Role of transit-oriented developments in Indonesia

The completion of mass rapid transit (MRT) systems, intercity rail links and toll roads in recent years throughout Indonesia has heralded the emergence of transit-oriented developments (TODs) in real estate. These are intended to maximise the convenience of major transport centres, thereby reducing the collective dependence on private motor vehicles.

TOD Communities

A modern TOD typically constitutes a multi-purpose, pedestrianised community hub that contains places of residence, employment and recreation near high-capacity public transport facilities. These developments generally seek to offer sustainable, healthy living and facilitate responsible economic growth. Successful examples of the effective planning and execution of TODs – as well as their ability to reduce traffic congestion, pollution and regional economic disparities – can be found in both China and Singapore. The all-purpose nature of TODs is intended to meet both the needs and interests of a mix of demographics with varying financial status.

Decongesting Jakarta

The economic activity of the Jakarta metropolitan area, known locally as Jabodetabek, vastly outweighs that of any other region in the archipelago, so efforts are focused on ensuring a more even spread of wealth and job creation, and alleviating the strain on the city’s transport infrastructure. New transportation networks and corridors, such as the ongoing Jakarta-Bandung highspeed rail project, are a key component of this drive.

The seven stations on the Jakarta-Bandung line are each due to have their own TOD, which, once complete, will act as nuclei for more expansive, self-sufficient satellite towns that offer residential and commercial opportunity. This is will be pivotal in dispersing some of Jabodetabek’s 27m-strong population along the 142.3-km stretch of rail.

Planning & Regulation

The annual economic cost of traffic congestion in Jakarta due to lost productivity is an estimated Rp960bn ($67.7m). The implementation and proliferation of TODs in Indonesia is, therefore, becoming more prominent among the government’s infrastructure and sustainable urban development initiatives. Generally, funding methods used for TODs are the same as those used for traditional urban redevelopment projects and involve both the public and private sectors. Since the state budget for 2020-24 will only be able to cover 30% of the total estimated cost of its infrastructure initiatives, according to the Ministry of Public Works and Housing, much of the funding will thus need to come from private investment.

TODs do, however, create lucrative opportunities for private developers in wider transport infrastructure projects, and associated industries are slated to see benefits as well. That said, the unique requirements of TODs make them more complicated in both their planning and implementation stages, with land acquisition a familiar obstacle; this requires that innovative solutions be sought to maximise their advantages for all stakeholders.

One issue that could potentially deter investors is the fragmented administrative process for TODs in Jabodetabek, which is governed by the Jakarta, West Java and Banten administrations. To address this, the government has created a new umbrella entity, MITJ, to manage the provision of an integrated transport network across the administrative areas.

Developers are now being encouraged to use the TOD model for projects across the country. Java, and particularly Jakarta, will, as a matter of necessity, see the highest number of TODs in the coming years – with an associated rise in demand for land and property in areas close to these transportation centres. Jakarta’s MRT system, which started operating in March 2019, and Dukuh Atas, a TOD that will connect several mass transit systems when completed at the end of 2021, are also central to the government’s efforts to promote the use of public transportation and are likely to induce similar growth in appetite for nearby property and land.

Multi-Modal Connectivity

When fully operational, Dukuh Atas will be served by a host of MRT, rail, light rail transit (LRT) and bus links. This should stimulate high levels of demand for the housing units, commercial premises and office space in the centrally located development. However, with hundreds of thousands of commuters expected to converge on the area daily, its central location becomes a double-edged sword. Moreover, the early stages of its operation have seen busy roads closed to make the area more traversable on foot, exacerbating traffic congestion in the short term.

Dukuh Atas highlights the physical complexities of implementing TODs in developed areas, and the need for innovative landscaping and design to maximise their convenience. Another issue that could disrupt the multi-modal system rollout is the need to develop an integrated payment system for the different forms of transport, which is likely to require a complex technical solution.

Public & Private Investment

The list of other major TODs in Jakarta includes Sakura Garden City – a collaborative development between Japan’s Trivo Group, Daiwa House and Japan Overseas Infrastructure Investment Corporation for Transport and Urban Development – which lies close to Ciracas LRT station in East Jakarta. Composed of some 5000 residential and commercial premises spread across a number of high-rise towers, the development is planned to include a hotel, mall, lake, jogging track, gym, pool, and medical and educational facilities. As much as 60% of the 12-ha development is reserved for grassland, demonstrating how the compact, vertical design concept of inner-city TODs can assist in achieving the government’s aim of preserving 30% of Jakarta’s total area for green and open spaces, as stipulated in the Spatial Planning Law passed in 2007.

In addition, PP Properti, a subsidiary of stateowned construction firm Pembangunan Perumahan, is set to build two apartment blocks with convenient access to the Juanda commuter line station in central Jakarta. One of the towers will comprise units for commercial sale, while the other will be reserved for low-cost housing. Although the latter will require considerable state subsidies, the former will help to offset some of this cost, and facilitate the government’s drive to reduce the affordable housing deficit from around 11m, as of January 2020. Add to these the development of seven major TODs by Adhi Commuter Property – a subsidiary of state-owned Adhi Karya – along the new Jakarta and Jabodetabek LRT routes, and the multi-faceted benefits offered by TODs in both stimulating major investment and tackling social issues become more apparent.

Remodelling Suburbia

Domestic firm Ciputra Residence is proving an active player in Indonesia’s TOD landscape, with various ongoing projects. Its Citra Maja Raya township development is situated 80 km west of Jakarta in Tangerang regency and close to Maja commuter train station. As of January 2020 the official website for the project stated that 600 ha of the 2,600 ha plot had been completed, and that over 15,000 residential and commercial properties had been sold, with prices ranging between Rp168m ($11,800) and Rp450m ($31,700).

Ciputra Residence is also involved in a joint venture with Tridaya Semesta and Sarana Golf Utama to develop Citra Sentul Raya township in the city of Sentul, West Java, 50 km south of Jakarta. The project is accessible by the Jagorawi Toll Road and will be built around the Sirkuit Sentul LRT station. Both this and the Citra Maja Raya township differ from inner-city TODs as they represent more traditional suburban communities, featuring low-rise properties spread over a larger expanse of land – albeit with the core principles of TOD in place – and display both the versatility of the TOD concept and its potential scope for future implementation.

In addition, land and real estate in the areas serviced by the South Sumatra LRT Project, Indonesia’s first light rail corridor, are being acquired by investors who recognise that growing government support for TODs presents considerable opportunity – particularly in a country trying to address a housing deficit and cater for the needs of an expanding middle class.

Lessons Learned

With urbanisation set to rise dramatically, lessons must be learned from the social, environmental and economic issues currently facing Jakarta. Constructing the new capital city in East Kalimantan is an opportunity to integrate efficient spatial and real estate planning into the design of a major metropolitan area – without many of the obstacles and constraints faced when attempting to retrofit such developments into highly developed areas. Initiatives to increase the use of public transport and promote the attractiveness of TODs are, thus, likely to be more aggressively pursued by both the public and private sectors in the coming years.