T

he rising trend of suburban vertical development will not solve the housing backlog in Greater Jakarta, an analyst has warned.

Indonesia Property Watch (IPW) executive director Ali Tranghanda said recently that apartments were usually built in densely populated areas where land value was high and the target market included college students and expatriates.

However, Ali said, the trend of building apartments in suburbs of the capital, such as Tangerang in Banten and Bekasi in West Java, relied on '€œfake'€ demand.

He explained that developers preferred building apartments instead of landed houses in suburban areas in order to optimize land. '€œBuilding apartments is always more lucrative than building landed houses,'€ he said.

'€œMany developers compulsively build apartments, and consumers then compulsively buy them. However, they don'€™t buy them to live in, but as an investment,'€ he added.

As land in the world'€™s metropolises became ever more limited and ever more expensive, Ali said, the trend for apartment-building would grow exponentially. '€œThis phenomenon can been seen in parts of Greater Jakarta where demand is high, such as Cikarang industrial estate,'€ he said.

The purchase of suburban apartments to let or as investments, he went on, would inflate apartment prices, but prices would eventually plateau.

According to the analyst, Bekasi will have 30,000 apartments in the next few years, while demand remains low. '€œSome of the projects will be canceled, while others will suffer from low occupancy rates,'€ he said.

He added that sales would slow in line with dwindling rental demand.

High supply would moreover not solve the housing demand in Greater Jakarta, Ali said. '€œThe price of an apartment unit is supposed to be lower than a landed house. People who work in Jakarta will buy them as they cannot afford to buy one in the capital city,'€ he said.

These buyers would face commutes of three to four hours from their houses in Bekasi and Tangerang into Jakarta. '€œEventually they will be exhausted and prefer to stay in boarding houses near their offices in Jakarta,'€ he said.

He added that apartments or housing complexes in the suburbs would only be a solution if the government provided adequate mass transportations like trains or monorails and the developers began building apartments near stations, a concept known as transit-oriented development.

One of the developers joining the trend of building apartments in Greater Jakarta is Pollux Properties Indonesia.

Relying on the rapid development of Bekasi as an industrial center, Pollux is set to build a superblock mega-project called Encore Bekasi. The project comprises 6,000 units in 18 towers equipped with shopping malls and other facilities.

Pollux sales general manager Maikel Tanuwidjaja said on the sidelines of the project preview last week that a shift in demand was underway, with buyers in the suburbs increasingly preferring apartments to landed houses.

'€œIn an apartment block, it is easier to access malls and food shops,'€ he said. '€œOur previous Chadstone apartment project in Cikarang was successful.'€

Apartments located near schools and universities, he added, were a good choice both to live in and as investments.

Besides Bekasi, other satellite cities like South Tangerang and Depok have also seen rapid development of high-rise buildings. Developers behind planned communities like Bumi Serpong Damai (BSD) and Alam Sutera have also included apartments in their developments.