Earlier this year, Indonesia entered into an agreement with Qatar to develop affordable housing for the country’s growing middle class. The Memorandum of Understanding (MoU), signed by Sheikh Abdulaziz bin Abdulrahman Al Thani, chairman of the Qilaa International Group, and Maruarar Sirait, Indonesia’s Minister of Housing and Settlements, marks a significant step in addressing Indonesia’s housing shortage. Under this agreement, Qatar will begin construction of one million apartment units after Eid, as part of President Prabowo’s ambitious plan to build 15 million new homes. The initial phase of Qatari investment, projected between $16 billion and $20 billion, will also support housing development in the new capital, Nusantara (IKN).
While this investment could help alleviate Indonesia’s 11-million-unit housing backlog, it is not without challenges. Three key obstacles stand in the way: the mismatch between Indonesia’s housing preferences and Qatar’s apartment-focused model, regulatory and infrastructure hurdles that could slow down the project’s implementation, and the need to integrate sustainability into the development process. Addressing these challenges will be crucial for the investment to succeed.
Cultural and Market Preference Challenges
One of the main hurdles Qatar’s investment faces is the difference in housing preferences between the two countries. In Qatar, high-rise apartment living is a common housing model, but in Indonesia, many homebuyers prefer landed houses. Apartments are often associated with a more urban, high-income lifestyle, whereas most middle-class and lower-middle-class Indonesians aspire to own individual homes with small yards. Many Indonesian families, particularly those in suburban and rural areas, prefer multi-generational living arrangements, where extended family members reside in the same household. This cultural preference for landed housing over vertical living means that high-rise developments may not immediately attract widespread demand. Additionally, there are concerns about space limitations, privacy, and a perceived lack of community integration in apartment complexes, further challenging their appeal among potential buyers.
This mismatch raises concerns about whether the project will be well-received by the target market. If buyers are reluctant to embrace apartment living, the success of the investment could be at risk.
Regulatory and Infrastructure Barriers
Beyond consumer preferences, regulatory and bureaucratic hurdles pose another challenge. Indonesia’s permitting process for large-scale housing projects can be slow and complex, often requiring multiple layers of approvals from both national and local authorities. This bureaucratic red tape increases the risk of delays, which could significantly impact project timelines and costs. Land acquisition remains a major issue, as legal disputes, unclear land titles, and lengthy negotiations with landowners often stall construction efforts. Moreover, inconsistencies in regional zoning laws can create additional barriers to development.
Infrastructure limitations further complicate matters. Many areas where affordable housing is needed lack adequate access to transportation, water, and reliable electricity. Poorly developed roads and public transit systems make it difficult for residents to commute, potentially reducing the appeal of new housing projects. Additionally, Indonesia’s electricity grid, particularly in rural regions, is not fully equipped to support high-density residential developments. Frequent power shortages and outdated infrastructure may hinder the efficient operation of modern apartment complexes. Without significant upgrades to roads, public utilities, and energy infrastructure, Qatar’s investment may struggle to deliver housing projects at the promised scale and efficiency, limiting its potential impact.
Sustainability Considerations
While the primary focus of Qatar’s investment is on housing affordability, integrating green building practices is crucial. Indonesia has already initiated efforts to promote sustainable housing through the Indonesia Green Affordable House Program (IGAHP), which aims to provide one million eco-friendly homes by 2030. The pilot project for IGAHP in South Sumatra has demonstrated that green housing can significantly reduce energy consumption and carbon emissions.
Given Qatar’s expertise in renewable energy—particularly in solar power—there is significant potential to incorporate sustainability elements into the housing projects. Qatar’s experience with large-scale solar farms, such as the Al Kharsaah Solar Plant, provides a model for integrating renewable energy solutions into residential developments. By partnering with Indonesia’s state-owned electricity company, PLN, Qatar could help install solar panels on apartment rooftops, implement battery storage systems, and introduce smart metering technology to optimize energy usage.
This approach would not only reduce long-term energy costs for residents but also contribute to Indonesia’s broader sustainability goals by lowering carbon emissions and decreasing reliance on fossil fuels. Additionally, the incorporation of water-saving systems and environmentally friendly building materials would further enhance the ecological benefits of these projects. If properly executed, this could help reduce long-term energy costs for residents and contribute to Indonesia’s broader net-zero emissions goal by 2060.
The Way Forward
To ensure the success of Qatar’s investment, Indonesia must address these challenges proactively. The government should streamline regulatory processes, simplify land acquisition procedures, and harmonize zoning laws to create a more investor-friendly environment. Additionally, efforts should be made to improve coordination between national and regional authorities to reduce bureaucratic delays. Infrastructure improvements, particularly in electricity and transportation, must also be prioritized to support large-scale residential projects. Upgrading public transit networks, expanding road access, and modernizing power grids will be essential to ensuring these developments are both accessible and sustainable.
Qatari investors should conduct market research to identify homebuyers’ preferences, guiding the adoption of hybrid models like low-rise apartment clusters with shared green spaces. Indeed, to align with local expectations, Qatari investors should incorporate community spaces, green areas, and flexible ownership structures—such as rent-to-own schemes and co-living arrangements for extended families—to make apartment living more appealing. These strategies bridge the gap between traditional Indonesian housing preferences and modern urban living while also enhancing affordability for middle-class buyers.
Furthermore, incorporating sustainable building practices, such as solar panels, energy-efficient construction, and water-saving technologies, will enhance the long-term viability of these housing projects. By leveraging Qatar’s expertise in renewable energy and integrating innovative solutions like smart grids and battery storage systems, these developments can reduce reliance on fossil fuels and lower utility costs for residents. Additionally, adopting sustainable construction materials and waste management strategies will contribute to reducing the environmental footprint of the housing sector, ensuring a greener and more resilient urban landscape for Indonesia’s growing population.
Qatar’s investment in Indonesia’s housing sector presents a significant opportunity, but it also faces considerable challenges. The success of the initiative will depend on how well it can navigate Indonesia’s unique housing preferences, overcome regulatory and infrastructure obstacles, and integrate sustainability into its development. If these issues are addressed, the investment could play a crucial role in reducing Indonesia’s housing deficit while also supporting green development. However, without careful planning and adaptation, the project risks failing to meet its intended goals. By tackling these challenges head-on, both Qatar and Indonesia can maximize the benefits of this partnership and create a more sustainable and inclusive housing future.
[Photo by Rafli Raihan on Unsplash]
Muhammad Zulfikar Rakhmat is Director of Indonesia-MENA Desk at Center of Economic and Law Studies in Jakarta.
Shafa Kalila Aryanti is Researcher at Center of Economic and Law Studies in Jakarta. The views expressed in this article are those of the authors.
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