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Govt’s pitch to foreign housing developers no easy sell
Chinese developers have spare capacity but face constraints in expanding abroad due to financial challenges following the property bust in their own country.
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Rising population: A residential area near the city center of Jakarta is seen in this aerial photo taken on Dec. 2, 2021. (AFP/Bay Ismoyo )
T
he government is looking to foreign developers to support President Prabowo Subianto’s ambitious housing program, but many Chinese firms that could in theory handle large-scale projects face constraints in expanding abroad due to financial woes following the property bust in their own country.
China has been the largest foreign investor in Indonesia’s real estate market in recent years, but the government’s target of building 3 million homes a year is a herculean task.
There are also doubts about foreign investors’ interest in Indonesia’s housing program, unless the government provides guarantees on land status and market demand.
Housing remains in short supply in Indonesia, with the gap between home demand and existing ownership amounting to 9.9 million units in 2023, where demand is defined as any family that does not own a home or whose home is deemed substandard.
As the population kept rising, this so-called housing backlog has proven a vexing challenge for successive governments.
President Prabowo’s administration has vowed to build 2 million homes in rural areas and 1 million in cities and has established a housing task force led by his brother Hashim Djojohadikusumo.
At an event on Wednesday, Hashim stated that the program aimed to tap not only local investors, but also international “funds” from Abu Dhabi, Qatar, China, India and Singapore.
