Maritime highways to blaze new trail for Indonesia’s neglected property markets

With sea toll road programme, far-flung portions of the archipelagic country will get more opportunities to ride the crest of the real estate wave

Industrial port of Tanjung Priok in Jakarta, Indonesia. Creativa Images/Shutterstock

President Joko Widodo’s decision to expand the tol laut or maritime highway programme further across the archipelago will ripple through property markets outside Jakarta.

The tol laut (‘maritime highway’) programme helped increase the nationwide distribution of supplies to 279 million tonnes last year, up from 238 million tonnes in 2015, according to figures from Statistics Indonesia (BPS).

Tol laut is expected to reduce the pricing gap of goods between Indonesia’s progressive western parts and more impoverished eastern areas by 30 percent. “The tol laut programme has progressed significantly, contributing to the increase of national distribution,” said Transportation Ministry’s sea transportation director general Wisnu Handoko in a statement to The Jakarta Post.

The scheme essentially allows for delivery of construction materials between remote points of Indonesia at very cheap costs, according to Bagus Adikusumo, Colliers Indonesia’s senior director for office services.

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For example, a bag of cement that is sold for IDR100,000 (USD7) in Jakarta is going to cost the same in Papua, Kalimantan or Sulawesi where prices are three to 10 times much higher.

“As a result, the cost to build apartments in those places will be the same as in Jakarta. Developers in Papua, for instance, where land costs are much lower, are going to sell a much cheaper apartment than one in Jakarta but for the same quality,” said Adikusumo.

“Once the logistic cost is cheaper, it’s expected that all parts of Indonesia, especially the eastern part, will develop faster. Once it develops faster, it will create new property markets,” said Doddy Tjahjadi, head judge of the PropertyGuru Indonesia Property Awards, now in its fifth year.

Logistic costs represent around 24.6 percent of the Indonesian GDP. Indonesia ranks 46th on The World Bank’s 2018 Logistics Performance Index.

Do you know of an outstanding Indonesian company making waves in industrial property development? Nominate it now to the PropertyGuru Indonesia Property Awards. Entries close on 19 July. Find more details here: www.asiapropertyawards.com/award/indonesia-property-awards