With development in Bali reaching a tipping point, more and more investors are looking eastwards to Lombok. Silk Air has recently requested a direct route from Perth to Lombok, which means the international world is taking note of this travel destination, and more will follow. Living in South Lombok is Frenchman Jean-Marc Reynier, Founder and CEO of Naga Indo Investment Limited, a land and property investment company. We talk to Jean-Marc about the potential of this emerging market.
Jean-Marc, how long have you been living in Indonesia?
I left France 15 years ago and I have been living in South Lombok for three years. I came for surfing and to buy a piece of land. I wanted to get away from busy Hong Kong where I lived for eight years before Indonesia.
You founded Naga Indo Investment Limited in 2011 as a land development and investment company in an emerging real estate market in Southeast Asia. Tell us why.
I came to Lombok in 2009, and I could see so many opportunities. It felt like the right time for me to get involved. I also realised that many investors from Hong Kong would be interested in owning not just one asset but a portfolio. The idea of investing in an emerging market like Lombok was exciting, so I created a structure to test people’s interest. It worked out and it became a full-time job.
What potential do you see in the property development industry in South Lombok in particular?
Lombok has for too long been in the shadow of Bali, just 40km away. However, Bali has reached a tipping point where mass tourism dictates uncontrolled and polluting developments. Five years ago, the Gilis in northwest Lombok started their boom and now it is spreading across South Lombok. The opening of the international airport and the Government’s commitment to building infrastructures in a more civilised manner offer bright prospects.
What changes are you seeing in the property market in Lombok and the Gilis?
There has been a very big change over the past few years. Land speculation is giving way to land development, which means we can see many new commercial operations opening, and also servicing and subdividing land or residential building. There are more mid-scale businesses entering the market as well as a few boutique hotels; many coming from overcrowded Bali. They bring a certain experience of what should be done and what should be avoided in this new development. This has attracted much attention from expatriates across Asia seeking a holiday home destination at a fraction of Bali’s prices.
There are two types of people who invest here: those looking for pure investments and those looking for a family home. Demographics are expatriates living in Asia; 80 percent from Hong Kong and Singapore who own a property in the Philippines, Thailand, Vietnam or Indonesia, visiting their dream home once a month on average. Many Australians like it here, too. Then we see tourists from Europe or America who see it as an investment first but are happy to own a dream villa in a remote paradise destination. Last but not least, we see the growing Indonesian middle class, who will probably become the biggest buyers in the next 10 years as we saw in Bali.
What questions should interested investors ask themselves before purchasing land in Lombok?
I believe the agent/developer/partner you use is as important as the choice of the land itself. You will need someone you can trust, who is well connected and skilled to advise you so that you can benefit fully from your dreamland or new business. That works before acquiring the land but it is even truer to manage the property and the development afterwards.
Foreign investors may typically be weary of investing in Indonesia for a variety of reasons, especially with the economy as it is today. Is Lombok a safe region to invest in?
Emerging markets carry more risk than developed ones but the return goes with it. Expect a 30 percent net return a year. If you perform with proper due diligence and you have the right team around you, you will be safe.
What are the positive aspects of investing in property development in Lombok?
A mix of being very authentic and natural and having an international airport close by, which is quite a special situation, and pure beauty; many people think Lombok is among the top ten most beautiful places in Asia.
And what about the negative aspects?
We are at an early stage of development; some people say it is like Bali 30 years ago. So you have to accept that not everything is available; there is no Carrefour, no Gucci, no car dealers and no Disneyland. However, there is an international standard hospital and an international school.
President Joko Widodo recently visited South Lombok and announced a newly built office in the region to speed up licensing of all activities in the area. Can you tell us more about this and what it means for property developers in the region?
It means faster processing of paperwork. Indonesia is full of red tape and regulation; despite being on a very beautiful island, you still have to go through the proper legal set up. Usually, a lot has to go through the central office in Jakarta and it can take a while and slow down your implementation. Thanks to the new office in the Mandalika area of South Lombok, this will accelerate the processes.
What does your company do to ensure that Lombok will be developed responsibly and sustainably?
We minimise the impact of our activities on the surrounding habitat, and we only associate ourselves with suppliers and workers that respect our commitment. Wherever possible, we will endeavour to utilise natural resources like solar power, collected rainwater and recycled wastewater when supplying services to sites in our portfolio.
After the servicing of our sites, we make sure we preserve the environment and hedge the soil against erosion by planting vetiver grass. When planted in single rows, vetiver plants will form a hedge which is very effective in slowing and spreading runoff water, reducing soil erosion, conserving soil moisture and trapping sediment and farm chemicals on site.
We help locals to create new businesses by establishing vetiver nurseries ahead of the growing demand from developers and builders. Naga Indo has leased land from local farmers instead of buying them. We bring know-how from experts in Bali, invest in the nursery and assist locals with development. We also offer extra vetiver slips for the most motivated workers to set up their own nursery on their land, showing them that vetiver nurseries are a viable business, as erosion is strong in many developing areas and many project managers require green solutions to fight it. Once the lease expires, we expect the local people to take over the business and feel confident to market and sell the grass to developers and encourage a ‘green living’ environment.
Why do you do what you do?
It is my choice of work, which I love, and my choice of life. I always wanted to come back to the countryside because that’s the kind of place I grew up in. I go surfing in the morning; it’s peaceful, relaxing and it reminds me of why I am here. I also like to ride a bike; it’s much better than driving a car because you feel the wind and hear the sounds of nature.
What challenges do you face working here?
Living in a community is something new to many Westerners or city dwellers.
Newcomers like me have to adapt and show respect to the local culture, religion and way of living.
It is an effort. Learning how to be patient, for example, is a hard test for many of us, but it is a must.
The other challenge is to train and retain staff. The level of education is generally low in Lombok. It takes a lot of energy and patience to train staff to the required level.
Do you have any plans to leave Indonesia?
No, I have lived in eight different countries and I believe I am ready to settle down. I found my little secret garden.