Leveraging land value capture for coastal infrastructure financing: a case study of Kenjeran, Surabaya

Abstract This study explores the potential of land value capture (LVC) as a financing mechanism for infrastructure development in Kenjeran, a coastal region of Surabaya, Indonesia. The development trajectory of Kenjeran gained momentum following the construction of the Suramadu Bridge, which catalyzed urban expansion and led to a substantial rise in property values. Subsequent major infrastructure investments, including the Suroboyo Bridge, beach revitalization projects, new cultural landmarks, enhanced transportation networks, and coastal conservation initiatives, have further reshaped Kenjeran into a dynamic hub of connectivity, tourism, and sustainable development. This research posits that LVC mechanisms offer a viable approach for mobilizing resources by leveraging the appreciation in land values driven by these infrastructural advancements. Employing a mixed-methods approach that integrates descriptive quantitative analysis, geographic information systems (GIS), empirical market assessments, and a comprehensive literature review, the study investigates recent land value trends in the Kenjeran area. Findings reveal that market-based land prices are up to three times higher than official government valuations, underscoring the untapped potential for implementing LVC instruments such as land value taxation, transfer of development rights, land readjustment schemes, and density bonus incentives to finance future coastal infrastructure investments.