There are many reasons for an expatriate to buy a small piece of land, a house, or an apartment in Jakarta or its surrounding area. However, the vast majority of expats present in Jakarta prefer to rent a residence rather than buy a property there. The complexity of Indonesian land ownership laws is the primary reason for this. While it is possible for foreigners to own property in Jakarta or other parts of Indonesia, the process is generally quite complicated.
Also read: Guide for Moving to and Living in Jakarta for Foreigners
Can Foreigners Buy Property in Jakarta?
Yes, foreigners can purchase property in Jakarta, but they must navigate specific regulations and restrictions. Current legislation prohibits non-citizens from purchasing real estate in their own name anywhere in Indonesia. However, there are alternative options available that allow foreigners to enjoy property ownership in the country. Primarily, foreigners can acquire leaseholds in Indonesia, and there are several methods to facilitate this type of property ownership.
Also read: Recent Updates on Property Acquisition in Indonesia for Foreigners
Types of Property Ownership for Foreigners
- Hak Milik (Freehold): Restricted to Indonesian citizens only.
- Hak Guna Bangunan (HGB) (Building Leasehold): Available to foreigners, typically for up to 25 years with an option to extend for another 25 years. Minimum property value for HGB in Jakarta: IDR 5 billion for landed houses and IDR 1 billion for apartments.
- PT PMA (Foreign Investment Company): Foreigners can establish a PT PMA to purchase property.
- Landed House Ownership Scheme for Foreigners (2023): Foreigners can own one landed house (minimum value IDR 5 billion) with just a passport, without a residence permit. Consultation with a property expert is recommended for this relatively new scheme.
- Hak Pakai (Usufructuary Right): Involves an Indonesian citizen holding the property in the name of the foreigner, which can be risky.
Also read: Can Foreigners Buy Property in Indonesia? (2024 Update)
Why Invest in Jakarta Real Estate?
- High Demand: As Indonesia’s capital, Jakarta has a population of over 10 million, driving high demand for residential and commercial properties.
- Solid Economic Development: Jakarta is Indonesia’s financial hub, with a high demand for commercial real estate such as offices, malls, and hotels.
- Government Support for Foreign Investment: Recent changes in regulations have made it easier for foreigners to invest in Jakarta’s real estate market.
- Growing Middle Class: Increased demand for luxury residential buildings due to the expanding middle class.
- Improving Infrastructure: Significant investments in transportation infrastructure like MRT and LRT enhance connectivity and accessibility.
- Attractive Returns: Competitive real estate prices and high rental yields make Jakarta an appealing investment destination compared to other Southeast Asian cities.
Best Locations for Property Investment in Jakarta
- South Jakarta: Business centers like Sudirman and Kuningan offer high rental potential and property value appreciation.
- West Jakarta: Areas like Grogol Petamburan are ideal for young professionals and families, with easy access to Soekarno-Hatta Airport and major toll roads.
- North Jakarta: Kelapa Gading is known for its green residential areas and consistent rental demand, making it perfect for families.
- Central Jakarta: Prestigious areas like Menteng and the Golden Triangle attract high-end business communities, ensuring exclusivity and high rental potential.
Understanding Property Taxes in Jakarta
Before purchasing property in Jakarta, it’s essential to understand the various taxes involved, including:
- Annual land and building tax
- Rental income tax
- Land acquisition tax
- Transfer tax
- Corporate income tax
- Construction tax
- Document stamp tax
Average Property Values in Jakarta
Residential houses average IDR 18.3 million per square meter, while commercial spaces cost around IDR 25 million per square meter. Land costs about IDR 12.6 million per square meter.
How to Buy Property in Jakarta for Foreigners?
One effective method for foreigners to invest in Jakarta’s real estate is through the establishment of a PT PMA (foreign-owned company). While this procedure may initially seem cumbersome, it is a safer solution compared to partnering with a local citizen. In this arrangement, the property is owned by the company, thus mitigating personal risks.
However, it is important to note that the types of land available to foreigners through a PT PMA are limited to certain categories. Prospective buyers should verify the classification of the land under local legislation before proceeding.
If you are interested in establishing a PT PMA to purchase property in Jakarta, InvestinAsia can assist you. Please check our services for PMA registration in Indonesia.
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Additionally, foreigners married to Indonesian citizens may be eligible to own property in Indonesia, but strict conditions apply. For instance, foreigners must possess a KITAS (temporary residence permit) or KITAP (permanent residence permit) to purchase and hold property. They are restricted to purchasing individual houses or apartments, and the property must meet the minimum value requirements set by the government. In Jakarta, the minimum property value for expatriates is IDR 10 billion (approximately $673,000) for a house and IDR 5 billion (approximately $340,000) for an apartment.
Here are some key requirements and policies for expatriates who wish to purchase property in Indonesia:
- Expatriates must reside in Indonesia and obtain a KITAP or KITAS to purchase and hold property.
- The minimum property price in Jakarta is IDR 10 billion (about $673,000) for a house and IDR 5 billion (about $340,000) for an apartment.
- Expatriates and their families are allowed to own only one property, with a maximum area of 2000 square meters.
- The property must be paid for in cash or financed by a bank loan from an Indonesian financial institution.
- If an expatriate leaves Indonesia, they must transfer the property rights to another eligible person within one year of departure.
- The initial right of use is set for 30 years, with possible extensions up to 80 years.
- These regulations are designed to ensure that foreigners can invest in Jakarta’s real estate market while adhering to Indonesian laws and policies.
To obtain the necessary visa and stay permit, you can also rely on our services for Indonesia visa and stay permit application. We can help you with the following processes:
- Indonesia business visa application
- Indonesia tourist visa application
- Indonesia work visa / KITAS application
- Indonesia investor visa / KITAS application
- Indonesia spouse visa application
- Indonesia dependent visa application
- And any other related inquiries.
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InvestinAsia Can Help You Buy Property in Jakarta
Due to the intricate property ownership regulations in Indonesia, InvestinAsia is here to assist you in purchasing property in Jakarta. Explore our special package for Indonesia PMA and KITAS applications.
If you have any questions or inquiries, feel free to reach out to our team!
FAQs about Foreign Property Investment in Jakarta
1. Can foreigners directly own property in Jakarta?
No, foreigners cannot directly own property in their own name in Jakarta but can invest through options like PT PMA or leaseholds.
2. What is Hak Guna Bangunan (HGB)?
HGB is a type of building leasehold available to foreigners, allowing them to own a property for up to 25 years, with the possibility of extensions.
3. How can a foreigner buy a landed house in Jakarta?
Foreigners can buy a landed house under the new scheme with a minimum value of IDR 5 billion, using just a passport. Consulting with a property expert is advised.
4. What are the minimum property values for foreigners in Jakarta?
The minimum value for a landed house is IDR 5 billion, and for an apartment, it is IDR 1 billion.
5. What are the property tax obligations for foreigners?
Foreigners must pay various taxes, including annual land and building tax, rental income tax, land acquisition tax, and more.
