Trend: Superblocks Property Booming in Indonesia
No. 48/VII/July 31 - August 06, 2007 Economy & Business
Back to the heart of the City
Property kings are competing to build superblocks in Jakarta, where residents seek ease of living in special integrated districts.
Jakarta is not dreaming. At least 200 new giant buildings are competing to tear up Jakarta skies. Many towers have already shot up during the last year. Several others are still creeping up. Property projects, which were hit really hard by the economic crisis, now appear to regaining their strength.
Find this difficult to believe? Just look to the left and right along the streets of the capital city. Hundreds of hectares of land have already been subdivided. Cranes are busy moving around building materials. Trucks are going in and out of building sites until late at night. “The property business is booming,” said Viven G. Sitiabudi, the President Director of Lippo Karawaci, last week.
The property development trend that is currently adored by tycoons is the development of special integrated districts. This concept brings together apartments and offices with a hotel and a shopping center. They are called by various names from superblock, mixed-use development, to new city.
According to veteran property entrepreneur Trihatma K. Haliman, this integrated district concept will continue to mushroom for the next five years. “Currently the trend for residents is back to the city,” he said. The trigger for this has been the fact that modes of transportation to and from Jakarta’s outskirts have made living there even more unpleasant.
The hundreds of thousands of vehicles entering and exiting Jakarta during the course of each day have made the streets even more oppressive. Then there’s the fact that fuel is more expensive, making living outside the city a waste of time, energy and money. “So there’s no other choice,” said Lucy Rumantir, Chairperson of Jones Lang LaSalle Jakarta. “Members of the urban general public have begun to choose to live in apartments.
Property kings have therefore seized upon this opportunity. Bear in mind that land in Jakarta is becoming scarce and expensive. Optimizing the use of land became the choice of property entrepreneurs following the crisis. With the introduction of the superblock concept, life is really easy for the workers or businesspeople who live there. All they have to do is walk or take the lift in order to go shopping, to the cafe, to the office or to enjoy entertainment.
It’s not surprising therefore that the tycoons are busy coming down from the mountains to create “new cities” throughout Jakarta. Apart from in East Jakarta where purchasing power is low, they have been targeting vacant and strategic land in West, South, Central and North Jakarta. They include the Lippo Group, the Agung Podomoro Group, the Bakrie Group, the Ciputra Group, the Djarum Group and even the Pakuwon Jati Group from East Java.
At the beginning of this coming August, Lippo Group will commence groundbreaking with the laying of the first stone at the Kemang Village development. On an area some 12 hectares in size, the business group belonging to the Riady family will not only be offering a hotel, condominiums, offices and a mall, but also complete facilities including a Pelita Harapan school and a Siloam Gleneagles hospital. This group will also provide a helicopter pad for executives who want to speed off to the airport or another business center.
With an investment of US$880 million or around Rp8 trillion, this business group commanded by James T. Riady is dreaming about turning Kemang Village into an international community that can accommodate some 10,000 people. “Our concept for this development is The Ultimate Landmark of Life Style,” said Sitiabudi. It’s not surprising then that prices of the apartments being offered for sale range from Rp800 million to Rp2 billion.
Jopy Rusli, a Director of Lippo Karawaci, is convinced that he will be able to win the battle for the upper classes in this elite district of Jakarta. The reason for this is that Lippo possesses advantages that other developers do not. In addition to being active in property projects, this group owns hospital, school and retail business units. “We have all of these advantages available here,” he said.
Even though the competition is tight, Pakuwon Jati, which is controlled by Alexander Tedja, seems to have sufficient confidence as regards joining in the game in South Jakarta. Here, it’s not only Lippo that he is facing. Quite a few foreign companies are relocating to this area. “Examples of this are Dupont and ConocoPhillips,” said Ivy Wong, head of Business Development for the Pakuwon Group, last week.
Because of this, after issuing foreign exchange bonds worth US$110 million, Pakuwon has begun to speed up the development of Gandaria City in South Jakarta. This Rp2.1 trillion project will include apartments, a mall, offices and a hotel, all in one location. “We are lucky to own a strategic location,” said Wong. “Here, the main roads are not three-in-one and close to housing estates.”
Agung Podomoro, a property king who has moved quickly since the crisis, is not taking part in the game in South Jakarta, but is surrounding the capital city from the west and the north as well as in the center with five superblock projects, all at the same time. “We are not playing in the south, but we are lucky enough to control the Dragon’s Head district,” said Trihatma, the owner of Agung Podomoro. He was referring to Kelapa Gading, North Jakarta, which—according to Chinese belief—is geographically considered to be the Dragon’s Head.
In Kelapa Gading, Trihatma is working with Agung Sedayu to construct the Kelapa Gading Square with 10 towers. One of the advantages here is the Mall of Indonesia, the largest shopping center in Jakarta. Still in North Jakarta, in Pluit to be precise, he has also created a new business center called the Pluit Central Business District (CBD).
In West Jakarta, Trihatma does not have many competitors. In Tanjung Duren, he is forging ahead with the wholly integrated Podomoro City, which is somewhat of a gamble because it will become the flagship of this business group. With a total area of 21 hectares, this project will have 20 giant buildings containing apartments, a hotel, offices and a shopping center.
There will also be a complete range of entertainment and recreation facilities, including even a library. “We have also allocated 1.5 hectares for gardens,” said this entrepreneur who has already developed 50 giant towers since the crisis. He is convinced that all these facilities will attract students, who are one of the target markets of Podomoro City. Don’t forget that this area is surrounded by 50,000 students from three universities—Ukrida, Trisakti and Tarumanagara.
So far, four apartment towers have been completed and some of these are already occupied by students. There are clothes drying on every floor indicating that almost all the apartments are already occupied. With an investment of Rp4 trillion, he is targeting being able to develop 16 apartment towers with a total capacity of 10,000 units. The majority of construction will be completed between 2007 and 2010.
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THERE certainly is a real battle taking place in Jakarta’s business centers, such as in Kuningan, South Jakarta and the Sudirman-Thamrin area, Central Jakarta. In Kuningan, several developers, such as the Bakrie Group, the Ciputra Group, the Agung Podomoro Group and the Pakuwon Jati Group, are currently competing to construct skyscrapers with a range of facilities.
In Kuningan, the Bakrie Group will present the Rasuna Epicentrum, the largest superblock in Jakarta, with a total land area of 54.7 hectares. The business unit, Bakrieland Development, is dreaming of turning the Epicentrum into a world-class superblock, like Potsdamer Platz in Berlin, Germany, or Orchard Road in Singapore.
Bakrie Tower, a 48-floor skyscraper, will become an icon of Jakarta, like Petronas in Malaysia. This advantageous skyscraper was designed by HOK—Hellmuth, Obata, and Kassabaum—the world-class architects who created the Tuntex Sky Tower in Taiwan and Dubai Marina in the United Arab Emirates.
In order to make this dream come true, Bakrie is promising a hotel, offices, a shopping center and three classy apartment tower blocks, such as The Grove, which cost Rp16 million per square meter. This superblock promises a metropolitan and humanist lifestyle designed by the young architect Ridwan Kamil, from Urbane.
It is planned that this superblock will be complete with pedestrian precincts, a concert hall, television studios, a sports center, trams, an integrated basement, a retail corridor for cafes and restaurants, plus a river dividing up the district. “We are currently chasing up offers,” said Ferry Supandji, head of Marketing for Bakrie Swasakti Utama, a subsidiary company of Bakrieland, last week. “This first phase of construction will be competed by the end of 2008 with total investment of Rp3.5 trillion.”
Not that far from the Rasuna Epicentrum, Pakuwon is in the midst of making plans for the development of Kota Casablanca. While on Jalan Dr Satrio, Kuningan, Agung Podomoro is developing Kuningan City and Ciputra is building a superblock. The concepts are not that different, all with shopping centers, apartments, offices, hotels and pedestrian precincts.
There’s also competition close by at the Hotel Indonesia roundabout, on Jalan Thamrin, Central Jakarta. Here, the giant cigarette manufacture the Djarum Group is currently creating the Grand Indonesia superblock, which it is hoped will be completed this year. Bank Central Asia, the second largest bank in Indonesia, will move its headquarters here.
Only around 100 meters behind this, the Jakarta City Center (JaCC), also owned by Podomoro, is being developed. This shopping center will be complete with offices and seven apartment towers. “The shopping center may be quiet at the moment, but the apartments are almost already completed,” said Trihatma. “In two years’ time, apartment seekers will be the main target market of JaCC.”
Competition is certainly fierce. However, Trihatma and other property practitioners are optimistic enough as regards future market prospects. According to Lini Djafar, a property consultant from Provis, based on research results it is known that the property business—from retail, offices to apartments—is on the way up. “Our apartment sales target even reached 94 percent in June this year,” said Djafar.
In the future, it is predicted that this situation will continue. This is not just the result of interest rates dropping to a single digit level. Changes in lifestyle, increases in the number of residents and the security of living in apartments are the key factors. “After all, with only between Rp400 million and Rp500 million, one can purchase an apartment,” said Lucy Rumantir.
Because of this, it’s no surprise that research by Jones Lang LaSalle indicates that the supply of apartments has already become greater than before the crisis. In 1995-1997, the supply was only 16,000 units, while in 2004-2006 it became 24,000 units. And between now up until 2009, around 35,000 apartment units will be ready to enter the Jakarta market. What is even more surprising is that 65 percent of these have already been sold. Are you among the buyers?
