Today, many investors are considering investing in Indonesia for foreigners. The country's economy is showing stable growth, and the number of real estate transactions is increasing every year. Considering the country's terrain, there are not many available land plots suitable for construction. This, combined with the resort-oriented nature of the country, maintains a high apartments and houses demand.
One of the most popular regions for real estate investing Indonesia is the island of Bali. It is known with its beautiful surfing beaches, hilly tropical forests, and famous rice fields. The island has a well-developed infrastructure. Tourists come here to relax and enjoy rejuvenating spa treatments, delicious and nutritious food, clean air and a tranquil atmosphere. A large English-speaking community resides on the island. The popularity of Indonesian resorts is attracting investors from around the world to the local market.
- Why invest in Indonesia properties?
- Key reasons to invest in Indonesia real estate
Why invest in Indonesia? Purchasing apartments or villas in Indonesia is a good safe investment option as property values are increasing. In addition, the Indonesian government aims to attract foreign capital to contribute to economic growth and reduce inflation in the country.
Indonesia has visa programs for wealthy investors and retirees. In 2021, a decree was issued allowing foreigners to own private property in certain locations. This stimulated increased housing demand among citizens of other countries. Let's explore 10 reasons to invest in Indonesia!
Are you thinking of is it safe to invest in Indonesia real estate? One advantage is the ability to register the property under private ownership. There are two main requirements to register ownership as a foreigner.
- First, the property must be located in a specially designated free economic zone, free trade zone, industrial zone or tourist zone. Foreigners can also purchase property in Indonesia with an HP or HGB title and houses on land with an HP title.
- Second, the value of the property must be at least the government-set threshold. In Bali, the minimum cost of a flat is $140,000 and $351,000 of a house. Central Java has limits of $70,000 on a flat and $210,000 on a house, while Jakarta has limits of $210,000 on a flat and $702,000 on a house.
If you're looking for a flat in an area where formalize ownership, it doesn't mean that you should give up on the purchase. How to invest in Indonesia in these areas? In such cases, you can acquire the right to long-term use. If you are an investor planning to earn rental income, this is not a bad option, as the right of use is initially granted for 30 years, with the possibility of two extensions: 20 and 30 years. Considering the good profitability over such a long period of time, the apartments can fully pay off. Moreover, such properties can be sold or bequeathed.
High returns are one of the main reasons to consider investing in Indonesia. In the first half of 2023, the number of applications to purchase local real estate increased by 47%. Much of this growth is attributed to the influx of foreign investment.
Half of the foreign buyers of houses and apartments in Indonesia prefer Bali. Over 80% of the island's GDP comes from tourism. Thanks to the warm climate, the influx of tourists is practically continuous. The island attracts around 6 million tourists a year, maintaining a consistently high housing demand in various price ranges.
How to invest in Indonesia real estate to maximize returns? Choose apartments or villas in well-known resort areas, close to the sea and close to infrastructure and natural attractions. In popular coastal villages and towns on the island, such as Sanur, Canggu, Seminyak, Berawa, Ubud and Umalas, the profitability of properties can reach 12–15% per year. This is considering that the average gross yield of real estate in the country was 7.55% in the third quarter of 2023.
The Indonesian residential housing market is currently in a growth phase. Prices have not yet reached their peak and continue to rise gradually. The interest in the local housing market among investors is largely due to the democratic cost compared to similar properties in Asian countries, the UAE or Europe.
The average cost of a 1-bedroom apartment is $73,200. In resort areas, prices are higher due to increased housing demand among vacationers. Flat prices in Bali range from $75,000 on small units to $250,000 on elite residences. Villa prices start at $250,000.
The cost of real estate is influenced by several factors, primarily location, total area, the presence of amenities on the condominium grounds, and other nuances.
The country is experiencing stable real estate appreciation. According to the results of the Market Dynamics Survey in the second quarter of 2023, the price growth index increased to 1.92% compared to 1.79% in the previous year.
The country's stable economy and the active recovery of the tourist flow ensure the continued growth of property values.
To determine which country's real estate is profitable to invest in, it is worth examining economic indicators. Data in 2022 shows that buying local apartments and villas is reasonable. The country has one of the lowest inflation rates at 2.28%. Meanwhile, the GDP has grown by 5.1%. Tourist arrivals have almost returned to pre-pandemic levels, reaching 5.5 million annually.
A warm climate throughout the year, stunning beaches and calm seas ideal for surfing and swimming, a variety of exotic fruits, magnificent nature, and affordable food and accommodation prices - all these factors attract tourists from around the world to Indonesia's resorts. The country is actively developing, with new infrastructure projects and modern residential and commercial complexes being built. Overall, this makes it a promising investment destination.
It is possible to purchase apartments or houses in Bali or any other Indonesian island remotely. Typically, real estate agencies, brokers, or even the developers themselves offer remote housing purchase services. This option is convenient for investors who want to invest money safely but do not want to spend time traveling abroad, independently selecting properties and handling paperwork. The purchase process is carried out on the basis of a power of attorney.
Is it profitable to invest in Indonesian real estate or is it better to open a bank account? Today, many developers offer investors the option of a ready-made rental business with stable passive income and the opportunity to stay in a personal apartment annually or several times a year. This investment option is no less lucrative and to some extent even more reliable than a bank account, especially for those who want to diversify their portfolio.
The developer's ready-made business option looks like this:
- The investor buys apartments in a residential complex or guesthouse managed by a hotel company or the developer itself.
- A contract is signed whereby the management company takes full responsibility for the maintenance and rental of the housing and the owner receives income.
- The income options can vary: a fixed percentage of the price of the apartment, a share of the revenues, etc.
- An additional bonus for the investor is the opportunity to live in the apartment during a certain period of the year.
Payment can be made in various ways:
- Bank transfer through a non-sanctioned bank;
- Using cryptocurrency.
The Indonesian real estate market offers a wide range of properties. Modern apartments and studios are part of residential complexes. The latter often resemble multi-apartment buildings and typically have a lobby with a concierge, swimming pool, gym and other amenities depending on the characteristics of the residential complex.
Similar villas and townhouses are often grouped together in gated communities. If you are an investor looking for the most profitable investment, a good option is to consider properties that are still under construction. They can be purchased in installments at an attractive price, and by the time the building is ready for occupancy, the cost of the apartments usually increases by up to 30% from the original price.
Buyers can find the right apartment for investment on our website. Using a convenient search system, you can quickly find the apartment or house you want. Each listing includes photos, a description of the property, its location and the seller's contact information. We only work with verified agents and developers and do not charge hidden fees to our clients.