Market mechanisms and low-income housing patterns in the context of urban growth: study of developer behaviours in Bandung Metropolitan Area Indonesia

The private sector dominates low-income housing provision in both the Global North and South. Compared to the Global North, formal low-income housing in the Global South typically manifests as low-density urban sprawl. This study investigates how the layered motivations and strategies of developers shape low-income housing development patterns in the Bandung Metropolitan Area, Indonesia. Semi-structured interviews with 21 developers—14 focused on subsidised housing and 7 on market housing with low-income housing experience—reveal a mix of motivations that combine economic pragmatism and socio-political considerations shaped by local embeddedness and institutional settings. Despite lower investment returns, low-income housing is perceived as a viable investment due to strong market demand, government support, and personal values. Developers’ continued preference for building single-family homes represents a rational and pragmatic response to cultural preferences, regulatory conditions, and capital constraints. Amid growing urban land scarcity, developers pursue increasingly distant land parcels and employ relational strategies to sustain this development model. As a result, multifamily housing remains marginalised, while developers’ decisions reinforce the trend toward smaller single-family units built farther from urban centres, exacerbating the spatial mismatch between housing and employment opportunities. This study demonstrates how market mechanisms operating within immature institutional frameworks can intensify spatial inequities rather than advance the social objectives of low-income housing. The research suggests that examining land and housing tenure systems can provide valuable insights into the persistence of low-density sprawl in such housing developments. We also recommend policy makers adopt narratives of higher-density housing to challenge such entrenched practices.