Housing for a Resilient Urban Future in Indonesia

 Indonesia is experiencing a period of rapid urbanization, with cities now home to 54% of the national population as of 2020, up from 48% in 1990. This trend is projected to continue, with the urban population expected to reach 158.7 million by 2030. While this growth has been a primary driver of productivity and poverty reduction, it has also created significant pressures on housing and infrastructure that must be addressed to ensure a resilient urban future.

The sources highlight the following trends and challenges within the context of Indonesia's urban housing landscape:

1. Demographic and Geographic Concentration

• Java Island Predominance: Urban development is heavily imbalanced, with a high concentration of Functional Urban Areas (eFUAs) on Java Island. Four of Indonesia's largest metropolitan areas—Jakarta, Surabaya, Bandung, and Surakarta—are located there.
• Small vs. Large eFUAs: While 69.3% of Indonesia's urban areas are small (fewer than 250,000 inhabitants), 66.3% of the urban population is concentrated in just 19 large metropolitan areas with over 1.5 million residents.

2. The Critical Housing Shortage

• Scale of the Backlog: Approximately 29.2 million family units in Indonesia either do not own a home or live in inadequate conditions.
• Urban-Specific Gap: In urban areas specifically, there is a recognized shortage of 4.6 million homes for ownership and a need to renovate 2.1 million inadequate homes.
• Rising Costs: Housing challenges are exacerbated by rising property prices, which increased by nearly 11% between 2019 and 2024, alongside a 17.7% spike in building material costs.

3. Environmental and Climate Vulnerabilities

As cities expand, they face mounting environmental risks that threaten their long-term resilience:

• Emissions: The building and transport sectors together account for more than half of Indonesia's energy-related greenhouse gas emissions.
• Coastal Risks: Nearly 24% of the urban population lives in low-elevation coastal zones vulnerable to sea-level rise and flooding.
• Extreme Heat: The Urban Heat Island (UHI) effect is intensifying, with Jakarta recording 30 consecutive days over 35°C in 2023.

4. Pathways Toward a Resilient Future

The sources identify several strategic policy pathways to balance the need for mass housing with sustainability:

• Three Million Housing Programme: This flagship initiative aims to deliver three million affordable units per year. It represents a "unique opportunity" to guide cities toward low-carbon development if implemented with energy-efficiency standards.
• Compact Urban Development: Shifting toward Transit-Oriented Development (TOD) can reduce environmental footprints and infrastructure costs by concentrating housing near public transport hubs like the MRT in Jakarta or LRT in Palembang.
• Green Building Regulations: Strengthening the Bangunan Gedung Hijau (BGH) framework is essential. Currently, mandatory compliance is often limited to large non-residential buildings, but expanding these to residential sectors is a key recommendation.
• Institutional Capacity: The establishment of the Ministry of Housing and Settlement Areas reflects a policy shift to provide dedicated authority and resources to meet these urban challenges.

The sources conclude that Indonesia's continued urbanization and large-scale housing investments offer a critical opportunity to shape more resilient, sustainable, and inclusive cities if managed through integrated land use and climate-proof planning.

Indonesia faces a monumental housing crisis, with approximately 29.2 million family units either lacking a home entirely or living in inadequate conditions. Within the context of a resilient urban future, these challenges are compounded by rising economic costs, environmental vulnerabilities, and institutional hurdles.

1. The Scale of the Housing Backlog

The sources categorize Indonesia's housing deficit into two primary areas:

• Ownership Backlog (Quantity): An estimated 12.6 million families do not own a home. In urban centers, there is a recognized shortage of 4.6 million homes for ownership.
• Adequate Housing Backlog (Quality): Approximately 16.6 million families live in dwellings that fail to meet basic standards for living space, clean water, proper sanitation, or durable building materials. In cities, at least 2.1 million homes require urgent renovation.

2. Economic Barriers and Urban Sprawl

Providing housing is increasingly difficult due to a widening gap between wages and property costs:

• Rising Costs: Between 2019 and 2024, residential property prices rose by 10.9%, while the cost of building materials spiked by 17.7%.
• Spatial Inequality: Because land near urban cores has become unaffordable, subsidized housing is increasingly pushed to peripheral areas. This forces low-income residents into long commutes and creates "urban sprawl," which increases infrastructure costs by up to 40%.
• Infrastructure Lag: Rapid residential expansion is outstripping the delivery of essential services like transport, water, and sanitation, leading to increased congestion and reduced well-being.

3. Environmental Risks and Resilience

Resilient urban planning is hindered by the fact that a significant portion of the population lives in high-risk areas:

• Coastal and Flood Risks: Nearly 24% of the urban population resides in low-elevation coastal zones vulnerable to sea-level rise. Furthermore, many of the country's 38,000 hectares of slums are located in flood-prone or landslide-prone corridors.
• Heat Stress: The Urban Heat Island (UHI) effect is intensifying, with residents exposed to an average of 363 days of heat stress per year.

4. Governance and Policy Obstacles

The sources identify several institutional challenges that prevent efficient housing delivery:

• Land Tenure Uncertainty: Current public land lease regulations (HGB) often limit initial periods to 30 years with uncertain renewal terms. This lack of long-term certainty discourages private developers from investing in large-scale urban housing projects.
• Institutional Fragmentation: Housing policy is split across multiple agencies, including the Ministry of Housing and Settlement Areas, the Ministry of Public Works, and Bappenas. This fragmentation, combined with recent budget cuts—such as the reduction of the Housing Ministry's 2025 budget from IDR 5.27 trillion to IDR 1.61 trillion—constrains the government's ability to meet ambitious targets.

5. Strategic Pathways Forward

To address these challenges, the sources suggest leveraging the Three Million Housing Programme as a catalyst for reform. Key recommendations include:

• Transit-Oriented Development (TOD): Concentrating affordable housing near public transport hubs to reduce emissions and improve job accessibility.
• Green Building Standards: Gradually extending mandatory Bangunan Gedung Hijau (BGH) regulations to the residential sector to avoid locking cities into a high-emissions future.
• In-Situ Upgrading: Focusing on community-led resilience in existing settlements rather than relocation, which often disrupts livelihoods.

Indonesian cities are currently grappling with significant environmental pressures that threaten the long-term sustainability of their urban growth. While urbanization has historically driven economic expansion, it has also led to rising greenhouse gas (GHG) emissions, increased climate vulnerabilities, and severe pollution.

The sources detail these environmental challenges across several key dimensions:

1. Climate Mitigation: Rising Emissions and Energy Demand

• Sectoral Contribution: As of 2023, the building and transport sectors together accounted for more than half of Indonesia's energy-related GHG emissions. Energy-related $CO_2$ emissions from these sectors more than doubled over the last three decades.
• Cooling Demand: Driven by rising temperatures and improved living standards, the share of the population owning an air conditioning unit is expected to jump from 14% in 2023 to 85% by 2050. Consequently, electricity demand for cooling in buildings is projected to be 11 times higher in 2050 than in 2022.
• Emissions Growth: Between 2000 and 2022, Indonesia’s total GHG emissions (excluding land use) increased by 109%, contrasting with a 12.3% decrease across OECD countries during the same period.

2. Climate Adaptation: Flooding and Heat Stress

• Coastal Vulnerability: Nearly one-quarter (24%) of Indonesia's urban population—roughly 34 million people—lives in low-elevation coastal zones (LECZ) below 10 meters, making them highly vulnerable to sea-level rise and storm surges.
• Flooding Risks: The share of built-up areas exposed to floods has increased, and annual river flood damage in urban areas is estimated to reach USD 15 billion by 2030 under high-emission scenarios.
• Extreme Heat: The Urban Heat Island (UHI) effect is intensifying due to high population density and heat-retaining materials. Indonesians were exposed to an average of 363 days of heat stress per year between 2019 and 2023, and Jakarta recorded 30 consecutive days over 35°C in 2023.

3. Pollution and Resource Management

• Air Quality: The residential sector is the largest source of fine particulate matter (PM2.5) in urban centers, contributing 46% of total emissions in 2020. This pollution has severe health impacts; in Jakarta alone, it is estimated that 7,390 residents die prematurely every year due to high PM2.5 levels.
• Water Quality: Around 70% of rivers in Indonesia are polluted, primarily due to untreated domestic wastewater. National wastewater treatment coverage was estimated at just 14% as of 2016.
• Waste Crisis: Only about 10% of waste is properly managed, with 70% of total waste remaining unmanaged outside formal collection systems. Landfills across the country are projected to reach full capacity by 2030.

4. Strategic Pathways for a Resilient Future

The sources emphasize that the government's Three Million Housing Programme offers a "unique opportunity" to shift these trends. Key strategies identified include:

• Transit-Oriented Development (TOD): Reducing environmental footprints by concentrating housing near public transport nodes like the MRT and LRT.
• Green Building Standards: Gradually expanding the Bangunan Gedung Hijau (BGH) framework beyond large commercial buildings to include the residential sector.
• Nature-Based Solutions (NbS): Systematically integrating green infrastructure—such as mangrove belts, infiltration wells, and green open spaces—to mitigate heat and flood risks while improving biodiversity.
• Hazard-Sensitive Planning: Using digitalized spatial plans (RDTR) and hazard maps to direct new housing construction away from disaster-prone land.

The sources identify four primary policy and governance pathways to balance Indonesia's urgent need for affordable housing with long-term sustainable and resilient urban development goals. These pathways leverage the Three Million Housing Programme as a catalyst for systemic change.

1. Efficient and Integrated Use of Urban Land

Optimizing urban space is essential to meet housing demand while reducing environmental footprints.

• Transit-Oriented Development (TOD): Policies should expand TOD beyond major rail stations to include Bus Rapid Transit (BRT) and Light Rail Transit (LRT) nodes. This model supports higher density, mixed-use development, and reduces car dependency.
• Reforming Land Leases: Current public land lease regulations (HGB) often have short durations (30–40 years) and uncertain renewal terms, which discourages private investment. Reforming these systems to provide long-term certainty is seen as critical for attracting private capital for large-scale urban projects.
• Strengthening Perumnas: Expanding the mandate of the state-owned housing developer, Perumnas, would allow it to move beyond individual plot development and act as an integrated urban development agency involved in land management and infrastructure provision.

2. Mainstreaming Energy Efficiency and Decarbonization

Mass housing development must avoid locking cities into a high-emissions trajectory.

• Green Building Standards (BGH): The sources recommend a "step-by-step" approach to tighten and broaden regulations, gradually extending mandatory green building requirements from large commercial buildings to the residential sector.
• Certified Materials (SNI): Mandating the use of SNI-certified materials in building codes and public procurement can ensure structural safety and accelerate the adoption of energy-efficient components like high-performance insulation.
• Technical Capacity: To support these standards, the government must address the shortage of certified architects, green building assessors, and energy auditors, especially in smaller cities, through targeted training and knowledge-transfer initiatives.

3. Fostering Resilient Urban Development

Policy must steer new construction away from hazard-prone areas and upgrade existing settlements for climate safety.

• Hazard Mapping and Spatial Planning: Accelerating the preparation and digital integration of Detailed Spatial Plans (RDTR) is essential for enforcing zoning that restricts development in disaster-prone locations.
• Community-Led Adaptation: Programs like ProKlim (Climate Village) and KOTAKU (Slum Upgrading) should be integrated with city-scale planning to provide in-situ resilience measures like improved drainage and early-warning systems.
• Nature-Based Solutions (NbS): Regulations should systematically integrate green infrastructure—such as mangrove belts, pocket parks, and permeable sidewalks—into urban planning to mitigate heat and flood risks while improving public amenities.

4. Institutional Capacity and Policy Alignment

A whole-of-government approach is required to align housing delivery with sustainability goals.

• Institutional Framework: The establishment of the Ministry of Housing and Settlement Areas reflects a policy shift toward dedicated authority. However, formalizing an inter-ministerial co-ordination mechanism (like the Housing Task Force) is recommended to align projects across various agencies.
• Planning Alignment: The sources emphasize embedding the Three Million Housing Programme within the Long-Term (RPJPN) and Medium-Term (RPJMN) National Development Plans, with measurable indicators for energy efficiency and emission reductions.
• Data Granularity: Implementing One Data Indonesia (SDI) is critical to harmonize data collection. Policymakers need more granular, neighbourhood-level data on building age, structural integrity, and climate exposure to target interventions effectively.