Residential Property Market of Indonesia; Government Relaxes Requirements for Foreign Buyers
Over the past two months or so, there has been some more-than-usual reporting in Indonesian media on whether the property market of Indonesia can become a future market for foreigner buyers. It specifically involves residential property in popular places like Bali, Batam, and Jakarta. Moreover, when foreigners can buy property, it may also attract more foreign investment in Indonesia’s property sector.
Paulus Totok Lusida, who is General Chairman of the Indonesian Real Estate Board (DPP REI), said that foreigners currently account for a very small percentage of total sales in Indonesia’s property sector. However, Lusida is convinced that residential property could become an interesting market for foreigners in the future. Moreover, the presence of many foreign buyers would cause a big domino effect. He added that DPP REI has completed a guidance book for foreigners who want to buy property in Indonesia that will soon be released.
Meanwhile, Hendra Hartono, who is Chief Executive Officer (CEO) of Leads Property Services Indonesia, said there is great potential for foreign investment in property in Indonesia as the country’s economy is stable, while the investment environment is improving, including easier procedures to obtain licenses as well as tax incentives.
Based on recent data from the Investment Coordinating Board (or BKPM), foreign direct investment in Indonesia’s property sector reached a total of USD $7.6 billion in 2022.
Another reason why Indonesia is interesting for foreign property developers is that land is still relatively affordable in Indonesia when compared with land prices found in Singapore or Malaysia. And, another positive factor is that Indonesia shows rapid urbanization, while the population size is huge (Indonesia being home to 275 million people), and so demand should be strong.
Hartono added that infrastructure development has improved connectivity across the Archipelago, and therefore new areas too come on property developers’ radars.
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