Developers complain about land brokerage
Developers complain about land brokerage
JAKARTA (JP): The association of real estate developers voiced their complaints yesterday about land brokers who dictate their prices to developers, whose business tend to suffer as a result.
"This has become a serious problem for the construction business," chairman of Real Estate Indonesia (REI) Enggartiasto Lukita told a hearing with Commission V of the House of Representatives here.
Speculative actions, which are spreading all over the country, could lead to a high-cost construction sector if no measures are taken.
"Very often they forcibly ask developers to pay for the land they control at their set prices. Such a practice tends to protract the development process of public housing," he said.
President of Lippo Cikarang, Herman Latief, seconded the view, saying that his company also faces speculators in land clearances, including Lippo Cikarang, an industrial estate near Bekasi which was visited by Commission members yesterday.
Reliable sources told The Jakarta Post that many developers are facing similar problems in constructing their projects on Java and other islands.
"They move very quickly. If there is a construction project in an area, they will move and buy the land there from local residents at very low prices. And then they sell it to developers at very high prices," said a source.
They added that such tactics will not only harm developers but also the public. Many of the land owners cannot get market prices for their land.
Due to high land prices, developers have to sell the houses they build at unusually high price levels.
REI, grouping 2,110 developers from all over the country, 900 of which are based in Jakarta, is facing a slump in the construction business. The demand for houses is also weak.
More and more banks are reluctant to provide credits to the property sector. "I think banks have now become choosy in giving their credits to the property sector. They are likely to give credits just for construction and not for land clearances," said Herman.
Furthermore,the government has appealed to all banks to limit their credit to the property sector.
Credit to the property sector has reportedly reached a warning level and many of them could turn into problem loans. In 1993, credit levels to the sector were at Rp 21.8 trillion (US$9.49 billion) but as of August 1995, the level had reached Rp 41 trillion.
Such problems are likely to be discussed at REI's national conference from Dec. 11-14. (13)