Indonesia, with its breathtaking islands, tropical beaches, and growing economy, has become one of Southeast Asia’s most attractive real estate markets. From luxurious villas in Bali to modern apartments in Jakarta, foreigners are increasingly interested in buying property in Indonesia — whether for investment, retirement, or vacation living.
However, Indonesia’s property laws can be complex, especially for non-citizens. Understanding the types of ownership, legal restrictions, property costs, and buying process is crucial before making any investment.
This comprehensive guide will walk you through everything you need to know about purchasing real estate in Indonesia, including property types, prices, taxes, and how foreigners can safely buy and own property.
Overview of Indonesia’s Real Estate Market
Indonesia’s real estate sector has grown rapidly in recent years, supported by:
- A stable economy and expanding middle class
- Infrastructure development across major islands
- Rising foreign investment in tourism and property
- The government’s gradual relaxation of foreign ownership rules
Popular destinations such as Bali, Jakarta, Yogyakarta, Surabaya, and Lombok attract investors seeking both residential and commercial opportunities.
According to recent data, property prices in Indonesia remain lower compared to neighboring countries like Singapore or Malaysia, making it a cost-effective investment destination.
Can Foreigners Buy Property in Indonesia?
This is the most common question asked by foreign investors — and the short answer is yes, but with restrictions.
Under Indonesian law, foreigners cannot directly own freehold land (Hak Milik). However, there are several legal alternatives that allow foreigners to buy, lease, or control property securely:
1. Hak Pakai (Right to Use)
This is the most common and legal way for foreigners to own property in Indonesia.
- Granted for up to 30 years, extendable to 80 years.
- Can be issued for residential or commercial property.
- The property remains under state ownership, but you have exclusive usage rights.
2. Hak Sewa (Leasehold)
Foreigners can also lease land or property under a private agreement.
- Lease periods typically last 25 to 50 years, renewable.
- You can build and own a structure on the leased land.
- Common in tourist areas like Bali.
3. Hak Guna Bangunan (Right to Build)
This right allows you to construct and own a building on land that is not owned by you.
- Usually valid for 30 years, extendable up to 80 years.
- Often used by foreign-owned companies (PT PMA).
4. PT PMA (Foreign-Owned Company)
If you want to invest long-term or own multiple properties, setting up a PT PMA (Penanaman Modal Asing) is an option.
- A PT PMA allows foreigners to buy and own property under company ownership.
- Ideal for commercial or rental properties.
- Requires compliance with Indonesia’s investment regulations.
Types of Properties Available in Indonesia
Indonesia offers a wide range of real estate options for both residents and foreign investors.
Residential Properties
- Villas: Especially popular in Bali and Lombok, villas are ideal for private living or Airbnb-style rentals.
- Apartments: Found mostly in Jakarta, Surabaya, and Bali; available under both freehold (for locals) and Hak Pakai (for foreigners).
- Townhouses: Gated communities are becoming popular in suburban areas.
Commercial Properties
- Hotels, guesthouses, and resorts in tourist regions.
- Office spaces and shop-houses (ruko) in urban centers.
- Agricultural or industrial land for business development.
The Process of Buying Property in Indonesia
Buying real estate in Indonesia involves several steps. It’s crucial to work with a qualified notary (PPAT) and reputable legal advisor to ensure all documents are properly prepared.
Step 1: Conduct Due Diligence
Before purchasing, verify:
- The property title and ownership type.
- Whether the land is free of disputes or encumbrances.
- The land zoning regulations.
Your notary or lawyer can check property records through Indonesia’s National Land Agency (BPN).
Step 2: Sign a Sale and Purchase Agreement (SPA)
Once you’ve agreed on a price, both parties sign the Preliminary Sale and Purchase Agreement (Perjanjian Pengikatan Jual Beli).
- A deposit of 10–30% is usually required.
- The agreement should clearly state the terms, ownership rights, and payment schedule.
Step 3: Transfer and Registration
For Hak Pakai or Hak Guna Bangunan, the notary will prepare the necessary documents for registration with the BPN.
Step 4: Payment of Taxes and Fees
Both buyer and seller must pay taxes before the property is officially transferred.
Taxes and Fees When Buying Property in Indonesia
Here are the common taxes and costs associated with property transactions:
| Type | Description | Typical Rate |
|---|---|---|
| Buyer’s Tax (BPHTB) | Transfer duty | 5% of property value |
| Seller’s Tax (PPh) | Capital gains tax | 2.5% of selling price |
| Notary Fees | Legal and processing fee | 0.5%–1% of property value |
| Land Registration Fee | BPN documentation | IDR 1–2 million |
| Maintenance Fees | For apartments or gated communities | Varies |
Property Prices in Indonesia
Prices vary greatly depending on the location and property type. Here’s a general overview:
| Location | Type | Average Price (USD per m²) |
|---|---|---|
| Jakarta | Apartment | $1,500 – $3,000 |
| Bali | Villa | $1,200 – $2,500 |
| Surabaya | Apartment | $900 – $1,800 |
| Lombok | Villa/Land | $600 – $1,500 |
| Yogyakarta | House | $500 – $1,200 |
In Bali, for example, you can find luxury beachfront villas for $400,000–$1 million, while inland properties start around $100,000.
Financing Options
Foreigners generally cannot obtain standard local mortgages in Indonesia unless they have resident status or own a PT PMA. However, there are alternatives:
- Developer financing plans (installment payments).
- Offshore loans from international banks.
- Local partnerships with Indonesian citizens.
Key Legal Considerations
Before buying property in Indonesia, keep in mind these essential points:
- Only Indonesian citizens can own freehold land.
- Foreigners can legally lease or use property via Hak Pakai, Hak Sewa, or PT PMA.
- Always conduct due diligence through a certified notary.
- Avoid informal “nominee” arrangements — these are legally risky and not recognized by law.
Living and Investing in Indonesia
Beyond property ownership, Indonesia offers an attractive lifestyle for expats:
- Affordable cost of living compared to Western countries.
- Excellent cuisine, culture, and nature across islands.
- Warm, welcoming communities and vibrant expat hubs (especially in Bali).
- Potential for rental income from tourism-driven demand.
Many foreigners buy villas or apartments for passive income, renting them out to travelers through platforms like Airbnb or Booking.com.
Future Outlook of Indonesia’s Real Estate Market
Indonesia’s property market remains resilient and promising, supported by:
- Urban development projects in major cities
- Infrastructure upgrades (new airports, toll roads, and seaports)
- Government efforts to simplify property ownership for foreigners
- Growing interest in eco-friendly and digital nomad housing
With the right legal guidance and local support, buying real estate in Indonesia can be a smart long-term investment.
Conclusion
Indonesia’s real estate landscape offers great potential for foreign investors, but understanding the legal framework, taxes, and property rights is essential.
Whether you’re dreaming of a seaside villa in Bali or an apartment in Jakarta, the key is to follow the law, work with professionals, and ensure your investment is secure.
With strategic planning and proper guidance, owning property in Indonesia can be both rewarding and profitable — giving you a slice of paradise and a sound financial asset in one of Asia’s fastest-growing economies.
For more information on buying real estate in Indonesia, check out my book “Navigating the Indonesian Real Estate Market” on Amazon.
Also, here are some of my other books on Amazon:
Also, considering Malaysia as a place to retire or live? In addition to the languages, the cultures of both countries are also very similar. Check out our blog on The Cost of Living in Malaysia: A Complete 2025 Guide
