Simulating the impact of developers’ capital possession on urban development across a megacity: An agent-based approach

Abstract

The spatial decisions of land developers are known to play a significant role in driving urban expansion into previously undeveloped areas. This is especially the case in developing country contexts. Using the Jakarta Metropolitan Area as the case study context, we model the impact of capital possession by land developers on the location selection and unveil the way in which this exerts an effect on the spatial patterns of urban development. Through a hybrid agent-based and microeconomic modelling approach, different scenarios of capital possession and loans are simulated. Results show that areas with high values of return and low development costs are most likely to emerge as targeted locales. In order to result in measurable impact on the Jakarta Metropolitan Area urban footprint, developers need to possess a minimum capital investment of US$375 m allied with a 75% lending capacity. Results also reveal that the impact of the large land developers – those with in excess of US$750 m in capital that bring higher levels of lending leverage – extend the urban footprint in more predictable ways compared to land developers with less capital and lending capacity. Our study demonstrates the value of adopting an agent-based model to explore how human decisions at the individual scale can influence the emergence of new urban forms in a rapidly developing metropolitan region.