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Toll roads, public transit projects drive up property prices in Indonesia

Publication Date : 25-08-2014


Property values in some areas of Greater Jakarta have unexpectedly surged with the construction of infrastructure and public transportation projects having been commenced or already completed.

Property-analyst portal Lamudi reports that land prices in residential areas in Bekasi, West Java, and in southwest Jakarta have risen as the city administration and the central government are currently developing infrastructure and public transportation connecting these areas to downtown Jakarta.

Katan Khetan of Lamudi said infrastructure projects in the capital had affected property values and the quality of life of the people living near those projects.

The Public Works Ministry recently opened the last section of the Jakarta Outer Ring Road (JORR) W2 North, connecting Ciledug and Ulujami in West Jakarta, providing greater access to Soekarno-Hatta International Airport in Tangerang, Banten.

The JORR W2 North section — part of the JORR toll-road network connecting Rorotan in East Jakarta to Penjaringan in North Jakarta — now connects to several toll roads in Greater Jakarta, namely the Jakarta-Cikampek, Jagorawi, Jakarta-Tangerang and Sedyatmo toll roads near the airport.

Lamudi pointed out areas near the JORR 2 and near the Cibatu toll road construction in Lippo Cikarang as among the areas where land prices have surged, surpassing the increase of most parts of the capital.

Lamudi’s research shows that the price of land near the Cibatu toll road jumped by 30 per cent compared to last year, while land prices in Central Jakarta, South Jakarta and North Jakarta increased by between 19.5 per cent and 25 per cent over the same period.

Meanwhile, Lamudi property analysts estimate land prices around JORR 2 toll road will surge by more than 25 per cent.

Both the JORR 2 and Cibatu toll roads have shortened travel times by between 15 percent and 20 per cent.

The Cibatu toll road is expected to reduce traffic congestion on the West Cikarang toll gate by more than 70 per  cent and shorten the travel time from Jababeka to Lippo Cikarang in Bekasi by 30 minutes.

Deputy Governor Basuki “Ahok” Tjahaja Purnama welcomed rising property prices, saying property in Jakarta was undervalued compared to its counterparts in the Southeast Asian region.

“When property values rise, people will benefit from it. The problem remains for the poor and those starting out. That’s why we provide low-cost apartments and traditional markets for people wishing to start their businesses,” he said.

To ensure that the affordable facilities would not be misused, the city administration has signed agreements with the vendors, forbidding them from selling or subletting the apartment units or kiosks to other people.

“They can only transfer the ownership to spouses, children or sons- or daughters-in-law. Otherwise they must return the property to the city administration,” he said.

Sudaryatmo, the Indonesian Consumers Protection Foundation chief, said the surge in property values in the capital would hurt residents with middle to low incomes.

“Property values increase faster than the increase in people’s income. Soon, those with minimum-wage salaries won’t be able to afford a house,” he said.

He encouraged the city administration to ensure that government subsidies were enjoyed by the right people.

“At the moment, government subsidies in the form of mortgage interest, for instance, are mostly enjoyed by the middle- to upper-income groups rather than people with lower incomes.

“Low-cost apartments such as Kalibata apartments [South Jakarta] are also mostly owned by middle- to upper-income earners. It is obvious judging from the cars parked outside the apartments — because the apartments were deliberately built without adequate parking facilities,” he said.

Sudaryatmo cited transparency as one way to ensure that subsidies were distributed only to those who deserved them.



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