Govt to limit land for housing developers

Govt to limit land for housing developers

JAKARTA (JP): The government will limit the size of land that
can be acquired by housing developers throughout Indonesia
because many of them have purchased land much larger than what
was required for their housing projects, a minister said.

"The government will soon issue a regulation on the size of
housing land that can be cleared by developers," State Minister
of Public Housing Akbar Tandjung told The Jakarta Post
yesterday.

He was commenting on the problem of bad loans, which according
to analysts, was partly caused by the fact that developers bought
land much larger than their capacity to construct houses.

The analysts estimated that bad loans in the property sector
would reach Rp 5.25 trillion (US$2.3 billion) this year.

Because most land sites are purchased with bank loans,
developers have to pay high interest rates, even though they have
not yet built houses.

Tandjung said that the regulation will stipulate, among other
things, that land procurement for housing will be limited in
every city and that it will be set according to the developers'
needs.

According to Tandjung, besides the regulation on the maximum
acreage of land to be acquired, the government will also issue a
regulation on the establishment of a state-owned company to
manage the cleared land sites for housing construction.

"This state-owned company will be under the supervision of the
office of the minister of public housing," Tandjung told the
Post.

He added that the draft regulations had been submitted to the
state secretariat and they are expected to be issued before the
end of this year.

Tandjung said that the bad loans in the property sector were
also caused by a market slump and high interest rates.

"Currently, the demand for medium and luxury houses is
decreasing, while the interest rates remain high. Developers,
therefore, find it difficult to repay their loans," he said. (13)