Authored by the expert who managed and guided the team behind the Indonesia Property Pack
Everything you need to know before buying real estate is included in our Indonesia Property Pack
Medan offers rental yields ranging from 2.5% to 8% depending on property type and location, with apartments averaging 3.9-5% and commercial properties delivering the highest returns at 5-8%.
The city's rental market has shown strong demand growth, particularly in areas like Medan Baru and Kampung Baru, driven by professionals, expats, and students seeking modern amenities and proximity to business districts.
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.
Medan's rental market offers diverse opportunities with apartments yielding 3.9-5%, houses 2.5-4.5%, and commercial properties 5-8% as of September 2025.
Prime areas like Medan Baru and Polonia deliver the strongest rental demand, while university districts provide steady student tenant flow.
| Property Type | Average Yield | Monthly Rent Range (IDR) | Best Areas |
|---|---|---|---|
| City Center Apartments | 3.9-5% | 3.2-8.8 million | Medan Baru, Polonia |
| Suburban Houses | 2.5-4.5% | 5-15 million | Cemara Asri, Bumi Asri |
| Commercial Properties | 5-8% | 10-20 million | Kampung Baru |
| Student Housing | 4-6% | 1.6-3.8 million | University areas |
| Short-term Rentals | 5-7%* | Variable | City center |
What are the main property types available in Medan for rental investment?
Medan offers four primary property types for rental investment, each targeting different tenant segments and yield expectations.
Apartments and condominiums represent the most popular choice among investors, particularly attracting professionals, students, and expatriates. The market includes both luxury city center units and more affordable suburban developments, with gross yields averaging 3.9-5% depending on location and amenities.
Single-family houses and townhouses provide another strong investment avenue, especially appealing to families and long-term tenants. These properties are abundant and generally more affordable than apartments, though recent price surges have moderated yields to typically 2.5-4.5% depending on the specific area and tenant profile.
Commercial properties, including shop-houses (ruko), small offices, and retail units, offer the highest potential yields in the Medan market. These investments typically deliver 5-8% returns in high-demand commercial areas, particularly around busy markets and business districts.
Land holdings, while available, are typically held for development purposes or commercial leasing arrangements rather than traditional rental income, making them less suitable for immediate rental yield generation.
Which areas or neighborhoods in Medan tend to offer the strongest rental demand?
Medan Baru leads the city in rental demand growth, experiencing the fastest price and rental appreciation rates as of September 2025.
This premium district attracts professionals and families seeking modern amenities and benefits from ongoing infrastructure upgrades that continue to enhance its appeal. The area's proximity to business centers and international-standard facilities makes it particularly attractive to expatriate tenants willing to pay premium rents.
Kampung Baru demonstrates high local demand driven by its vibrant markets and concentrated commercial activity. This area offers excellent opportunities for investors focused on yield generation, particularly for affordable residential properties and commercial spaces that benefit from the constant foot traffic and business activity.
Polonia and Setiabudi districts cater to the premium expatriate market, offering proximity to international schools and high-end amenities. These areas typically deliver stable yields with lower vacancy rates due to their appeal to high-income tenants and expatriate families seeking quality living environments.
University areas around the University of North Sumatra and University of Medan Area provide consistent student demand, creating reliable rental income streams for investors targeting the student housing market segment.
How do rental yields differ between apartments, houses, and commercial spaces?
| Property Type | Gross Yield Range | Key Factors |
|---|---|---|
| Apartments | 3.9-5% | Higher yields in suburban areas, lower in city center |
| Houses/Townhouses | 2.5-4.5% | Yields compressed by recent price surges |
| Commercial Properties | 5-8% | Best returns in high-traffic business areas |
| Student Housing | 4-6% | Consistent demand near universities |
| Premium Expat Properties | 3-4% | Lower yields but stable, high-quality tenants |
What is the typical purchase price of different property types, including fees and taxes?
Property purchase prices in Medan vary significantly by type and location, with apartments commanding the highest per-square-meter prices as of September 2025.
Apartments average 2.2 billion IDR (approximately $134,200 USD) with costs of 27.1 million IDR per square meter. Houses typically cost 1.3 billion IDR (around $79,300 USD) at 9.8 million IDR per square meter, while townhouses are more affordable at 693 million IDR (approximately $42,273 USD) with 7.8 million IDR per square meter pricing.
Commercial properties average 2 billion IDR (roughly $122,000 USD) with 9.2 million IDR per square meter costs, positioning them between apartments and houses in terms of total investment required.
Additional costs include an 11% VAT, though the Indonesian government offers significant incentives for 2025, providing 0-50% discounts on VAT for qualifying properties. Buyers also face a 5% property transfer tax (BPHTB), and most properties under 2 billion IDR are exempt from VAT under current incentive programs.
Annual property tax stands at 0.5% of assessed value, while mortgage registration fees and other administrative charges apply to financed purchases, though these are generally modest compared to the VAT and transfer tax obligations.
What are the usual ongoing costs for owners, like maintenance, service charges, and property tax?
Property ownership in Medan involves several ongoing costs that directly impact net rental yields and overall investment returns.
Property tax represents a fixed annual cost of 0.5% of the assessed property value, applying consistently across all property types and locations throughout the city.
Maintenance and service charges for apartments typically range from 60,000-120,000 IDR per square meter monthly. For a standard 50 square meter unit, this translates to approximately 3-6 million IDR monthly (roughly $183-366 USD), covering building maintenance, security, and common area upkeep.
Utility expenses including electricity, water, and internet services generally cost 1-2 million IDR monthly for apartment units, though this varies based on usage patterns and unit size.
Property insurance, while optional, typically costs 3-10 million IDR annually for apartments and houses, with higher premiums for luxury properties or large commercial spaces due to increased replacement values and liability exposure.
It's something we develop in our Indonesia property pack.
Don't lose money on your property in Medan
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
How does financing with a mortgage impact the net rental yield compared to cash purchases?
Mortgage financing significantly impacts net rental yields in Medan due to current interest rate levels and market conditions.
Indonesian mortgage rates in Medan average 9.25% for 20-year fixed loans as of September 2025, substantially higher than typical gross rental yields of 4-6% across most property types.
This interest rate differential means mortgaged purchases often produce negative net yields after interest payments, requiring investors to rely primarily on capital appreciation rather than rental income for returns. For example, a property yielding 4% gross with a 9.25% mortgage rate results in negative cash flow after interest payments.
Cash purchases eliminate interest costs entirely, allowing investors to capture the full gross yield as net return, making them significantly more attractive for income-focused investment strategies.
However, leveraged purchases can amplify total returns when property appreciation exceeds the mortgage interest rate, particularly in rapidly appreciating areas like Medan Baru where prices have increased 47.7% annually in 2025, though this strategy carries higher risk and requires careful market timing.
What are the average monthly rents for different property types and sizes in Medan?
Rental rates in Medan show significant variation based on property type, size, and location, with city center properties commanding premium rents.
One-bedroom apartments in the city center average 3.17 million IDR monthly (approximately $193 USD), while similar units in suburban areas rent for around 1.6 million IDR monthly (roughly $97 USD), demonstrating the substantial location premium for central areas.
Three-bedroom apartments follow a similar pattern, with city center units averaging 8.75 million IDR monthly (about $535 USD) compared to 3.75 million IDR monthly (around $229 USD) in suburban locations, reflecting the strong demand for family-sized accommodation in prime areas.
Single-family houses typically rent between 5-15 million IDR monthly ($306-918 USD) depending on size, location, and amenities, with gated community properties commanding the highest rents within this range.
Commercial properties in prime locations can generate 10-20 million IDR monthly ($612-1,224 USD) in rental income, though these figures depend heavily on foot traffic, business district proximity, and the specific commercial use permitted.
How do short-term rental returns compare with long-term rental returns in practice?
Short-term rentals in Medan can potentially generate 20-40% higher monthly rental income compared to long-term arrangements, but this comes with significant operational complexities and risks.
City center and luxury apartments show the strongest short-term rental performance, particularly those targeting business travelers and tourists visiting Medan's commercial districts and cultural attractions.
However, occupancy rates for short-term rentals frequently drop below 50% during off-peak periods, significantly impacting annual returns despite higher nightly rates. Seasonal fluctuations and economic conditions can create substantial income volatility that long-term rentals avoid.
Long-term rentals provide steadier, more predictable income streams with lower management requirements and costs. These arrangements are particularly favored in suburban areas, family-oriented neighborhoods, and expatriate communities where tenants seek stability and landlords prefer reliable monthly income.
Management costs for short-term rentals are substantially higher, including cleaning, marketing, guest communication, and property maintenance, often requiring professional management services that can consume 20-30% of gross rental income.
What kind of tenants typically rent in Medan, and what are their profiles?
1. **Expatriate tenants** prefer gated communities and city center condominiums with international amenities, security, and proximity to international schools and business districts.2. **Local professionals** typically seek apartments in Medan Baru and city center areas for easy access to business districts, modern amenities, and professional networking opportunities.3. **Families** gravitate toward houses and townhouses in mid-tier and outer districts, prioritizing space, safety, and proximity to schools and family-friendly amenities.4. **University students** represent a consistent rental segment, typically seeking affordable one-bedroom apartments or shared housing arrangements near campus areas.5. **Business travelers** create demand for short-term accommodations in central locations with business facilities and transportation access.What are the average vacancy rates by area and property type?
Vacancy rates in Medan vary significantly by location and property type, directly impacting investment returns and cash flow stability.
City center apartments experience 10-15% average vacancy rates, with potential increases during off-peak seasons when business travel and expatriate movement slow down, affecting demand for premium rental properties.
Suburban houses and townhouses maintain lower vacancy rates of 5-10%, benefiting from stable family tenant demand and longer lease terms. Properties with good proximity to schools and public transportation typically achieve the lower end of this range.
Commercial spaces show varying vacancy rates depending on location, with prime areas near markets and business districts maintaining 5-8% vacancy rates due to consistent business demand and foot traffic.
The student rental market experiences higher volatility with 12-18% average vacancy rates, fluctuating significantly based on semester schedules and academic calendar timing, requiring careful planning for cash flow management.
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.
How have rental prices and yields changed over the past 5 years and in the last year?
Medan's rental market has experienced dramatic changes, particularly in the past year, with substantial price appreciation compressing yields despite strong rental demand.
Apartment prices surged 47.7% annually in 2025, creating significant capital appreciation for existing owners but slightly compressing rental yields as purchase prices outpaced rental growth in the short term.
Houses led the market with an extraordinary 67.8% price increase over the past 12 months, substantially reducing yields for new investors as acquisition costs have risen faster than rental rates can adjust to market conditions.
Commercial properties showed more moderate but still strong appreciation at 13.8% annually, with yields remaining stable or slightly improving in high-activity markets where business demand continues to grow.
Historical perspective reveals that yields across all property segments are significantly lower than levels seen a decade ago, when typical yields reached 10-13%, compared to current ranges of 4-6% reflecting market maturation and increased investor interest.
What are the smartest rental property choices in Medan right now, and how do yields compare with other big Indonesian cities today and in the next 1, 5, and 10 years?
The smartest rental property investments in Medan focus on three key segments that balance yield potential with capital appreciation prospects.
Medan Baru luxury condominiums represent the top choice for investors seeking capital growth combined with expatriate rental demand, offering stable tenancy and strong appreciation potential despite moderate current yields of 3.9-4.5%.
Kampung Baru commercial properties and affordable houses provide the best yield-focused opportunities, delivering 5-8% returns in commercial spaces and 4-5% in residential properties while benefiting from consistent local demand and business activity.
University area apartments offer steady student demand with 4-6% yields and predictable rental cycles, providing reliable cash flow for investors comfortable with seasonal vacancy patterns.
Compared to other major Indonesian cities, Medan's current yields of 4-6% are competitive with Jakarta's 4-5.4% range but below Surabaya's 6.6% yields, while offering similar or better capital appreciation prospects than Bandung.
It's something we develop in our Indonesia property pack.
Long-term forecasts indicate steady 1-3% annual price growth for Medan properties over the next decade, with premium and infrastructure-connected areas expected to achieve 5-7% annual appreciation, positioning the city for 30-50% cumulative price growth over 10 years.
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.
Medan's rental market offers compelling opportunities for investors willing to navigate recent price appreciation and focus on areas with strong tenant demand.
The city's diverse property types cater to different investment strategies, from yield-focused commercial properties to capital appreciation plays in premium residential areas, making it a competitive choice among Indonesian secondary cities.
It's something we develop in our Indonesia property pack.
Sources
- Indonesia Real Estate - Medan Property
- BambooRoutes - Medan Price Forecasts
- BambooRoutes - Medan Property
- BambooRoutes - Medan Property Investment
- BambooRoutes - Medan Real Estate Trends
- Global Property Guide - Indonesia Price History
- MUC - VAT Incentive Extension 2025
- Juwai Asia - Property Taxes
- Numbeo - Cost of Living Medan
- BambooRoutes - Medan Real Estate Market