Research

Jakarta, Jokowi and the impact of infrastructure

Jakarta, to put it mildly, is a difficult city to get around

August 15, 2018

Ride hailing firms like Go-jek and Grab compliment the Bluebird and Express taxi services but traffic congestion remains a serious problem. Public transportation options are limited to an insufficient express bus network (Transjakarta), a commuter train line and an extremely old network of city buses. That, however, is set to change next year.

Joko Widodo (Jokowi) came to power in 2014 and one of his administration’s promises was to increase investment in infrastructure. This has taken the form of new toll roads, power stations, airports and seaports across the archipelago but the two most newsworthy projects in Jakarta are the Light Rail Transit (LRT) and Mass Rapid Transit (MRT) networks. Both of these projects are likely to be completed early in 2019, in advance of the next presidential election.

The MRT runs from South Jakarta to the Hotel Indonesia roundabout in the centre of the city – right through the heart of the CBD. Commercial buildings with direct or convenient access to the MRT are likely to outperform the rest and developers and investors continue to eye development sites with MRT access. Most locations on the route of the MRT are already considered decent places to live and the good location factor is, to an extent, captured in residential prices even before the addition of the MRT network.

That brings us to the LRT which connects decentralised locations in the south and east of Greater Jakarta to the centre of the city. The LRT is set to reduce travel times from parts of Greater Jakarta to thirty or forty minutes from one and a half hours or more (depending on traffic). This means that inconvenient locations may become convenient overnight and some local and international developers are already looking to tap into growing demand for these locations.

We are extremely excited about the prospects for the property market on the back of these new infrastructure initiatives and my colleagues and I are in the process of writing a white paper on the subject to be published later this year.

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