Whether you’re looking for a second property to use as a holiday home or you’re looking to move home altogether, Indonesia is a very desirable location. It is Southeast Asia’s richest and biggest country in terms of population and is set to be a new powerhouse in the coming years. Plus, with the local government trying to increase foreign investment, laws have been relaxed, and the country is opening up to allow more foreigners in over the next decade or so. Because of this, now could be the perfect time for you to bag yourself an Indonesian property.
But how do you go about doing this? Well, that’s exactly what this guide is going to tell you. Over the next chapters, we are going to look at the kinds of properties you could buy, the best places to invest your money and living costs in comparison to Australia. Read on to find out more.
Can foreigners buy property in Indonesia?
First, let’s look at whether it is even possible to buy property in Indonesia.
It used to be much harder to break into the real estate market in Indonesia, and for a long time, it had been decreed that land and property could only be owned by citizens. But as we said, the government are taking small steps to try and make this easier for ex-pats.
Part of this has involved new rules and regulations, and in the late 90s, new laws were introduced that permitted foreigners to purchase apartments and office space in Indonesia, but only if the building has a strata title status. So essentially, you could own the apartment or office space but not the land that it stands on.
Since then, more laws have been put in place to allow foreigners to own apartments through 25/30-year lease agreements; these fall under ‘right to use’ certificates known as hak pakai.
That said, leases held by foreigners do not come with the same protections as Indonesian citizens, which can make them harder to finance and secure mortgages on.
It’s also worth noting that foreigners still cannot buy a plot of land in Indonesia.
What kind of property could you buy in Indonesia?
Land is no matter if you’re just looking for a property, and as we now know, you can buy those. There are several different types of property you might wish to purchase, and these include:
- Houses that are not subsidised by the government
- Apartments, condos or office spaces with strata titles
- Vacant land as long as you get the right agreements in place with the local title owner
This may be the current list of available properties, but with the government hoping to attract investment, these rules may change again in the future.
Where should you buy property in Indonesia?
Indonesia is a big country and is made up of a chain of lots of little islands, so how do you’d decide where to buy your property? Well, to help you narrow it down, we’ve put together a list of some of the most popular and most promising places across the nation. These include:
Bali
This is one of the most visited and talked about resort islands in Indonesia. It is one of the more expensive places to live there, but this is because it tends to be cleaner and more family-friendly. Some areas to invest in include Nusa Lembongan Island, Lombok and the Gili Islands.
Jakarta
Jakarta is the capital of Indonesia, and it is the nation’s financial centre. There is currently a lot of investment being put into Jakarta, making it very up-and-coming, and also a very exciting place to live.
Surabaya
Surabaya is the second biggest city, and it is a hub of commercial activity; in fact, it has recently started to outperform Jakarta in terms of economic growth. It is ideal if you’re looking for cheaper real estate.
Bekasi
Lots of people choose to live in Bekasi because there is a lot of investment being put in right now. That and its proximity and easy access to Jakarta. If you’re looking for long-term investments, this could be the best place.
Medan
Finally, there is Medan which is the fourth-largest city and is located in Sumatra. It is one of the most important cities from a commercial point of view and also has good proximity to Singapore and Malaysia. Its promising property market, as well as new shopping centres, condos, hotels, etc., make it an interesting place to invest.
The cost of property and living in Indonesia
The cost of property in Indonesia is not much different than that of Australia, depending on the area you choose to live in. As of 2020, the average property in Indonesia cost around 14.97 million Indonesian rupiahs per square meter, that’s equivalent to around AU$1250 per square metre. Of course, some areas are more expensive to live in than others.
When compared to Australia, this is not a huge difference. In 2019 the Australian average was AU$1393 per square metre.
That being said, there are some other costs you need to take into account when buying a property in Indonesia. These might include:
- Transfer tax
- Legal fees
- Registration fees
- Luxury tax (if the property costs over 20 billion Indonesian rupiahs)
Therefore, you need to take these additional costs into account when setting a budget for your property.
You may also be required to pay holding fees during the time you hold the property, such as withholding tax and annual property tax.
In terms of utilities, food, transportation and other living costs, Indonesia is cheaper than Australia, so you could be saving yourself money in the long run.
In summary
Indonesia is set to grow so much in the coming years and is a very promising place to live. That said, there is still a lot that needs to be done to make buying a property easier for foreigners looking to relocate.
However, it is not impossible to find the right property in the right place; you just need to do some research and ensure that you get all the right certificates and legal support behind you.
