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Surabaya's property market is experiencing robust growth with average prices reaching IDR 20 million per square meter in 2025. The city's real estate sector shows strong fundamentals driven by infrastructure development, foreign investment, and urban expansion, though affordability challenges persist for local buyers.
Over the past five years, property prices have surged 33-43%, delivering annual growth rates of 6-8%. Rental yields remain attractive at 6.62% average for apartments and potentially reaching 8-15% for houses, positioning Surabaya as a compelling investment destination in Indonesia's property landscape.
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Surabaya's property market shows strong momentum with IDR 20 million per square meter average prices and 6-8% annual growth rates driven by infrastructure projects and foreign investment.
While rental yields remain attractive at 6.62% for apartments and up to 15% for houses, affordability challenges persist with a price-to-income ratio of 21.8, creating opportunities for investors but barriers for local buyers.
| Market Indicator | Current Value (2025) | 5-Year Change |
|---|---|---|
| Average Price per m² | IDR 20 million | +33-43% |
| Annual Growth Rate | 6-8% | Consistent trend |
| Apartment Rental Yield | 4.76-8.45% | Stable range |
| Price-to-Income Ratio | 21.8 | Increasing |
| Mortgage Interest Rate | ~6% | Moderate levels |
| Commercial Occupancy | 76% | Improving |
| Foreign Investment Growth | +35% (2022-23) | Strong increase |
What are current property prices per square meter in Surabaya across different neighborhoods?
As of September 2025, residential property prices in Surabaya average IDR 20 million per square meter, equivalent to approximately USD 1,330.
The fastest-growing neighborhoods include Gubeng, Darmo, and Rungkut, representing central established districts and newly developing areas respectively. These locations command premium prices due to their strategic positioning and ongoing development projects.
Apartment prices typically average IDR 500 million (USD 35,000) for standard units, while houses generally start around IDR 1 billion (USD 70,000). Upscale housing developments in areas like Citraland and West Surabaya command significantly higher premiums, often exceeding the city average by 30-50%.
The median property price across all types reaches approximately IDR 2.21 billion (USD 150,000), reflecting the diverse range of housing options available throughout the city.
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How have these prices changed over the past 5 years, and what's the annual growth rate?
Surabaya's property market has experienced substantial growth over the past five years, with prices increasing from IDR 14-15 million per square meter in 2020 to IDR 20 million per square meter in 2025.
This represents a total price appreciation of 33-43% over the five-year period, translating to an annualized growth rate of 6-8%. This consistent growth trajectory positions Surabaya among Indonesia's most dynamic property markets.
The primary drivers behind this price growth include significant infrastructure upgrades, increased foreign investment flows, accelerating urbanization, and supportive government incentives for property development. These factors have created sustained upward pressure on property values across most neighborhoods.
The growth has been particularly pronounced in areas benefiting from new infrastructure projects and those attracting foreign investment, where annual appreciation rates often exceed the city average.
What's the current rental yield in Surabaya for apartments, houses, and commercial spaces?
Rental yields in Surabaya present attractive opportunities for investors across different property types as of September 2025.
| Property Type | Rental Yield Range | Average Yield |
|---|---|---|
| Apartments | 4.76% - 8.45% | 6.62% |
| Houses | 8% - 15% | 11.5% |
| Commercial Spaces | 15% - 40% | 27.5% |
| Premium Properties | 4% - 6% | 5% |
| Emerging Areas | 10% - 20% | 15% |
Houses consistently deliver higher yields than apartments, often ranging from 8-15% depending on location and property age. The variation in yields reflects different market segments, with older properties in established areas typically offering higher rental returns.
Commercial properties present the most lucrative opportunities, with yields potentially reaching 30-40% in high-demand commercial nodes, though these require larger initial investments and more sophisticated management.
How do property prices compare to average household incomes in Surabaya?
The affordability situation in Surabaya presents significant challenges for local buyers, with a price-to-income ratio of approximately 21.8 as of September 2025.
This ratio indicates that median property prices are nearly 22 times the average annual household income, well above international affordability benchmarks. Mortgage payments can consume up to 224% of annual income for typical properties, highlighting the substantial financial commitment required.
The high price-to-income ratio reflects rapid property price appreciation that has outpaced income growth in the region. While this creates opportunities for investors with capital, it poses significant barriers for local first-time buyers seeking homeownership.
Median household income remains substantially below the threshold needed for comfortable property purchases, contributing to sustained rental demand and supporting the investment case for buy-to-let properties.
What's the current demand and supply situation—are there more buyers or more listings right now?
Surabaya's property market demonstrates robust demand fundamentals driven by urban migration, GDP growth, and infrastructure expansion, though supply dynamics vary significantly by property segment.
Demand remains strong across most property categories, fueled by continued population growth, economic development, and increasing foreign investment interest. The city's strategic position as East Java's economic hub continues to attract both local and international buyers.
However, oversupply exists specifically in the apartment sector, where recent development booms have created excess inventory in certain submarkets. This oversupply primarily affects mid-range apartment developments rather than premium properties or single-family homes.
The demand-supply imbalance varies by location, with established central areas maintaining balanced conditions while some outer districts experience temporary oversupply pressures that could affect pricing and absorption rates.
How many new residential and commercial projects are being launched in Surabaya this year?
Surabaya is experiencing unprecedented development activity in 2025, with hundreds of new residential and commercial projects being launched throughout the year.
The development surge is concentrated particularly in emerging and outlying areas, driven by sustained population growth and comprehensive government development initiatives. These projects span from affordable housing complexes to luxury residential towers and mixed-use commercial developments.
Commercial and mixed-use developments are attracting significant attention from both investors and owner-occupiers, reflecting confidence in Surabaya's economic growth trajectory. Many projects incorporate modern amenities and sustainable design features to meet evolving buyer preferences.
The scale of new project launches reflects developer confidence in market fundamentals, though it also contributes to supply pressures in certain segments, particularly affecting apartment inventory levels.
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What's the current vacancy rate for rental properties in the city?
Surabaya's rental property market shows mixed vacancy patterns across different property segments as of September 2025.
Commercial retail properties maintain a 76% occupancy rate, representing a 24% vacancy rate that has been improving annually. This occupancy level indicates a recovering commercial sector with room for further improvement as economic activity expands.
Residential vacancy rates are higher in certain apartment segments due to recent supply surges from new developments. The apartment oversupply particularly affects mid-range properties in outer districts, where absorption rates have slowed compared to central locations.
Houses and premium apartments in established neighborhoods maintain lower vacancy rates, benefiting from sustained demand from both local residents and expatriate communities. These properties typically achieve faster rental absorption due to limited comparable supply.
How are mortgage interest rates and lending conditions affecting affordability in Surabaya?
Current mortgage interest rates in Surabaya hover around 6% as of September 2025, closely aligned with Indonesia's BI Rate of 5.5%.
Lending conditions have been relatively supportive, with banks offering relaxed Loan-to-Value (LTV) ratios and favorable financing terms to qualified borrowers. These conditions reflect government efforts to stimulate property market activity and support economic growth through real estate investment.
Despite favorable lending terms, affordability challenges persist due to the high price-to-income ratio of 21.8. The combination of moderate interest rates with elevated property prices means that while financing is available, the absolute payment amounts remain substantial relative to local incomes.
Foreign buyers often benefit from more favorable lending terms and have greater purchasing power, contributing to sustained demand in higher-end market segments where financing conditions are most competitive.
What impact are infrastructure projects, like new roads or public transport, having on property values?
Infrastructure development is serving as a primary catalyst for property value appreciation across Surabaya, with new roads, commercial hubs, and updated public transport systems significantly boosting values in targeted neighborhoods.
Properties located close to new infrastructure projects and CBD zones are experiencing the most pronounced value increases, often outperforming the city average by 15-25%. The government's record budget allocation for East Java infrastructure represents a major factor sustaining price growth momentum.
Transportation improvements, including road network expansions and public transit upgrades, are expanding the boundaries of desirable residential areas. Previously peripheral neighborhoods are becoming more accessible and attractive to both residents and investors.
The infrastructure impact extends beyond immediate vicinity effects, creating broader economic development that supports sustained property demand across multiple districts. These projects are reshaping Surabaya's urban landscape and property value map.
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 do foreign investment rules and local regulations affect property ownership in Surabaya?
Foreign property ownership in Surabaya operates under Indonesia's updated regulatory framework, which has become increasingly investor-friendly in recent years.
Foreigners can own property through Hak Pakai (Right to Use) arrangements or by establishing a PT PMA (Foreign Investment Company) structure. Recent regulatory relaxations have contributed to a 35% increase in foreign investment during 2022-2023, demonstrating the effectiveness of policy reforms.
Streamlined regulations and targeted incentives have bolstered international capital inflows, particularly driving demand in higher-end market segments. The simplified application processes and reduced bureaucratic barriers have made Surabaya more accessible to foreign investors.
These regulatory improvements position Surabaya competitively within Southeast Asia's property investment landscape, offering foreign buyers viable pathways to property ownership while supporting local economic development through increased investment flows.
What are analysts and local real estate agents predicting for property price growth over the next 2–3 years?
Market analysts and real estate professionals forecast continued moderate growth of 3-5% annually for Surabaya property prices over the next 2-3 years, representing a more sustainable pace compared to recent high growth rates.
Key areas near infrastructure projects are expected to outperform the city average, potentially achieving 7-10% annual appreciation as transportation and commercial developments reach completion. These locations benefit from improved accessibility and enhanced commercial activity.
Rental yields are projected to remain attractive compared to Jakarta and other major Indonesian cities, especially in commercial real estate and upmarket apartment segments. This yield advantage supports continued investor interest and capital inflows.
The consensus view anticipates steady but moderated growth as the market matures and supply-demand dynamics rebalance. Most forecasts incorporate assumptions about continued infrastructure investment and stable economic conditions supporting sustained property demand.
What risks could negatively affect the market outlook—like oversupply, economic slowdown, or policy changes?
Several risk factors could potentially impact Surabaya's property market trajectory, with oversupply representing the most immediate concern for certain segments.
Oversupply pressures are particularly acute in apartment and high-rise segments, where recent development booms could pressure both prices and rental rates in less desirable locations. This excess inventory may take 18-24 months to absorb in affected submarkets.
| Risk Factor | Impact Level | Affected Segments |
|---|---|---|
| Apartment Oversupply | High | Mid-range apartments, outer districts |
| Interest Rate Increases | Medium | All financed purchases |
| Economic Slowdown | Medium | Luxury and investment properties |
| Policy Changes | Low-Medium | Foreign investment segments |
| Global Economic Shocks | Low-Medium | Export-dependent areas |
Economic slowdown, interest rate hikes, and abrupt policy changes represent additional risks that could weigh on market momentum. Rising mortgage costs would particularly affect affordability in a market where price-to-income ratios are already stretched.
Regulatory tightening and external economic shocks, including global economic disruptions or commodity price volatility, could negatively affect demand and price growth, especially if financing costs increase substantially or foreign investment flows decline.
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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's property market outlook remains fundamentally positive, supported by strong economic growth, infrastructure development, and increasing investor interest from both domestic and international sources.
While challenges exist around affordability and selective oversupply, the combination of attractive rental yields, ongoing urbanization, and strategic infrastructure investments creates a compelling investment environment for those with appropriate capital and risk tolerance.
Sources
- Surabaya Price Forecasts - BambooRoutes
- Surabaya Property Analysis - BambooRoutes
- Indonesia Property Market Report - Juwai Asia
- Surabaya Real Estate Trends - BambooRoutes
- Indonesia Property Price History - Global Property Guide
- Indonesia Rental Yields - Global Property Guide
- Surabaya Property Investment Index - Numbeo
- Surabaya Retail Occupancy Analysis - Real Estate Asia