Language(s): Bahasa Indonesia
Total Area: 1,904,570km²
GDP (in million USD): 706,735
Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 17,508 islands.
Indonesian residential property prices rose by 4.5% during the year to end-Q3 2011, according to Bank Indonesia's Residential Property Survey. Higher prices of construction materials (up by 7% to 12 %), higher workers' wages and a higher permittance were some of the reasons for the price rise witnessed in new construction.
Rapid urbanization has led to high urban densities, especially in Jabodebek-Banten (Jabotabek) which led the property market among the regions. Jabotabek or greater Jakarta is the urban development around Jakarta with more than 28 million residents, and its population continues to grow due to migration from all Indonesia. Here property prices were up 5.74% over the year to Q1 2011. However, in inflation-adjusted terms, prices were down by 1% over the same period.
Land titles (hakmilik) can only be held by Indonesian citizens. Foreign land ownership is against the constitution. For apartments, the 1996 regulation (No. 41/1996) states that foreigners who reside in Indonesia, or visit the country regularly for business purposes, can purchase a home, apartment or condominium as long as it isn't a part of a government-subsidized housing development.
However, foreigners can only hold land-use (hakpakai) deeds, and most developments hold right-to-build deeds (hakgunabagunan). It is not possible for someone to have a land-use deed for a sub-unit of a right-to-build deed. The length of these titles varies as well. Therein lie some of the difficulties and unclear ownership issues. Foreigners may purchase a house on freehold land by written consent from the landowner, for 25 years and extendable to a further 25 years. A mooted change in the law on foreign property ownership would extend the leasehold period to a full 70 years as opposed to 25 years followed by subsequent renewals, was expected at the end of 2010, but is yet to be passed in the House of Representatives, and has encountered opposition, particularly in Bali.
While the passing of this law will be a welcome change, investors will still find it coming up short when compared with the regulations in other countries in the region such as Malaysia and Singapore.