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Surabaya rental yields range from 6.47% to 40% depending on property type, with apartments averaging 6.47%-7.22% and commercial properties reaching 30-40%. The Surabaya property market offers compelling opportunities for investors seeking strong returns in Indonesia's second-largest city.
Commercial properties and land plots deliver the highest yields, while residential properties provide more stable returns with lower vacancy risks.
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Surabaya offers rental yields from 6.47% for apartments to 40% for commercial properties, with neighborhoods like Citraland and Darmo providing stable returns.
Commercial properties and land plots generate the highest yields, while residential properties offer more predictable income streams for long-term investors.
| Property Type | Average Yield | Best Areas |
|---|---|---|
| Apartments | 6.47%-7.22% | Citraland, Pakuwon City |
| Houses/Villas | 10-18% | Darmo, Citraland |
| Luxury Properties | 15-25% | Premium neighborhoods |
| Commercial | 30-40% | Business districts |
| Land Plots | 25-37% | Development areas |
| Student Housing | 8-12% | Kertajaya, Gubeng |
| Short-term Rentals | 7-15% | Central areas |
What are the main property types in Surabaya and how do their rental yields differ?
Surabaya's property market offers four main investment categories with significantly different yield profiles.
Residential apartments deliver the most conservative returns at 6.47%-7.22% gross rental yields, making them suitable for investors seeking stable income with lower risk exposure. Houses and villas generate substantially higher yields of 10-18%, with luxury properties reaching 15-25% in premium neighborhoods like Darmo and Citraland.
Commercial properties dominate the high-yield segment, delivering exceptional returns of 30-40% for office and retail spaces. Land plots designated for development or commercial leasing achieve yields of 25-37%, particularly attractive for investors with longer investment horizons and development expertise.
The yield differential reflects risk and management requirements, with commercial properties requiring more active management but offering superior returns compared to residential investments.
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Which neighborhoods or districts offer the strongest yields right now?
Three distinct neighborhood categories provide the highest rental yields in Surabaya as of September 2025.
Premium expat-friendly areas including Citraland, Darmo, and Pakuwon City generate strong yields through consistent demand from international families and professionals seeking quality accommodation. These neighborhoods command higher rents while maintaining low vacancy rates, making them ideal for long-term rental strategies.
University districts such as Kertajaya, Manyar, and Gubeng near major educational institutions deliver excellent yields of 8-12% through student and young professional housing demand. These areas benefit from consistent rental demand throughout the academic year, though they may experience seasonal fluctuations.
Suburban areas increasingly attract families and remote workers, driving up yields as demand outpaces supply in these previously overlooked markets. The shift toward suburban living, accelerated by remote work trends, creates emerging opportunities for yield-focused investors.
Commercial districts maintain the highest absolute yields, though they require more sophisticated market knowledge and active management to maximize returns.
How do yields vary depending on the size and surface area of a property?
Property size directly correlates with rental yield potential in Surabaya's current market conditions.
Smaller apartments, particularly one-bedroom units, generate lower yields of 6-8% due to limited tenant demand and higher per-square-meter costs. These properties often attract single professionals or students with constrained budgets, limiting rental premium opportunities.
Larger residential properties including three to four-bedroom houses consistently achieve higher yields of 10-18% through strong family and professional demand. These properties command premium rents from expat families, local professionals, and multi-generational households seeking space and privacy.
Luxury homes and villas deliver the highest residential yields of 15-25% in premium neighborhoods, targeting high-income expats, executives, and affluent local families willing to pay substantial premiums for quality and location.
Surface area optimization becomes crucial for yield maximization, with properties offering efficient layouts and desirable outdoor space commanding rent premiums that translate directly into superior yield performance.
What is the average total purchase price including fees and taxes for different types of properties?
| Property Type | Average Price (USD) | Total Cost Including Fees |
|---|---|---|
| 1-bedroom apartment | $100,000 | $107,000-$110,000 |
| 3-bedroom house | $170,000 | $182,000-$187,000 |
| Luxury villa | $300,000+ | $321,000-$330,000+ |
| Commercial property | Varies significantly | +10-15% in fees |
| Land plot | Market dependent | +6-10% in costs |
| Student housing unit | $80,000-$120,000 | $85,000-$132,000 |
| New build apartment | Base price + VAT | +21% total costs |
What are the ongoing costs such as property tax, maintenance, and management fees that affect net yield?
Annual ongoing costs significantly impact net rental yields and require careful calculation for accurate investment analysis.
Property tax (PBB) represents approximately 0.1% of cadastral value annually, providing relatively low carrying costs compared to other Asian markets. Rental income tax at 10-11% of gross rental income creates the largest ongoing expense for property investors.
Maintenance costs vary substantially by property type, ranging from $500-2,000 annually for apartments and houses. Apartment buildings typically charge monthly management fees (IPL) subject to VAT, while standalone properties require direct maintenance management by owners.
Additional expenses include utilities during vacancy periods, insurance premiums, and repair costs that can fluctuate based on property age and quality. Commercial properties often require higher maintenance budgets due to tenant fitout requirements and more intensive usage patterns.
Effective net yield calculation must account for these ongoing costs, which typically reduce gross yields by 2-4 percentage points depending on property type and management efficiency.
How does financing with a mortgage impact rental yields compared to buying in cash?
Mortgage financing at current rates of approximately 6% creates leverage opportunities that can enhance or reduce effective yields depending on rental income levels.
Cash purchases eliminate interest costs and provide immediate positive cash flow, making them particularly attractive for foreign investors who may face more restrictive lending conditions. Cash buyers avoid financing complexity and benefit from faster transaction processes.
Mortgage financing amplifies returns when rental income exceeds the cost of debt service, allowing investors to deploy capital across multiple properties rather than concentrating investment in single assets. Government incentives including VAT relief and relaxed loan-to-value ratios currently support mortgage buyers in 2025.
Highly leveraged investments may reduce net yields if rental income fails to cover mortgage payments plus ongoing costs, particularly during vacancy periods or economic downturns.
The optimal financing strategy depends on individual investor circumstances, risk tolerance, and ability to secure favorable lending terms in the Indonesian market.
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What are the typical rents for apartments, houses, and commercial units, both furnished and unfurnished?
Surabaya rental rates vary significantly based on property type, location, and furnishing status as of September 2025.
One-bedroom apartments rent for IDR 4-5.3 million monthly, while two-bedroom units command IDR 5 million monthly in standard locations. Four-bedroom houses achieve approximately IDR 75 million annually, reflecting strong demand from family tenants and professionals.
Furnished properties command premium rents of 10-30% above unfurnished equivalents, with the higher premiums applied to shorter-term leases and properties targeting expat tenants. The furnished premium reflects convenience value and the significant upfront cost savings for tenants.
Commercial rental rates fluctuate based on location, size, and specific business requirements, with prime locations commanding substantial premiums over secondary areas. Retail spaces in established shopping areas generate higher rents than office spaces in emerging business districts.
Rental pricing trends show stabilization after significant increases from 2020-2025, with current rates reflecting market equilibrium between supply and demand conditions.
How do rental yields compare between short-term rentals like Airbnb and long-term leases?
Short-term rentals offer higher yield potential but require significantly more active management and carry greater vacancy risks.
Airbnb and similar platforms in Surabaya can generate yields of 7-15%, though performance varies dramatically based on location, property quality, and management efficiency. These yields typically fall below Bali's tourist-driven market but can exceed long-term rental returns for well-positioned properties.
Long-term leases provide more predictable income streams with yields of 6.47%-7.22% for apartments and higher rates for houses, offering stability that appeals to passive investors seeking consistent cash flow. Family and professional tenants typically sign longer lease agreements, reducing turnover costs and vacancy periods.
Short-term rental success requires proximity to business districts, tourist attractions, or transportation hubs, limiting viable locations compared to long-term rental opportunities throughout the city.
Management intensity for short-term rentals includes guest communication, cleaning coordination, and marketing activities that may require professional services or significant owner time investment.
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 kinds of tenants are most common in Surabaya, and how do their profiles influence rent stability?
Surabaya's rental market serves three primary tenant categories, each with distinct characteristics affecting rent stability and yield optimization.
Expat families and international professionals represent the most stable tenant segment, typically seeking furnished properties in premium neighborhoods for longer lease periods. These tenants generally accept higher rents in exchange for quality, location, and service, making them ideal for yield-focused investors.
Local professionals including managers, entrepreneurs, and skilled workers form the largest tenant base, seeking reasonable pricing combined with convenient locations near business districts or transportation networks. This segment provides steady demand with moderate rent growth expectations.
Students and young workers prioritize affordability and flexibility, often accepting smaller spaces or shared accommodation in exchange for lower costs. While this segment can generate solid yields through higher density, it may experience higher turnover and seasonal fluctuations.
Tenant profile directly influences rent stability, with longer-term professional and family tenants reducing vacancy risks and management costs compared to more transient tenant segments.
What are the vacancy rates by property type and area, and how do they affect returns?
Vacancy rates significantly impact net rental yields and vary considerably across property types and locations in Surabaya.
Apartment buildings experience higher vacancy rates of 10-20% in suburban areas due to oversupply in certain segments, while premium apartments in established neighborhoods maintain lower vacancy rates through consistent demand from stable tenant profiles.
Commercial properties face challenging conditions with 24% vacancy rates, though retail occupancy forecasts project improvement to 76% in 2025. These higher vacancy rates reflect economic transition and changing business patterns affecting commercial real estate demand.
Premium neighborhoods including Citraland, Darmo, and Pakuwon City maintain lower vacancy rates due to stable expat and family markets, making these areas more attractive for investors prioritizing occupancy stability over maximum yields.
Student housing areas generally achieve strong occupancy rates when priced appropriately for the target market, though seasonal variations may create temporary vacancy periods between academic terms.
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How have average rents and yields changed compared to 5 years ago and compared to last year, and what are the forecasts for 1, 5, and 10 years ahead?
Surabaya property prices increased 33-43% from 2020-2025, with rental rates rising significantly but stabilizing recently as the market reached new equilibrium levels.
Current yields of 7-30% depending on property type represent a decrease from peak levels achieved a decade ago, reflecting market maturation and increased property values. The yield compression indicates market development and growing investor confidence in Surabaya real estate.
One-year forecasts predict moderate price appreciation of 6-8% annually, driven by continued foreign direct investment, expat population growth, and Indonesia's economic development. Rental demand remains stable as remote work trends and business expansion continue supporting housing demand.
Five-year projections indicate steady growth in both property values and rental rates, with yields likely maintaining current levels unless significant oversupply develops in specific segments. Government infrastructure investments and economic development plans support medium-term growth expectations.
Ten-year outlook remains positive barring major economic disruptions, with Surabaya's position as Indonesia's second-largest city supporting long-term rental demand and property value appreciation for well-positioned investments.
How do Surabaya's rental yields stack up against other major Indonesian cities or similar regional hubs?
| City | Average Rental Yield | Property Price (IDR/m²) |
|---|---|---|
| Surabaya | 7.22% | IDR 20 million |
| Jakarta | 4.27% | IDR 27.2 million |
| Bali (Denpasar) | 6-15% | IDR 13-20 million |
| Bandung | 8-10% | IDR 12.3 million |
| Medan | 6-9% | IDR 15 million |
| Makassar | 7-11% | IDR 18 million |
| Semarang | 8-12% | IDR 16 million |
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.
Surabaya presents compelling rental yield opportunities ranging from conservative 6.47% apartment yields to exceptional 40% commercial returns, positioning it favorably against other Indonesian markets.
Success requires careful property selection, understanding local tenant preferences, and accounting for ongoing costs that impact net yields by 2-4 percentage points across all property types.
It's something we develop in our Indonesia property pack.
Sources
- Global Property Guide - Indonesia Price History
- BambooRoutes - Surabaya Property Analysis
- Global Property Guide - Indonesia Rental Yields
- Own Property Abroad - Indonesia ROI Analysis
- BambooRoutes - Surabaya Real Estate Trends
- Global Property Guide - Indonesia Buying Guide
- Indonesia Real Estate - Property Buying Process
- Wise - Buy Property in Indonesia Guide
- BambooRoutes - Surabaya Price Forecasts
- Mercury Estate - Indonesia Property Taxes