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Indonesia's rental property market offers some of the most attractive yields in Southeast Asia, with nationwide averages ranging from 5.4% to 7.2% as of September 2025. Tourist hotspots like Bali can deliver exceptional returns of 10-20% for luxury villas, while major cities like Jakarta provide more stable yields of 4-7%.
The Indonesian rental market varies dramatically by location and property type, with short-term vacation rentals in Bali and Lombok significantly outperforming long-term residential leases in urban centers. Understanding these regional differences, along with the complex tax structure and financing options, is crucial for making informed investment decisions in this rapidly evolving market.
If you want to go deeper, you can check our pack of documents related to the real estate market in Indonesia, based on reliable facts and data, not opinions or rumors.
Indonesia's rental yields vary significantly by location, with Bali villas achieving 6-16% returns and Jakarta apartments averaging 4-7%. Short-term rentals consistently outperform long-term leases, particularly in tourist areas.
Investors should factor in substantial transaction costs (8-12% of purchase price) and ongoing taxes that can significantly impact net yields, especially the 20% rental income tax for non-residents.
| Location | Property Type | Typical Yield (%) | Best For |
|---|---|---|---|
| Bali (Seminyak/Canggu) | Luxury Villas | 10-20% | Short-term rentals |
| Lombok | Villas/Houses | 8-12% | Tourist rentals |
| Jakarta CBD | Studio Apartments | 9-12% | Long-term rentals |
| Jakarta Premium | 2-3BR Apartments | 4-5% | Expat housing |
| Surabaya | Apartments/Houses | 7-8% | Balanced portfolio |
| Tangerang | Residential | 5.6-7.1% | Stable income |
| Yogyakarta | Student Housing | 4-6% | Long-term holds |
Fact-checked and reviewed by our local expert
Daniel Rouquette 🇫🇷
CEO & Co-Founder at Villa Finder
What's the average rental yield right now in Indonesia?
As of September 2025, Indonesia's average rental yield ranges from 5.4% to 7.2% nationwide, making it one of the more attractive investment destinations in Southeast Asia.
The Indonesian rental market shows significant regional variation, with tourist hotspots consistently outperforming urban centers. Bali leads the pack with villa yields reaching 6-16%, particularly in premium areas like Seminyak, Canggu, and Ubud where luxury properties can achieve 10-15% or even higher returns. Lombok follows closely with yields of 8-12%, with some exceptional locations reaching 20-30%.
Major urban centers offer more conservative but stable returns. Jakarta apartments typically yield 4-7%, though smaller studio units in central business districts can achieve above 9%. Surabaya provides consistent 7-8% returns, while Tangerang and South Tangerang offer 5.6-7.1%. Yogyakarta, despite being a major university city, shows more modest yields of 4-6% in high-demand zones.
It's something we develop in our Indonesia property pack.
How does rental yield vary between different property types like apartments, villas, and houses?
Property type significantly impacts rental yields in Indonesia, with villas commanding the highest returns and apartments showing the most variation by location.
Villas consistently deliver the strongest performance, particularly in tourist destinations. Bali villas range from 6-20%, with luxury properties in prime locations like Seminyak achieving the upper end of this range. The villa market benefits from Indonesia's growing popularity as a destination for digital nomads and luxury travelers willing to pay premium rates for private accommodation with pools and gardens.
Apartments show the widest yield range from 4-12%, heavily dependent on location and unit size. Jakarta's central business district studios can achieve 9-12% yields due to high demand from young professionals and limited supply of small units. However, premium apartment complexes in expatriate areas often yield only 4-5% due to higher purchase prices and more selective tenant pools.
Traditional houses typically yield 4-8%, offering stable but moderate returns. Jakarta and Bandung house markets provide consistent performance around 6-7%, appealing to families seeking longer-term leases. Houses require less intensive management than short-term villa rentals but generate lower absolute returns.
Which cities or areas in Indonesia offer the highest and lowest yields?
Bali dominates Indonesia's high-yield markets, with tourist-focused areas consistently delivering the strongest returns across all property types.
The highest yields concentrate in tourist destinations where short-term rental demand drives premium pricing. Bali leads with villa yields of 10-20% in areas like Seminyak, Canggu, and Ubud. Lombok follows with 8-12% yields, reaching exceptional levels of 20-30% in emerging hotspots. Batam also performs well due to its proximity to Singapore and strong tourist traffic.
The lowest yields appear in established urban centers where property prices have appreciated faster than rental rates. Jakarta's expatriate and central zones typically yield 4-7%, with premium districts like Menteng and Kebayoran Baru often at the lower end due to high acquisition costs. Bandung and Medan, being non-tourist cities with limited international demand, generally produce yields below 6%.
Secondary cities like Surabaya and Tangerang occupy the middle ground with yields of 5-8%. These markets offer more balanced risk-reward profiles, combining reasonable yields with better liquidity than tourist markets. Jakarta's studio apartment market stands out as an exception, achieving above 10% yields despite the city's generally lower performance.
How does property size or surface area affect rental returns?
Smaller properties generally deliver higher rental yields as a percentage of purchase price, while larger luxury properties generate higher absolute rental income but lower yield percentages.
Studio and one-bedroom units consistently outperform larger properties on a yield basis. These smaller units remain affordable to a broader tenant base and maintain higher occupancy rates. Jakarta studios achieve yields above 10% because they appeal to young professionals, students, and single expatriate workers who prioritize location over space. The lower purchase price relative to rental income creates an attractive yield profile.
Mid-sized properties of 50-100 square meters often represent the optimal balance between yield and management complexity. Two to three-bedroom apartments and houses attract stable tenant profiles including small families and sharing professionals, maintaining consistent occupancy with reasonable maintenance requirements.
Large luxury properties and villas exceeding 200 square meters can generate substantial rental income but typically show lower yield percentages unless located in prime tourist areas with exceptional management. Bali luxury villas prove the exception, where premium daily rates for short-term rentals can push yields into double digits despite high acquisition costs.
What's the total purchase price breakdown, including legal fees and transaction costs?
Indonesian property transactions involve substantial additional costs that add 8-12% to the listed purchase price, significantly impacting investment calculations.
| Cost Component | Percentage | Notes |
|---|---|---|
| Acquisition Duty (Buyer) | 5% | Of declared property value |
| Seller's Income Tax | 2.5% | Often passed to buyer |
| Legal & Notary Fees | 1-2% | Essential for foreign buyers |
| Real Estate Agent | 2-5% | Varies by property type |
| VAT | Up to 11% | 50-100% exempt under IDR 2B in 2025 |
| Miscellaneous Costs | 1-2% | Banking, insurance, inspections |
Base property prices vary significantly by location as of September 2025. Jakarta apartments cost 25-35 million IDR per square meter, while Bali properties command 55-66 million IDR per square meter. Yogyakarta offers more affordable options at 10-20 million IDR per square meter, making it attractive for investors seeking entry-level opportunities.
The 2025 VAT incentive provides substantial savings for residential properties under IDR 2 billion, offering 50-100% exemptions that can reduce total transaction costs by several percentage points. Foreign buyers should factor these costs into yield calculations and ensure adequate capital beyond the purchase price for a successful transaction.
What taxes and recurring charges impact the net rental yield?
Indonesian rental property taxation significantly impacts net yields, with non-resident investors facing particularly high tax burdens that can reduce returns by 20-35%.
Rental income tax represents the largest ongoing cost for property investors. Indonesian residents pay progressive rates of 5-35% on rental income, while non-residents face a flat 20% final withholding tax that cannot be offset against other deductions. This 20% rate immediately reduces gross yields, making a 10% gross yield effectively 8% after tax for foreign investors.
Property tax (PBB) adds 0.5% annually based on the property's taxable sales value. While relatively modest, this recurring charge compounds over time and must be factored into long-term yield calculations. VAT at 11% applies to most residential property purchases, though the 2025 incentive program provides significant exemptions for properties under IDR 2 billion.
Maintenance fees for apartments typically range from IDR 50,000-150,000 per square meter monthly, potentially adding IDR 3-9 million annually for a 60-square-meter unit. Villas incur higher management costs including pool maintenance, garden care, and security, often totaling IDR 5-15 million annually. Utility charges add another IDR 1-2.5 million monthly for typical two-bedroom Jakarta apartments.
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How does financing with a mortgage affect overall profitability?
Mortgage financing in Indonesia presents significant challenges for foreign investors, with limited availability and high interest rates that can substantially impact investment returns.
Foreign nationals face restricted access to Indonesian mortgages, with most banks requiring local residency status or Indonesian partnerships to qualify for financing. Local residents can access mortgages more readily, but interest rates typically range from 8-12% annually, significantly higher than many Western markets.
High interest rates can dramatically reduce net yields when leverage is employed. A property yielding 8% gross return becomes marginal or unprofitable when financed at 10-12% interest rates, especially after factoring in additional loan fees, insurance requirements, and bank charges. The mathematics only work favorably when properties generate yields well above financing costs or when significant capital appreciation is expected.
Cash-on-cash returns can improve with leverage if investors can secure favorable financing terms and purchase properties with yields exceeding 12-15%. However, the limited mortgage availability for foreigners means most international investors must rely on cash purchases or alternative financing structures through local partners, which adds legal complexity and risk to investment transactions.
What are the typical rental prices for different property types and sizes?
Indonesian rental prices vary dramatically by location and property type, with Bali commanding premium rates and Jakarta offering more moderate pricing for long-term leases.
| Property Type | Typical Monthly Rent | Location Notes |
|---|---|---|
| Jakarta Studio (CBD) | $370-400 | Central business district |
| Jakarta 1BR | $460-495 | Average across city |
| Jakarta 2BR | $615 | Standard apartment |
| Jakarta 3BR | $1,540 | Premium locations |
| Bali 1BR Apartment | $200-400 | Tourist low season |
| Bali Standard Villa | $250-2,600 | Wide range by location |
| Bali Luxury Villa | $3,000-5,000 | Seminyak/Canggu premium |
Jakarta's rental market centers around $28-30 per square meter monthly in central business district locations, making it relatively affordable compared to other major Asian cities. The structured pricing reflects the city's established long-term rental market with clear tiers based on location and amenities.
Bali's rental market operates on different dynamics due to its tourist focus and seasonal variations. Villa rentals can range from budget options at $250 monthly to ultra-luxury properties commanding $5,000 or more during peak seasons. The wide pricing spectrum reflects the diverse international clientele from budget backpackers to high-net-worth individuals seeking exclusive properties.
What's the difference in returns between short-term rentals (like Airbnb) and long-term rentals?
Short-term rentals in Indonesia significantly outperform long-term leases, particularly in tourist destinations where daily rates can generate yields of 8-15% compared to 4-10% for traditional rentals.
Bali and Lombok short-term rental markets demonstrate exceptional performance with occupancy rates reaching 80-89% during peak seasons and average daily rates up to $93 for well-positioned properties. Luxury villas can generate monthly revenues exceeding $2,800, translating to annual yields of 10-20% when managed professionally. The tourist-driven demand allows properties to capture premium pricing that long-term rentals cannot match.
Long-term rentals provide more stable but lower returns, typically yielding 6-10% for well-located properties with less seasonal variation. These investments appeal to investors seeking predictable cash flows without the intensive management requirements of short-term operations. Long-term tenants also provide more stable occupancy, reducing the risk of extended vacancy periods that can impact short-term rental returns.
Short-term rental management requires significant additional investment in licensing (Pondok Wisata permits in Bali), professional cleaning services, guest management, and marketing. These operational costs, combined with higher seasonal vacancy risks, must be weighed against the premium pricing potential when evaluating investment strategies.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Indonesia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are the vacancy rates by property type and location, and how do they affect yield?
Vacancy rates in Indonesia vary significantly between market segments, with Jakarta's serviced apartment sector experiencing elevated vacancy while Bali's short-term market maintains strong occupancy levels.
Jakarta's serviced apartment market faces challenges with occupancy rates falling to 56-65% in Q1 2025, reflecting oversupply in certain segments and reduced corporate travel demand. This elevated vacancy directly impacts yields by reducing effective rental income, making property selection and location crucial for maintaining target returns. Properties in prime business districts typically maintain higher occupancy than suburban or secondary locations.
Bali's short-term rental market demonstrates more resilient occupancy patterns, averaging 66% annually with peaks reaching 89% during high tourist seasons. The seasonal nature means properties may experience lower occupancy during monsoon months but can capitalize on premium rates during peak periods. Well-managed properties in prime tourist areas consistently outperform market averages.
Long-term lease properties typically achieve 80-90% occupancy for assets in established business districts, university areas, or residential neighborhoods with strong transportation links. Luxury properties often experience higher vacancy rates due to smaller tenant pools and more selective requirements, requiring careful market positioning to maintain occupancy levels.
What kind of tenant profiles usually rent in Indonesia, and how stable are they as renters?
Indonesian rental markets serve distinct tenant profiles depending on location and property type, with urban professionals providing stability while tourist markets offer higher returns but greater turnover.
Jakarta's apartment market primarily serves corporate professionals, expatriates, students, and local middle-class families. These tenants typically sign 1-3 year leases, providing stable income streams for property owners. Expatriate tenants often prove most reliable due to corporate housing allowances and higher income levels, though they may relocate when employment contracts end. Local professionals represent a growing segment as Indonesia's economy develops and urbanization continues.
Bali and Lombok markets cater to a different demographic including international tourists, digital nomads, and remote workers seeking short-term accommodation. These tenants pay premium rates but typically stay 1-6 months, requiring more intensive property management and marketing efforts. The growing digital nomad community provides a new middle ground between traditional short and long-term rentals.
University areas attract student tenants who provide consistent demand but often have limited budgets and higher turnover rates. Business districts near major corporations tend to attract the most stable tenant profiles with steady employment and longer-term housing needs, making these locations attractive for investors prioritizing occupancy stability over maximum yields.
How have rents and yields changed compared with five years ago and one year ago, and what's the forecast?
Indonesian rental yields have declined from peak levels of 10-13% in 2019-2022 to current ranges of 5.4-7.2%, primarily due to property price appreciation outpacing rental growth in major markets.
The five-year trend shows yields peaked during 2019-2022 when property prices remained relatively stable while tourism recovery drove rental demand. However, significant property price increases in 2023-2024 compressed yields even as rental rates continued growing. Jakarta and Bali experienced the most dramatic compression as international investment and domestic demand pushed purchase prices higher faster than rental markets could adjust.
The 2024 market averaged 6.1% yields nationwide, showing gradual decline from previous years. By September 2025, yields have stabilized in the 5.4-7.2% range, with tourist destinations like Bali and Lombok maintaining outlier high returns of 10-15% for premium properties while urban markets have normalized to more sustainable levels.
Forecasts for 2025-2030 project compound annual growth rates of 5-8% for property prices, with yields likely to stabilize or rise slightly in tourism areas and secondary cities as rental markets catch up to price appreciation. Indonesia's rental yields of 10-15% in prime tourism areas significantly outperform regional competitors like Thailand (4-6%), Malaysia (3-5%), and Singapore (2-4%), though Jakarta's 4-7% yields remain competitive regionally but not globally exceptional.
It's something we develop in our Indonesia property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Indonesia's rental property market offers compelling opportunities for investors willing to navigate its complexities and regional variations. Tourist destinations like Bali and Lombok provide exceptional yields of 10-20% for well-managed short-term rentals, while urban centers offer more stable but moderate returns of 4-8% for long-term investments.
Success requires careful consideration of substantial transaction costs, ongoing tax obligations, and the limited financing options available to foreign investors. The 20% rental income tax for non-residents, combined with 8-12% total purchase costs, significantly impacts net yields and must be factored into investment calculations from the outset.
Sources
- Global Property Guide - Indonesia Rent Yields
- LinkedIn - Indonesia Rental Income Analysis
- Global Property Guide - Indonesia Rental Yields
- Juwai Asia - Indonesia Property Investment
- BambooRoutes - Indonesia Property Market Outlook
- Indoned - Rental Yields in Indonesia
- Marina Bay City - Indonesian Property Market Outlook 2025
- Farpoint - Property Investment Indonesia 2025