Property Investment in Indonesia: Foreigner’s Guide (2025)

Indonesia’s beautiful landscape, growing economy, and moderate tax structure makes it an attractive real estate location. In recent years, Indonesia loosened its laws for foreign investors, which, when combined with Indonesia’s growing economy, expanding tourism sector, and improved infrastructure, is drawing new international buyers.

This newly updated 2025 edition guide will take you through the basic steps and important things to consider when buying property in Indonesia as a foreign first-time buyer.

12 Things to Know Before Buying a Property in Indonesia

1. Can Foreigners Buy Property in Indonesia
2. Best Cities and Regions to Invest
3. Square Meter / Square Foot Prices
4. Median Asking Prices
5. Rental Yields and Rents
6. Market Performance (Past and Present)
7. Landlord and Tenant Laws
8. Property Related Taxes
9. Buying (and Selling) Costs
10. Short-Term Rental Regulations
11. Mortgage and Financing Options
12. How to buy property in Indonesia: step-by-step

1. Can Foreigners Buy Property in Indonesia?

Yes, but with limitations. Foreigners cannot directly purchase land in Indonesia, but they can lease land through long-term Right-to-Use (“Hak Pakai”) leasehold agreements. These are typically set up for 30 years with possible renewable options, and typically, the best option for purchasing property for residential use.

A legal way to purchase land for commercial use, such as for a business, is through the PT PMA structure. This allows foreigners to set up a foreign-owned company in Indonesia, which can then purchase land.

Finally, Indonesia has set minimum property value requirements for foreign buyers. These vary by location. For example, in Jakarta, the minimum purchase price requirement ranges from $195,000 – $650,000.

2. Best Cities and Regions to Invest

Indonesia offers diverse real estate investment opportunities tailored to various budgets and strategies, from tourism-focused short-term rentals to urban developments and industrial hubs. Here are some of the top areas to consider:

• Jakarta - Indonesia’s economic and financial capital, making it a prime destination for high-end residential, commercial, and mixed-use projects. With ongoing infrastructure upgrades such as MRT lines and toll roads, Jakarta attracts both local and international investors looking for long-term capital appreciation and steady rental income in the heart of Southeast Asia’s largest city.
• Bali - Indonesia’s tourism crown jewel. Areas like Canggu, Seminyak, Uluwatu, and Ubud offer strong returns through vacation rentals and lifestyle villas. With increasing global attention and flexible zoning laws in some areas, Bali continues to deliver high short-term rental yields and is ideal for investors focused on hospitality or digital nomad markets.
• Bandung - known for its creative industries and educational institutions- is emerging as a tech and innovation hub. Its cooler climate, improved connectivity (including a high-speed rail to Jakarta), and affordable property prices make it attractive for mid-range residential and mixed-use developments aimed at young professionals and families.
• Surabaya - Indonesia’s second-largest city and the commercial center of East Java. Its economy is driven by trade, manufacturing, and logistics, offering opportunities for both residential and commercial real estate. With lower property prices than Jakarta and consistent economic growth, Surabaya is becoming increasingly attractive to long-term investors.
• Yogyakarta - the country’s cultural heart and a major education hub. Its steady student population creates strong demand for affordable apartments, co-living spaces, and hospitality ventures. Investors benefit from relatively low land prices and a dynamic, creative economy that continues to expand.
• Lombok - gaining traction as the “next Bali.” With a new international airport, the Mandalika MotoGP circuit, and government-backed tourism projects, Lombok presents early-stage opportunities for resort developments and beachfront investments. As infrastructure improves, land values are rising rapidly, making now a strategic time to enter the market.
• Batam - located just across the strait from Singapore- is a key industrial and logistics zone. As part of a free-trade area, it benefits from tax incentives and proximity to global shipping routes. Investors here typically focus on industrial property, commercial units, and workforce housing tied to the island’s growing manufacturing sector.

3. Square Meter / Foot Prices

Indonesia’s square meter prices are lower than in many parts of Asia.

• Jakarta: $2,194 per square meter

Prices vary in different parts of Indonesia, and even in Jakarta, which is home to over 11 million people and has varying neighborhoods.

4. Average Asking Prices

The average price of a 1-bedroom apartment in Indonesia is lower than in most other Asian countries, but prices significantly vary based on location. Bali, which is a growing tourist spot, averages almost four times the average cost in Jakarta, which has the second highest average.

• Jakarta: $46,000
• Bali: $160,000
• South Tangerang: $36,000
• Tangerang: $30,000
• Surabaya: $21,000

5. Rental Yields and Rents

Rental yields in Indonesia are low to moderate, with higher average yields in South Tangerang and Surabaya. However, Jakarta’s yields vary based on the area of the highly populated city. West Jakarta has the lowest yields, an average of 5.75% for a one-bedroom apartment, but Central Jakarta’s yields are over 11% for one-bedroom apartments, and even higher for studio and two-bedroom apartments.

As of June 2025, rental rates for 1-bedroom properties in major Indonesian cities are approximately as follows:

• Jakarta: 5.42%
• South Tangerang: 6.74%
• Surabaya: 7.12%
• Tangerang: 4.80%
• Bali: 4.07%

6. Real Estate Market Performance (Past and Current)

Indonesia’s housing market is stable, but slow-moving. Although property prices increase a little each year, actual gains are small – or even negative in some instances – when inflation is factored in.

Some cities, like Pontianak and Batam, are doing better than others. In these areas, prices are rising more than inflation. Meanwhile, bigger cities like Jakarta, which is where many investors focus, are stagnant.  

Home sales dropped by around 8% in Q3 2024 compared to the same time the previous year. Reasons for this include the rising building costs, tightened financing requirements, and some government incentives ending.

On the upside, Indonesia’s tourism industry plus major infrastructure projects are helping. Those areas near new airports and tourist hot spots are seeing steady demand with better long-term potential for price growth.

Some cities like Pontianak and Batam are showing stronger growth, while areas like Medan and Bandung are holding steady. If rental income is on your radar, Jakarta’s still delivering around 4.27% returns, which isn’t too shabby.

Here’s a year-by-year look at how Indonesia's property market has performed:

Data Source: Bank Indonesia.

7. Landlord and Tenant Laws

Indonesian laws are judged by the Global Property Guide to be slightly Pro-Tenant. Lease agreements play a big role in determining rights and responsibilities, as Indonesia has no specific landlord-tenant laws. Rent rates are negotiated by the landlord and tenant – usually in U.S. dollars but paid in Rupiah – but the oversupply of rental units gives tenants more power to reduce rates.

8. Property Related Taxes

The Annual Land and Building Tax (PBB) for foreigners is a maximum of 0.5% of the property’s assessed value.
Larger, high-end properties require a 20% Luxury Goods Sales Tax when the primary sales price is higher than IDR 30 billion, or approximately $2 million.

Individual nonresidents must pay taxes on any income gained in Indonesia, including rental income. Nonresidents are taxed at a flat rate of 20%. Double taxation agreements (DTAs) between Indonesia and some countries may reduce this rate to 10%. Companies pay a flat 25% rate.

A Property Transfer Duty (BPHTB) is a one-time tax that must be paid by the buyer when purchasing property. The tax equates to 5% of either the purchase price or the government’s assessed value, whichever is higher.

Sellers must pay a Final Income Tax (PPh Final). Those selling freehold property usually pay 2.5% of the sale price. The percentage due for leasehold title depends on whether or not the seller has an Indonesian tax number (NPWP) – 10% with an NPWP and 20% without.

A construction tax must be paid upon completion of any newly built property. The rate for this tax ranges from 1.75% to 6% of the project budget.
New property sales by developers also require paying a value-added tax, which increased by a percentage point to 12% in 2025. This VAT does not apply to private resales between individuals.

Further Reading: Guide to Property Taxes in Indonesia.

9. Buying (and Selling) Costs

Indonesia’s property transaction costs are in the moderate range compared to other parts of Asia.

In addition to the purchase price, buyers should expect to pay an additional 6.5% to 9%. Seller costs average from 3% to 5%.

Here's a full breakdown:

10. Short-Term Rental Regulations

Foreigners can only own a short-term rental in Indonesia, but only if they create a foreign-owned company (PT PMA) in Indonesia. Additionally, non-residents must partner with or have an Indonesian hold the required permit.

It is easier to get short-term rentals licensed in tourism zones than in other types of zones. It’s essential to check the regulations and zoning rules of the specific area. Indonesian officials are increasingly cracking down on illegal rental operations.

11. Mortgage and Financing Options

Foreigners can potentially obtain mortgages from Indonesian banks or international banks, but they typically require higher down payments (often 30% to 50%) and may have higher interest rates than in the U.S.

Mortgages for properties under the Hak Pakai (Right to Use) title are generally more accessible than Hak Guna Bangunan (Right to Build).

12. How to Buy Property in Indonesia: Step-by-Step

1. Research and Find Property: Study the different Indonesian communities, as investment potential and prices widely vary. Local real estate sites like Rumah123, reputable local agents, or contact international brokers familiar with the area and regulations are all good sources.
2. Research Pricing, Yields, and Legal Restrictions: Foreigners generally must purchase property under long-term right-to-use (Hak Pakai) or right-to-build titles. Rental yields range significantly by neighborhood, even within the same city. For example, West Jakarta’s one-bedrooms average 5.75% yields, but Central Jakarta’s yields are over 11%.
3. Research Long-Term Market Trends: Indonesia’s real estate market is slowly growing but stable. After adjusting for inflation, price gains have only been modest in recent years. Popular tourist destinations and areas with major infrastructure projects are stronger than other areas.
4. Research Fees, Taxes, and Landlord Rules: Understand all the required taxes and restrictions before purchasing any property. Buyers must pay a one-time 5% transfer tax (BPHTB), plus annual land and building tax (PBB) up to 0.5% of the assessed value, and possibly VAT on new builds. Rental income is taxed at a flat 10% or 20% for non-residents, depending on whether their home country has a double taxation agreement. There are not a lot of landlord or tenant laws. Lease agreements play a large role in defining rights and responsibilities.
5. Get Legal Advice: Hire a reputable local notary (PPAT) and/or real estate lawyer with experience helping foreign buyers. They play a critical role in checking land titles, verifying zoning, and confirming that the property complies with all laws. Using a lawyer can help you avoid pitfalls.
6. Make an Offer and Conduct Due Diligence: When you find the right property, let your agent handle the offer. If accepted, a deposit, typically 10% to 30%. A quality agent can help ensure everything is spelled out in the contracts to protect your interests.
7. Sign the Sale Contract: The notary will draft the final deed (Akta Jual Beli), confirm all conditions have been met, and register the transaction with the National Land Agency (BPN). Both the buyer and seller (or their representatives) must be present to sign.
8. Registration and Ownership Transfer: After signing the final sale contract, the notary will submit the deed to the National Land Agency to update the land or building certificate with the owner’s name and title rights. The notary also helps calculate, file, and pay any required taxes and other administrative fees. This step officially confirms your legal right to use or develop the property.

Timeline: 2 to 6 months from offer to final registration, depending on how complex the title checks and local approvals are.

Need Help?

Buying property in a foreign country can feel overwhelming, but we're here to help.

At Global Property Guide, we offer:

• Data-backed insights on property prices, rental yields, and taxes
• Country-specific legal and tax guidance through our partner network
• Pre-screened investment properties, including income-generating Airbnb units
• 1-on-1 consultations with real estate experts focused on international buyers
• Step-by-step buyer support, from due diligence to closing

Whether you're looking for your first investment in Indonesia or expanding your international portfolio, we can help you make smart, secure decisions.

Contact our team or book a free consultation to get started.