So far East Jakarta has been left behind in terms of property development in the capital city of Indonesia. For many decades Central and South Jakarta have seen the construction of many residential property and office tower projects. Recently, West Jakarta experienced a major surge in property development. Few investors, however, dared to develop projects in East Jakarta as demand from the (upper) middle class and elite for property or offices in East Jakarta has been low.
However, Ali Tranghanda, Executive Director of the Indonesia Property Watch (IPW), expects property development in East Jakarta to grow in the next couple of years supported by infrastructure development plans in this region as well as the lower land prices (compared to other regions in Jakarta). However, he added that considering several infrastructure projects are to be developed, land prices can rise rapidly in East Jakarta. In fact, over the past couple of years land prices in East Jakarta rose at a faster pace (at 5.58 percent per year) compared to land prices in other regions of Jakarta (this is also related to the correction that land prices in other regions of Jakarta experienced after a too big jump in the 2010-2012 period.
Currently, the average price of land in East Jakarta is IDR 7.9 million (approx. USD $593) per square meter, while these prices are IDR 13.2 million per m2 in West Jakarta, IDR 17.1 million per m2 in South Jakarta and IDR 18.7 million per m2 in Central Jakarta. High land prices and the limited availability of land in Jakarta, is also reason for developers to focus on vertical infrastructure (in this case apartment and office towers). However, due to availability of land in East Jakarta, there is still room for landed housing projects. Fanny Meilana, Head of Marketing at Rumah123, added that demand for property in Jakarta basically never stops.
Another factor that should boost property demand in East Jakarta is that the largest flow of people who enter Jakarta every morning (mostly for work or business) originates from Cikampek, located east from Jakarta.
Read more: Overview of Indonesia's Property Sector
Property developers are also optimistic about the potential of property development in the city of Surabaya in East Java on the back of available land and high demand for property. The local population in Surabaya is starting to become confident to invest in property rather than in other investment instruments, says Rudy Harsono, Project Director for Grand Sungkono Lagoon, a super-block project located in West Surabaya. More than 80 percent of its buyers originate from Surabaya. This super-block, a project of PP Properti, will eventually consist of four residential towers, one mall, and one hotel.
Although compared to Jakarta there is still plenty of land available in Surabaya, analysts also see land prices rise rapidly in Surabaya, while available land will become scarce over time. Therefore, property developers in Surabaya have also started to focus on apartment towers (vertical infrastructure), although this is still a rather new concept for the local population in Surabaya. Therefore, developers say demand for apartments in Surabaya can currently only be encouraged by offering the super-block concept (where the apartment is connected to a mall). If the developer only constructs an apartment tower then demand will not be as big.