How to Make Money on Real Estate Investments in Indonesia?

How to Make Money on Real Estate Investments in Indonesia?

Investing in real estate in Indonesia is becoming increasingly popular. This can be easily explained: the return on investment is high, and prices are still affordable. The Asia-Pacific region is the area showing the most optimistic economic growth rates, which allows you to earn money on real estate in Indonesia.

The Indonesian authorities are supportive of overseas investors and do not restrict expats from purchasing housing and making a profit from renting it out. Unfortunately, the national visa policy does not allow you to obtain a residence permit through investment, but you may apply for a golden visa if you have a deposit of over $350,000. Even if you do not plan relocation, the opportunity to live in another country legally is still a nice perk.


Real estate market in Indonesia

The country has significantly improved its macroeconomic and structural policies over the past 15 years. This is driving up home prices due to a high population growth rate and rapid urbanisation. The state’s GDP derived from real estate activities has been gradually increasing since 2014.

Even COVID-19 has not had a significant impact on the demand for property in Indonesia. Home prices were down only 0.2% in 2020, although sales during that period dropped significantly due to border closures. With the recovery of the tourist flow, the situation has improved, and today not only residents are interested in local homes.

Market outlook in Indonesia

The island nation has a lower inflation rate, less rapid rise in interest rates, and less currency devaluation compared to the US and European markets. The property market is expected to show a growth rate of 5.8% per annum over the next 5 years. It will continue to grow in the coming years thanks to the overall economic upturn and the scaling of the tourism industry.

Best areas in Indonesia for investment

For those interested in how to earn on real estate in Indonesia, the location of a future acquisition remains one of the most important aspects. The more sought-after the city, the higher the return. It is hard to describe the best cities in Indonesia for investment in one article, since the republic covers over 1,000 hectares. Of the 17,000 islands, almost half are uninhabited. However, the rest have plenty of attractive locations. Foreign investors can find promising, affordable apartments and houses in many regions. Among them, it is worth considering territories with well-developed infrastructure or those with access to the sea.

  • The island has become a kind of Indonesian icon, beckoning with luxurious beach views.
  • The capital is the largest city with well-developed infrastructure and its economic and cultural centre.
  • The second most populous city is another popular tourist destination, offering both budget-friendly and premium options.
  • The popular resort is a worthy competitor to Bali.
  • The island in the eastern part has everything you need to live in comfort: shops, restaurants, medical facilities, and schools.
  • The capital of Central Java offers a wide range of both affordable and upmarket options.

This list can go on and on.

Real estate prices in Indonesia

Home prices are growing steadily. The dynamics of local property appreciation are as follows: 3.5% in 2017, 2.95% in 2018, 1.77% in 2019, 1.43% in 2020, and 1.47% in 2021. So far, the market prospects in Indonesia are quite favourable. Apartments start at an average of $150,000. There are cheaper and pricier options. The final cost of a unit directly depends on several aspects:

  • Type and area. Villas are more expensive than apartments, although things are not as straightforward. A house costs an average of $500,000, but the same amount can also buy a spacious multi-bedroom apartment.
  • The most expensive housing is on the seafront and in popular tourist locations.
  • The higher the class, the more additional amenities the owner has, the higher the cost.

In general, there are quite a lot of offers, and they are aimed at different budgets. So, can you make money investing in real estate in Indonesia? You sure can, as flexible pricing allows everyone to find the optimal option.

Possible earning strategies

There is no doubt about whether it is possible to earn money by buying real estate in Indonesia today. You just need to decide on your earning strategy. You may choose to invest money in an off-plan property and resell it later. The difference in price may reach from 20 to 100%; the final profit depends on the unit’s prestige and location. Another advantage of such a purchase is the possibility of using an instalment plan. It is the optimal solution in case of insufficient budget, since it is problematic to get a mortgage in Indonesia as a foreigner.

This approach comes with a certain risk, since there is no legislation in the country that would protect the rights of investors in off-plan projects. However, developers themselves are maximally interested in delivering projects in time and making a profit, so any risks can be minimised. You just need to choose a company with a decent reputation.

The second strategy involves receiving rental income in Indonesia. Rents are rising along with home prices. In Bali, they increase by an average of 15–20% per year. The average occupancy rate of housing stock over the year is 65–80%. Thus, the payback period is 5 to 7 years.

Long-term rentals in Indonesia

Local housing is in demand throughout the year. Many foreign nationals come to the island nation to have a winter escape, preferring the warm climate to European cold. A convenient visa regime allows you to stay in the islands long-term. The authorities are currently discussing the possibility of introducing a special digital nomad visa, which will appeal to remote workers and help attract overseas investors.

Short-term rentals in Indonesia

In popular tourist areas, the return on housing is up to 10%. To run a rental business in Indonesia, you do not have to permanently reside in the country. Local agencies provide services to landlords, taking care of tenant search and property maintenance in Indonesia. In some residential complexes, units are sold with a fixed income rate. With this approach, the owner receives a stable profit throughout the year.

How to choose a promising property in Indonesia

There are a number of things to consider when choosing an apartment or villa in Indonesia:

  • If you want to save as much as possible on your purchase, investing in off-plan development is more profitable. If we are talking specifically about investing, rather than about picking a house to relocate, the waiting period will not be of fundamental importance. However, it will give you an opportunity to save at least 20% of the cost.
  • To build a successful rental business, it is important to purchase a unit appealing to visitors to the country. Coastal homes are in great demand. Quality also matters. Apartments in new buildings or houses in new residential complexes are preferable, as they meet modern comfort requirements.
  • The safety and success of the transaction largely depends on the qualified assistance of the broker. You should not try to save on an agent’s services, since purchasing homes abroad requires knowledge of local legislation and market practice.

On our website, you will find listings from developers and agencies. The regularly updated database contains different types of property. Start choosing a villa or apartment in Indonesia right now!

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