Report from AVA Congress 2017: Asti Widyahari, Indonesia's Representative, Talked about Land Value Capture Valuation

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

Report from AVA Congress 2017 

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