Although one of the largest countries in Southeast Asia, Indonesia appears to be somewhat isolated, both for investors and for buying real estate. Although there is interest in buying real estate in this part of the world, some things can be aggravating circumstances.
However, this should not stop you from considering investing in real estate in this part of the world. If you’ve been wondering if this is a good idea, here’s the answer.
Indonesia: Unexplored Real Estate Paradise
Although it has shown significant economic growth in recent years – Indonesia still appears to be an unexplored market for many investors and property buyers. True, this is partly caused by laws that are a little more rigorous in Indonesia – especially when it comes to property ownership. However, that does not mean that you should give up this kind of endeavor. What you DO need the most, is to be informed about everything. In that sense, we will try to help you with some facts when it comes to buying real estate in Indonesia – so let’s start from the beginning.
Can Foreigners Buy Real Estate In Indonesia?
Although things are moving for the better when it comes to the economic situation in Indonesia – many people still do not know what their options are when it comes to the real estate market. In recent years and decades, many foreigners have come to Indonesia with the desire to invest in a business there – or to settle in a britannica.com/place/Bali-island-and-province-Indonesia.
However, most foreigners there are surprised by the fact that in Indonesia, buying and selling real estate is not possible – at least not in the same way as in Western countries.
Namely, foreigners in Indonesia cannot own real estate in their name, and in the way, it is implied in other countries. Does that make buying and selling real estate in Indonesia an impossible mission? Certainly not!
How To “Buy” Property In Indonesia When You Are A Foreigner
According to the current laws in Indonesia, a foreigner cannot own real estate that will be in the name of the buyer or his name. In other words, you have no property rights.
Although these laws will soon change in favor of real estate buyers – the option that is currently available to you is not as bad as it may seem to you. Namely, Indonesian law implies certain rights, that is, titles that you can acquire in this country. Hak Pakai certificate is the title most often awarded to foreigners. This title implies that when you “buy” real estate, you get ownership of the property for a certain period. To be more precise, it works for 25 years, with the possibility of later extension for an additional 45 years – which means that you can own real estate for 70 years in total. The situation is similar if you are an investor and want to build. In that case, the license you receive is for 30 years, and you can renew it after that period. Of course, this is all way too complicated for an average buyer. Therefore, according to penidaland.com, you will need to have a real estate agent in Indonesia who will help you out not just with choosing a property, but also with the legal issues that you may find confusing.
Pay Attention To Taxes
You will not find a country where taxes are not paid. Here, we are talking about property taxes. In this regard, we can say that the tax policy in Indonesia is quite strict, and taxes are not in the least naive. For example, for real estate sellers, the tax is 2.5% of the property price. On the other hand, buyers have their share of payment related to the purchase of land on which the property is located – and this amounts to 1% of the amount.
However, Western buyers are most often looking for luxury real estate in Indonesia, and that’s where the most unpleasant surprise awaits you – because the tax on luxury houses or apartments is extremely high, to be precise, 20%. It is pretty much the same with the lease – because homeowners are subject to income tax in the same percentage. To all this, we must add the annual property tax, which may vary depending on the decisions of the Indonesian government. Therefore, you need to think carefully about these things if you want to invest in real estate in Indonesia.
Where To Invest In Real Estate In Indonesia?
Indonesia is known to be a populous and densely populated country that is evolving at a rapid pace. Although it has not yet reached the competition like India, China, etc. – this is the country of the future and investing, both in real estate and business. If you are wondering where it is best to invest in Indonesia, we will give you a few suggestions.
Although not among the most powerful, Jakarta is still one of the largest business and financial centers in this part of Asia. Given the investment opportunities, this urban center is considered the most suitable location for buying real estate – but also investing in the business. Namely, this city, which is divided into districts, offers you an extremely large number of opportunities for investments of various types.
This is another Javanese city that owes its drastic development to urbanization. It is considered that this is the city with the greatest prospects for investments – and this has been recognized by many foreign companies that are opening their representative offices here. So you will find most of the “big game players” such as banks or insurance companies right here.
The favorite tourist destination of all world travelers and vloggers. Bali is known for having an extremely well-organized infrastructure, and on the other hand, offers the opportunity to enjoy a private paradise among palms on tropical beaches with fine sand.
The Bottom Line
Although technically foreigners are still unable to become owners of the property they are buying – the change is expected in the foreseeable future. Under pressure from the real estate market needs, the legal constraints that have been practiced in Indonesia are slowly beginning to ease – and the opening of this market is expected soon. Therefore, if you decide to invest in real estate in Indonesia, we wish you a lot of success. We are sure you will not go wrong.