Strategic Interaction Between the Agglomeration of High-Rise Buildings and the Economy of DKI Jakarta

Abstract

Vertical building development has become a strategic solution in accommodating the need for living and working spaces in DKI Jakarta with its land scarcity issues. As a response to the increasing demand for space, the government and experts constantly update the strategic policies for high-rise building development while the developers plan and construct more buildings for business purposes. This study aims to investigate the economic and non-economic factors that affect the development of high-rise buildings and the relationship between the agglomeration of high-rise buildings and the tertiary sector GRDP. To achieve these objectives, we primarily use the data of the number of floors of high-rise buildings collected from Emporis. Other variables are retrieved from the secondary data collected from the official data of the DKI Jakarta government. Pooled OLS estimation of panel data in the 2007-2018 urban village level proves that the strategic interactions occur during the construction of commercial-office and residential high-rise buildings in DKI Jakarta. The estimation result at the city level provides evidence that the presence of commercial-office high-rise buildings in DKI Jakarta generates effective density as it contributes positively to the tertiary sector GRDP. This study provides a new perspective in examining the relationship between the agglomeration of the economy and high-rise buildings in third-world cities, in this case, DKI Jakarta, by using quantitative research through econometric models.