From Jakarta to Bali: Why Invest in Real Estate in Indonesia

From Jakarta to Bali: Why Invest in Real Estate in Indonesia

Indonesia is the world’s fourth-most populous country, a nation of dreamlike sunsets, heavenly beaches, and the best waves for surfing. The country is popular among tourists, expats and investors and has apartments, villas and hotels to cater to all tastes. Read on to learn how a foreigner can buy real estate in Indonesia, which projects are best for investors, and the pitfalls to be aware of.

Indonesia’s Real Estate Market

Indonesia is one of the fastest-growing economies in the world. The country’s GDP increased by 5.3% in 2022 due to unprecedented demand for natural resources. Meanwhile, inflation in Indonesia is relatively low, at just 5% in 2022. The country's authorities expect Indonesia to become one of the top five world economies in the next 20 years.

The country’s real estate market, as in other countries, suffered during the pandemic. However, it was experiencing a strong recovery by 2021, although the intensity of growth varied by region. Indonesia is an island state, so the real estate market here is very heterogeneous: the regions differ greatly in terms of the pace of life, population density and economic activity. 

For example, in Jakarta, the price growth in 2022 was insignificant: up to 0.6%, while there was a slight revival of demand. Meanwhile, property prices in Bali rose by as much as 15%. According to the Rumah agency, Indonesia's overall property price index showed an increase of 7% for the first quarter of 2023, compared to the same period of 2022. The reason for such a huge difference is that housing prices in Jakarta are higher than in resort areas, and therefore grow more slowly. On the other hand, after the Covid-19 restrictions were removed, the resort areas were the first to return to growth. However, despite an ongoing restoration of the island’s infrastructure, Bali’s tourism industry has still not fully recovered: in 2022, two million people came to the dream island, compared to six million in 2019. Investors are increasingly looking at the resorts of the island state amid a weakening currency and a simplification of the rules of real estate purchase for foreigners.

Vaduk Melati, Central Jakarta, Indonesia. Photo: Dias ^ (Unsplash)

Can Foreigners Buy Real Estate in Indonesia?

The first thing every investor should know is that only citizens of the country can buy real estate and have full ownership, Hak Milik (HM). This is how the authorities protect the market from large foreign investors.

There are several types of real estate ownership for foreigners in Indonesia, but they all have a limited timeframe. For example, to obtain construction permission (Hak Guna Bangunan, or HGB), a foreigner has to start a company PT PMA (Perseroan Terbatas Penanaman Modal Asing) or be a co-founder of a new company. They are then issued with a special type of business licence. Holders of this licence have the right to the long-term lease of land for construction, up to 40 years with the possibility of prolongation, and are also entitled to manage the real estate built on it. Upon the expiration of the lease, if it has not been extended or re-registered to another company, the land goes back to the original owner with all buildings.

An enterprise with any foreign shareholders is considered an international enterprise in Indonesia. Two partners, one commissioner, and one director are sufficient to start a PT PMA company. The minimum share capital is 10 billion Indonesian rupiahs ($650,000). 

Foreign buyers who do not plan to construct new buildings have the following options for real estate ownership:

  • Hak Pakai is a type of property ownership for those who plan to reside permanently in Indonesia. The buyer has the right to use the real estate, but not rent it out. You will need a long-term work visa (KITAS) to take advantage of this option. A property is leased for up to 25 years with the possibility of prolongation for up to 100 years. You can only buy one property as Hak Pakai. At the same time, if you leave the country, you have to transfer the right to land or housing to another owner. Otherwise the authorities have the right to seize the property without compensation.
  • Hak Sewa is a classic leasehold, the most popular type of property ownership among foreigners in Indonesia. The lease period is 30 years with the possibility of prolongation for up to 80 years in total. You will be able to rent your property out for short- or long-term or transfer the leasehold right to a third party.
  • Ownership through a representative. Until 2015, this form of ownership was the only one available to foreigners. An Indonesian citizen is the owner of the land or real estate and they conclude an agreement with the buyer recognising the foreigner as the actual owner. However, it is almost impossible to completely eliminate the risk that accompanies this kind of contract, particularly the risk of fraud. There have been cases when the Indonesian end owners got into debt and the property was confiscated.

Littlefinger Beach, Bali. Photo: Iswanto Arif (Unsplash)

Foreign citizens are often not accustomed to the leasehold type of property ownership. However, if you look at real estate as an investment rather than a place to live and pass on through the generations, 30 years of ownership is more than enough.

Since the property title system in Indonesia is rather complicated, investors usually hire consultants or real estate agents. All properties in the Indonesian listing on Housearch are accompanied by experienced real estate agents.

Real Estate Value Limitations for Foreigners

Lack of full ownership is not the only restriction on property ownership for foreigners in Indonesia. In addition, authorities do not allow foreign citizens to buy cheap real estate, this is intended for the local population. The minimum cost varies depending on the region and type of property.

Region in Indonesia
Minimal house price
Minimal flat price
5 billion rupiahs ($325,000)
3 billion rupiahs ($195,000)
5 billion rupiahs ($325,000)
2 billion rupiahs ($130,000)
Eastern Java
5 billion rupiahs ($325,000)
2 billion rupiahs ($130,000)
Western Java
5 billion rupiahs ($325,000)
2 billion rupiahs ($130,000)
Central Java
3 billion rupiahs ($195,000)
2 billion rupiahs ($130,000)
Northern Sumatra
2 billion rupiahs ($130,000)
1 billion rupiahs ($65,000)
3 billion rupiahs ($195,000)
1 billion rupiahs ($65,000)
5 billion rupiahs ($325,000)
2 billion rupiahs ($130,000)
Western Nusa Tenggara
3 billion rupiahs ($195,000)
1 billion rupiahs ($65,000)

The government constantly revises the minimum price limits for foreigners. Prices in the table above were released in August 2023.

Popular Areas in Indonesia for Buying Real Estate

When choosing where to buy property in Indonesia, you should take into account that the regions of Indonesia differ in terms of population composition, pace of life, and cost of living.


The capital is located on the northwest coast of the island of Java. The population of the metropolitan area is over 34 million people. Formally, Jakarta is not even a city, but rather a province, consisting of five municipalities and one district. The first underground line in Jakarta opened in 2019, but buses remain the main means of transportation here. Therefore, residents carefully consider the infrastructure of the area where they plan to live: shops, schools, hospitals, and distance from work. The vast majority of Jakarta's population is Muslim (85%), so the city observes all religious traditions.

Floods are common in Jakarta, especially its northern and western parts. This is such a serious problem that the authorities are even considering moving the capital to another location. Although the airport is located in the western part of the city, investors tend to focus more on the business and premium quarters of the centre and southern part of the city. Here you can find multi-level apartments, townhouses and luxury villas. 

Property rental yield is around 5%, in the southern part of the capital this figure reaches 7%. Real estate prices there are also much higher than in other municipalities. Prices per square metre in Jakarta start from $1300, but it's hard to find options cheaper than $2600 in decent areas. It is also quite difficult to make money on real estate resale in Jakarta: you have to study the market of the metropolis very well to profitably invest in a project.

Jakarta. Photo: Muhammad Rizki (Unsplash)

Western Nusa Tenggara

This is a picture-postcard province in the Lesser Sunda archipelago and the most well-known islands here are Lombok and Sumbawa. The administrative centre is the city of Mataram on the island of Lombok. West Nusa Tenggara is basically a resort and the infrastructure can be rather poor, but the islands are known for their beaches, surfing spots, and natural attractions. There is currently a high level of investment in hotels in this region and you can find villas and spacious luxury flats in the Cocana Resort. Or you can invest in the luxurious Kuara boutique resort with spacious ocean-front houses, a spa, stables, and delicious local cuisine.

It is not always easy to foretell the project profitability in the region, since it tends to depend on the occupancy rates on Bali, which neighbours Lombok. Many surfers prefer to choose Lombok as an alternative to the overpopulated Bali. 

Tanjung An Beach, West Nusa Tenggara, Indonesia. Photo: Corbett Campbell (Unsplash)


The most well-known resort in Indonesia, the island of Bali, needs no introduction. This is a paradise for surfing and spiritual growth enthusiasts from all over the world. Bali brings investors a stable 10% to 15% annual return on real estate and a 25% price increase during the construction period. Official tourist season on the island goes on from May until October. However, tourists are here all year round; there are just fewer good days for swimming and water sports in winter. Ocean-front complexes and villas are in the highest demand in Bali. Price per square metre starts from $1300.

Well-known management companies and experienced developers work in Bali. It is home to such spectacular projects as Magnum Residence Berawa with an infinity pool on the roof and panoramic windows overlooking the ocean, and the oriental-style Amali complex on the cliffs of Uluwatu. If you prefer villas and townhouses, take a closer look at Nila Residence in Kuta.

Tanah Lot, Bali. Photo: Nick Fewings (Unsplash)

Buying Real Estate in Indonesia: Step by Step

You’re now familiar with conditions in the country and have picked out a property. It’s time to move to the purchase procedure. In the case of leasehold, it is quite simple. The buyer just needs a passport and a visa.

  1. Check the seller. At this stage, the real estate agent checks the seller’s documents. There is no escrow account guarantee in Indonesia, so the agent carefully examines the company's licences, building permit, land tax receipts, water and electricity bills, and a sales permit (if the seller is a company).
  2. Secure the property. To do this, you must make an advance payment of 5% to 10% of the total cost; the deposit may be less than this and is defined by the seller. The selected property is booked until the deal is completed.
  3. Memorandum of Understanding. This document contains all the details of the deal, as well as the rights and obligations of the parties, the value of the property, ownership duration and the priority in extending the long-term lease. 
  4. Crediting the initial payment in case of instalment plan or full payment.
  5. Notary registration of the contract after full payment.
  6. Certificate of ownership.

The whole procedure usually takes no more than a month.

Additional Costs When Buying a Property

Additional costs for a real estate transaction in Indonesia are split between the buyer and the seller. Both pay 5% of the transfer tax (fee for the transfer of the right to the property). This is the complete list of taxes and fees:

  • Transfer tax: 5% hereinafter from the value of the property (paid by both the buyer and the seller);
  • Notary fee: 1% for contract registration (paid by the buyer);
  • Real estate agent’s fee: 5% (paid by the seller);
  • Registration fee: 0.2% (paid by the seller);
  • Lawyer fee: up to 1.5% (paid by the buyer).

Real Estate Taxes

There are real estate taxes in Indonesia, and an investor should know about them to calculate potential income correctly. If you are buying a flat or a villa, you will have to pay VAT of 11% of the property price. Income tax for non-residents in Indonesia is 20%. The annual property tax is 0.1% to 0.2% of the estimated cost.

A luxury tax is applied to particularly expensive real estate worth more than 30 billion rupiahs ($2 million): 20% of the transaction amount upon assignment of property right.

Tax rates in Indonesia are reviewed every three years, and once a year in rapidly developing regions.

Can a Foreigner Buy Property in Indonesia Remotely?

Yes. You have to issue a power of attorney for your representative, usually a real estate agent. You can pay from your account through the SWIFT system or with cryptocurrency.

Can a Foreigner Get a Mortgage in Indonesia?

Since foreigners are not allowed to buy real estate in Indonesia, a mortgage loan is also not available.

Can I Get Residence Permit in Indonesia for Buying Real Estate?

Indonesia does not grant residence permits for the purchase of real estate, but there is a Second Home visa available for investors. To get it, you need to buy a property in the luxury segment for 2 billion Indonesian rupiahs ($130,000) or more. The visa is valid for either five or 10 years.

In a Nutshell

Indonesia is a rapidly developing country with great opportunities for investors. Bali is the best place for a profitable investment in Indonesian real estate. With the year-round tourist season, the return on residential property on the surfer’s island reaches 15%. Foreigners do not have the right to buy real estate in Indonesia, but they can purchase it on a long-term lease (leasehold) or establish a company with the right to build. Since the tourist flow in Indonesia has not yet fully recovered after the pandemic, the resort real estate market on the islands has a strong potential for growth.

Cover photo: Setiabudi, Indonesia, Afif Ramdhasuma (Unsplash)

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