Developers shun low-cost apartments: REI

Developers shun low-cost apartments: REI

JAKARTA (JP): Developers are not interested in investing in
low-cost apartments as it is considered a money losing business,
an executive of the Indonesian Real Estate Association (REI)
says.

Enggartiasto Lukito, chairman of REI, told reporters over the
weekend that it is next to impossible to build low-cost
apartments because the construction costs for low-cost apartments
is the same as that of luxurious apartments.

"The construction cost for an apartment cannot be less than Rp
800,000 per square-meter," Enggartiasto told reporters at a
meeting between members of the Jakarta branch of REI and
apartment developers.

Enggartiasto said the only way to provide low-cost vertical
housing, which is being aggressively promoted by the city
administration as part of its drive to improve the welfare of
slum dwellers, is through a cross-subsidy system, which is
stipulated in a gubernatorial decree.

The decree, which stipulates that developers of luxurious
apartments are required to build low-cost apartment buildings in
the city as well, was issued to solve the problem on the scarcity
of funds.

Previous head of the City Housing Office, Ongky Sukasah, said
the city's promotion of low cost apartments is hindered by a
financial problem.

Under the cross-subsidy system, part of profits registered
from the sales of their luxurious apartments should be set aside
for financing the construction of low-cost ones, he said.

He added that the decree is the best way to support the
implementation of the vertical housing program.

Low-cost apartments built under such a cross-subsidy system
include those built in Bidaracina, East Jakarta, on Jl.
Penjernihan, Central Jakarta and in the Tebet area, South
Jakarta.

In a related development, Thamrin Djamain, president of the
city owned housing developer PD Sarana Jaya, said that his
company is currently managing 2,996 leased apartments in the
city's five mayoralties.

Of the 2,996 units, 1,382 are located in Penjaringan, 490 in
Tambora, 124 in Cengkareng, 360 in Karang Anyar, 152 in Jati
Rawasari, 152 in Cipinang, 125 in Pondok Bambu and another 150 in
Pondok Kelapa, he said.

In the period between 1990 and 1995, PD Sarana Jaya has
furnished over Rp 2.3 billion (US$1.04 million) for the
management of the facilities.

He explained that the rental system is considered to be the
most applicable to help solve the problems of housing for people
with incomes of between Rp 150,000 and Rp 250,000 per month.
(yns)