Property industry: New opportunity in the new capital, Nusantara
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Industri properti: Peluang baru di IKN Nusantara
20 January 2022
By: Yanita Petriella and Hendra Wibawa
The ratification of the Capital City Bill becoming law provides opportunities for the development of property business in East Kalimantan. So, how does the market respond?
Property business opportunities arrive in East Kalimantan, specifically in North Penajam Paser Regency and Kutai Kartanegara Regency. As the new capital city named Nusantara, property business in both regencies has the potential to surge after the House of Representatives (DPR) passes the Capital City Bill as law.
Colliers Indonesia Research Senior Associate Director, Ferry Salanto, said that property in the new capital city had a bright prospect. The prospect will become stronger if there are policies from the government that sets civil servants must live and work in the new capital city. However, the rapid development of the property business in the new capital city takes time.
“The new capital city probably needs more time, even though there are already several developers that target the areas there,” he said recently.
He continued that moving the capital city from Jakarta to East Kalimantan did not automatically develop North Penajam paser and Kutai Kartanegara.
For example, he stated that Malaysia had two capital cities, Kuala Lumpur and Putra Jaya. However, Putra Jaya is not experiencing significant development.
“We will see how it will be after the presidency of Jokowi is over. If the new capital city [development] is continued, it will be a new locomotive besides Jakarta and Java Island,” he stated.
Ferry also predicts that moving the capital city will not impact the property industry in Jakarta and its vicinity.
According to him, Jakarta will still function as a commercial and business city even though the capital city is officially moving to East Kalimantan.
“So, commercially, we predict that, until the next 10 years, Jakarta will still be the main attraction for property industry players,” he said.
Rumah.com Country Manager, Marine Novita, also said that new investors were starting to eye the new capital city. However, she does not know if property development in the new capital city will develop to be like Jakarta.
“We are cooperating with agents in China. They want to invest in regions such as the new capital city as it is already too expensive to invest in Jakarta,” she stated.
According to her, potential investors are looking for regions such as the new capital city to invest in. For now, she said that there were problems regarding the regulation that forbids foreigners owning property.
She continued that there were many agents from China who wanted to invest in Asia, especially Indonesia. They are looking for property in Vietnam, Thailand, and Malaysia. “There are opportunities in Indonesia, but the regulation for foreign investors must be made attractive. In Malaysia, foreigners who purchase property are provided incentives,” Marine explained.
Rumah123 Country Manager, Maria Herawati Manik, said that 99 Group had launched a website regarding the new capital city.
According to her, the new capital city development needs attractive regulations for potential investors.
“This is all the government’s policy as the new capital city development needs around 10 to 20 years. This will expand the domain of property business, not only housing but also businesses, hotels, and so on,” she stated.
Based on the data collected by Bisnis, the government will develop the new capital city Nusantara in stages, starting from the government area that includes the Presidential Palace, the government central office, and settlement for civil servants, the Indonesian National Armed Forces/National Police, and civilians.
The Presidential Palace is the main infrastructure that must be prepared before moving the capital.
From 55 hectares, the new Presidential Palace Complex will be built on a land of 100 hectares that will accommodate a larger green open space in the form of a botanical garden.
Settlement
For the settlement area, the PUPR Ministry will build 100,000 houses. The total population that will live in the new capital city Nusantara will reach 320,000 people in 2045, so around 82,353 to 100,000 units are required.
The government is also building a dam that is required to provide clean water for citizens in the new capital city Nusantara.
The PUPR Ministry is constructing Sepaku Semoi Dam in Tengin Baru Village in Sepaku Sub-district, North Penajam Paser Regency.
The dam construction started in July 2020 and is set to finish by 2023. The dam holds a capacity of 10 million cubic metres to provide raw water with a capacity of 2,500 litres per second and reduce flood by 55%.
The PUPR Ministry is also constructing supporting infrastructure to sustain clean water supply in the form of river intakes and transmission pipe networks.
Until now, the government is also constructing Sepaku Ring Road project to smooth out access from Balikpapan to the centre of the new capital city.
The ring road is designed to span 5.77 kilometres that is separated into three segments where segment 1 spans 1.75 kilometres, segment 2 spans 1.85 kilometres, and segment 3 spans 2.17 kilometres.
Besides that, the PUPR Ministry will build a toll road that connects SAMS Sepinggan Airport in Balikpapan to the new capital city in Sepaku Sub-district in North Penajam Paser Regency spanning 47 km.
Task Force for the Development of Capital City Infrastructure Chairperson, Danis Hidayat Sumadilaga, said that there several infrastructures in the new capital city Nusantara that are ready to be constructed. Currently, the taskforce is continuously preparing their plan.
The plan that is being prepared includes the construction of drainage and raw water facilities in the new capital city, logistics route connectivity, as well as the road connecting SAMS Sepinggan Airport in Balikpapan to the new capital city.
“In terms of the plan regarding [the provision of] water resources, drainage, and raw water, the Highways Directorate General is preparing connectivity with roads for logistics and access to the new capital city, while we are preparing the toll road from Sepinggan Airport in Balikpapan to the new capital city,” he stated on Tuesday (18/1).
Besides that, he is also preparing to organise the presidential palace area, ministry offices, and houses that are ready to be used by civil servants from Jakarta.
