June 10 (Bloomberg) -- At 8 a.m. on a sunny Wednesday, industrialist Muhsin heads out for his usual workout of a swim and a few laps around a running track. His chosen location: Indonesia’s most luxurious cemetery.
The 500-hectare (1,240-acre) San Diego Hills Memorial Park, which opened in 2007, was inspired by the Forest Lawn chain of U.S. cemeteries, the final resting place of celebrities such as Michael Jackson. Yet even Hollywood’s five-star graveyards can’t match San Diego Hills’ adornments, which beyond the sports facilities include an Italian restaurant called La Colina, a small-scale replica of Istanbul’s Blue Mosque and a man-made eight-hectare Lake of Angels that’s dotted with rowboats on weekends, Bloomberg Markets reports in its July issue.
The cemetery also hosts wedding parties, and rich Indonesians impatient with Jakarta’s traffic jams can land their helicopters on the facility’s dedicated landing pad. Those attractions lure visitors such as Muhsin, 58, who lives nearby and owns steelmaking company PT Kayafit Metal Industries.
“This is a happy place,” says Muhsin, who has bought several grave sites for family members. (Like many Indonesians, Muhsin only has one name.)
San Diego Hills is the latest manifestation of how entrepreneurs can profit from the growing spending power of the world’s fourth biggest consumer market by population. At least 35 million of Indonesia’s 240 million citizens -- equivalent to the population of Canada -- are middle class and above, according to calculations by economist Cyrillus Harinowo, an independent commissioner of PT Bank Central Asia, the country’s biggest financial services company by market value.
Burials Bull Market
Along with a boom in real estate, stock prices and sales of designer goods, Indonesia is experiencing a bull market in luxury burial plots. San Diego Hills, located 46 kilometers (29 miles) outside the capital, was dreamed up by billionaire property developer Mochtar Riady, 80, who with his son James controls a media, financial services and real estate empire that includes property company PT Lippo Karawaci.
The Riadys bet that there would be enough Indonesians rich enough to patronize a cemetery that resembled a country club. (James Riady, a supporter of U.S. President Bill Clinton, attracted unwelcome publicity when he pleaded guilty in 2001 to a criminal charge of improperly funneling foreign funds into Democratic Party coffers and agreed to pay an $8.6 million fine.)
1 Million Spaces
To sell the cemetery plots, they hired Suziany Japardy, a career banker, who had been a regional manager at PT Bank Lippo, once owned by the Riadys.
“I was so worried about marketing this product,” says Japardy, 48.
She needn’t have been. So far, 14,000 plots have been sold, and there’s room for a total of 1 million bodies. Mochtar Riady has even re-interred his parents there.
Three years ago, the cheapest single-grave plots sold for 3.5 million rupiah ($400). Today, the entry price has almost tripled to 9.5 million rupiah, with the most expensive memorials costing 8 billion rupiah. By comparison, residential real estate prices have been rising at 10 percent a year, says Anton Sitorus, head of research at the Indonesian unit of Jones Lang LaSalle Inc. Grave sale revenue last year soared to 62 billion rupiah -- a 21 percent increase over 2008, according to the Lippo Karawaci annual report. A secondary market has also sprung up, with San Diego Hills charging a 10 percent commission on each transaction.
Three years after opening, Lippo Karawaci still has the luxury cemetery market to itself.
‘It’s a very interesting idea and totally new in Indonesia,’’ says Natalia Sutanto, a property analyst at Bahana Securities in Jakarta, who has a “buy” recommendation on Lippo Karawaci stock. “I think it will eventually give them a big profit, but I’m not sure I would want to get married there.”
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