2020: The Year of transit-oriented developments?

February 28, 2020 / By  

Two mega projects are set to revolutionise public transportation in Greater Jakarta – the Mass Rapid Transit (MRT) and Light Rail Transit (LRT). They offer a long-term solution to congestion in one of the most congested cities in the world. Based on its regulation on transportation (PERPRES No. 55 TH 2018), the Indonesian Government is keen to reduce the use of private vehicles and encourage people to use public transport.

Realising these projects has been difficult and time-consuming. The MRT became operational in early 2019 though it was originally planned in 1985, which means it took around 34 years before we saw phase I (Lebak Bulus in South Jakarta to the Hotel Indonesia Roundabout) up and running. Its phase II (the Hotel Indonesia Roundabout to Kota in North Jakarta) is scheduled to have its groundbreaking in March 2020.  Meanwhile, the LRT, connecting Jakarta with other satellite cities, was 67% complete, as of December 2019, and is expected to become fully operational only in June 2021.

The existence of the MRT and LRT will enable commuters to travel faster, safer and be better connected to the city. This increased convenience means that some developers are targeting certain strategic areas for transit-oriented developments (TODs).

TODs are still a relatively new concept in Greater Jakarta and they would typically consist of a mixed-use development, comprising condominiums, shopping malls and office towers with direct connectivity to the MRT or LRT. The combination of these components creates a full urban living experience where business, entertainment, living and transportation interact in the same area. The MRT and LRT lines also create business opportunities for small and large business owners and potentially boost the investment value of nearby projects, in the future. However, as all current projects are still under construction, we haven’t yet seen any major differences in terms of prices compared to non-TOD projects. However, anecdotally, demand for office buildings and condos with convenient access to infrastructure is relatively strong compared to other projects.

Several projects have been introduced in the market over the past few years across Jabodetabek (Jakarta metropolitan area comprising the cities of Jakarta, Bogor, Depok, Tangerang and Bekasi). Projects currently on the market, are developed by both local and foreign developers, such as LRT City by Adhi, Core Cipete by Jaya and Sakura Garden City – a joint venture between a Japanese developer Daiwa House and a local developer Trivo Group. As connectivity improves, we expect more developments to take place close to MRT and LRT stations.

Infrastructure continues to improve in Indonesia and we expect future TODs to appear, not just in locations close to the MRT and LRT and not just in Greater Jakarta but also in other locations across Indonesia. Another example of an up and coming development is the Jakarta to Bandung high-speed railway while toll roads continue to be built and improved around the archipelago. All of these projects present potential opportunities for developers.

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