Photo by Minister of SOEs

JAKARTA (TheInsiderStories) – The development of property projects in cities historically followed trade and transport routes. With a strong demand for better public transportation into suburban areas, many developers are competing to build projects close to mass transport stations.

The horrendous traffic congestion of urban Jakarta is mostly attributed to private automobiles, with one or two passengers only. Air quality also worsens, from automotive exhaust, and the expense is wasteful of too many private vehicles creates significant transportation costs and traffic congestion.

To provide an attractive alternative to the usage of private vehicles, urban development authorities have begun to invest heavily in transit-oriented developments (TOD), typically designed to maximize access to public transportation, around a ‘hub’ of housing and shopping.

This concept of property project development is integrated with mass transit systems, such as bus rapid transit or ‘busways’, mass rapid transit, light rail transit or Jakarta Bogor Depok Tangerang Bekasi (Jabodetabek) Commuter Lines, renovating legacy urban trains for daily commuters.

State-Owned Enterprises (SOEs) Minister Rini Soemarno explains how this integrated concept can support government-backed urban development. In her role as a regulator, she gathered eight SOEs to work together to develop residential areas clustered around train stations. She announced that areas adjacent to the Jakarta-Bogor-Sukabumi rail line will be the focus of development in the first phase.

The Government has appointed PT Waskita Karya Tbk (IDX: WSKT) through its subisidiary, PT Waskita Karya Realty, to sign a memorandum of understanding with PT Kereta Api Indonesia, to work on a TOD situated near Bogor Station, with total area of 98,910 square meters; investment is estimated at Rp1.5 trillion (US$75,9 million).

“Groundbreaking will be held on October 5th,” said Rini, on Monday (11/9).

Transportation Minister Budi Karya Sumadi has announced, that the government will be inviting in private lenders to take part in the construction of light rail transit projects in Greater Jakarta through the TOD scheme, under which private lenders will be allowed to develop properties near LRT stations.

The Jakarta administration has been working on a massive expansion of the BRT, along with development of the MRT and LRT, since 2012. In line with the government’s integrated urban development program, developers are now planning the construction of transit-oriented developments.

State-owned construction company PT Adhi Karya Tbk (IDX: ADHI) Director Budi Harto said, around 50 hectares of land near LRT stations could be developed into commercial areas. The Rp 23,5 trillion project will connect Cibubur in East Jakarta with the capital city’s downtown areas.

Meanwhile, state-owned housing provider PT Perum Perumnas has finally started construction of low-cost rental apartments, with its first TOD concept, located adjacent to Tanjung Barat Station, South Jakarta. A total of three towers, consisting of 1,232 residential units and , in the areas of 15,224 square-meters has been built, with an investment of Rp705 billion.

US$ 1= Rp13.300

Writing by Elisa Valenta, Email: elisa.valenta@theinsiderstories.com