Investor's Paradise: Indonesia's Real Estate Allure for International Buyers


Indonesia's flourishing real estate market is increasingly becoming a focal point for foreign investors, with hotspots like Batam, Jakarta, and Bali drawing particular attention. The ease of property acquisition, requiring only a passport, visa, or residence permit, is making the Indonesian property market more enticing than ever.

Ignesjz Kemalawata, Vice President for Legislation and a prominent figure in real estate organizations like FIABCI, shed light on the factors driving this trend. Jakarta, as a global city boasting robust infrastructure, is alluring for foreigners in search of investment opportunities. Bali's reliance on tourism elevates its desirability, and Batam's strategic proximity to Singapore has transformed it into a hotspot for buyers from the city-state.

Notably, countries such as Singapore and Australia have expressed keen interest in the Indonesian property market, demonstrating diverse preferences that range from flats and apartments in Batam to apartments in Jakarta and villas in Bali.

However, navigating the foreign property purchase process does present certain administrative challenges. Efforts are underway to align tax identification numbers with passport numbers, particularly in regions like Batam and Bali.

While foreign ownership of property can bring about economic growth, employment opportunities, and increased tax revenue, it's imperative to acknowledge the existing limitations. Foreigners can typically own landed houses, provided they meet specific criteria outlined in the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency's Regulation Number 18 of 2021:

1. Landed houses must adhere to statutory provisions, especially in the luxury house category.
2. Each individual or family is limited to owning one plot of land, with a maximum area of 2,000 square meters.
3. Additional land or larger areas may be permitted with ministerial approval, subject to certain conditions.

Moreover, the types of flats available for foreign ownership are generally commercial flats, as specified in Article 185 of the same regulation. These flats must be constructed on land with specific usage rights, such as Right to Use or Right to Build on State Land, Right to Use or Right to Use Building on Land, Right to Management, or Right to Use or Building Use Rights on Freehold land.

Finally, Article 187 paragraph 2 of the regulation states that foreigners can purchase both new and old houses/units, with the price determined by a Ministerial Decree.

In summary, foreign property ownership in Indonesia is indeed feasible but is subject to specific regulations designed to strike a balance between reaping economic benefits and safeguarding the nation's interests. Indonesia's real estate market continues to beckon foreign investors seeking opportunities in one of Southeast Asia's most vibrant economies.

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