Mechanism of value capture on gated community housing by developers in Jakarta Metropolitan Area

Abstract

We reviewed the state of the art on gated community development, property valuation, and value capture literature to discuss how gated housing serves as a mechanism for land value capture by developers. Land value capture, instead of measures such as urban fears and segregation, justifies developers’ action to build impenetrable walls around their residential development projects. Previous works on housing markets in JMR suggests that housing products tend to be overpriced. We found early indications that enclosing physical boundaries on housing projects were positively correlated to residential price growth in Jakarta Metropolitan Regional (JMR). We used a study case embedded design for this initial research with mixed analysis data method. Our results show and argue that the real estate developers’ motive to install walls and gates in their residential projects is to enhance the existing land value. The ratio of land value on housing inside the gated area is 1,5 up to 7 times more higher than the surrounding area outside the gate. Our study helps to develop an understanding of the motive behind the gating trends in housing development projects. All of the information is substantially useful to help public sector working on managed residential land sustainably.