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Indonesia's property market in September 2025 presents a compelling investment landscape with selective regional growth and improving fundamentals. Property prices across major cities show modest but stable growth, with Bali leading at 10-15% annual increases while Jakarta and Surabaya maintain steady 1-2% gains. Foreign buyer interest has surged following relaxed ownership regulations, though local buyers still dominate most transactions at around 85% of total volume.
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Indonesia's property market is experiencing steady growth with strong regional variations, driven by infrastructure development and favorable government policies.
The market offers competitive rental yields averaging 5.4%, with Bali outperforming other regions due to tourism and foreign investment demand.
| Market Indicator | Current Status (Sept 2025) | Outlook |
|---|---|---|
| National Price Growth | 1.1% YoY (Q1 2025) | Steady 1-2% annually |
| Mortgage Interest Rates | 7.5-9.1% (major banks) | Declining trend continues |
| Average Rental Yields | 5.41% nationally | Stable with regional variation |
| Foreign Buyer Share | 15% of total transactions | Growing due to law reforms |
| Market Size | $66.74 billion (2025) | $86.98 billion by 2030 |
| Development Pipeline | 9,317 units (Jakarta, 2025-2026) | Focused on mid-market segment |
| Key Risk Factors | Legal complexity, currency | Mitigated by reforms |
Fact-checked and reviewed by our local expert
Daniel Rouquette 🇫🇷
CEO & Co-Founder at Villa Finder
What's the current trend in Indonesia's property prices across major cities?
Indonesia's residential property market is experiencing modest but stable price growth as of September 2025.
National property price growth reached 1.1% year-over-year in Q1 2025, marking the first real inflation-adjusted increase since Q2 2021. When adjusted for inflation, prices were up by a minimal 0.5% year-over-year, showing genuine market recovery.
Bali leads the country with the strongest price appreciation, recording 10-15% annual increases driven by tourism recovery, foreign investment, and digital nomad demand. Badung Regency and Denpasar have seen particularly strong foreign buyer activity, with increases of 92.1% and 81.3% respectively in foreign ownership registrations.
Jakarta's property prices remain relatively stable with modest growth, particularly in the Central Business District and high-demand residential areas. The capital city faces pressure from new supply additions, with 708 new apartment units completed in Q1 2025 alone.
Surabaya demonstrates steady appreciation with limited volatility, maintaining consistent performance as Indonesia's second-largest economic center. The city benefits from its strategic position as East Java's commercial hub and lower price points compared to Jakarta.
How much demand is coming from foreign buyers compared to local buyers?
Foreign buyer participation in Indonesia's property market has increased significantly since the government relaxed foreign ownership regulations through Government Regulation No. 18 of 2021.
Local Indonesian buyers continue to dominate the market, representing approximately 85% of total property transactions nationwide as of September 2025. This reflects the strong cultural preference for property ownership among Indonesian families and the government's focus on supporting domestic homebuyers through various subsidy programs.
Foreign buyers now account for roughly 15% of total transactions, concentrated primarily in tourist destinations and premium urban developments. Bali shows the highest foreign buyer concentration, with some premium developments reporting foreign participation rates of 30-40% of total sales.
The relaxed ownership laws allow foreigners to own apartments in special economic zones and landed houses under specific requirements, with minimum investment thresholds ranging from $65,000 in northern Sumatra to $325,000 in Bali and Jakarta. Foreign buyers must establish PT PMA companies or use leasehold arrangements to comply with Indonesian property laws.
It's something we develop in our Indonesia property pack.
What's the current mortgage interest rate environment in Indonesia and how is it expected to move?
Indonesia's mortgage interest rate environment has improved significantly, creating more favorable conditions for property buyers as of September 2025.
Bank Indonesia cut its benchmark rate to 5.25% in July 2025, down from 6% at the end of 2024, with further cuts expected before year-end. The central bank has indicated additional 25-50 basis points of rate reductions are possible, targeting a policy rate around 5% by December 2025.
Major Indonesian banks currently offer mortgage rates ranging from 8.04% (BTN) to 12.5% (Bank Mandiri) as of May 2025. BCA offers rates around 9.35%, BNI at 9.10%, and BRI at 10%, representing significant improvements from previous years when rates exceeded 10% across most institutions.
The average mortgage rate across all banks declined to 7.47% in Q2 2024, marking the lowest level since Q1 2020. This downward trend is expected to continue through 2025, supported by controlled inflation remaining within the 2.5%±1% target corridor and the central bank's focus on supporting economic growth.
Lower mortgage costs are driving increased housing affordability, with loan-to-value ratios relaxed to 80% for most residential purchases, making homeownership more accessible to Indonesia's growing middle class.
How are rental yields performing in key cities like Jakarta, Bali, and Surabaya?
Rental yields across Indonesia's major cities show significant variation, with overall national averages remaining competitive for Southeast Asian standards.
| City | Average Gross Rental Yield | Range |
|---|---|---|
| Jakarta | 4.03% | 2.45% - 12.18% |
| Bali | 5.05% | 3.69% - 6.25% |
| Surabaya | 6.62% | 4.76% - 8.45% |
| South Tangerang | 6.39% | 5.42% - 7.00% |
| Tangerang | 4.96% | 4.64% - 5.20% |
| National Average | 5.41% | Down from 6.12% in Q4 2024 |
What's the pipeline of new residential and commercial developments in the next 2-3 years?
Indonesia's development pipeline reflects strong momentum in both residential and commercial sectors, with significant projects scheduled across major urban centers.
Jakarta is expected to receive 9,317 new apartment units by 2026, distributed as 4,516 units in 2024, 3,956 units in 2025, and 845 units in 2026. South Jakarta will lead this supply addition, accounting for 72% of upcoming residential completions through 2027.
The commercial development pipeline includes the $2.58 billion PIK 2 integrated tourism complex and various logistics warehouses driven by e-commerce growth. Office developments are shifting toward flexible workspace formats to accommodate changing business needs post-pandemic.
Nusantara, Indonesia's new capital city, represents the largest development opportunity with $3 billion committed through 2029, including a $419.4 million hospitality-office project. Construction work on major government buildings commenced in Q3 2024 with completion targeted for 2026-2027.
Bali's development pipeline focuses on luxury villas and eco-friendly resorts, with projects like Aquamarine II in Canggu targeting the premium tourism market. Property prices in these developments are projected to rise 5-10% annually through 2025-2026.
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How is government policy, like foreign ownership rules or tax incentives, impacting the market?
Government policy reforms have significantly liberalized Indonesia's property market for both foreign and domestic investors.
The implementation of Government Regulation No. 18 of 2021 allows foreigners to own apartments in special economic zones and landed houses under specific conditions. Foreigners can now acquire property through PT PMA companies with minimum investments of $700,000, or through leasehold arrangements extending up to 30 years with renewal options.
Tax incentives include VAT exemptions on residential units priced up to IDR 5 billion ($325,000), supporting middle-income housing demand. The government also introduced a 25 basis-point interest rate cut to 5.75%, reducing mortgage servicing costs for first-time buyers.
The 3 million houses program received increased funding from IDR 28.2 trillion to IDR 35.2 trillion in 2025, targeting 350,000 affordable housing units for low-income families. This massive public housing initiative is expected to generate 2.3 million jobs and mobilize $2.8 billion in private capital.
New digital registration systems have streamlined property transactions, with electronic Building Approval Permits now issued within two days. These efficiency improvements reduce transaction costs and processing times for both domestic and foreign buyers.
What's the state of infrastructure development and how does it affect property hotspots?
Indonesia's infrastructure development is creating new property hotspots and enhancing existing urban centers through massive public investment programs.
Jakarta's Mass Rapid Transit (MRT) and Light Rail Transit (LRT) expansions are directly impacting property values in connected areas. Properties near transit stations have experienced 15-20% value premiums, similar to patterns observed in Bangkok's BTS Skytrain network development.
The Trans-Sumatra toll road project worth $33 billion is unlocking new industrial corridors and residential development opportunities in previously isolated areas. These connectivity improvements are reducing logistics costs and making secondary cities more attractive for both business and residential investment.
Nusantara capital city development represents $33 billion in infrastructure investment, creating entirely new real estate markets in East Kalimantan. The project includes government buildings, residential zones, and commercial districts scheduled for completion between 2025-2027.
Bali's infrastructure improvements include airport upgrades and new highway connections that enhance property accessibility and tourism appeal. These developments support the island's continued price appreciation and rental yield performance above national averages.
How are occupancy rates trending in the residential, office, and retail sectors?
Occupancy rates across Indonesia's property sectors show mixed performance, reflecting post-pandemic recovery patterns and changing usage demands.
1. Residential occupancy remains stable with improving demand in affordable housing segments driven by government programs and demographic growth2. Jakarta's serviced apartment occupancy fell to 56.8% in Q1 2025, down 5.4% quarter-over-quarter due to government budget cuts affecting corporate tenants3. Office occupancy faces pressure from hybrid work trends, particularly in Jakarta's CBD where companies are reducing physical space requirements4. Retail occupancy is recovering in tourist destinations like Bali but remains challenged in traditional shopping centers due to e-commerce growth5. Hotel occupancy shows strong recovery with average daily rates returning to pre-pandemic levels across three-star to luxury segmentsThe residential sector benefits from sustained urbanization and middle-class growth, while commercial sectors adapt to changing business models and consumer behaviors post-pandemic.
What are the main risks investors should watch out for in Indonesia's property market?
Indonesia's property market presents several risk factors that investors must carefully evaluate before making investment decisions.
Legal complexity represents the primary risk for foreign investors, with property ownership laws requiring navigation through PT PMA company structures or leasehold arrangements. Land title verification can be challenging, particularly outside major cities where documentation standards may be inconsistent.
Currency volatility poses ongoing risk, with the rupiah reaching 27-year lows against the US dollar in recent months. Foreign investors face potential losses from currency depreciation when repatriating funds, making hedging strategies important for international buyers.
Market oversupply concerns exist in certain segments, particularly luxury condominiums in Jakarta's CBD where new inventory has outpaced end-user absorption. This creates extended sales cycles and pressure on rental rates in premium segments.
Regulatory changes can impact foreign ownership rights and tax obligations. While recent reforms favor foreign investment, policy shifts under new administrations could introduce additional compliance requirements or ownership restrictions.
It's something we develop in our Indonesia property pack.
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 does Indonesia's economic growth and inflation outlook tie into property demand?
Indonesia's macroeconomic fundamentals provide a supportive backdrop for sustained property demand through 2025-2026.
GDP growth is projected at 5.1-5.6% for 2025, driven by infrastructure spending, domestic consumption, and export performance. This economic expansion directly supports household income growth and purchasing power for property investment among Indonesia's expanding middle class of over 50 million households.
Inflation remains well-controlled at 2.4% as of July 2025, up from 1.9% in June but still within Bank Indonesia's 2.5%±1% target range. Low inflation preserves real purchasing power and supports continued property affordability for domestic buyers.
The government's fiscal position remains stable with deficit targets at 2.78% of GDP, allowing continued infrastructure investment that benefits property markets. Public spending on strategic projects worth $128.6 billion creates jobs and economic activity that translate into housing demand.
Foreign direct investment surged 18.55% in Q3 2024, reflecting growing international confidence in Indonesia's economic stability. This investment flow supports both commercial real estate demand and indirect residential demand through job creation and economic development.
What's happening with land prices in both urban centers and emerging secondary cities?
Land prices across Indonesia show a clear divergence between established urban centers and emerging secondary markets.
Jakarta's land prices remain stable to moderately appreciating, constrained by high existing values and supply limitations within prime locations. The city's land scarcity is driving vertical development and pushing residential buyers toward satellite cities with better value propositions.
Emerging secondary cities are experiencing faster land appreciation as infrastructure connectivity improves. Medan in North Sumatra has shown particularly strong performance due to foreign direct investment and strategic trade position near Malaysia.
Batam Island's digital economic zone designation has driven significant land value increases, supported by proximity to Singapore and special economic zone incentives. The government targets IDR 76.8 trillion in new investments for such zones by 2025.
Lombok is gaining attention as "the next Bali" with land prices rising rapidly following new airport infrastructure and the Mandalika MotoGP circuit development. Early-stage investment opportunities exist before full tourism development materializes.
Tourism zones across Bali, parts of Sulawesi, and coastal areas continue seeing faster land appreciation than national averages, driven by both domestic and international tourism recovery post-pandemic.
How do Indonesia's property market returns compare with other Southeast Asian countries?
Indonesia's property market returns position competitively within Southeast Asia, offering attractive risk-adjusted opportunities for regional investors.
| Country/Region | Average Rental Yield | Price Growth (Annual) |
|---|---|---|
| Indonesia (National) | 5.41% | 1.1% (Real: 0.5%) |
| Indonesia (Bali) | 7-15% | 10-15% |
| Thailand (Bangkok) | 6.05% | 2-3% |
| Malaysia (KL) | 4.60% | 3-4% |
| Philippines (Manila) | 5.28% | 4-5% |
| Vietnam (Ho Chi Minh) | 5-7% | 8-12% |
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 property market in September 2025 presents a balanced investment environment with selective opportunities for informed investors.
The combination of government policy support, infrastructure development, and demographic trends creates a foundation for sustained growth, particularly in strategically located properties near transportation networks and tourist destinations.
It's something we develop in our Indonesia property pack.
Sources
- Global Property Guide - Indonesia Property Market Analysis
- Mordor Intelligence - Indonesia Real Estate Market Report
- Bamboo Routes - Indonesia Property Market Outlook
- Focus Economics - Indonesia Interest Rate Forecast
- Katadata - Indonesia Mortgage Interest Rates
- Lets Move Indonesia - Property Market Analysis
- Bamboo Routes - Bali Rental Yield Analysis
- World Bank - Indonesia Economic Outlook