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
What will happen in Indonesia’s real estate market? Will prices go up or down? Is Bali still a hotspot for foreign investors? How is Indonesia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who buy properties in Indonesia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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2) More subsidized housing projects will emerge in urban areas due to the government's focus on affordable housing
The government's focus on affordable housing is set to lead to more subsidized housing projects in urban areas.
In Indonesia, the government is ramping up its budget for affordable housing, aiming to deliver 3 million housing units annually. A big chunk of these, about 800,000 units, will be subsidized under the Housing Financing Liquidity Facility by 2025. This clearly shows their commitment to expanding affordable housing options.
To make this happen, they've rolled out policies and incentives to get developers on board. For instance, the extension of the VAT exemption for buyers is expected to make housing more affordable. Plus, financial support through the Housing Financing Liquidity Facility is making it easier for developers to build these units.
There are already successful examples, like the affordable green housing project by the International Finance Corporation and FARPOINT Realty Indonesia. This initiative, part of the One Million Houses Program, plans to build around 8,000 houses across Indonesia, including urban areas like Greater Jakarta.
These efforts are not just about numbers; they're about creating sustainable living spaces. The green housing project is a testament to how affordable housing can also be environmentally friendly, setting a benchmark for future developments.
With these strategies, the government is not just addressing the housing shortage but also ensuring that urban areas become more inclusive and accessible for everyone. The focus on affordable housing is a step towards a more balanced urban development.
Sources: Expat Indonesia, Consultamo, IFC
We have made this infographic to give you a quick and clear snapshot of the property market in Indonesia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Properties in flood-prone areas will become less desirable due to more frequent natural disasters
Floods are becoming more frequent, making properties in flood-prone areas less appealing.
In Indonesia, the number of floods has jumped from 1,080 in 2020 to around 1,255 in 2023. This increase signals a higher risk of property damage, which naturally makes owning property in these areas less attractive. As floods become more common, insurance premiums are also rising for properties in these regions. The property insurance market in Indonesia is growing because more people want coverage for natural disasters, leading to higher reinsurance costs.
These increased costs make properties in flood-prone areas less appealing to buyers. In places like Jakarta, which often experiences flooding, property values are dropping due to the high risk of damage. This decline in value further discourages potential homeowners and investors from considering these areas. The frequent floods not only affect property values but also increase the cost of living due to the need for constant repairs and maintenance.
For those thinking about buying property in the country, it's crucial to consider these factors. The rising insurance costs and declining property values in flood-prone areas are significant concerns. Potential buyers should weigh these risks carefully, as they can impact both the short-term and long-term value of their investment. The trend of increasing natural disasters is reshaping the real estate landscape, making it essential to stay informed and cautious.
Sources: Statista, Insurance Business Mag, Prevention Web
4) Eco-friendly home demand will raise prices in Bogor and Bandung where these developments are more feasible
The demand for eco-friendly homes is booming in places like Bogor and Bandung.
In recent years, the Indonesian green buildings market has been valued at $22.3 billion, and it's only getting bigger. People are more aware of the environment now and want homes that are healthier and sustainable. This shift is making eco-friendly homes more popular.
The government is helping this trend along with some pretty sweet incentives. They're offering tax cuts and faster administrative processes to developers who build green. Plus, there's the Indonesia Green Affordable Housing Program aiming to build 100,000 green homes, which is a big boost for the market.
Eco-friendly homes aren't just good for the planet; they offer healthier living conditions too. Indonesia is perfect for this with its abundant renewable energy sources like solar and hydroelectricity. This makes areas like Bogor and Bandung prime spots for green development.
As more people want these eco-friendly homes, property prices in these areas are likely to rise. It's a win-win for both the environment and the real estate market.
Sources: Business Indonesia, AIP Publishing, GlobalData
6) Demand for properties with EV charging facilities will grow as electric vehicles become more popular
Electric vehicle sales in Indonesia skyrocketed by 502% from 2022 to 2023, marking a significant shift in the automotive landscape.
With the government pushing for 2.1 million electric motorcycles and 400,000 electric cars by 2025, it's clear that EVs are here to stay. This push is backed by attractive incentives like reduced value-added tax and no luxury tax for 2024, making EVs more appealing to buyers. As more people make the switch, the demand for homes with charging facilities is expected to rise.
People's preferences are changing too. A University of Indonesia survey found that over 70% of the public is keen on owning electric vehicles, mainly due to environmental concerns. This shift in interest means that properties equipped with charging stations will likely become hot commodities.
Charging stations are popping up everywhere, especially in residential areas. PLN's initiative to install thousands of these stations by 2025 will make it much easier for EV owners to charge at home. This convenience is set to increase the attractiveness of properties with built-in charging facilities.
Imagine living in a place where you can charge your car as easily as you charge your phone. As EVs become more common, homes with charging capabilities will be in high demand, offering a modern lifestyle that aligns with future transportation trends.
For those considering buying property in Indonesia, it's worth noting that the rise of electric vehicles will increase demand for properties with charging facilities. This trend is not just a passing phase but a significant shift in how people live and commute.
Sources: IIPC New York, US-ASEAN, ADL Indonesia
7) Digital land registries will make property transactions easier and cut down on fraud
Digital land registries are revolutionizing property transactions, making them quicker and more secure.
Estonia led the way in 2023 by using digital systems to slash real estate processing times. With e-ID cards and digital signatures, forging documents became nearly impossible, which not only sped up transactions but also saved the country 2% of its GDP. This move effectively wiped out real estate crimes, showcasing the power of digital innovation.
The UK also jumped on the digital bandwagon, experimenting with blockchain to manage land ownership data. This technology showed promise in speeding up house purchases and cutting down delays. The Netherlands followed suit, seeing a 50% decrease in land transfer processing time through blockchain pilots, which likely reduced fraud opportunities.
Estonia's digital land registry system is a shining example of how technology can boost efficiency and transparency. All registration applications are submitted online, and decisions are made digitally, with blockchain ensuring data security. This system has been praised for its effectiveness, and the high trust Estonians have in digital services is a testament to its success.
In Estonia, all registration applications are submitted online, and decisions are made digitally, with blockchain ensuring data security. This system has been praised for its effectiveness, and the high trust Estonians have in digital services is a testament to its success.
With these advancements, property transactions are becoming more streamlined, reducing the chances of fraud and making the process more efficient for everyone involved.
Sources: GovInsider, Idea Usher
8) Property values will rise along Jakarta's new MRT lines as the network expands
The expansion of the MRT in Jakarta is set to boost property values along the new lines.
People are eager to live near MRT stations, and this isn't just a hunch. We've seen it before with projects like the Light Rail Transit and the Jakarta-Bandung High-Speed Train, where property values shot up in nearby areas. It's a pattern that keeps repeating.
Look at the numbers: areas close to existing MRT lines in Jakarta have already seen property values rise. This isn't just a Jakarta thing. In Cleveland, for example, properties near high-quality transit systems like BRT have seen value increases of up to 41.5% for multi-family homes. It's a trend that speaks volumes.
Real estate experts, especially those from JLL Indonesia, are confident that the MRT expansion will continue to drive property values up. They point out that the government's push for infrastructure development is a major factor in this growth. It's not just about convenience; it's about smart investment.
Surveys show that buyers are on the lookout for properties with easy access to public transport. This preference makes living near MRT stations a hot investment opportunity. It's not just about getting from A to B; it's about enhancing your property's worth.
Sources: OSU News, JLL New Zealand, Enterprise League
We made this infographic to show you how property prices in Indonesia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) New airports in secondary cities will boost property investment attractiveness in these areas
The development of new airports in secondary cities is making these areas more attractive for property investment.
In Indonesia, there's been a 34% rise in passenger traffic at airports in 2023, especially in secondary cities with new airports. This surge shows a growing interest in traveling to these areas, which is a promising sign for potential property buyers.
As more travelers flock to these secondary cities, property prices are climbing. Places like Lake Toba, Mandalika, and Likupang have seen increased property values thanks to the influx of tourists and investors. This trend highlights how new airports are boosting economic activity and making these regions more appealing for property investment.
The Indonesian government is also playing a big role by investing heavily in infrastructure, including airports, with a 7.8% increase in budget allocation for 2024. This push to improve connectivity is part of a larger plan to stimulate economic growth and attract both foreign and domestic investors.
New airports are not just about better flights; they also mean improved accessibility. The addition of metro lines, skytrains, and toll roads is making travel easier, which in turn makes these secondary cities more desirable for property investors.
With these developments, secondary cities are becoming hotspots for property investment. The combination of increased travel, rising property values, and government support is creating a perfect storm for investors looking to tap into new opportunities.
Sources: Oxford Business Group, PwC Indonesia, Ipsos
10) Old neighborhoods in Jakarta will be redeveloped due to the government's urban renewal efforts
The government's focus on urban renewal in Jakarta is backed by significant funding and strategic planning.
One standout project, the Socially Inclusive Climate Adaptation for Urban Revitalization, received USD1.3 billion in investment, highlighting the commitment to revamping the city. This kind of financial backing is a clear indicator of the government's dedication to transforming Jakarta's urban landscape.
With the capital moving to Nusantara, there's a ripple effect on infrastructure investments, leading to an expected 8.5% annual growth in construction until 2028. This boom includes major investments in residential and civil engineering, which are essential for breathing new life into old neighborhoods.
Public-private partnerships (PPPs) are also making waves in Jakarta's urban development scene. These collaborations bring in both financial resources and innovative solutions, ensuring that redevelopment projects are not only relevant but also sustainable. The track record of successful PPPs bodes well for the future of Jakarta's urban renewal.
For those considering buying property in Jakarta, these developments mean potential opportunities in revitalized areas. The government's push for urban renewal is likely to transform old neighborhoods into vibrant communities, making them attractive for investment.
As Jakarta undergoes this transformation, the blend of government initiatives and private sector involvement is set to reshape the city's urban fabric. This dynamic environment offers a promising landscape for property buyers looking to invest in a city on the rise.
Sources: C40, Oxford Economics, Go Academica Journal
11) Properties with sustainable features will become more attractive as climate change awareness grows
In Indonesia, 84% of people are now choosing eco-friendly products, showing a big shift towards sustainable living.
Jakarta is seeing a boom in green-certified buildings, with a 15% rise in green commercial areas from 2022 to 2023. This means more buyers are interested in properties with sustainable features.
The Indonesian government is pushing for eco-friendly real estate with the Indonesia Green Affordable Housing Program, aiming to build 100,000 green houses by 2024. This shows a strong move towards sustainable property development.
Media coverage on climate change is making a difference, helping people see why sustainable features in homes matter. This awareness is driving the demand for eco-friendly properties.
As more people understand the benefits of sustainable living, properties with these features are becoming more appealing. This trend is clear in the growing interest in green-certified buildings.
With government support and media focus, the shift towards sustainable properties is gaining momentum, making them a smart choice for future buyers.
Sources: Snapcart, Business Indonesia, Sustainability Magazine
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12) Tech-enabled properties will become more desirable in cities as smart home technology rises
In Indonesia, smart home technology is becoming increasingly popular.
By 2025, nearly a quarter of Indonesian households will have at least one smart device, showing a clear shift towards tech-friendly living spaces. This trend is making properties with smart features more attractive to potential buyers.
The Indonesian government is also pushing for 100 smart cities by 2045, focusing on digital infrastructure and innovative public services. This initiative is enhancing urban living and making tech-enabled homes more appealing as they fit into these future-ready plans.
Young, tech-savvy Indonesians are showing a growing preference for homes with smart technology. The pandemic has only accelerated this trend, as people now value efficient and secure home environments more than ever.
Smart homes are becoming a key factor in urban real estate, especially as consumer behavior shifts towards prioritizing technology. This change is driven by the desire for convenience and security in daily living.
As smart home technology continues to evolve, urban properties with these features are likely to see increased demand. The integration of smart tech into homes aligns perfectly with the government's vision for modern urban living.
Sources: Kadence, Modern Diplomacy, Social Expat
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.