Foreign Property News | Posted by Zarni Kyaw
Great fanfare greeted the naming of Indonesia’s new capital, Nusantara, but real estate analysts don’t expect any significant shift in emphasis away from Jakarta in the near future. The analysts also say that the label of Jakarta as the capital city may change. But its status as the financial capital and centre of business and the economy will not; Nusantara is unlikely to attract a significant number of private sector companies.
Nusantara, the future capital of Indonesia in East Kalimantan province, is beset by similar headaches. Billed as an eco-friendly answer to sinking Jakarta, the new administrative hub in Borneo promises green construction and a host of liveability perks. Yet, critics warn building works will clear thousands of square kilometres of forest.
State city planners have marked a cross where the new presidential palace will eventually stand. But plans to break ground by the end of 2021 were delayed, a sign that stage one of the new city may not be completed by the target date of 2024 when civil servants are due to relocate from Jakarta.
Construction has begun on a dam which will provide water for the new city. Work is underway on access roads to allow initial construction work at the site, now expected to break ground in the second half of 2022.
“We are optimistic. We are currently completing logistics and roads,” said Minister of National Planning Suharso Monoarfa following the latest of his many visits to the site in mid-January. “The acceleration is extraordinary.
A slick government website for the project details plans to add a new economic area to Nusantara by 2035, including government incentives for the private sector. But the city is not slated for completion until 2045.
What happens between now and then will determine the broader trajectory of the Indonesian real estate market. For years the action has focused on Jakarta, the largest city in Southeast Asia by landmass and population.
Land prices in and around the new capital site have increased about 25-fold since President Joko Widodo first announced plans for the relocation in 2019, according to the government in Sepaku district, East Kalimantan.
The central government has allocated just IDR510 billion (USD35.6 million) for the first phase of construction. A law confirming the relocation was only passed by the Indonesian parliament in January 2022.
East Kalimantan Governor Isran Noor said the United Arab Emirates, United Kingdom, Germany, China, South Korea, and Japan had all expressed interest in contributing overseas investment and expertise.
Ref: Jakarta to remain business centre despite capital relocation (propertyreport)
