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State-owned construction company Perum Perumahan Nasional plans to build three housing estates worth a combined Rp 14.5 trillion ($1.6 billion) near two of the country’s largest cities.

Himawan Arief Sugioto, president director of the state firm also known as Perumnas, told the Jakarta Globe last week that the company hoped to target middle-income buyers by offering small- and medium-sized houses near Jakarta and Surabaya.

“The middle class is growing, and so is demand for residential areas located near cities where people work,” he said on Friday. “These houses will be built in integrated areas near toll roads in Jakarta and Surabaya.”

Units are expected to sell at an average of about Rp 200 million.

Developing Kota Mandiri Maja will be the company’s biggest project, Himawan said. The project, to be built on 11,000 hectares of land in Banten at a cost of Rp 6.5 trillion, has been on hold for 12 years because of a lack of funding and interest, he said.

“Perumnas and the Housing Ministry will go to Beijing next week to court Chinese investors to help us finance this project and maybe other projects as well,” he said, adding that construction on Kota Mandiri Maja was expected to start in 2014.

Finding funding is not the only hurdle facing Perumnas, though. It has nothing to offer investors other than land at this point, Himawan said, as the company continues negotiations with the Public Works Ministry to build roads that will connect the estate to the Jakarta-Merak toll road.

Perumnas also plans to construct the Kota Baru housing estate in Pulo Gebang, East Jakarta. Construction on that project could begin as early as this year, Himawan said, after the company won approval from the Public Works Ministry for direct access to the toll road.

The Kota Baru project will be built on 40 hectares of land at an estimated cost of around Rp 3.5 trillion, he said. “We’re still offering this project via a public-private partnership scheme. Our target is to start construction in the second half of this year.”

In addition, Perumnas is looking at 450 hectares of land in Gresik, near Surabaya, as a potential location for a Rp 4.5 trillion housing project scheduled to begin construction in 2012.

However, Himawan said, the projects are being hampered by familiar problems such as land acquisition disputes, squatters and a lack of infrastructure.

“We’re still negotiating land prices on several sites,” he said. “While we’re negotiating, we also have to deal with squatters occupying the government’s land. And infrastructure, such as roads connecting the housing estates to the main toll road, is still nonexistent.

“All the related stakeholders, including the Housing Ministry, the Public Works Ministry, the State Enterprises Ministry and local administrations, need to coordinate to resolve these problems or else the projects might not take off.”

Elsewhere, the coordinating minister for the economy, Hatta Rajasa, said on Friday that the government would build 36-square-meter houses for the poor at Rp 26 million each.