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
Foreigners can legally buy apartments in Indonesia through specific ownership structures like Hak Pakai (Right to Use) and leasehold arrangements, though they cannot own freehold land. The process requires valid residency permits and involves significant legal and tax considerations that differ from those applicable to Indonesian citizens.
As of September 2025, the Indonesian apartment market offers attractive investment opportunities in major cities like Jakarta, Bali, and Surabaya, with rental yields ranging from 4% to 15% depending on location and property type. Foreign ownership comes with higher tax obligations and specific legal requirements that make professional guidance essential.
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.
Foreigners can purchase apartments in Indonesia through Hak Pakai (Right to Use) or leasehold structures, requiring valid residency permits and involving total costs 7-12% above listing prices.
The Indonesian apartment market offers rental yields between 4-15%, with Bali and Jakarta being the most popular destinations for foreign investors seeking both lifestyle and investment returns.
| Aspect | Foreigners | Indonesian Citizens |
|---|---|---|
| Ownership Type | Hak Pakai, Leasehold | Freehold (Hak Milik) |
| Residency Requirement | KITAS, KITAP, or Second Home Visa | Indonesian citizenship |
| Capital Gains Tax | 5% of gross proceeds | 2.5% of transaction value |
| Rental Income Tax | 10-20% of gross income | 5-35% progressive on net income |
| Mortgage LTV | Up to 60% (40% down payment) | Up to 80-90% |
| Popular Investment Cities | Bali, Jakarta, Surabaya | All major cities |
| Average Purchase Costs | 7-12% above listing price | 5-8% above listing price |
Fact-checked and reviewed by our local expert
Daniel Rouquette 🇫🇷
CEO & Co-Founder at Villa Finder
Can foreigners legally buy an apartment in Indonesia, and how does that compare to what locals can buy?
Yes, foreigners can legally purchase apartments in Indonesia, but they face significant restrictions compared to Indonesian citizens.
Foreigners cannot own freehold land (Hak Milik), which is exclusively reserved for Indonesian nationals. Instead, foreign buyers must acquire apartments through alternative ownership structures such as Hak Pakai (Right to Use) or leasehold arrangements. These legal frameworks allow foreigners to control, use, and transfer apartments while maintaining legal ownership protection through registration at the National Land Office (BPN).
Indonesian citizens enjoy full property ownership rights, including freehold ownership of apartments, houses, villas, and land with virtually no restrictions. They can purchase any type of residential property anywhere in the country and hold indefinite ownership rights that can be passed to heirs without complications.
Foreign ownership is limited to apartments in buildings with strata title status specifically approved by the government for foreign ownership. The property must also meet minimum investment thresholds, typically around IDR 2 billion (approximately $130,000 USD) in major cities like Jakarta and Bali.
What are the visa or residency requirements for a foreigner to own an apartment?
Foreign apartment ownership in Indonesia requires valid long-term residency status, not just tourist visas.
The acceptable residency permits include KITAS (temporary stay permit), KITAP (permanent stay permit), or the recently introduced Second Home Visa. Tourist visas, visit visas, and short-term permits do not qualify for property ownership. The government requires proof of legitimate residence and income sources to prevent speculative foreign investment.
The Second Home Visa, launched in late 2023, has become the most popular option for property investors. This visa allows stays of up to 10 years and specifically caters to foreign property buyers with a minimum investment requirement of IDR 2 billion ($130,000 USD). The visa includes multiple entries and can be renewed, making it ideal for investors who want property ownership without employment or retirement visa complications.
KITAS holders must demonstrate employment, investment, or family ties to Indonesia, while KITAP requires longer-term residency commitments. Each permit type involves different application processes and fees, with the Second Home Visa being the most straightforward for pure property investment purposes.
It's something we develop in our Indonesia property pack.
Do you need to be physically present in Indonesia to complete the purchase of an apartment?
Physical presence in Indonesia is not always mandatory for apartment purchases, but it is highly recommended for due diligence and legal security.
Foreigners can legally appoint a qualified Indonesian attorney or notary to act as their legal representative during the purchase process. The power of attorney must be properly executed and notarized, allowing the representative to sign documents, transfer funds, and complete registration procedures on the buyer's behalf.
However, being present in Indonesia during key transaction phases offers significant advantages. Physical presence allows buyers to personally inspect the property, verify building conditions, meet with developers or sellers directly, and ensure all documentation is properly executed. Many experienced investors recommend being present for the final signing and payment phases to avoid potential complications or misunderstandings.
Remote purchases carry higher risks, including potential fraud, document discrepancies, and communication issues with local representatives. The Indonesian legal system strongly favors in-person verification and signature authentication, making physical presence a valuable protection against future disputes.
What is the step-by-step process for a foreigner to buy an apartment, and which documents are required?
The foreign apartment purchase process in Indonesia involves seven distinct steps that typically take 2-4 months to complete.
First, obtain valid residency status through KITAS, KITAP, or Second Home Visa applications. Second, identify suitable apartments that meet foreign ownership criteria, including strata title status and minimum investment thresholds. Third, engage qualified legal professionals for comprehensive due diligence on property titles, building permits, and developer credentials.
Fourth, negotiate and sign the Sale and Purchase Agreement (Akta Jual Beli) at a registered notary office. Fifth, complete payment obligations according to the agreed schedule, whether lump sum or installment payments for off-plan properties. Sixth, register ownership rights with the National Land Office (BPN) to receive the official Hak Pakai certificate in your name. Seventh, complete final handover procedures and receive property keys.
Required documentation includes: valid passport with appropriate visa stamps, current residency permit (KITAS/KITAP/Second Home Visa), Indonesian tax identification number (NPWP), comprehensive bank statements proving fund sources, recent passport photographs, and supplementary documents such as marriage certificates if applicable. Additional documents may be required depending on the specific property type and location.
Is hiring a lawyer mandatory for foreigners when purchasing an apartment in Indonesia, or is it just recommended?
Hiring a lawyer is not legally mandatory but is considered essential for protecting foreign buyer interests in Indonesian real estate transactions.
Indonesian law requires a licensed notary (PPAT - Land Deed Making Official) to execute and register property transactions, but notaries primarily serve administrative functions and represent government interests rather than buyer advocacy. Notaries ensure legal compliance and proper documentation but do not provide strategic advice or protect buyer rights during negotiations.
Independent legal counsel offers critical services including comprehensive due diligence on property titles, building permits, and zoning compliance. Lawyers verify developer licensing, review contract terms, identify potential legal issues, and ensure foreign ownership structures comply with current regulations. They also coordinate with notaries, banks, and government offices to streamline the transaction process.
Legal fees typically range from 0.5% to 1.5% of the transaction value, representing a small investment compared to potential losses from legal complications, fraudulent transactions, or regulatory non-compliance. Most experienced foreign property investors consider legal representation an essential cost of doing business in Indonesia's complex regulatory environment.
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What taxes, fees, and additional costs should a foreigner expect when buying and later reselling an apartment?
Foreign apartment buyers in Indonesia should budget an additional 7-12% above the listing price for total acquisition costs.
Purchase costs include Transfer Tax (BPHTB) at 5% of property value after non-taxable thresholds, Value Added Tax (VAT) at 11% if the developer is VAT-registered, notary and legal fees ranging from 0.5% to 1.5% of transaction value, and variable registration fees with government offices. Due diligence costs, agent commissions, and miscellaneous administrative fees add another 1-3% to total expenses.
Annual ownership costs include Property Tax (PBB) at approximately 0.1% of assessed property value, building management fees ranging from IDR 15,000 to IDR 50,000 per square meter monthly depending on building amenities, and utility connections. Insurance, maintenance reserves, and professional property management can add another 1-2% annually for non-resident owners.
Resale taxation significantly favors Indonesian citizens over foreigners. Foreign sellers pay capital gains tax at 5% of gross sale proceeds, while Indonesian citizens pay 2.5% final tax on transaction value. Foreigners cannot claim deductions for improvements, holding costs, or depreciation, making the effective tax burden substantially higher than domestic sellers face.
It's something we develop in our Indonesia property pack.
Are mortgages available for foreigners buying apartments in Indonesia, and if so, what are the typical interest rates and conditions?
Mortgages are available for qualifying foreigners, but terms are significantly more restrictive than those offered to Indonesian citizens.
Major Indonesian banks including BCA, Mandiri, and international banks like HSBC Indonesia offer mortgage products to foreign residents with valid long-term permits. Loan-to-value ratios typically cap at 60%, requiring minimum down payments of 40% compared to 10-20% for Indonesian citizens. Maximum loan terms generally limit to 10-15 years versus 20-25 years for domestic borrowers.
Interest rates for foreign borrowers range from 8% to 12% annually, depending on the bank, borrower profile, and economic conditions. These rates reflect higher perceived risk and limited credit history accessibility for foreign applicants. Some banks offer preferential rates for borrowers with substantial Indonesian banking relationships or high-value deposit accounts.
Qualification requirements include stable Indonesian income sources, comprehensive financial documentation, property insurance, and often personal guarantees or additional collateral. Many foreign buyers choose cash purchases to avoid restrictive mortgage terms and expedite transaction completion, particularly given Indonesia's historically volatile interest rate environment.
Which cities or regions in Indonesia are the most popular among foreigners for buying apartments, and why?
Bali dominates foreign apartment investments, accounting for approximately 60% of foreign residential purchases nationwide.
Bali's popularity stems from established tourism infrastructure, international airport connectivity, large expatriate communities, and lifestyle amenities that appeal to both investors and residents. Areas like Seminyak, Canggu, and Ubud offer rental yields between 7% and 15% due to strong short-term rental demand from international tourists and digital nomads.
Jakarta ranks second for foreign apartment investments, attracting business-focused buyers who need proximity to corporate headquarters, financial districts, and international schools. South Jakarta districts like Kemang, Senayan, and SCBD offer modern high-rise apartments with yields between 5% and 8%, supported by stable expatriate tenant demand.
Surabaya has emerged as a third-tier destination for cost-conscious foreign investors seeking higher yields in Indonesia's second-largest city. Commercial growth, university populations, and lower entry prices create opportunities for investors willing to accept less international amenities in exchange for better financial returns.
Batam and Lombok represent emerging markets with specific appeal - Batam for Singapore proximity and industrial growth, Lombok for undeveloped beach tourism potential and lower competition from established foreign investors.
Which areas currently offer the best liveability, rental income potential, tourism-driven demand, and capital appreciation forecasts for apartments?
| Location | Rental Yield | Capital Growth Forecast | Key Advantages |
|---|---|---|---|
| Bali (Seminyak/Canggu) | 10-15% | 5-8% annually | Tourism demand, beach access, international community |
| Jakarta (South Jakarta) | 5-8% | 2-4% annually | Business hub, expat tenants, infrastructure development |
| Yogyakarta | 4-6% | 8-10% annually | Cultural center, university town, affordable entry |
| Surabaya | 6-8% | 3-5% annually | Industrial growth, large population, lower prices |
| Bandung | 4-7% | 4-6% annually | Cool climate, weekend tourism, creative economy |
| Lombok | 6-12% | 6-9% annually | Emerging tourism, lower competition, infrastructure development |
| Batam | 5-8% | 4-7% annually | Singapore proximity, industrial zones, tax advantages |
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 is the current breakdown of apartment prices across major Indonesian cities and regions?
Indonesian apartment prices vary dramatically between major cities, with Bali commanding premium pricing and secondary cities offering affordable entry points.
As of September 2025, Bali apartment prices range from IDR 55-66 million per square meter in popular areas like Seminyak and Canggu, making a 100-square-meter apartment cost between IDR 5.9-7.3 billion ($380,000-$470,000 USD). Jakarta premium districts charge IDR 40-60 million per square meter, while mid-market areas average IDR 25-35 million per square meter.
Yogyakarta offers the most affordable major city pricing at IDR 10-20 million per square meter, making it attractive for first-time foreign investors or those seeking higher rental yields relative to purchase prices. Surabaya and Bandung fall in the middle range at IDR 15-25 million per square meter, providing balance between affordability and urban amenities.
Price growth rates vary significantly by location, with Yogyakarta leading at 8.9% annual appreciation, Bali averaging 7% annually, and Jakarta showing modest 0-3% growth in established areas. These growth rates reflect local economic conditions, infrastructure development, and supply-demand dynamics rather than overall national trends.
It's something we develop in our Indonesia property pack.
What are the most common mistakes and pitfalls foreigners face when buying apartments in Indonesia?
The most dangerous mistake foreigners make is attempting to purchase freehold land through illegal nominee arrangements with Indonesian citizens.
Nominee structures involve foreigners providing funds while Indonesian citizens hold legal title, creating extreme vulnerability to disputes, fraud, and total loss of investment. Indonesian courts consistently rule against foreigners in nominee disputes, and recent legal changes have increased penalties for both parties involved in such arrangements.
Property due diligence failures represent another common costly mistake. Foreign buyers often skip professional verification of building permits, developer licensing, strata title registration, and zoning compliance. Inadequate due diligence can result in purchases of illegal buildings, unregisterable titles, or properties subject to government seizure or demolition orders.
Underestimating total acquisition costs leads many buyers to budget incorrectly for purchases. Hidden fees, taxes, legal costs, and registration expenses typically add 7-12% to advertised prices, creating cash flow problems for unprepared buyers. Currency fluctuation risks also affect foreign buyers who fail to hedge exchange rate exposure during extended purchase processes.
Many foreigners fall victim to high-pressure sales tactics from developers or agents who promise unrealistic returns, guaranteed buybacks, or simplified legal processes. These promises rarely materialize, leaving buyers with overpriced properties in unsuitable locations or developments that fail to complete construction.
How do the fiscal implications, such as rental income taxation or capital gains tax, affect foreigners differently compared to locals?
Indonesian tax policy significantly disadvantages foreign property owners compared to Indonesian citizens across all major tax categories.
Rental income taxation for foreigners involves flat rates of 10% on gross rental income for residents, plus potential additional 20% withholding for non-residents, creating effective rates up to 30% of gross income. Indonesian citizens pay progressive income tax rates of 5-35% on net rental income after deductions for maintenance, depreciation, and operating expenses, often resulting in much lower effective tax rates.
Capital gains taxation creates even larger disparities between foreign and domestic sellers. Foreigners pay 5% final tax on gross sale proceeds with no deductions allowed for purchase costs, improvements, or holding expenses. Indonesian citizens pay 2.5% final tax on transaction value and can qualify for reduced rates or exemptions for properties held longer than five years.
Property tax (PBB) rates remain similar for foreign and domestic owners at approximately 0.1% of assessed value annually. However, foreigners often face higher property assessments due to perceived higher value locations and inability to negotiate effectively with local tax officials. Transfer taxes and transaction fees also tend to be higher for foreign buyers due to additional documentation and verification requirements.
These tax disadvantages mean foreign investors must achieve higher gross returns to match after-tax returns available to Indonesian investors, making property selection and location strategy more critical for investment success.
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.
Foreign apartment ownership in Indonesia offers legitimate investment opportunities through proper legal structures, but requires careful navigation of complex regulations and higher tax obligations compared to domestic investors.
Success depends on choosing appropriate locations like Bali or Jakarta, securing proper residency status, engaging qualified legal professionals, and budgeting for total costs that exceed listing prices by 7-12%.
Sources
- DSG Pay - Buying Property in Indonesia for Foreigners
- Emerhub - Laws and Regulations for Buying Property in Indonesia
- Global Property Guide - Indonesia Buying Guide
- Exotiq Property - Visa Requirements for Property Investment
- Immigrant Invest - Indonesia Second Home Visa
- Indonesia Real Estate - Property Buying Process
- Exotiq Property - Can Foreigners Buy Property in Indonesia
- CPT Corporate - Step by Step Guide for Foreigners
- Bali Lawyers - Real Estate Purchase Guide
- Mercury Estate - Taxes and Expenses