Disclaimer
Aligning Expectations
The information provided in The Bali Business Club Podcast is for entertainment purposes only and should not be considered a solicitation for investment. Any investment into any fund, property, business, stock, bond etc is always speculative and involves a high degree of risk. Past performance is not indicative of future results.
The information provided on this Podcast is not intended to be a complete representation of what topic is discussed, its strategy, or any financial projections. Any potential investors should conduct their own due diligence and consult with appropriate professionals before making any investment decisions.
The Bali Business Club Podcast and its affiliates and agents do not make any representations or warranties, express or implied, as to the accuracy or completeness of the information provided.
Real Estate: How to 9x your investment and other Bali property tips
Episode 1 of the @BaliBusinessClub kicks off with an exclusive interview featuring Omri Ben-Canaan, CEO of The Kosong Satu Group and Fund Manager of The Kedungu Fund.
With over 30 years of residency in Bali, Omri offers deep insights into the cultural shifts, economic impacts, and the evolving property and business environment on the vibrant Island of the Gods, Bali.
🔗 Learn more about The Kedungu Fund by subscribing to their channel: @thekedungufund
Instagram: https://www.instagram.com/thekedungufund
X: https://x.com/kedungufund
LinkedIn: https://www.linkedin.com/company/thekedungufund/
Contact The Kedungu Fund:
W: https://www.thekedungufund.com/invest
E:
T: +62 812 4616 2018
Want to invest in Bali? Book a call with their team: https://thekedungufund.com/invest-wit…
🎙️🎬 Don’t forget to subscribe and turn on notifications so you never miss out on our newest uploads!
Follow us on Instagram: bali.business.club
Facebook: https://www.facebook.com/share/aULxyz…
Our podcasts are available on all platforms.
#BaliBusinessClub #BaliRealEstate #BaliProperty #PropertyInvestment #InvestmentStrategies #InvestmentOpportunities #RealEstateFund #ExpertAdvice #TheKedunguFund #Kedungu #Podcast #Tourism #Bali
Summary
Highlights
- 🏝️ Introduction to The Bali Business Club podcast and discussion on Bali property investment strategies.💼
- 🔍 Omri shares a secret formula for making 5x to 9x returns on Property investments in Bali.💰
- 🏄 Importance of surf spots in driving development in Bali regions.🌊
- 💡 Understanding the property investment graph for emerging regions in Bali.📈
- 📈 The ROI of The Kedungu Fund, reaching 43% net ROI 2023, showcases its past success.💸
- 🇸🇬 Easy access to The Kedungu Fund for foreign investors through Singapore incorporation.🌏
- 💼 Lower entry ticket of USD $30,000 for The Kedungu Fund before a potential increase.📉
Key Insights
- 🏖️ The focus on surf spots and coastal development as key drivers of property growth in Bali highlights the importance of understanding local factors in real estate investments.🏝️
- 📊 The application of a strategic investment graph to determine entry and exit points in emerging regions like Kedungu demonstrates a data-driven approach to maximizing returns in the property market.📈
- 🌐 The incorporation in Singapore enables easier access for foreign investors and streamlines the onboarding process, showcasing a well-thought-out strategy for international investment funds.
- 💸 The high ROI of The Kedungu Fund and the potential for future growth suggest a promising investment opportunity for those looking to capitalize on Bali’s real estate market.💰
- 🎟️ The lower entry ticket of $30,000, before a potential increase, provides an accessible entry point for investors interested in The Kedungu Fund, offering a chance to participate in Bali’s property market with a lower initial investment.🏦
Transcript:
Welcome to The Bali Business Club podcast.
– I’m Gawain and this is Omri.
– Hi
– We’re going to be discussing Bali, property, investing and business
Omri is a 30-year veteran, has all the tips and tricks.
How are we going to do it?
– Alright. So, hi everyone! Thank you Gawain.
I’ll keep it short.
I’m going to try to explain here
my secret formula, my secret recipe
on how to make between 5x and 9x on your investments
which I’ve been doing for a few years now.
and some background nuggets on Bali investment.
Or Indonesian investment stories.
What to do and what not to do and and stuff like that.
– Cool. See you there!
[Music]
– Omri Ben-Canaan.
This is the 3rd or 4th Bali
Business Club podcast you’ve done yeah?
– We’ve done some before but we never published them.
– Okay, we might go back in time and then republish them.
– Yeah yeah yeah, probably.
– But yes, I think we’re just discussing today Bali business, business life, property, culture
and then we’re going to touch on The Kedungu Fund a little bit.
– Yeah sure.
– So, you’re a long-term resident of Bali. 30 years.
– Yeah
– That must have been quite a amazing transition to see Bali progress as you grew up in it.
– Well it’s certainly not the same Bali
today as it was when I arrived.
Actually it was quite
crowded when I arrived but back then we were
– Where did you stay when you arrived?
– When I arrived in 1994,
we were at the the limit of Legian and Seminyak.
Seminyak was two streets.
– So 1994? You must have been like what, 14? 12?
Just born.
– I was 20.
– Wow! Okay okay. So not with parents, with parents?
– My father used to live here so I came just to visit.
– So he was doing business here? Living here?
– He did business here.
I was living in Japan back then so I stayed for a while.
But yeah, back then – basically
Seminyak was a couple of streets
Jalan Double Six and Jalan Gado-Gado, Dhyana pura.
after Jalan Dhyana Pura it was
bunch of rice fields. Forever. Until Java. That’s it.
– A long journey to get to this point.
What were the main things that you think has changed? Like if you put it top 3 in 30 years.
Other than obviously
the development which is very visually apparent.
What do you think culturally has changed the most in 30 years?
– Wow.
The reason for coming to Bali is different today
for most people than it was 30 years ago.
There were a lot of hippies. Lot of hippies.
They were doing like Goa – Koh
Phan Gan – Bali. That was like the you know the Golden Triangle of the of the hippie life you know. And so there were those guys and the Kuta people so, the Australians tourists and very very little expats actually.
And I mean the only thing you could do as an expat is either open a restaurant but there were very few of them. Or do Furniture business but there were there was almost no property business back in the day. We had we had no idea Bali would become like that. I mean I remember some friends that were that bought some beach front land, probably I’m not sure where but probably around here, for like $10-15,000 and we were laughing at them. So yeah we really had no idea. We thought these guys were crazy to buy like you know land 10 km from the airport or something like that you know. Where today we are 20 km now.
– So what were like the first businesses for expats specifically that started first getting traction?
Like tourism, development, FNB.
– Bali was very much furniture and manufacturing place before.
– Oh really? Okay so that was the first thing that actually took off?
– Yeah
– Oh wow
– M y father was in into that as well
Now I don’t know anyone that does furniture. And also,
with internet coming to the island around 15 years ago, the landscape has totally changed in in terms of what I mean
So many digital nomads, so many internet-related businesses. So yeah, it’s completely different than before.
– Have you seen it influence the local Balinese culture and religion etc.
Have you seen that being like net positive or a net negative?
Or do you think that it coexists really well together?
– It always coexisted well.
Balinese people, you know how Balinese are. They’re super friendly and welcoming and I think their approach to tourism
is in some ways very smart.
– Yeah I think the tourism
statistics were quite amazing it was like 5 million foreign tourists but it took it almost double as far as like local tourism visiting Bali.
I had no idea of those numbers. It was substantial. A lot of local tourism. – Yeah yeah, and the Indonesian government has a very very strong policy in terms of getting more and more tourists not only from abroad but local as well, nationally. So they, they have a really aggressive policy towards
making Bali worldwide known destination. – So the evolution from like
Seminyak, Canggu, Berawa. That must have been quite an interesting kind of development progression to witness.
What did you gain from it, what did you learn from how Bali is quite unique in its way
that it develops west or south around from a ground zero.
– Actually Seminyak got extended over the years
because the name is trendy. So everyone called a villa in Petitenget Seminyak but I don’t think it was actually Seminyak
Now it’s obviously Seminyak. So, I mean it took so many years to build to develop sorry I mean that whole area. I didn’t think back then and I remember like around the year 2010ish that’s when Seminyak was almost full. 2010-2013 between 10 and 13 and that’s when it started to spill over Canggu. So around 2013-2015, the tourists, the Western population, tourist population and expats from Seminyak started to spill over Canggy slowly. And I think it’s around 2015-2016
then it really started to go crazy. It wasn’t very clear how the trend was. You could see a trend but there wasn’t enough historical data to make a graph and say “Okay this is what’s going to happen in 2 years, in 5 years, in 10 years”
Whereas today we have this data. We’ve seen it in Seminyak, we’ve seen Berawa
we’ve seen Batu Bolong, Pererenan. It’s just following the coast. Of course one thing to understand is that wherever you have surf will develop first.
– That’s actually my next question.
A region developing around a surf spot, I kind of got it but I didn’t actually understand until I really started looking at the gravity and how much that actually gives the area, region its core residence.
– Yeah
– And everything grows from there.
So surfers are, especially in Bali,
the pioneer residents in an area
and they build the coffee shop next and the surf rental shop.
So really interesting concept.
I’ve never thought of it before you mentioned it.
– I mean if the break is good, if the surf is good then it’s going to develop.
If the surf is [ __ ] it’s not. I believe in Seseh you have like a tiny wave but it’s really really bad right? So it’s not a “surf” area.
But if you look at Seminyak: surf is great
And then you have Canggu (Batu Bolong/Berawa)
And then you have Pererenan
And then you have nothing.
Until Kedungu.
So, Kedungu is starting to develop now or has been started about a year ago.
And compliments to – I mean half the population of Kedungu are surfers today.
If you go to Kedungu in the morning and I know you’ve been there many times. I saw you there once or twice.
– Hiding in the bushes – So you have all these APV trucks with a bunch of surf boards on top. All the schools are going there. Because you have this population there, I mean you need to eat and drink so you have a couple of
restaurants and then a few guest houses and then it starts. So the surfer population is really here to
kickstart the development of an area.
– What would you say both to the communities, government developers, what are those challenges that happened to date and do you see those challenges moving forward or do you see some of them actually being resolved and kind of dealt with? When the development moves further west you know?
– Interesting question. So, I think the community can be part of the change and if we take the example of Pererenan, where we moved about 6 years ago. When we came here it was less developed than Kedungu. It was a giant rice field there were 2 cafes.
– Really? So 6 years ago Pererenan was less develop than Kedungu?
– Yeah but basically that was it. I mean 5-6 years ago you would see a Bule in the street and you would say hi.
Like what are you doing here,
are you lost or something you know? So yeah it does
bring its challenges and one thing that we
we started since the very very early days of us moving into Pererenan and the Kosong Satu Group.
We started a a WhatsApp Community.
With a friend of mine dodo,
who is a part owner of la Brisa and and Woods. So we started this community.
In the beginning we were like 15-20 people in the in the group
and then we decided to, as a Community to help build the shortcut between Pererenan and Padang Linjong
So we raised money.
I’m the Treasurer of the Pererenan community.
We raised money. I think was like 450 million something and we build that shortcut you know? – Yeah, that was a game changer for Pererenan
– That was a total game changer and that was the idea. As a community you can do stuff.
I mean people are organizing into a community and being able to have a real tangible action on the neighborhood where they live. I mean, I was part of that experience here and now what I’m trying to do is reproduce it in Kedungu.
– So your personal property investment journey, it’s been what 20 years? 15 years?
From I presume one of the first properties you bought. I mean that must have been educational from early days.
– I’ve made mistakes.
– One or two mistakes I’m sure along the way.
Explain in a nutshell buying property directly in Bali as an investor. What are your opinions on it?
What are the red flags? what are the green flags? – Wow all that? Do you have time?
Well the first property I bought ever was in Gili. – Oh wow.
– I bought 20 are of land.
– 20 are? Wow massive.
– And I bought it for 49 million per are. That was in 2012/10 something. I forgot.
14 years ago something like that. And I sold it a year later not even a year later, 49 – 85.
– So it doubles. I mean you’re probably not used to any property deal it doesn’t double.
As a rule of thumb, I don’t invest if I don’t double in 3 years. That’s my minimum.
But I can imagine most is 2 years double.
– I do usually more better than that but that’s my baseline.
– I mean as far as like property
investment goes that’s unheard of.
– Not in France where I’m from you know.
– Not in France. Well not Europe nowhere.
– Nowhere in the world world yeah.
– I mean maybe maybe anything that touches that, Dubai in the last 10 years? I don’t know. Nobody’s getting that price. Where else is even competing with that kind of value?
– I don’t know. I’m sure there are places in the world.
– Like little pockets or neighborhoods – Like Bali you know. So Gili was my first land and then a friend of mine came. No, then I bought another land in Berawa which I still have. I bought a land of 10 are plot
in Berawa which was yellow zone and what happened to me is that the government turned the yellow
zone into a green zone. Usually it’s the other way around. Bad luck, my second land it turned
it into a green zone. So I do own a piece of green zone in the center of Berawa
which I can do anything with it, not much. So I sold some of it, not all was turned green but I sold 3 are and I have 7 left if you want to build a hut be my guest. I’ll do a good price for you.
We’ll get into that commercial residential and which one you prefer but I see another issue that a lot of foreign investors make is buying beautiful rice patty view and then 2 days later you’ve got a massive. – Of course, so this is one thing you should forget about.
– If you’re building within the 3 kilometers
3 or 4 kilometers from the ocean, from the shore, you should forget about the view.
Because it’s going to get built, no matter what. Except in rare occasions, rare cases.
– Yeah, unless you’re in front of like a green zone or something, which is what something I’ve been looking at.
– Green zone will turn into yellow zone at some point you know.
– I mean how many green zones do you know in Kuta? or in Seminyak?
– True.
– So in Canggu you still have some.
Like my land is on green zone and now they’re building. Everyone is building around my green zone land.
So it’s going to turn yellow.
It’s not a matter of if it’s a matter of when.
– So that’s your personal property
kind of investment history and I’m sure the lots after your Berawa property. When did you start getting into, when did you see the gap for The Kedungu fund? And how does that work? The vision and the purpose and the opportunity that it’s there to service. How did you see that?
– I think perhaps before we go there we should talk about how I got into understanding where is the best to invest as opposed to going mainstream and investing where everyone invests.
So, I like to call what I do a Pioneer Real Estate. So after those Berawa land, which was a massive failure.
Still there if anyone interested you know, it’s for sale.
I started investing in Sumba
and me and a friend of mine, Hussain
we bought hectars, dozens of hectars of land.
We used to buy one hectar of beach front land
for $10,000. 150 million Rp. Back in the day. And sell it for much more. So we probably sold around 300 hectares of land there.
– Oh wow that’s a lot.
– Yeah. But what’s interesting with that experience is I understood when we started investing there everybody was laughing at us. So it was a bit of a it was a mix of us being visionary and having a lot of chance, lot of luck. But as it happens, there was no better time to market than what we did. We started to invest and and then it started to grow, you know. And it went from $10,000 an
hectar to $200,000 in matter of years. Like very very fast. Few years only. And I realized as opposed to my little friends in Bali that were buying land in Seminyak back then. Buying land in Seminyak and making 20% something like that. I was making like 300% or 500% it was ridiculous. In a matter of month or years you know it’s super fast I realized that’s when I understood there was a way to make much more money by land banking than just your typical you know today buying in Canggu or in
Pererenan which to me doesn’t make sense.
– So what’s your secret source?
– Well you just have to study. You have to understand why a region is going from emerging to mature in so many years. You have to understand what makes a region attractive to tourism growth.
So surf is one thing, surf all over Indonesia. And then following the coast is another thing and then you have to understand why the development is which direction development is going. So in Bali is I mean for me it’s quite simple you cannot build upward so the development will be horizontal, right?
And as it’s following the coast. So there basically like 3-4 ingredients.
First, government is increasing tourism as we speak.
More and more. Jokowi promised to double
the tourism in the 5 first year of his mandate, his first mandate. And he did it short of 100 I think because of Covid. So aggressive policy from the government then, buildings
cannot go above 50 meters, so development is horizontal.
– So that’s a national that’s a – That’s a Bali thing.
– And it’s not going to change? Well it’s not in the pipeline?
It’s supposed to be revised I think in 2 or 3 years.
How it changes, I don’t know but it’s supposed to be revised.
– I don’t think that would change.
I mean that would be a big negative on things – I don’t think so. I think they should change per zones.
– Yeah maybe, if there’s a city that would seem like a city center
– A law: 30 meters in Kuta and 50 meters in Canggu for example. So you can build upward. True. So you have this
factor, you know lower building and development going horizontal and then you have the surf. So if you look at where, if you’re trying to understand where it’s going to develop next you just follow the coast, look at where the surf spots are and this is it.
You have it. Because there are more tourists. I mean you got to put these people somewhere and because you cannot put them in you know highrise tower then it’s developing westward. So Kedungu is the obvious answer to that question and then after Kedungu it will be Yeh Gangga.
And so on and so on.
– So that’s your kind of underlying investment thesis
– That’s the recipe. It’s worked so far you know.
– But there’s obviously a short time frame for that
You’ve got what, 5 years? For that kind of period where something starts to take off to where it reach maturity.
– It takes 5 years yeah. Canggu took 5 years.
Now Canggu is about 8 years into development, something like that. 8-9 nine years. Pererenan is 5 years exactly.
– 5 years into it?
– Yeah. So now Pererenan is super mature. – So regional escalations in prices. Obviously it’s from Canggu, Seminyak, Pererenan.
Explain how this works. Entry points, exit points. How you figured it out because I’ve never heard it before.
So how did you put it together?
– All right, so I guess this is why I have my iPad here.
Let me show you what no one in Canggu in the mainstream real estate business has understood. Okay?
An this is how I make real estate investments.
So you basically have here your dollar axis and then your time axis. We’re going to put a little T here.
little dollar here and then take another color so it’s easier. Boom. Like this.
So basically in Bali, the land price remains stagnant for years and years and years.
Which is around 3 million Rp per are/per year when is 100 square meters until there’s an interest for the region and it starts slowly to pick up. Not slowly. Starts to pick up. There’s an uptick and then it goes up and up and up and up and up. Super fast for a period of about
5 years until it plateau again. Okay? So that’s 3 million Rp Here is around 40 to 45 million Rp.
And where I invest, my sweet spot is around here, around 5 million Rp.
– And 5 million Rp is what in dollars?
– Around 300 something
– And an are is how big? So it’s 5 million Rp or 300 USD per are.
– One are is 100 square meters. On the ground. So basically I wait until it’s at 5 million Rp. This is for me proof of concept. It works and it’s going It means like the growth has started and it’s not going to stop. Yeah, so that’s for leasehold obviously. What you have here so that period of time between that that curve and and when it starts to plateau is 5 years. Okay it just take 5 years. So from Canggu started to develop about 8 years ago. Canggu is now is here, somewhere around here.
Pererenan is exactly 5 years ago,
6 years ago. Let’s say 6 years.
So, Pererenan would be like around somewhere here. Basically let’s compare the leasehold with the freehold.
So that’s 300 million Rp/per are. If it was freehold
– 3 million Rp/per are.
– Sorry 3 million Rp/per are. If it were freehold, it would be around 250 million. 200-250 million. That 5 million is around 300 million yeah ish.
And then when it plateau. So this is 1.5 billion Rp. So that’s $100,000 ish So basically if you look at the different values, the leasehold would have done here around 9x okay? The freehold here was
5x okay? Both are very good investments.
However one is better. So the rule of thumb to understand here is that in emerging region, it’s better to acquire leasehold in the early days of the growth rather than freehold. Because you will immobilize less capital and your multiplier is bigger. 9x versus 5x. Okay so I never buy freehold.
I never invest in freehold in emerging markets.
If you buy in Canggu, in Babakan in Seminyak sure, no problem.
– When you say emerging market,
you just mean emerging region.
Yes. So if you buy in mature markets, like Canggu, Pererenan and whatever you can buy freehold is not a problem. But if you buy in Kedungu or Yeh Gangga or this kind of regions who are going to experience a very very rapid growth. it doesn’t make sense to buy freehold. You can make way more money, generate way more profits by renting the land, by leasing the land. – And what is typical for a lease? 25 years? 30 years?
– So what I try to do is 30 years plus a 5 year extension.
At a guaranteed price of original price plus 30%.
And that option is only valid for a certain period of time which is like 3, 5, 7 years, something like that.
– Into the initial period. – Yeah so basically today let’s say I lease the land for, let’s say 10 million per are/per year. So I lease a land for 10 million per are/per year for 30 years and in the contract what I always try to do is to have an extension period of 5 years. So from 30 to 35 if I want to take it. For a price of 10 million per are.
Plus 30% is 13 million per are. So basically I promise the owner of the land that within the next 5 years or 3 years or whatever. I will take an extension period on that land for 13 million per are,
which is 30% more than the original price of 10 million per are.
– When you’re talking about these kinds of escalations,
it’s almost nothing – It’s ridiculous.
– I think the leasehold as a structure
keeps the landlord, the property
will always remain within the local community hands at the end of the day, generational wealth.
– Absolutely.
– It’s not like other countries
Africa or etc where the land just goes.
– Yeah, I think it’s a
great system because the landlords lease the land So they get a bunch of cash which they use to buy another land or to build a house or whatever and then 30 years later when their son is like 50 years old, or 40 years old then they inherit not only a land that’s worth of money, but a bunch of buildings on top of it
– Yeah yeah. I mean the UK monarchy perfected that system so it definitely works.
300 years of owning all the property you know, buying property in the UK, it’s system that works
– Something similar. So if you look at that graph here. That graph is the road map, the blueprint
to investing in Bali in emerging areas and make great profit.
– So the same graph applies to Seminyak,
Canggu, Pererenan and it will apply to Kedungu.
– So it’s always the same. There’s no surprise here.
What I don’t understand is that they didn’t understand it.
None of them. Everybody is investing in like you know, small Airbnb or small land you know in middle of
Canggu or middle of Seminyak and make 15% profit, 15% ROI. I mean to me this is really boring.
– Well, I just think it’s your appetite and your risk and if you want passive income etc etc.
I mean this is great as far as like actual value escalation but your entry and exit points are critical.
– Yeah
– Importantly your exit you know.
– Absolutely
– And being able to, this market you can get rid of and exit your assets at a certain point in time at the top which I suppose is kind of the the underlying theory of The Kedungu Fund is the 5-year investment horizon.
– The whole Kedungu fund is based on that graph, basically. That’s the key.
That’s the blueprint of the fund. – As in how it will increase value for investors.
– Absolutely. Originally, The Kedungu fund when we started it a bit over a year ago, we went development was not part of the equation.
We are just land banking.
It was just about applying that graph to the capital that we
– Yeah, but if you don’t develop the land and you just do land banking, it will slow the regional development down. You have to develop to get a critical mass of investors. You don’t have to but if you do it at a larger scale and
you know increases 20-30 million you can’t you just be stuck with a whole bunch of undeveloped land. Which is not good for the area
– I wouldn’t say that. I would say I don’t think it will slow the region down because the region is big. So our impact on the region as far as slowing it down, I don’t think it would slow it down. Now by developing and developing other buildings than other projects than villas, like we’re developing a school, shopping plaza. We have a medical center in in the works and a few you know FNB and
high street retail shops, retail businesses. So this is accelerating the process. Don’t get me wrong, if we weren’t in Kedungu today Kedungu will still grow.
– Sure.
– No question. But our action will probably increase that grow by 10-20% or something
like that. So that’s the only thing.
– And how many properties is currently owned or in the portfolio. And how many are in development? You mentioned School,
Plaza, etc. What else? How did you get to those decisions and what else is in works? – We have currently around 11 properties that we already acquired or I think 12 already acquired or in process of being acquired. The school construction has started, three weeks ago.
A month ago now. It’s meant to be finished beginning of 2025, for a launch, an opening of the school
in August 2025.
– So you’re building things that are critical to the community
That will increase the regional value of things because
you’d have a community that
actually resides there doesn’t leave and develops.
– Correct.
So the business model behind the school.
If you just think in terms
of bottom line dollar, the business,
the school is not as good a business as building something else. Maybe residential or something else.
However it brings, that school goes to grade one to grade six.
So that’s about 100ish students, so around maybe 80- 90 families and they all need lodgings. Somewhere to eat, somewhere to buy stuff and brings awareness to the region and traction so controlling some aspect of the school, not all of course because we are not running the school, there’s a company running the school. I mean the fund is not running the school enable also to have access to this pool of expats, who are also investors because they need to live somewhere ahead of their journey to Bali or coming to Bali for many of them, the schools. I know that because we are business partners with the French school and with one of our companies and we see how things are done so, the kids are being enrolled maybe like 6 months, 8 months before actually the start of the year. And for many expat families is before actually coming to Bali. So getting
these families on the table talking to us before, enables to upsell houses. – Genius little strategy.
– I don’t know genius. Genius but very humbly.
– So all bases are covered. You’ve got everything in your portfolio that kind of mitigates risk, I suppose. From of commercial, residential. What else is in the pipeline as far as, any more land acquisition immediately.
– We’re targeting, so 2024 our target is $20 million
Now the fund is worth $2 million. Our target for 2024 is 20 million dollars. So we talking to different players in various countries to that extent Those $20 million will be broken down into 13 million acquisition.
Around $5.5 million development and the rest is Opex. So we do intend to acquire a lot more land we’re just waiting for the funds to do it. –
So land banking still be a core tenant of – Absolutely absolutely. With $20 million we couldn’t develop all the lands that we acquire.
We need much more money and resource, of course yeah. – So you acquire, develop intensively for 3 to 5 years and then exit. So exiting, let’s say 15, 18 properties at the end might be a bit
– It would be much more than 15 18
Maybe like more like 3- 4 hectares. I don’t know how many properties is that but a lot more.
– But you would need to, I mean the whole thesis of the fund is to exit when you hit the tipping points of escalation at the end of the 5-year period.
Would that be difficult to liquidate at that time or do you think the market will be so mature and – Absolutely, the market will be very mature and the demand will be there, that’s for sure.
The same way Pererenan is mature now or Canggu like a few years ago you know.
Everybody wants to be in that place.
– And would you sell to another fund or a Consortium? – Our exit strategy is threefold. First, so the land that, bare land that we didn’t develop will just sell on the market, as we also
operate. Kedungu Real Estate, which is the only real estate agencies there. We have a very strong base of leads and clients to that purpose.
And we will have more even more in 4 years. So that’s the first one the second one is we’re going to create another fund on the next region so probably called, we haven’t done it yet, but probably called the Yeh Gangga
fund. We’ll probably create it around 2027ish Yeah so our current LPs (Limited partners) will be invited if they want to either to exit or to follow up a transition to the second fund.
– So you could technically sell the assets from this fund into another fund.
– That’s the third exit strategy so the
assets that are generating high income such as the school, probably everything that’s high Street retail will be acquired by a secondary fund. Will be an option I presume an option if it’s generating good enough money good enough yeah then it will yeah. So that’s that’s a strategy for and that will all happen between 2027 and 2028 n yeah
– So ROI is something I get asked a lot in regards to this fund. I think 43% was last 2023 published cor I think to date it’s it’s pushing 45 46, correct me if I’m wrong something – Around those lines yeah.
– So how I mean, I get it because you know I’m looking if two years in or a year in on on your upti on your up swing yeah maybe just talk around that a little bit um 43% does look you know great for a year you know Net ROI in a year. So how is it calculated so basically, we’re working with a uh official valer called KGB which is a valer for CB I mean the only one in Indonesia the only one in val pertaining to real estate MH uh is government yeah so government evaluate and they do it quarterly so they look at all the and they look at properties around it depends on the properties so we have
quoty evaluation on some properties some that are in construction it’s in the middle of the construction so it really depends on property but we have a deal with them to so they do the valuation of the different assets that we we own whether it’s well today we don’t have a business yet because the school is not school is the first one but it’s not finished yet so today we have a lot of land and construction site this is this the assets that are owned by the fund yeah
– So another question I get asked a lot talking about income generating assets. Can you get dividends in this fund? How does that work?
– Sure so let me just finish on the first question. So kgp does the valuation of the asset that we own and basically we apply those that valuation to I mean it does change the net asset value per share and this is how the Val the increase in AI happens yeah so they do the valuation which then you pull back into share valuation ABS the navs or yeah So any new investor on boarding would then be subjected to that share price if they wanted to buy in Absolut at that time absolutely like today the share is 83.6 that was from the last
valuation in March so we’re doing a new valuation in June in a couple of weeks I mean we are releasing it okay and the price of the share will increase I don’t know how much yet but probably around base to invest now it’s better to invest before we increase yeah exactly so it’s better to invest yeah before the third week of June yeah basically so then if somebody is TE to invest you know you they’ve given a a share valuation they’re happy to buy in it that what is the ticket amount and what is the onboarding process? How easy is it because going back to our other point around, the risks and difficulties of owning a property in a foreign market especially Bali I can imagine some red flags you know especially if you don’t know the market legal process bureaucracy Etc. I presume that process is easy to onboard you’ve got a Singaporean investment arm or company it’s all done for you really yeah. So the way the fund is structured Sorry so the fund is incorporated in Singapore okay so the LPS become shareholder of private Limited in Singapore that private limit why Singapore there out of interest. Couple of reasons first the onboarding process in Singapore is way easier than Indonesia.
In Indonesia you have to come and sit down in front of the notary.
can’t be you have to be physically present yeah it’s very complicated yeah Singapore is all online it’s fair easy so we use a a corporate agent there that handles all corporate documents and that makes the link between Acra which is the corporate arm of the Ministry of Finance in Singapore basically
that’s private Limited in Singapore controls a PTP so a foreign own Capital company in Indonesia and that PTP do the all the operational Le the assets sell the assets that’s that’s the fund yeah the Manco which is the management company which is as the fund manager is also a shareholder of that ppma 2% so private Limited in Singapore owns 98% and the Manco owns two yeah yeah okay so the Manco is definitely directly in incentivized for the success of the fund I mean that’s how and that’s how all Manos work in the world yeah you have some fees that cover for expenses and then you have the performance fee and this is where
the money come from here okay so easy access into Singapore I presume KYC is not particularly owner tax benefits also with no dividend. So KYC is done by Singapore. okay so if you want to join the fund tomorrow we sign an investment agreement between you and us and then
we you start the KYC process with our corporated agent in Singapore once your KYC get green lighted you transfer the funds to our bank accounts with that uh being in Singapore yeah in Singapore yeah with that being credited
actually you can send also to Indonesia yeah it’s possible okay yeah you just the shares without yeah so once we get once we get the fund in capital in we send the proof of payment to the corporate agent we give it to Acra and then the share certificate is issued that’s basically the whole process takes about between two to three weeks each it’s all it depends a lot on Acra actually okay because the kyc can be can be tenous uh if you invest as an individual is very fast like three four days but you invest as a corporate entity it’s a bit longer if your corporate entity is is owned by other corporate entities and it’s even longer and so so forth because you have more and more people to kyc so that’s it okay so then I mean it’s pretty straightforward process. I mean I don’t think we we should or there’s I’m sure protection risk mitigation strategies feasibility studies you know all those kinds of things high water mark Etc I don’t know if you we should will have the time to drill down into leave it for we’ll do that another time yeah another we can get into the nitty-gritties and the technicalities behind you can see everything on the website. true true but I think it’s probably worth talk through absolutely absolutely yeah but yeah I think, I mean from my side I understand you know a lot more around Bali property market environment and how you’ve related and built in The Kedungu Fund to kind of capitalize on that with EAS easy access for foreign investors which I think is yeah kudos to you I think it’s a great idea and and is effective Can I put you down for $100,000?
– Where’s my wallet got to check I’m not sure you’re going to
pass yeah so yeah. I think one thing we could add is that the entry ticket is quite low at the moment. We did not touch on that yeah. what is the ticket label so we are $30,000 minimum at the moment yeah it will go up probably go up. It was higher before and then we started a B2C campaign so we decided to lower it a little bit, so but that’s not going to last for very long so ad 30k USD will probably go back up to 75 or 100K in one or two months one months probably okay so when you redo the valuation you might go up as far as ticket we are we thinking about it yeah okay that was just one two months uh tests okay well yeah I think uh That’s it. I got no more amazing questions for you.
– We’ve talked about everything?
– Pretty much
[Music]
– All right, thanks so much
for joining us on the Bali Business Club podcast.
Subscribe over here if you’d
like to see us again. We’re on ll the podcast channels, all socials.
And then thanks Omri for joining us. Tell us a little bit about The Kedungu Fund and how people can get involved.
– Thanks Gawain. Very cool.
So all the information will be will be here.
I don’t know what camera I’m looking at. This one or this one? That one?
– Hi guys, so all the information
will be down below if you want to contact us.
You can write to us on the website thekedungufund.com.
We have a deck which you can download on the Fund and I’d love to have a meeting with you
if you want to have a coffee, if you
want to come to Pererenan.
– Or set up a Google Zoom or anything like that.
– Easy – Thanks Gawain. thank you all right bye guys [Music]