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Bandung brimming with potential
The emerging middle class in Bandung has propelled the growth of the property sector in the city, ranging from housing complexes and apartments to malls and hotels
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Vertical living:: An artistâs impression of Parahyangan Residences now being constructed by property developer Agung Podomoro Land in Bandung, one of the top five cities in Indonesia. The apartment is one of the many property projects under construction in the city. (Courtesy of Parahyangan Residences) (Courtesy of Parahyangan Residences)
T
he emerging middle class in Bandung has propelled the growth of the property sector in the city, ranging from housing complexes and apartments to malls and hotels.
One of Indonesia's largest cities, Bandung has become increasingly attractive not only among local and foreign tourists alike but also those seeking homes.
This explains why the demand for houses, apartments and hotels has been on the increase.
Property developer Ciputra Group and other property giants, such as Agung Podomoro Group and Summarecon Agung, are now developing their projects in the city to take advantage of this growing demand.
Summarecon, one of the country's leading property players, for example, has picked Bandung as a destination of choice to develop its new township project. The company will kick start its 300-hectare township project next year.
Agung Podomoro Land, a subsidiary of Agung Podomoro Group, has a 27-hectare land reserve which it will use to develop several property projects in the city.
The company already has a portfolio for the development of Festival Citilink, a life-style center.
'Festival Citilink certainly adds to the more colorful lifestyle in Bandung as West Java's capital of hip and happening,' Agung Podomoro Land says on its website.
The project provides a world-class lifestyle destination where shopping mall, convention hall and hotel are astonishingly integrated to give a new vibe to the city of Bandung.
Currently, the company is developing Parahyangan Residences and Bandung City Center, which includes Pullman and Ibis Style hotels and a convention center.
'We are still constructing both the Pullman and Ibis Style hotels. We will start the operation of the two hotels in 2016,' Agung Podomoro's investor relation officer Wibisono was quoted by kompas.com as saying.
The company planned to utilize its land reserve to erect houses as it was not suitable for high-rise buildings, he said, adding, 'Both hotels have 500 rooms in total.'
'We still have a 27-hectare land reserve in Bandung that we will utilize for future development,' he noted.
Vertical living: An artist's impression of Parahyangan Residences now being constructed by property developer Agung Podomoro Land in Bandung, one of the top five cities in Indonesia. The apartment is one of the many property projects under construction in the city. (Courtesy of Parahyangan Residences)
More hotels
With Bandung becoming increasingly popular among local tourists as a lifestyle destination, the demand for accommodation is on the rise. This has also prompted several hotel operators to develop accommodation in the area.
National hotel operator Dafam Group, for example, is expanding its accommodation facility portfolio by opening its Dafam Hotel.
With the establishment of the hotel, the group now manages three portfolios.
Data compiled by kompas.com shows that as many as 32 apartment buildings and 20 hotels have entered the construction phase.
All the projects will be launched on the market in the next two to three years.
The number of hotel rooms in Bandung has increased steadily. In the second quarter of this year, Bandung had a total of 7,377 hotel rooms.
The number of hotel rooms has increased by 0.55 percent per quarter.
The increase in hotel-room supply has been the result of the development of budget hotels like Fave Hotel Pasir Kaliki and Hotel Zodiak.
Numerous starred hotels under construction include D'Green Pasteur and Hotel Royal Tulip.
Hotels are among the types of property frequently developed in the last three years thanks to their positive growth.
Latest data from Bank Indonesia (BI) shows that the need for accommodation facilities tends to increase on a three-monthly and annual basis.
According to Indonesian Real Estate (REI) West Java branch secretary Lia H Nastiti, as quoted by kompas.com, Bandung's property market has grown rapidly since Indonesia recovered from the 2008 global financial crisis. The growth has occurred in all property sub-sectors, comprising houses, apartments, hotels, as well as shopping and office centers.
'Nowadays, houses are no longer concentrated in Bandung's city center.
Instead, they are evenly distributed throughout the city, especially in its eastern area,' she said.
She added that the demand for houses grew along with people's increasing purchasing power. Mid-sector houses are being sold out with a backlog of only 10,000 units per year.
Herman Muchtar, chairman of the West Java chapter of the Indonesian Hotel and Restaurant Association (PHRI) echoed Lia's statements, attributing the increasing demand for property in Bandung to the city's emerging middle class.
'Bandung's economic growth has always exceeded 8 percent in the last five years, far higher than the national figure. Meanwhile, Bandung's regencies have posted an economic growth that exceeds 5 percent,' he said.
'A lot of hotels are being developed in Bandung because the city has the necessary market. The hotels generate revenues not only from visitors staying there but also meeting, incentives, convention and exhibition [MICE] businesses,' he added.
High land prices
The intensive property development in Bandung has caused land prices in the area to shoot up.
According to Era Metta broker member, Herlina, as quoted by kompas.com, Bandung's land prices have continued to rise every year. Currently, the most expensive land is located in the Dago area, or around Jl. Ir H Juanda, which serves as the city's business epicenter.
'Land prices in the Dago area have reached Rp 40 million [US$3,360.50] per square meter. Meanwhile, the land located in its adjacent areas like Jl. Riau, Jl. WR Supratman, Jl. Jawa, Jl. Sabang and Jl. Trunojoyo is priced at around Rp 25 million to Rp 30 million per square meter,' Herlina said.
According to her, land prices in other areas vary from Rp 10 million to Rp 20 million per square meter.
'The closer it is to the business center, where a lot of apartments, hotels and shopping centers are being constructed, the more expensive its price,' she said.
Lia said that the land-price hike was not happening only in Bandung but also in its secondary cities.
'Two years ago, land in the eastern Bandung area was priced at Rp 200,000 per square meter. Currently, the price has already reached Rp 300,000 per square meter. Meanwhile, land located near the main roads can carry a price of Rp 1 million per square meter,' she said.
Taking land price into account, it is no wonder that the price of property in Bandung has continued to rise. Currently a 36-by-90 meter home has a price of Rp 500 million to Rp 600 million per unit. Bigger houses can reach a price of Rp 1.5 billion to Rp 3 billion per unit.
