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Ciputra Property, a unit of property giant Ciputra Group, plans to spend around $124 million for the construction of two luxury hotels in Bali by the end of the year to tap into high-end tourism in the resort island.

Candra Ciputra, chief executive of Ciputra Property, said that the company is currently in talks with two potential hotel operators and will start building hotels by the end of the year. Total investment for the two hotels is estimated at Rp 1.2 trillion ($124 million).

“We are choosing five-star hotels because the rate is very high now in Bali as tourism continues to grow,” Candra told reporters on Wednesday in Jakarta. He said the hotels can be a dollar earner to help the company when the rupiah is weakening.

The company has already secured about 35 hectares of land in Seminyak, in Bali, Candra said, adding that construction will take about two-and-a-half years.

With construction set to start by the end of the year, only 5 percent of the Rp 1.2 trillion investment wil be spend this year. That 5 percent is already included in the company’s total capital expenditure of Rp 1.97 trillion this year.

Artadinata Djangkar, a director at Ciputra Property, said that the company will use this year’s funds to continue the construction of two sites in Jakarta — the 5.5-hectare Ciputra World 1 and the 3.2-hectare Ciputra World 2. The two projects are so-called mix-use property complexes that will have apartment buildings, office towers and shopping centers.

About Rp 500 billion of the capital spending will be funded from the remaining loan facility it has from Bank Mandiri, while the remainder will come from the company’s sales proceeds from last year, Artadinata said.

The company will also start construction of four budget hotels in the first quarter this year. Each hotel will require about Rp 35 billion of investment. The four budget hotels are located in four cities including Semarang and Bandung.

Artadinata also said on Wednesday that the company’s unaudited net income almost doubled to Rp 304 billion in 2012 from Rp 158 billion the year before. It exceeded Ciputra Property’s earlier net income estimate of Rp 228 billion. Revenue rose 84 percent to Rp 809 billion.

Artadinata said that “2012 was a very good year for property industry especially in Jakarta. There was increase in price as well as as increase in [sales] volume.”

Rising domestic demand combined with stable economic growth and low interest rates have helped to encourage consumers to buy property.

The company this year continues to aim for earnings growth supported by the Ciputra World projects.

For 2013, Artadinata said the company is targeting Rp 1.9 trillion in revenue and Rp 590 billion in net income. Its marketing sales — sales of property units that are still under construction — for this year is targeted at Rp 2.3 trillion. Last year, marketing sales reached Rp 2 trillion, surpassing its Rp 1.5 trillion target.

Shares of Ciputra Property rose 8.3 percent to Rp 780 on Wednesday, outpacing the 0.4 percent gain in the main index. (Jakarta Globe)