INDONESIA UP DATE CURRENT PROPERTY TRENDS Over the past few years, Indonesia has indeed become a frontier market despite the government’s tight regulations on foreign ownership. Its appeal to both foreign and local players seems to only intensify, causing the market to be hyped and driving property prices sky high. In fact, during the second quarter of this year, Indonesia even beat Singapore in terms of house price growth rate. The latest report from the Knight Frank House Price Index showed that prices were up 12.1% year-on-year, putting Indonesia in the 7th place among 55 countries surveyed. Demand, on the other hand, is high as indicated in the property sales report for the fourth quarter of 2012. According to Global Property Guide, residential property sales rose by 26.7% from the previous quarter while small houses logged a 41% quarteron-quarter increase, which by far is the highest in the region. The burgeoning confidence of property investors can be attributed to a much improved investment climate in the country, which also bodes well for the country’s economy. The Wall Street Journal cited a report from Indonesia’s investment board that foreign direct investment for the April-June period logged a record-level increase at 66.7 trillion rupiah (USD $6.5 billion). Many analysts forecast that the positive market trend will continue for the remainder of 2013. Some also said that the price growth is likely to further surge to between 15 to 20% until 2014.
FESTIVAL / DISH FOR YOUR BUCKET LIST: If you think that Kentucky is the only place for the best fried chicken in the world, then you haven’t been to Indonesia. Ayam goreng, the Indonesian version of fried chicken, is one of the most cooked— and ordered—food in the country which is quite understandable given its crispy perfection. Containing of at least one or two chicken parts and infused with a flavorful mixture of spices, Ayam goreng is so juicy that it may require not only more napkins than the avergae fast food meal, but also an extra serving.
TO BE ENJOYED AT JAKARTA: A cozy flat in the bustling metropolitan of Indonesia is the perfect setting to enjoy the juiciness of ayam goreng. But to put a musical twist on your eating experience, choose an apartment, which is close to a Jakarta’s world-class jazz festival.
TOTAL AREA
1,904,569 sq km
REGION
South-East Asia
POPULATION
248,645,008 (July 2012 est)
TIME ZONES
UTC +8 to +9
DIALLING CODE
+62
GDP (Nominal; 2012 IMF estimate)
USD $894.854 billion
GDP PER CAPITA (Nominal; 2010–2011 IMF estimate)
USD $3,512
HUMAN DEVELOPMENT INDEX
0.617 (medium)
WHERE TO BUY Although tagged as the fourth-most populous country in the world, Indonesia is without a doubt still a favourite tourist destination in South-East Asia. Given the list of tourist’s attractions, tropical floras and faunas, unspoilt islands and breath-taking mountains that Indonesia has to offer, it’s hardly surprising that some tourists ended up residing here. While its tourism industry continue to boom, so too is the property market. And because of the robust demand in housing sector, the government has decided to loosen the regulation for foreign ownership. In 2012, the Indonesian government announced that foreigners are now authorised to own a property albeit limited to condominiums priced at IDR 2 billion rupiah (USD $206,000). The price tag is not a problem though because the boom in Indonesia’s residential market is also in part due to the record-level demand for mid-level and luxury property. The most sought-after places in Indonesia include: Bali – Long noted as the haven for both rich and middle=class citizens as the province features magnificent beaches, beachfront villas, world-class restaurants and bars, posh shopping centres and all the good stuff designed for high-end living. Jakarta – The capital of Indonesia and among the most preferred place to live in by expats, given the wide array of residential houses offered. Jones Lang LaSalle said that 2013 is a good year for Jakarta as it will continue to register positive growth in the housing market. In Knight Frank’s The Wealth Report 2013, Indonesia’s prime residential markets were the biggest performers in 2012, with Jakarta leading the pack with values surging 38% followed by Bali at 20%. According to Knight Frank, Jakarta and Bali benefited from the continued strong GDP growth (6%). It added that increased access for non-resident buyers could help sustain the trend though 2013. SOURCE GLOBAL PROPERTY GUIDE
BUYING PROCESS
PROPERTY BASICS AVERAGE PRICE
USD $2,099 psm (usually a 120-
RENTAL YIELD
9.31%
RENT PER MONTH
US$1,955 (usually a 120-sqm
CAPITAL GAINS TAX
20%
sqm apartment in premier city centres)
apartment in premier city centres)
COUNTRY INFORMATION OFFICIAL NAME
Republic of Indonesia
CAPITAL CITY
Jakarta
CURRENCY
Rupiah (USD $1 = IDR9,712)
LANGUAGE
Bahasa Indonesia
Can foreigners buy property in Indonesia? The answer to this is ‘it depends on the title of the land on which the property sits’. There are two fundamental rulings foreign property ownership in Indonesia: the Basic Agrarian Law of 1960 (UU Pokok Agraria Tahun 1960) and Government Decree #41 of 1996. The Basic Agrarian Law is Indonesia’s main law concerning land ownership and includes a section about ownership by foreign individuals and institutions. According to it, a foreigner who resides in Indonesia is allowed to own a residential property built on land with a ‘Hak Pakai’ (right of use) title. Further, Government Decree #41 of 1996 stipulates that the maximum period for ‘Hak Pakai’ ownership is 25 years, which can be extended for another 20 years. On this basis, a foreign individual is legally allowed to buy, for example, a house that is built on a single parcel of land, but they must convert the title of the property to a ‘Hak Pakai’ title to comply with the laws. Another option for foreigners is to use a local nameholder for the property, with whom the foreign buyer
For more detailed guides, visit www.propertylife.asia/countryguides
enters into contracts. If using a local nominee, the following documents should be signed with your nominee prior to the purchase: ➊ Mortgage Agreement. Cost: 1% mortgage value for Notary; 1% of total mortgage value for BPN land affairs office ➋ Power of Attorney. This grants exclusive rights to mortgager to release the mortgage ➌ Financial Loan Agreement ➍ Power of Attorney for all rights to the land ➎ Statement Letter ➏ Statement of Indemnity (for nominee). ➐ Power of Attorney for IMB ➑ Statement Letter ➒ Lease Agreement All transactions of land rights must be via deeds executed before a land deed official at the local office of the Pejabat Pembuat Akta Tanah (PPAT), where the land is located, and must be registered in the regional office of the National Land Agency. Although there is no regulation regarding language, it is recommended having contracts and agreements drawn up and executed in Bahasa Indonesia (or two languages) to prevent potential arguments that the local partner did not fully understand the content.
GETTING IN VISA REQUIREMENTS No visa is required for short-term business or holiday visits for citizens of Brunei Darussalam, Chile, Hong Kong SAR, Macau SAR, Malaysia, Morocco, the Philippines, Peru, Singapore, Thailand and Vietnam. Indonesia also offers Visa on Arrival (VOA) with a maximum stay of 30 days (although this can be extended for an additional 30 days). Requirements for the VOA include a valid passport with at least 6 months validity, round-trip airplane ticket and fees of US$25. Citizens from the following countries are eligible for VOA: Argentina, Australia, Austria, Algeria, Bahrain, Belgium, Brazil, Bulgaria, Czech Republic, Cambodia, Canada, Cyprus, China, Denmark, Estonia, Egypt, Fiji, Finland, France, Germany, Greece, Hungary, India, Iceland, Iran, Ireland, Italy, Japan, Kuwait, Laos, Latvia, Libya, Lithuania, Liechtenstein, Luxembourg, Maldives, Malta, Mexico, Monaco, New Zealand, Netherlands, Norway, Oman, Panama, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Slovak Republic, Slovenia, Spain, South Africa, South Korea, Suriname, Sweden, Switzerland, Taiwan PRC, Timor Leste, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States of America. Check with the Indonesian visa authority for verification at www.embassyofindonesia.org/consular/ visitvisa.htm AIRPORTS AND AIRLINES Air transportation in Indonesia serves as a critical means of connecting the thousands of islands throughout the archipelago. Jakarta’s Soekarno–Hatta International Airport ( jakartaairportonline.com) serves as the country’s main international gateway. Flag carrier Garuda Indonesia (www.garuda-indonesia.com) has regular scheduled flights from Jakarta to numerous cities across the country and around the world, including Amsterdam, Bangkok, Beijing, Guangzhou, Hong Kong, Jeddah, Kuala Lumpur, Melbourne, Perth, Seoul, ShanghaiPudong, Singapore, Sydney, Taipei, and Tokyo-Narita. Indonesia’s second busiest airport is Bali’s Ngurah Rai International in Denpasar. There are also regional airports in Surabaya, Yogyakarta, Bandung, Banda Aceh, and Manado. LAND Frequent traffic jams in major cities, especially Jakarta, are an indication of the increasing number of cars on the road versus the amount of new road construction. Buses and trains offer unreliable service and put foreigners at risk of pickpockets and muggers and generally should be avoided except for the most adventurous. Unless you live in Indonesia and are comfortable driving, take a taxi, bus, train or flight.
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