July 11, 2023
JAKARTA – Several of Indonesia’s biggest property developers have unveiled their plans to build commercial facilities in Nusantara, the new capital city located in East Kalimantan, ranging from malls to offices to accommodate the new inhabitants of the government’s flagship project.
Two developers signed agreements with Nusantara-owned PT Bina Karya last Thursday and Friday, namely Ciputra Group-backed PT Citra Kotabaru Nusantara and publicly listed PT Pakuwon Jati, respectively.
However, no investment figure was disclosed in the press statements.
Ciputra Group plans to develop an integrated area consisting of housing, a hotel, a golf course and a botanical garden. These include meeting, incentive, conference and exhibition (MICE) facilities.
Meanwhile, Pakuwon plans to develop an integrated area of apartments, a mall and hotel in the new capital.
“We have built many properties in Indonesia cities. Now its time to build one in the new capital,” Alexander Stefanus Ridwan Suhendra, president director of Pakuwon Jati said in a statement on Friday.
Alexander said on June 27 that he was optimistic that retailing in Nusantara would have a huge potential market, as quoted in Detik.com.
“How about the cash flow? Maybe at first it won’t be profitable. In the long term, though, I believe it will be profitable, so everything will be fine,” he said last month.
Nusantara is scheduled to be inaugurated next year, coinciding with Indonesia’s 79th anniversary with President Joko “Jokowi” Widodo set to hold the independence celebration in the new capital.
Sinarmas Land, property arm of conglomerate Sinarmas, plans to develop a township in East Kalimantan named Grand City Balikpapan project, which is claimed to be the largest in the province, as reported by Kontan on Sunday,
According to several local media sources, the project will serve as a housing complex for civil servants moving into the new capital, and that a number of ministries and agencies have tagged the plot for their staff.
According to Franky Najoan, CEO of East Indonesia Sinarmas Land, the Grand City Balikpapan project will also include commercial sectors such as a food center, which it launched last November.
“The food center is directly connected to a 6-hectare site and is also equipped with a safe and spacious parking area to accommodate hundreds of vehicles,” Franky said in a statement as quoted by Kontan.
Publicly listed hospital chain PT Medikaloka Hermina said on June 23 it planned to build a hospital in Nusantara and that it was waiting for the government to grant a permit to start the development.
“In the first phase, the company will build a hospital with a 100-bed capacity. Next, the capacity will be increased to 200 beds,” Aristo Setiawidjaja, director at Hermina wrote in a company filling, published at the Indonesia Stock Exchange (IDX).
The new capital city is set to house around 2 million residents in its first phase, which will largely comprise civil servants.
Last year, Japanese holding company SoftBank Group was reported to have withdrawn from the project due to disagreements with the government after the company wanted all industries near Jakarta to be relocated to East Kalimantan and hoped the city would be inhabited by more than 50 million to ensure its desired returns.
According to Tenggara Strategics, a think-tank affiliated with The Jakarta Post, businesses have yet to start investing in the new capital as they want to see if the new administration that is formed after the 2024 election will continue the project.
Development of the project has commenced but is largerly reliant on state funding, despite the involvement of some private construction firms.
The government aims to make the project attractive, such as by promising tax holidays for up to 30 years and lengthy right-to-use periods of up to 80 years, which could then be extended.
The government has promised civil servants housing and higher pay, as well as absorbing the costs incurred in moving them from Jakarta.