Investing in real estate in Indonesia: a good idea?

The last few years have been times of uncertainty that the world as a whole has rarely or never experienced before, continuing to recover socially and economically from the blow of the COVID-19 pandemic and the conflict between Russia and Ukraine. Entire countries and communities are living in a state of change as we wait for the dice to land, when they finally stop rolling, before we make any life-affirming or transformative decisions. While we have all been affected to some extent by the events of recent years, some have suffered more than others. Economically, we have faced a sharp rise in prices over the past few years, an increase in unemployment, wage freezes or even cuts, depletion of savings, and a metaphorical tightening of belts like never before in memory. Now, as the first signs of global economic recovery begin to break through the clouds, we can finally turn our attention to personal matters and consider how to take steps for financial protection again. In previous editions, we explored the financial world, but another sector traditionally considered a "good investment" is the real estate market. Indonesia has seen significant real estate development in recent years, particularly in the rapidly growing metropolis of Jakarta. This raises several questions: why is such rapid expansion happening, and is it good overall? Also, is investing in real estate accessible and safe? Let’s address these questions in order.

Construction of new homes and increasing housing availability

Over the past thirty years, changes have occurred at a rapid pace and intensity, leading to the disappearance of previously untouched species across miles and miles of open fields, which have been transformed into residential areas and complexes aimed at various markets based on price and wealth. While some may mourn this state of affairs, others see the increase in housing as a necessity and a sign of progress.

The cost and investments in real estate in Indonesia

The cost of residential real estate in Indonesia varies considerably (as in most countries), but overall the country is considered one of the most inexpensive markets in Asia. This includes the location, size and age of the property, and you are of course strongly advised to do thorough research before making any commitment. The leader in terms of population in the Indonesian archipelago is the island of Java and is therefore the most sought after for real estate, but prices can vary greatly from province to province. This also applies to purchase price, rent and land per square meter.

Popular places for real estate investment

The most popular areas in Indonesia for real estate investment include Jakarta, Bali, Balikpapan, and Lombok. Jakarta, as mentioned, is attractive to investors due to the city's expansion. Bali is known for its tourism and attracts both investors and tourists. Lombok offers a less crowded alternative, while Balikpapan has opportunities for business and tourism.

The process of acquiring real estate in Indonesia

The process of purchasing real estate in Indonesia is similar to other countries and is usually done through mortgage schemes with repayments over five to twenty years. There are still a significant number of people who prefer to rent rather than buy, which of course opens up the market for those who want to purchase property for rental income.