Last September 11-14, 2017,
valuers from ASEAN countries as well as countries such as South Korea, Hong Kong,
and Fiji were attending the ASEAN Valuers Association (AVA) Congress 2017 in
Singapore. The main congress is a major event for ASEAN valuers. This year also
marks the 50th Anniversary of ASEAN. The AVA was established in 1981 with five
founding members: Indonesia, Malaysia, the Philippines, Singapore and Thailand.
The theme of the Congress for
this year is “Valuation – Real Estate and Beyond”. Speakers from various ASEAN
countries as well as specially invited valuation experts from the region present
papers on key topics which include “The need for Global Valuation Standards,
Global versus Local Valuation Practice, Business Valuation, Valuation of
Specialized Properties, Valuation of Green and Smart Buildings, New Accounting
Standards on Valuation and Real Estate Valuation – Challenges and Issues”.
Representative from Indonesia for
this congress is Mrs. Ni Luh Asti Widyahari. She talked about valuation on land
value capture of transit-oriented development to support public infrastructure
development in Greater Jakarta, Indonesia.
She said, the congestion in
Greater Jakarta leads to a trend of property development that is oriented and
integrated with public transportation, known as TOD (Transit-Oriented
Development). It increases the capital gain received by developers based on an
increase land value that cannot be separated from its connection with the
transit station. This additional revenue can be used to finance public
transportation, called Land Value Capture (LVC). Like any funding source, LVC
poses challenges. There is no standard yet to determine the contribution of LVC
in Indonesia. It’s important to valuers to determine the contribution by: 1)
identifying some factors that influence the land value by analyzing the link
between transport and land value, and 2) creating a mechanism of contribution calculation
by land valuation.
She also explained the approaches
used for the LVC contribution calculation, there are: 1) literature review of
baseline context and some factors that influence the land value associated with
transport investment, and 2) valuation approaches by calculating the residual
land value for development, assessing the probable level of profit, or
establishing a cost ceiling from construction. These LVC valuation techniques
are able to calculate the contribution of the increase of land value to
generate funds which can be used to support financial performance and generate
further benefits to public transportation development.
But, she emphasized the calculation
needs more attention: 1) It is important to incentivize the land owner with
reasonable rate of return or development will falter, and 2) The pattern of
development and land use opportunities for residential will affect income
streams and different locations and values.
Asti Widyahari
Valuer
asti.mbpru [at] gmail.com
