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Foreigners can legally buy and hold property in Medan, but face significant restrictions compared to Indonesian citizens. Leasehold, right-to-use titles, and strata-title apartments are the main options available, while full freehold ownership remains exclusively for Indonesian nationals.
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Foreigners in Medan can purchase property through leasehold agreements (25-30 years), right-to-use titles (Hak Pakai) with valid residency, or strata-title apartments.
Property prices in Medan range from $800-$1,500 per square meter with rental yields of 5-8%, making it more affordable than Jakarta or Bali.
| Ownership Type | Requirements | Duration | Typical Use |
|---|---|---|---|
| Leasehold (Hak Sewa) | No residency required | 25-30 years, renewable | Residential/commercial |
| Right to Use (Hak Pakai) | Valid residency permit | 30 years + extensions | Houses, apartments |
| Strata-title | Valid residency permit | Varies | Condos, apartments |
| PT PMA Structure | Business investment | Company lifetime | Investment properties |
| Freehold (Hak Milik) | Indonesian citizenship only | Permanent | All property types |
Can foreigners legally own property in Medan, and how do the rules differ from Indonesian citizens?
Foreigners cannot own freehold property in Medan under Indonesian law, which reserves full ownership rights exclusively for Indonesian citizens.
As of September 2025, foreigners have four main legal pathways to acquire property rights in Medan. The most accessible option is leasehold (Hak Sewa), which allows foreigners to secure property use for 25-30 years without requiring Indonesian residency. For those with valid residency permits, the right-to-use title (Hak Pakai) provides stronger protection for up to 30 years with possible extensions.
Foreign investors seeking commercial opportunities can establish a PT PMA (foreign-owned company) structure to purchase property for business purposes, though this involves more complex legal requirements and higher investment thresholds. Strata-title apartments represent another option for foreigners with proper residency documentation, offering ownership of individual units within developments.
Indonesian citizens enjoy unrestricted freehold ownership (Hak Milik) across all property types, while foreigners must work within these structured alternatives. The key difference lies in the temporary nature of foreign ownership rights, which require renewal or extension procedures that don't apply to Indonesian freehold owners.
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What types of property can foreigners buy in Medan, and which ones are strictly off-limits?
Foreigners in Medan can legally purchase apartments, condominiums, commercial properties, and landed houses through specific ownership structures, but cannot acquire any property under freehold title.
Under leasehold agreements, foreigners can access virtually any property type including single-family homes, townhouses, apartments, and commercial buildings. The right-to-use (Hak Pakai) title allows foreign residents to purchase landed properties and apartments, provided they maintain valid Indonesian residency status such as KITAS, KITAP, or the new Second Home visa.
Strata-title apartments in developments are available to foreigners with proper residency documentation, offering individual unit ownership within larger projects. Through PT PMA company structures, foreign investors can purchase land and buildings for business purposes, including rental properties or commercial ventures with minimum investment requirements typically around IDR 2 billion.
Strictly prohibited for foreigners are any properties under freehold (Hak Milik) title, which remains exclusively for Indonesian citizens. Agricultural land, certain strategic areas near borders or military installations, and properties in specific zones designated for Indonesian nationals only are also off-limits regardless of the ownership structure attempted.
The Second Home visa introduced in recent years has expanded access for foreign buyers willing to invest approximately $130,000, qualifying them for Hak Pakai rights on residential properties.
Do foreigners need a specific visa or residency status to buy or hold property in Indonesia?
Visa or residency requirements depend on the type of property ownership structure chosen, with leasehold agreements requiring no residency but other options demanding valid Indonesian permits.
For leasehold (Hak Sewa) arrangements, foreigners can complete transactions using only tourist visas or visitor permits, making this the most accessible option for non-residents. However, right-to-use (Hak Pakai) titles and strata-title apartment ownership require valid long-term residency such as KITAS (limited stay permit), KITAP (permanent stay permit), or specialized investment visas.
The Second Home visa launched recently allows foreign investors to obtain 5-10 year stays by investing approximately IDR 2 billion ($130,000) in Indonesian real estate or bank deposits. This visa specifically enables Hak Pakai property ownership and has become popular among foreign buyers seeking stronger property rights without full Indonesian residency.
PT PMA company structures for property investment require business visa categories and compliance with foreign investment regulations, typically involving larger capital commitments and ongoing business operations. Retirement visas and other long-term permits may also qualify holders for certain property ownership rights, though specific requirements vary by visa type.
As of September 2025, the Indonesian government continues expanding visa options for foreign property investors, making residency-based ownership more accessible than in previous years.
Is it necessary to be physically present in Indonesia to complete the property purchase process?
Physical presence in Indonesia is not legally required to complete property purchases in Medan, as transactions can be executed through authorized representatives with proper legal documentation.
Foreign buyers can appoint local representatives using properly executed power of attorney documents, allowing the designated person to handle all transaction procedures including document signing, payment processing, and registration with Indonesian authorities. The power of attorney must be notarized and legalized through Indonesian consulates in the buyer's home country to be legally valid.
However, property experts strongly recommend visiting Medan at least once for due diligence purposes, including physical property inspection, meeting with local lawyers or notaries, and verifying all documentation directly. Remote purchases carry higher risks of fraud, misrepresentation, or legal complications that could result in significant financial losses.
The notary public (PPAT) handling the transaction may require video calls or additional verification procedures for remote buyers to confirm identity and consent. Some banks or financial institutions involved in the transaction may also mandate in-person verification for large property purchases or financing arrangements.
While legally possible to complete purchases remotely, successful foreign property investors in Medan typically maintain regular communication with local professionals and visit periodically to monitor their investments and handle renewal procedures.
What are the step-by-step procedures and required documents for foreigners to purchase property in Medan?
The property purchase process in Medan involves six main steps with specific documentation requirements that vary based on the chosen ownership structure.
Step one requires selecting the appropriate ownership structure (leasehold, Hak Pakai, PT PMA, or strata-title) based on residency status and investment goals. Step two involves comprehensive due diligence including title verification, property inspection, and legal compliance checks through qualified Indonesian professionals.
Document preparation forms step three, requiring passport with at least 36 months validity, Indonesian tax ID (NPWP) if applicable, valid visa or residency permits for certain ownership types, marriage certificates for joint ownership, and proof of funds or financing approval. The seller must provide the original land certificate, proof of tax payments, building permits, and clear title documentation.
Step four mandates signing the deed of sale and purchase (Akta Jual Beli) before a licensed notary public (PPAT), as Indonesian law requires notarized property transfers. Step five involves payment of all taxes and fees including the 5% buyer's acquisition tax (BPHTB), 2.5% seller's tax, 1-2% notary fees, and additional administrative charges.
The final step completes registration with the local land office (BPN) to transfer ownership rights and obtain updated certificates reflecting the new owner's information. This process typically takes 2-4 weeks for standard transactions, longer for complex PT PMA structures.
All foreign-language documents require certified translation into Bahasa Indonesia, and certain permits may need approval from local authorities depending on property location and intended use.
Is hiring a local lawyer or notary mandatory, and what role do they play in the transaction?
Hiring a licensed notary public (PPAT) is legally mandatory for all property transactions in Medan, while engaging a lawyer is strongly recommended but not required by law.
The notary public serves as the official witness and certifier of property transfers, responsible for verifying all documentation, ensuring legal compliance, and executing the deed of sale and purchase (Akta Jual Beli). Indonesian law mandates that property ownership transfers occur only through licensed notaries who register transactions with government land offices and maintain official records.
Independent legal counsel provides additional protection through due diligence services, contract review, title searches, and representation during negotiations. Lawyers specializing in foreign property investment help navigate complex ownership structures, identify potential legal issues, and ensure compliance with Indonesian foreign investment regulations.
For remote purchases, lawyers coordinate with notaries to facilitate power of attorney procedures and provide ongoing communication with foreign buyers throughout the process. PT PMA company structures particularly benefit from legal counsel to handle corporate formation, compliance requirements, and ongoing regulatory obligations.
Notary fees typically range 1-2% of transaction value, while legal fees vary from 1-5% depending on transaction complexity and services required. Selecting qualified professionals with experience in foreign property transactions significantly reduces risks and ensures proper legal procedures.
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What are the taxes, fees, and hidden costs involved in buying, holding, and selling property in Medan as a foreigner?
Property transactions in Medan involve multiple taxes and fees that typically total 8-15% of the purchase price, with ongoing costs for property maintenance and ownership.
| Cost Type | Rate/Amount | Paid By | Notes |
|---|---|---|---|
| Acquisition Tax (BPHTB) | 5% of property value | Buyer | Mandatory government tax |
| Transfer Tax | 2.5% of property value | Seller (affects negotiations) | Often passed to buyer |
| Notary Fees | 1-2% of transaction value | Buyer | Legally required |
| Legal/Agent Fees | 1-5% variable | Buyer | Negotiable rates |
| Annual Property Tax (PBB) | 0.1-0.3% of assessed value | Owner | Ongoing annual cost |
| Title Renewal/Extension | $2,000-$10,000 | Owner | Every 25-30 years |
| Property Insurance | 0.1-0.5% annually | Owner | Recommended protection |
Hidden costs often catch foreign buyers unprepared, including local surcharges, utility connection fees, building permits for renovations, and mandatory community fees in residential developments. Leasehold agreements may require periodic renewal payments, while PT PMA structures involve ongoing corporate compliance costs and annual reporting fees.
Currency fluctuation risks affect foreign buyers paying in non-Indonesian currency, potentially adding unexpected costs during extended transaction periods. Property management fees for rental properties typically range 8-15% of rental income, plus maintenance and repair costs.
Are mortgages available to foreigners in Indonesia, and what are the rates, conditions, and practical tips to secure financing?
Mortgage financing for foreigners in Indonesia is extremely limited, with most banks refusing loans to non-residents and those available carrying restrictive terms and high interest rates.
Indonesian banks typically require permanent residency status, substantial local income verification, and significant down payments (often 50-70%) for foreign applicants. Interest rates for approved foreign borrowers range 8-12% annually, considerably higher than rates offered to Indonesian citizens, with loan-to-value ratios capped at 30-50% compared to 80-90% for locals.
PT PMA company structures may provide better financing access, as banks view corporate borrowers more favorably than individual foreign investors. Some international banks operating in Indonesia offer limited mortgage products to their existing high-net-worth clients, but availability remains restricted and terms unfavorable.
Practical financing alternatives include overseas mortgages secured against properties in the buyer's home country, personal loans from international banks, or seller financing arrangements negotiated directly with property vendors. Many successful foreign property investors in Medan use cash purchases or combine personal savings with overseas financing to avoid Indonesian banking restrictions.
As of September 2025, most foreign property purchases in Medan are cash transactions, with financing representing less than 10% of foreign buyer activity due to banking limitations and complex approval processes.
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Which neighborhoods or districts in Medan are most attractive for foreigners to live in, rent out, or invest in for capital appreciation?
Polonia, Setiabudi, Medan Barat, and Medan Selayang represent the most attractive districts for foreign property investment, offering superior infrastructure, security, and rental demand.
Polonia district appeals to expatriates and affluent locals due to its proximity to international schools, quality healthcare facilities, and modern shopping centers including Centro Mall and Plaza Medan Fair. Property values in Polonia range $1,200-$2,000 per square meter with strong rental yields of 6-8% driven by consistent demand from expatriate families and business professionals.
Setiabudi offers upscale residential developments with excellent security, landscaping, and community amenities that attract foreign residents seeking premium living standards. The area features proximity to universities and business districts, generating steady rental income from students and young professionals with yields typically 5-7%.
Medan Barat benefits from central location and ongoing infrastructure development, making it attractive for both residential and commercial property investment. New residential projects in this area show strong capital appreciation potential of 5-10% annually due to urban development and improved transportation links.
Medan Selayang provides more affordable entry points for foreign investors while maintaining good access to city center amenities and employment hubs. Areas near major universities such as Universitas Sumatera Utara generate consistent rental demand from students and faculty, though yields may be lower at 4-6% due to seasonal fluctuations.
Investors should focus on properties near international schools, hospitals, major malls, and transportation hubs for optimal rental performance and capital appreciation potential.
What do the latest liveability index, rental yields, rental income potential, tourism figures, and growth forecasts say about Medan's property market?
Medan's property market shows stable fundamentals with rental yields of 5-8%, moderate tourism growth, and steady local economic expansion, though it lacks the international recognition of Jakarta or Bali.
The liveability index for Medan ranks it as a regional center with adequate infrastructure, healthcare, and educational facilities, though it scores lower than major Indonesian cities on international connectivity and cultural amenities. Air quality and traffic congestion present ongoing challenges that affect long-term residential appeal for expatriates.
Rental yields in Medan consistently outperform Jakarta (4-7%) due to lower property prices and stable local demand. New luxury apartments near business districts achieve yields of 7-8%, while properties near universities can reach 8-10% despite seasonal fluctuations. The rental market benefits from Medan's role as North Sumatra's economic hub, generating demand from business travelers and relocated professionals.
Tourism figures show Medan serving primarily as a gateway to North Sumatra attractions like Lake Toba and Bukit Lawang, with limited direct international tourist accommodation demand. However, business tourism and domestic travelers provide consistent short-term rental opportunities, particularly in central locations.
Economic growth forecasts for North Sumatra project 4-6% annual expansion through 2027, supported by palm oil industry development, manufacturing growth, and infrastructure improvements. Population growth in greater Medan area continues at 2-3% annually, supporting residential property demand and rental markets.
Property price appreciation in Medan averages 3-7% annually, lower than Jakarta or Bali but more stable and less volatile, making it suitable for conservative foreign investors seeking steady returns.
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 property prices break down across Medan and nearby regions, and how do they compare to other Indonesian cities?
Property prices in Medan range from $800-$1,500 per square meter depending on location and property type, significantly lower than Jakarta ($1,500-$3,500) and Bali ($2,000-$8,000) but higher than secondary Indonesian cities.
Prime areas like Polonia and Setiabudi command $1,200-$1,800 per square meter for quality apartments and $1,000-$1,500 for landed houses, while emerging districts like Medan Barat offer entry points at $800-$1,200 per square meter. Luxury developments and international-standard projects can exceed $2,000 per square meter, though these remain limited in Medan compared to Jakarta markets.
Rental prices reflect the purchase price differentials, with quality apartments in prime locations commanding $300-$600 monthly rent per bedroom, while budget accommodations near universities start from $150-$250 monthly. Commercial properties in business districts rent for $8-$15 per square meter monthly, considerably less than Jakarta's $20-$40 range.
Regional comparisons show Medan property prices exceeding smaller North Sumatra cities by 50-100%, but offering better infrastructure, amenities, and rental demand. Neighboring regions like Binjai and Deli Serdang provide lower-cost alternatives at $400-$800 per square meter, though with limited foreign buyer interest and rental potential.
The price gap between Medan and Jakarta has narrowed slightly in recent years as infrastructure development and economic growth attract more investment to North Sumatra, though Medan remains significantly more affordable for foreign property investors.
It's something we develop in our Indonesia property pack.
What are the most common mistakes and pitfalls foreigners face when buying property in Indonesia, and how can they be avoided?
The most dangerous mistake foreigners make is using illegal nominee structures, which can result in complete property loss, followed by inadequate due diligence and misunderstanding ownership restrictions.
Nominee arrangements involve using Indonesian citizens as "fronts" to acquire freehold property, violating Indonesian law and leaving foreigners with no legal protection when disputes arise. These structures frequently collapse due to death, divorce, or bad faith by the nominee, resulting in total investment loss with no legal recourse for the foreign investor.
Title confusion represents another major pitfall, as foreigners often fail to verify whether properties are available under titles they can legally acquire. Purchasing property under Hak Milik (freehold) title when only leasehold or Hak Pakai rights are legally possible leads to invalid transactions and potential criminal liability.
Inadequate due diligence causes significant problems when buyers skip comprehensive property inspections, title verification, and legal compliance checks. Hidden liens, unpaid taxes, building permit violations, or disputed ownership can surface after purchase, creating expensive legal battles and potential property loss.
Underestimating ongoing costs catches many foreign buyers unprepared for annual property taxes, renewal fees for leasehold or Hak Pakai titles, maintenance expenses, and currency fluctuation impacts. Budget planning should include 2-5% of property value annually for ongoing ownership costs.
Working with unqualified professionals or skipping legal representation increases risks substantially. Foreign buyers should engage licensed notaries (PPAT), experienced lawyers specializing in foreign property investment, and reputable real estate agents with track records in international transactions to avoid costly mistakes and legal complications.
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.
Medan's property market offers foreign investors accessible entry points with reasonable yields, but success requires careful navigation of Indonesian ownership laws and proper legal structure selection.
Working with experienced local professionals, conducting thorough due diligence, and avoiding illegal nominee arrangements are essential for safe and profitable property investment in this growing North Sumatra hub.
Sources
- DSG Pay - Buying Property in Indonesia for Foreigners
- Own Property Abroad - How Can Foreigners Buy Property in Medan
- BambooRoutes - Indonesia Real Estate for Foreigners
- InvestAsian - Property Investment Risks in Indonesia
- Emerhub - Buying Property in Indonesia
- Journal of Legal and Tax Engineering
- Immigrant Invest - Indonesia Second Home Visa
- Wise - Buy Property in Indonesia