12 months. If you have all the team set up, et cetera. If you go on your own and you don’t know the market, it might take 24 to 36 months average. We know that we have all the technical knowledge and know how to make it happen.

00:44:09 So I would say that, like, we might need for the average an average project size about 12 to 24 months maximum. So we might say that 2025, 2026, we might see a lot of new projects being delivered in the fund. And this is good news for everyone, because if we have new projects, means net rental income, means distributions, means value increase. So, you know, like that’s the waterfall of the strategy. Let’s get back to growth and let’s touch on time frames. So why five years? How are those periods broken

00:44:47 down into what, when, and why five? And then it’s a liquidation period at the end. Maybe just talk through that just so that it puts some framework to that period. So five years is allowing us to fundraise, develop, start selling. Usually, as I said, development is about two years. So now the fund has about a year plus two years, that’s three years. And we will have about a year, two years to benefit from the net rental incomes, and then starting to sell. Today, what we say is like, basically, we will have–

00:45:24 So you’ll sell all the assets. We sell all the assets. We have different exit strategies. So we have different options. First option will be to sell asset per asset, on an asset per asset basis. So classical way to call brokers and to say, OK, we have this asset coming into the market. This is the value that we have today, because we are working with the valuers. We are working with auditors. We are working with different people to make sure that everything is solid around the fund. And basically, we will

00:45:50 wait for the buyer to come in. And then we close the deal, hopefully, if we agree on the terms. The second option, which is something that is most likely to happen, is to create another fund that will buy back these assets, or maybe even some cherry picking about the most performing assets, because they will be delivering the yield. And in this scenario, we can even think about creating a REIT, which is legally an entity in Indonesia that allow us to acquire yielding assets. So there’s a lot of different opportunities.

00:46:24 The last one you’ve touched based on this point at the beginning. You looked at tokenization, fraction investment, et cetera. There is always a way to create also a tokenized fund or tokenized solution for the exit. So we have different strategies. And we know that we can exit towards the different components. So as soon as those things come online, airport, port, et cetera, it’s going to be a big uptick. Absolutely We give also, just to complete on this as well, we give a flexibility to the fund during this liquidation period

00:46:56 in order to protect also our investors and benefit from the optimum during the sales phase. So we don’t want to be stuck into, oh, we need to sell tomorrow. We need to sell tomorrow. And this would be sending a bad message as well to the market. However, we want to have this flexibility to be able to sell more or less two years liquidation period. And actually, this is not damaging investors’ returns, because while we are in the sales phase, investors still receive distribution related to the net rental income.

00:47:29 Yeah, right. Let’s talk about growth and let’s talk about what investors are going to receive and how it works. There is obviously the five-year full investment period. And then at the end, you get your investment return. But there is dividends. Of course. So how does that work? How do they get paid? How they declared? Who makes the decision? Is it working on rental revenue, I presume? So actually, it’s quite a simple process, which is interesting to mention. All our assets in Indonesia, of course, real estate assets,

00:48:08 real estate holdings would generate net rental income. So basically, you have usually the top line is your rental income. Some expenses, net rental income. And then you will distribute the proceeds of these operations to the holding company in Singapore. In this process, in this fund flow from Indonesia to Singapore, there is a 10% withholding tax on dividends. So assuming we are making 100 to distribute to the Singaporean Hold Corps, we will take out 10 that we will pay to the government. And then we will distribute 90 to our

00:48:46 investors in Singapore. And the entity in Singapore, the Hold Corps, will then distribute this 90 to all our investors. And the good element as well is, in Singapore, there’s no taxes on capital gains. So basically, our investors will receive their proceeds wherever their domicile is. Minus the 10% that have been withheld in Indonesia. So the first rental incomes will be coming online relatively soon, 2026. 2025, actually. End of 2025. End of 2025. Actually, this fund is specifically oriented towards real estate.

00:49:28 So basically, our core competence is to develop the real estate and then to have operators or tenants which will live within the premises and manage the operations. Okay, so let’s talk about growth. All the sales collateral, 43% ROI, net ROI achieved 2023. 2-5X on return by the end of the five year investment horizon. Where does that come from? Who determines that? Et cetera. Just talk us through. So basically, before launching any fund, we need to run figures. So we have a fund economics. We’ve done some financial modeling.

00:50:14 We followed these different ratios that we’ve been talking about a bit earlier. We can give some details to our investors, of course, when they want to know more about the fund economics. But basically, we use, like actually Omri was doing some benchmark analysis about the land market price to look at the time where the first acquisition were made back in 2023. And correct me if I’m wrong, I think the price was about five to six million per are per year for the lease. So if we look at the market

00:50:47 today, we are reaching 12 to 15. So more like 15. Yeah, more towards 15. And depending on the location, of course, like now we’re talking about prime lands. So the 11 plots that Omri was mentioning, there are plots on the main Kedungu Road. High street. High street. Going to the beach. To the surf spot as well. So basically, this 43% is just a calculation about land at acquisition and land in the market today. What if we sell it today? If we sell it today, basically, that’s the return. And the next one will

00:51:23 come at the end of the month. So basically, the 43% will mechanically increase. What we’ve done in order to bring as to operate, actually, as REITs or real estate investment funds based in Europe or in the US, et cetera, to put our standards really high. And actually, that’s part of my experience as well, is to use external third parties to help us in this process to benchmark the land prices, the development values, and so on. So for the valuation of our fund, usually we calculate the net asset value per share.

00:52:03 This value is validated with an entity in Indonesia that we called KJPP You can research online. They are basically the– if we compare with what’s happening in Europe, it’s RICS, Royal Institute Chartered Surveyors. So they have this government certification to value our lands and our real estate asset holdings. So we are working with them. The people we are working with are called RHR KJPP, which they are also the strategic partner of CBRE, which is a pretty big real estate company worldwide, well-known.

00:52:45 We also have– It’s the biggest, isn’t it? CBRE, one of the top five players. And we also collaborate with the Mazars in order to provide financial statements audits. So we surround ourselves with high quality professionals in order to be completely clean and clear with our investors so we can provide all the information that they might require. And the last point is– and that was a really smart idea, actually. It’s the online dashboard. So investors has– all investors, once they are onboarding in the firm,

00:53:23 they have access at an online dashboard where they can see the evolution of the investment. They can have some key point information that they can access directly. Newsletters can have access to certificates, to documents from our due diligence. So if they have a question, they can just go there and click. And if they have more questions, they can call us and we can, of course, enter into a meeting. We’ll put the URL in the comments below. And it’s thekendungfund.com/demo. So anyone can go there and

00:53:57 check out the fund economics. So an external party, they do the valuation, which determines the share price. So any new investors onboarded are present as done quarterly. So an investor who onboards in three months’ time will obviously have a different share price. Purchase price, as they do now. So the next valuation is in 10 days. So anyone who invests wants to invest is better to invest in June than July, obviously. All right, so then another question I get fairly frequently is fees. Obviously, that’s how funds make their money.

00:54:39 And how are the fee structure, performance fees, et cetera, how does it all work and fit together? Well, the thing is, like, in real estate, the fee structure is slightly different from, like, let’s say classical corporate funds or funds that are more dedicated to investing in other companies, shares, obligations, whatever bonds, whatever kind of financial instruments, because we are more connected to tangible assets. So basically, we have different type of fees all following the lifecycle of the real estate investment.

00:55:18 So when we acquire a land or land and building, but we would mainly acquire land and then build, we get the acquisition fee. So basically, when the money is coming in, we are also incentivized to acquire as fast as possible so we don’t leave the money sleeping and the money start to create a substantial yield. Like an agent. Yeah, exactly. So basically, acquisition first, we get a fee at the acquisition. Then what we need to do is whether we will wait and do observe the land banking strategy. What we were talking before

00:55:55 about the 60%, 40%. So for this land, we will wait and then we will exit. And once we exit, we have an exit fee. So we take a percentageof the– At the end of the five-year period. At the end of the five-year period. The disposal fee. The disposal fee, yeah. So why? Because also you have some admin, et cetera. You have people to pay. You have a management company. So these fees are quite common– Standard, yeah. Standards in this process. If we go towards the second option, which is the development

00:56:25 phase, of course, we have also some people that will follow the development of the project that will coordinate with the architect, with the MEP design, with the engineer, with the structure engineer, with the lighting designer, with the interior designer, et cetera, et cetera. So in this scenario, we call it the CapEx management fee. So basically, it’s connected to the development budget. And once it is operated, because again, we need to talk with the brokers. We need to find the tenants. We need to do market studies.

00:56:56 That’s, of course, hours and hours of work and planning. We have asset management. And this is based on the rental income of the properties. Okay. So that’s fees. So then we’ve got performance fees and carry interest. How does it work? How the splits? The fees that Ilyas talked about are all related to expenses. So the fund doesn’t make money on this. This is to cover the expenses of the fund, basically, yeah? Where the fund makes money, oh, and then, sorry, there’s also the annual management fee of 2%, yeah? Okay. Which is

00:57:32 based on the capital. It’s the only fee based on capital. So you invest, you come into the fund with $100,000, the fund will take $2,000 as soon as… So it’s based on AUM, yeah? Yeah, completely based on AUM, yeah? All the rest of the fees are based on events or operations or sales acquisition, whatever. So now about carried interest, which is completely a different set of fees. This is where carried interest is where people make money, whether it’s the fund, so GP, General Partnership, or LPs, limited partners,

00:58:06 which are the investors, yeah? So the carried interest are structured in a way that seems to us when we start the fund very fair and incentivizing to both parties, LPs and GPs. So basically, you have your first 8% returns that are guaranteed to the LPs. So the investors, whatever money is made, the investors will get the first 8%, no matter what, okay? And the clawback provision is based on the 8%, that’s called the preferred return or the hurdle rate, yeah? Then after we have a catch-up of 6%, so from 8% to 14%, that

00:58:49 goes to the GP, the General Partnership, to the fund, okay? So 0% to 8%, first 8% goes to the LPs, and 8% to 14% goes to the GPs, yeah? The GP. Then the next 10% are split 80-20. 80% of those 10 go to the LPs, 20% goes to the GP, okay? So that goes from 14% to 24%. Whatever is above 24% is split 65% to the LPs, 35% to the GP. So our sweet spot is to go to beyond 24%. So that’s where we get the most profit from the returns. And if the fund goes there, thereby, the investors make more money. Where everybody makes money.

00:59:46 Everybody makes money. So it’s a win-win situation, yeah? And this is why we structured it like this in the first place, yeah. Okay, so let’s talk about making, in closing, when we’re running out of time. So making money, that’s what everybody is interested in. Five-year return on investment. How do we do it? How do we do it, yeah. And how exactly do we do it? Magic formula. The famous magic formula. Okay, so I think for this, we’re gonna go downstairs on the smart board so I can show you in detail.

01:00:24 I will draw some pictures. Yeah, the iPad is too small for that. So let’s go downstairs and we’ll come back after. It’s good. Go, go, go. All right, guys. So just come down from the other office. I’m here with Gawain and Ilyas. Hey, guys. They are out of the frame because there’s no space. So now we’re gonna talk about this, the money graph. So this is my secret formula on how to make money in real estate and investments in Bali that I’ve been using for the past 12, 13, 14, 15 years. So have a look.

01:01:10 Before we start, let me tell you just one important thing. So those are predictions based on historical operations that we have done and historical data. They are just predictions. There’s always a risk in investing money, your money, into anything, whether it’s real estate or private equity or anything. So I just want to be very, very clear that we’re not promising anything. This is just predictions, yeah. So now let’s get into it. So that graph here represents how the land price evolution in Bali has been happening

01:01:54 over the past few years, past 10, 15 years, and it’s always repeating itself. It’s a pattern. It’s always the same. So it’s fairly easy once you’ve understood how it works to predict and to identify new regions where to invest. So what do you have here? You have a timeline like years in increments of five years. So 2013 – 18, 2018 – 2023, 2023 – 2028, and so on and so forth. You have the COVID. COVID is right here, yeah. So around there, you can see during the COVID, you can see those lines that are

01:02:31 plateauing a little bit. And then you have the money axis in IDR or whatever. So if you look at how it’s worked in the past few years, so you have areas like Batu Bolong. So we put Batu Bolong, Pererenan, and Kedungu So Batu Bolong basically went high in around 2015, 2016. It started to pick up, go high really, really fast, then plateau a little bit at COVID, go high again. and now it’s at the peak. It’s past the peak. It’s already mature. It’s been mature for like two, three years. So we are into the maybe the eighth year of

01:03:16 Canggu as the Canggu we know. And then you have Pererenan who came a little bit later. But basically the same trend, the same shape of the graph goes up very fast. All of this is happening in a period of five years. So Batu Bolong went from 2015 to 2021 or something like that. Then you have Pererenan from 2018/2019. This is when we moved in here in Pererenan. There was nothing here. Literally nothing, just rice field and rice field. And then Pererenan went up, up, up and now we have maturity in Pererenan.

01:04:00 And then you have Kedungu. So Kedungu started 2022 and a half or 2023. And then went up really fast, still going very fast. 2024 here. So this is the point where we are. And the dotted lines, well all dotted lines are the future. Yeah. So we have it hasn’t happened. So we are predicting. So again, back to the disclaimer from the beginning of the video. So we are predicting it’s going to go this way because it’s just following a general trend that different areas in Bali have along the coast where the surf spots are.

01:04:38 It’s always the same and there are areas before that obviously. But you never know. This is Kedungu. Our prediction is that in 2028, this is the year, mid-2028, it’s going to be the year where it’s mature. And this is also why our fund ends in 2028. So now let’s put some numbers here. Just so everyone understands, the price of the land in Bali. So let’s talk about lease hold. The price of the land in Bali is more or less always the same. I mean, in areas that are not yet developed. It’s around 3 million per hour per year.

01:05:18 Okay. I’m going to put 3m here, 3 million per hour per year. And that’s generally what that price, give or take like 10/15%. It stays like this for years and years and years until there’s an interest, until something happens and then it starts to pick up and it goes super fast. Up to maturity. Yeah. And that period, like I said before, is normally is usually a period of five years. So from 3 million rupiah, so let’s not take the example of Kedungu here, but for 3 million rupees, it goes up super fast,

01:05:57 up to around 40 to 45 million rupiah. Depends on the market, depends where, if it’s like closer to the beach or more towards the Raya Canggu, Jalan Raya Canggu. I’m not talking here, but beyond Raya Canggu, which is like, it’s a completely different market, not completely different market, but slightly different market. So when it gets to 40, 45, this is your cue to sell. When it’s like, between like starting to approach the 40s, then this is when you should sell, because it’s going to go above 40, for sure,

01:06:33 above 40 or 45, but it’s going to be very slow moving forward to increase. So it will increase, but very, very slowly. So this is the maturity. And when that point is reached, this is also when, so sign for the next region to like be boosted, because people, basically this is saturation as well. This is when you have too many people in one place, the density of population is huge, and people just need to, you know, have space to live. So the next village, it’s spillover the next village, so to speak.

01:07:11 So if you look at, so I never invest at 3 million. I am always careful. What I do, okay, but again, this is me, I usually invest around 5 million. So say around here, yeah, 5 million. This is what I do. For me, when it reaches the 5 million mark, it’s a proof of concept. It means like, okay, it’s working. The trend has started. It’s going up. We are in the first year. The first year has not yet been over. So we’re still in the first year. There’s still like four good years to go where we’re going to make a massive profit

01:07:55 by the multipliers here. So if you invest at 5 million and you sell at 40, let’s say 45 million. So we’re talking, it’s a 9x on your investment. This is massive. Yeah, the logic here for you. Boom, 9x, that’s lease hold, yeah. I will talk about free hold in a minute. So 5 million, you invest at 5 million, you sell at 45 million, 9 times your money, 9 times your money. This is, so today, for instance, let’s take today. Today, we are, so now is the end of June 2024. As per the numbers that we pulled from

01:08:34 Kedungu real estate agency, which is owned by our group also, Kosong Satu Group. So, sister company of The Kedungu Fund. So we have, let me write it here. So lease hold average is 13 point something, I forgot, 13.5, I think, million per are per year. Okay, and free hold is 650 million per are Okay, so here, 13.5, I’m gonna write it here again, 13 million. So if you invest, if you invested like me, back a bit over a year ago, you would have already made more than two and a half times your money.

01:09:24 So that’s basically, if I were to liquidate the land that I personally bought, and the land that, and some of the land that the fund acquired in the early days of the fund, this is what we would make now, yeah. If you invest now, it’s not too late at all. If you invest now, whether you invest in bare land, or if you invest in the fund, which does exactly that plus more, you would make, I mean, again, predictions, yeah. So very careful with that, yeah. You would make at least three to three and a

01:10:02 half time your money, yeah. So you invest, like if you buy your land today, you say in four years, you will make three and a half time your money, it’s amazing, yeah. So, Gawain, you want to say something? He’s raising his hand. Sir. Give us some USD, calculate conversions just on the reverse, and people know. How big is an are, and then also freehold 600 million. Oh, yeah, so many questions. Not billion, yeah. Sorry? Oh, yeah, yeah, yeah, sorry, million, million, million, correct. Oh, sorry. Talking million.

01:10:37 Okay, so, thanks Gawain, you’re right. I’m speaking to, like if I’m, because I know this and I am, because I’m talking to you actually, yeah. Okay, so a million Rupiah is around, I don’t know today, probably around 60, 65 dollars, something like that. So, if you, 3 million Rupiah would be like a bit less than 200 dollars, okay. And 5 million Rupiah would be around 300 dollars, and 13.5 million Rupiah would be, around 1,000, no less, 900 dollars, something like that, okay. 900 dollars, and 40, 45 million Rupiah would

01:11:27 be, I’m gonna say something wrong at some point for sure, a bit less than 3,000 dollars, I would say like 2,700, maybe something like that. Okay, so. How big is an are, sir? So, one are is 100 square meters. So, 600 would be like 4,000, about 40k, I think. So, that’s the price to acquire freehold, freehold means to buy one out of land. And now, I’m going to explain why it’s better, in my opinion, again, okay. Why it’s better to invest in, to acquire leasehold land, as opposed to versus freehold plots, yeah.

01:12:22 And again, this doesn’t work everywhere. It works only in emerging regions. So, the leasehold versus freehold scheme doesn’t work anymore in Pererenan and in in Canggu, in Seminyak. However, it’s very, very relevant in Kedungu, which that always a emerging market, yeah. So, your 3 million Rupiah per are per year land is equivalent, when it has 3 million Rupiah per are per year, it’s around 250 million per are freehold, 250 million, yeah, which is about, so that’s 15,000 dollars, yeah. That 250 million Rupiah, I’m

01:13:14 going to go back to Rupiah here, yeah. So, when I invest, when I invest, it’s around 300 million, yeah, which is around 20,000 dollars, today, the price is around 650 million, okay. So 650 million, which is equivalent to around 40k dollars, yeah. And when it reaches maturity, so there’s an interesting thing about freehold. Freehold is coveted mainly by Indonesian, okay, by local citizens, so much less by foreigners. The reason behind that is that first, there’s less money, there’s more money involved in freehold,

01:14:11 you have to immobilize more money. Secondly, Indonesian are allowed to purchase land, as opposed to foreigners who cannot purchase land, cannot, the big no-no, it’s written in the constitution or somewhere, Indonesia cannot sell it, part of its soil, yeah. So that’s one thing. So mostly, Indonesian are buying freehold and foreigners are acquiring leasehold, yeah. So when you talk about freehold, there’s something interesting that happens. There’s a psychological cap, which is at 1.5 billion rupiah, which is

01:14:53 around 100,000 dollars, beyond which the land appreciation has a, you know, a hard time to go above. So this is it, it’s here, it’s right here, 1.5 billion rupiah, okay. And that’s 100,000 dollars equals 100k dollars. So it goes up to that, I mean, there are some lands that are more expensive than 1.5 billion rupiah, if you go close to the beach or some specific land, I’m not talking here about commercial, this is all about residential, by the way, commercial is even another graph. So it has a hard time to

01:15:39 go above the 1.5 billion. So as a result, it doesn’t increase, the multiplier between leasehold and freehold is slightly different. If you remember the 9x that we did on leasehold, so the same land, exactly the same land, both at the same time, acquired at the same time, which I acquired for 5 million rupiah, would be 300 million rupiah freehold. And when we sell, instead of selling at 45 million rupiah per year, you sell 1.5 billion, so you have a multiplier of 5x only, which is lower than 9, 9 obviously, plus you have to

01:16:21 immobilize more capital because the freehold is just more expensive. So in my mind, it doesn’t make sense to buy freehold in emerging regions, emerging regions. But note that that multiplier decreases over time. So the more time passes, the more the multiplier decreases and the more the difference decreases, where here it’s one on one. So in Bali anyway, emerging markets, just remember emerging markets, leasehold, any other market, freehold, or lease hold, doesn’t matter. So again, so Kedungu, now 13.5, this is the average price of leasehold.

01:17:11 If you invest now with the fund or if you buy land in Kedungu, you cannot lose money, you can’t lose Again, prediction, not promises. It is going up, it’s already going up. I mean, I’m sure in one month, it’s going to be 1 million more. So it just keeps going up and up and up. So that graph, so the fund uses this as one of the core principles of its thesis. It doesn’t use only this, it uses many other things because we are developing land as well. And also keep in mind that this is only good, this graph is

01:17:54 only good for residential. It’s not good for commercial. Commercial has a similar graph, but the numbers are much higher. So this is more or less the same here, more or less the same here, 3 million, 5 million, more or less but here, however, that’s the tipping point here, here, here and here for commercial land. So by commercial land, I mean land that’s on one of the main streets. So like Batu Bolong, anywhere on the Jalan Batu Bolong, of course, the closer you are to the beach, the more expensive.

01:18:33 Or here in Pererenan, from our office to the beach, if you know where our office is, Kosong Satu Group, that’s like, that’s super prime. That’s very, very, very prime. And then from our office to the north, uphill, it’s a little bit less prime as commercial real estate, but still very, very much more expensive than residential. So just to give you an idea, that 40, 45 million that you, is the top of the trend where it starts to plateau for residential, for real estate, for sorry, for commercial real estate, it

01:19:12 will be 70 million. Okay, so 70 million and it goes higher than that. Like in Batu Bolong right now, if you manage to find it, I don’t think there is any, I mean there are a few, but I don’t think they’re for sale. But if you manage to find them, the price of the land now is around 100. That’s 100 juta, sorry, 100 million juta is in Indonesian, 100 million rupiah per are, so per 100 square meters per year. So every year, that piece of land that’s 10 by 10 or something similar would cost you 100 million rupiah.

01:19:53 Yeah, and if you take the land for 20 years, that’s 20 times 100 juta, so 2 billion rupiah, which is around 130,000 dollars or something like that. So it’s like one are is 13– is 6 and a half thousand dollars every year. Okay, but you won’t find it in Batu Bolong. I don’t think there’s anything left. Even in Pererenan, I don’t think there’s anything left in Pererenan unless you buy your house from somewhere, I don’t know. But I don’t know any, or very, very seldom, you can find some bare land here.

01:20:33 In Pererenan, it’s probably around like 70 or 80 now, something like that. So boom, 80, yeah. So 100 in, if not more, if you’re close to the beach, I mean, there’s no limit, yeah. But it’s average 100 million and Pererenan is 70 to 80 million, yeah. Up, there you go. So we expect the same thing in Kedungu and the difference that the fund has, like what does the fund do more than that? One of the things is that the fund acquires all the land today that we have in the fund are all commercial plus,

01:21:16 prime commercial plus. So from, if you guys know where Kedungu Real Estate is, the agency. So around that area, up north, going north, to after the banjar, after the crab thing, you know, the crab statue, where the padel is, people know the padel, so where Jungle Padel is And this is where we build the school as well. And we have all that crossing, we have the two land at the crossing, we have the school, we have another one where we put the workers, which is like a 5.6 are maybe 100 meters north from the school, and a

01:21:53 few others as well. So we do that, the fund does that, it does exactly that, plus more, and it does it not on, not yet on residential real estate, does it on commercial real estate for the most part, yeah. All right, okay, so that’s it. Anything else? Ilyas? No? Okay, all right. Well, thank you very much, guys. Little quiz. What is the next area and when? Put your answer in the comment, I will buy you a beer to everyone, anyone that finds the right answer. Okay, in the meantime, let’s go back up, guys,

01:22:32 and finish that podcast we started earlier, yeah. Thank you, ciao. But that makes a lot more sense. I mean, it’s easy to understand, shows exactly how you did it, magic formula. Yeah, I mean, it really stacks up. So the whole, the whole pioneer real estate concepts comes from there. And the fund, the very core concept of the fund is based on that, on that graph that we just saw. Okay, so yeah, I think it’s a great place to end off. Thanks, Ilyas. Appreciate your time. Really great and informative and thanks

01:23:15 for being here and coming. Thanks, Omri. And yeah, all socials below. Check out the website, you can have a look at, you know, Omri’s killer graph and any other graphs and splits, etc. All the technical details put up. So it’s that camera. Was that this one before? No, it’s that one. Okay, okay, okay. All right, what did people annoy that we ran out of battery on one camera? Okay. And thanks, team, I appreciate it. Thank you, everyone. Thanks. Thanks, everyone, for watching. And feel free to contact us if you have any questions.

01:23:49 I’m happy to answer me or my team to answer any of the questions that you may have and set up a Zoom call or in person if you guys are in Bali and you want to come and jump by for a coffee in our Pererenan office. You’re more welcome, most welcome than to do so. More than welcome to do so, sorry. Yeah, and that’s it. And let’s see what we talk about in the next episode. Yeah, we’ll see you on the next podcast, number