| Summary: | In Jabotabek Indonesia, the private sector has urbanised 16.6 thousand hectares of rural land far away from the built-up area of Jakarta, selling around twenty five thousand housing units annually. Yet, there is little research, if any, that explores how and why private sector companies undertook such land development. This research investigated the behaviour of these formal private sector developers of land for housing, particularly their responses in the site selection process to land price, accessibility to centres of activities and availability of infrastructure. It hypothesised that, with the advent of economic liberalisation in Jabotabek, land price became the most important factor in deciding a project's site. Using an exploratory research strategy, a case study approach was adopted with Kabupaten Tangerang as the chosen area. Data was collected from several sources. In-depth interviews were conducted with 34 persons including executives of land development companies, experts and Government officials. Interviews were also administered to 232 households in 15 residential projects in Kabupaten Tangerang. A great deal of information on the companies' ownership was gathered through the Internet. Overall, it was concluded that these land developers were most strongly guided by land price in the selection of site because they took advantage of the country's particular financial conditions, economic growth and land use regulations to obtain the largest possible increases in land value which could occur when rural use was converted to urban use. Providing infrastructure and using certain marketing techniques as well as large scale construction completed with urban facilities and amenities, the developers enhanced the land value enormously. Among other effects, their activities have increased the supply of land for residential development far beyond the actual demand. The findings of this research reveal flaws in urban growth models based upon proximity to existing service infrastructures, as well as in Government policies built upon such models. In Indonesia, they also suggest the need to review the roles of public infrastructure investment and to reform the Location Permit system. The findings also suggest new areas for further research.
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