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Why is Medan emerging as a prime location for property investment in 2025? Is it the attractive rental returns, the city's rapid urban development, or the competitive pricing compared to other Southeast Asian markets? What makes Medan a compelling choice for investors?
We often encounter these questions because we're actively engaged with local developers, real estate agents, and investors like you. With growing interest in this market, we've decided to compile our insights into a detailed article for everyone's benefit.
Our aim is to present a clear argument for investing in Medan's real estate market, supported by our firsthand experience and market expertise.
If you feel we've overlooked an important aspect or want more information, please reach out (we respond very quickly). Your feedback enhances our content.
Finally, please remember that this is not financial or investment advice. Real estate investment involves inherent risks, and market conditions can change unexpectedly. We strongly recommend conducting thorough research and consulting with a qualified financial advisor before making any investment decisions.
1) Medan's natural resources boost industries, fueling economic growth and real estate demand
Medan is thriving thanks to its abundant natural resources like palm oil, rubber, and coffee.
In North Sumatra, where Medan is located, palm oil production is a big deal, contributing massively to Indonesia's economy. This region is a powerhouse, helping the country export billions of dollars worth of palm oil annually.
Medan's manufacturing sector is on the rise, with a 5.01% growth in 2023. This boom is driven by local demand and foreign investments, which are creating jobs and boosting the housing market, especially for workers in the palm oil and rubber industries.
Infrastructure is also getting a boost, with improvements in logistics and transportation. The expansion of port facilities is a game-changer, connecting Medan more efficiently to global markets and enhancing its export capabilities.
These developments are crucial for the smooth movement of goods and raw materials, fueling further industrial growth. As industries grow, so does the demand for housing, making Medan an attractive spot for property buyers.
With its strategic location and resource-rich environment, Medan is poised for continued economic expansion, making it a promising area for real estate investment.
Sources: World Bank, In Business PHX, Oliver Wyman, Business Indonesia
2) In Medan, you can find affordable properties with better returns than in other Indonesian cities
Medan's property prices are significantly lower than those in Jakarta and Bali, making it an appealing choice for buyers.
Imagine snagging a 1-bedroom apartment outside Medan's city center for about 1,600,000 Rp, while in Jakarta, you'd be looking at prices ranging from 2,000,001 to 4,500,000 Rp. This affordability is a major draw for those eyeing property investments.
Despite these lower prices, Medan's property market is on the up and up. Even when the national market was sluggish, Medan saw property prices rise, thanks to strong demand driven by foreign investments and economic growth.
Investors will be pleased to know that Medan offers competitive rental yields. With a gross rental yield of around 3.97% for apartments outside the city center, returns here can match or even surpass those in other major cities.
Medan's economy is booming, with a growth rate of 6.4% that outpaces the national average. This growth, coupled with ongoing infrastructure projects like new airports and public transport, is boosting property values and accessibility.
As Medan continues to develop as a key industrial and economic hub, its property market becomes increasingly attractive for both residents and investors.
Sources: Numbeo, Living Cost, Mobilise Your City
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.
3) Medan’s closeness to Lake Toba enhances eco-tourism, creating real estate opportunities
Medan's closeness to Lake Toba is a game-changer for eco-tourism and real estate.
In Indonesia, the sustainable tourism scene is booming, with a projected growth rate of 27.3% annually through 2034. This surge is fueled by a craving for eco-friendly adventures, especially in North Sumatra, home to the stunning Lake Toba. The government is pushing hard for sustainable tourism, focusing on things like responsible waste management and eco-lodging. This effort has put Indonesia on the map as a leader in eco-tourism.
Private companies are jumping on the bandwagon too, pouring money into green projects. Take the eco-friendly capsule hotel at Lake Toba, for instance. It's a perfect match for the area's environmentally conscious development plans. Infrastructure upgrades are making Lake Toba more accessible, drawing in more tourists eager to soak up its natural beauty.
One cool feature at the capsule hotel is the smart glass windows and mood lamps you can control with your phone. These innovations make the stay more enjoyable while keeping the environment in mind. This blend of tech and nature is a big hit with visitors, enhancing their experience without harming the surroundings.
Sources: Future Market Insights, Antaranews
4) Medan’s urban development focus boosts its livability and property appeal
The government's focus on urban development in Medan has significantly boosted the city's livability and property appeal.
In recent years, especially in 2023 and 2024, there's been a noticeable increase in government investment in infrastructure. Projects like the Medan Light Rail Transit (LRT) and Bus Rapid Transit (BRT) systems are underway, aiming to cut down traffic congestion and improve public transport. This makes the city more accessible and convenient for both residents and visitors.
Medan's connectivity has also improved with new airports and roads, enhancing mobility. These developments have not only made life better for locals but have also increased property values in nearby areas. The rise in property values is further fueled by foreign direct investment from countries like China, Russia, and Australia, driving real estate development in the city.
The government is also offering incentives for real estate development. The Housing Loan Liquidity Facility (FLPP) Program provides tax breaks and subsidized lending rates for first-time homebuyers, making homeownership more accessible. This initiative is part of a broader effort to promote urban living and enhance Medan's livability.
There's a push for more low-cost housing options, which is crucial for improving the quality of life in Medan. These efforts are attracting more people to the city, further boosting its property market.
With these developments, Medan is becoming a more attractive place to live and invest in, thanks to the government's strategic focus on urban growth and infrastructure.
Sources: World Economic Forum, ResearchGate, ITDP Indonesia
5) Medan’s port expansion will boost trade, making commercial real estate more valuable
Medan's port expansion plans are set to boost trade activity significantly, promising benefits for commercial real estate in the area.
Back in 2023, PT Pelabuhan Indonesia (Persero) reported that shipping times from Belawan Port to Jayapura Port were cut from 42 to 36 days. This efficiency boost shows the port's growing ability to handle more cargo, making it a key player in the region's trade network.
That same year, cargo traffic at Pelindo Regional 4 jumped by 57%, reaching 21.5 million tonnes/m³. Container unloading also saw a slight increase, hitting 1.07 million TEUs. These numbers underscore the port's expanding role in trade, with expectations for continued growth as the expansion moves forward.
The Indonesian government is pouring substantial investments into port infrastructure, including Medan, to enhance efficiency and cut logistics costs. This strategic push is set to boost trade volume, driving demand for commercial real estate like warehouses and distribution centers near the port.
Looking at other cities, such as Rotterdam, we see that port expansions often lead to increased property values and a higher demand for commercial spaces. Medan is likely to follow this trend, with logistics companies already planning to expand their operations, anticipating better trade routes and logistics efficiency.
Sources: PwC
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6) Medan’s focus on sustainable urban planning boosts the long-term value of your property investments
Medan is making waves in sustainable urban planning, boosting the long-term value of real estate investments.
In 2023, the city rolled out public transportation projects like Bus Rapid Transit (BRT) and electric bus pilots. These efforts aim to cut down carbon emissions and improve air quality, making Medan a more appealing place for both residents and investors. Imagine hopping on a sleek electric bus, knowing you're contributing to a cleaner city.
By 2024, Medan was all about eco-friendly building codes. A standout project was a children and youth activity center built to green standards. This not only promotes sustainable living but also makes properties in the area more desirable. New developments are increasingly integrating renewable energy, further boosting Medan's environmental credentials.
Consumer surveys from 2024 revealed a growing preference for eco-friendly living spaces. People are more aware of the need to preserve the environment, and this demand is pushing the market for sustainable buildings. Properties in areas with green infrastructure are seeing a rise in value, making them hot commodities.
Government incentives are also in play, encouraging developers to adopt sustainable practices. This is expected to lead to more eco-friendly developments, enhancing Medan's appeal even further. Imagine a city where every new building is a step towards a greener future.
Sources: ITDP Indonesia, E3S Conferences
7) Medan’s location as a gateway to Southeast Asia makes it ideal for international investment
Medan's strategic location makes it a prime spot for international investors eyeing Southeast Asia.
Foreign companies are flocking to Medan, with giants like Asian Agri, London Sumatra, and Musim Mas setting up shop. They're drawn by Medan's favorable business environment and its strategic position in the region.
The Port of Belawan, just a stone's throw from Medan, is a key player in global trade. Thanks to its proximity to the Strait of Malacca and top-notch infrastructure, it's a hotspot for exporting goods like palm oil and rubber, cementing Medan's status as a commercial powerhouse in Indonesia.
Medan's international airport is expanding, with new direct flights like the one from Doha by Qatar Airways. This boost in connectivity highlights Medan's rising importance as a regional hub, making it easier for international business and tourism to thrive.
With its strategic location and growing infrastructure, Medan is becoming a magnet for international investors. The city's appeal is further enhanced by its role as a gateway to Southeast Asia, offering unmatched access to regional markets.
As Medan continues to develop, its strategic advantages are becoming more apparent, attracting a diverse range of industries. The city's growth is a testament to its increasing significance in the global economy.
Sources: Wikipedia, The Perfect Media Group
8) Medan’s growing transport network makes properties more accessible and desirable
Medan's public transportation is booming, making it a hot spot for property buyers.
The Trans Mebidang BRT system, running since 2015, is seeing more riders every day. This uptick means public transport is becoming a daily staple for locals, making homes near BRT stops more appealing. Imagine the convenience of stepping out of your house and hopping on a bus that takes you anywhere in the city.
The Indonesian government is pouring $224 million into Medan's BRT systems, showing they're serious about better transport. This isn't just about buses; it's about making life easier and cutting down on traffic jams. With plans to expand from two to seven BRT corridors, getting around will be a breeze.
Look at other cities: when public transport improves, property values often go up. Medan is on the same path. Homes near new transit lines become hot properties because they offer easy access to everything. Jakarta saw real estate prices soar near BRT corridors, and Medan could see the same.
As Medan's transport network grows, expect property desirability to rise. The city's commitment to better connectivity is a win for anyone looking to invest in real estate. It's not just about getting from A to B; it's about making Medan a more livable city.
Sources: World Bank, MobiliseYourCity, Analysis of Trans-Mebidang BRT Policy
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.
9) With more tech startups in Medan, you’ll see a growing demand for office space
Medan is seeing a big boost in internet access, just like the rest of Indonesia.
With more people online, Medan is becoming a hotspot for tech startups. Across Indonesia, there are millions of small businesses ready to innovate digitally, and Medan is no exception. This city is riding the wave of a growing digital economy.
The Indonesian government is playing a key role by investing in digital infrastructure and supporting entrepreneurship. This creates a perfect environment for tech startups, which in turn increases the need for office spaces.
Medan is gaining recognition as a rising tech hub. The growth of coworking spaces like EV Hive shows the city's potential as a business center. These spaces offer more than just desks; they encourage collaboration and innovation among entrepreneurs.
As more startups emerge, the demand for office space is naturally increasing. Medan's tech scene is buzzing, and the city's infrastructure is keeping pace with this digital transformation.
Sources: DataReportal, Setkab, PR Newswire
10) New infrastructure projects, like toll roads, boost connectivity and increase property values
New infrastructure projects like toll roads can dramatically improve connectivity in a region.
Take the Indrapura-Kisaran toll segment, for example. It has slashed travel times from Medan to Kisaran from 5 hours to just 1.5 hours, making it much easier for people to travel between these areas. This enhanced connectivity makes the region more appealing for both living and business.
When connectivity improves, property values often rise. In other Indonesian cities, new toll roads have attracted investments and boosted property values. The Medan-Binjai-Stabat toll segment, for instance, extended connectivity to Langsa and Aceh, drawing more investments to these regions.
The government is pouring resources into infrastructure projects like the Trans Sumatra toll road to improve national connectivity and stimulate economic growth. This investment supports industrial and tourism development, enhancing economic activity and potentially driving up property values.
These projects are not just about roads; they are about transforming regions into more connected and economically vibrant areas. The ripple effect of such developments can be seen in increased business opportunities and a more dynamic real estate market.
For potential property buyers, these infrastructure improvements mean better access and higher property values in the future. It's a win-win for those looking to invest in regions with growing connectivity.
11) Medan’s festivals attract visitors, boosting short-term rental and hospitality opportunities
Medan's annual festivals and events are a big draw for visitors, boosting the hospitality and short-term rental sectors.
In 2023, North Sumatra welcomed 178,575 foreign travelers from January to November, marking a 222.92% increase from the previous year. This surge highlights the growing appeal of the region's events, making Medan a hotspot for tourists.
While we don't have exact numbers for Medan's hotel occupancy, the overall tourism boom in North Sumatra suggests a rising demand for places to stay during these events. Macao saw a similar trend during its Spring Festival Golden Week, which can be compared to Medan's situation, showing how festivals can significantly boost the hospitality sector.
Globally, there's a shift towards short-term vacation rentals, with a 13% growth from October 2023 to October 2024. This trend is likely happening in Medan too, as more visitors during festivals mean more opportunities for short-term rentals. The Lake Toba Rally National Championship drew over 10,000 international tourists in August 2022, showing the potential of Medan's events to attract large crowds.
Medan's vibrant events scene not only attracts tourists but also supports local businesses. Visitors flock to the city for its unique cultural experiences, creating a bustling atmosphere that benefits everyone from hoteliers to local vendors.
With the increasing popularity of Medan's festivals, the city is becoming a key player in the tourism industry. These events are not just about entertainment; they are a vital part of the local economy, driving growth and development.
Sources: Antara News, Macao Government Tourism Office, My Lighthouse
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12) Medan’s rich cultural heritage draws tourists, making it easy to rent out your property short-term
Medan's rich cultural heritage draws tourists, boosting short-term rental demand.
In October 2024, Kualanamu Airport welcomed over 20,000 international visitors, showcasing Medan's growing allure. This influx is largely due to the city's vibrant culinary scene and stunning natural attractions, making it a hotspot for travelers seeking unique experiences.
The hospitality sector in Medan is bustling. Star hotels reported a 46.23% occupancy rate in October 2024, while non-star hotels saw 20.52%. This steady demand underscores Medan's reputation as both a tourist and business destination, with visitors eager to explore its offerings.
Cultural festivals and events are key in drawing tourists to Medan. These gatherings not only fill hotel rooms but also invigorate local businesses. Visitors flock to these events for immersive experiences, further fueling the need for short-term rentals.
Medan's diverse cultural tapestry is a significant draw for tourists, enhancing the city's appeal. This cultural richness not only attracts visitors but also supports a thriving short-term rental market, as travelers seek authentic experiences in the heart of the city.
With its unique blend of culture and commerce, Medan continues to captivate tourists, ensuring a robust demand for accommodations. The city's ability to offer both traditional and modern attractions makes it a compelling choice for travelers worldwide.
Sources: Travel and Tour World, Beyond Pricing
13) Medan’s diverse population means a dynamic rental market with varied housing needs
Medan's diverse population is a major driver of its lively rental market.
In Medan, you'll find a mix of ethnic groups like Javanese, Sumatran, and Chinese, each bringing their own housing preferences. This cultural blend means there's always a demand for different types of homes, from traditional houses to modern apartments.
Adding to this mix are migrants, both domestic and international. For instance, Venezuelans have recently been moving to Medan, introducing new housing needs and styles. This constant influx keeps the rental scene fresh and ever-evolving.
Medan's universities are another key player. They attract students from all over, who are on the lookout for affordable and flexible housing. This student demand fuels the need for shared accommodations and budget-friendly apartments.
Then there's the city's booming business sector. As industries expand, they bring in a diverse workforce with varied housing requirements. This economic growth means the rental market has to cater to different income levels and job types.
Sources: IOM Regional Office in the Americas, RentCafe, Urban Institute
14) Medan is appealing for investment due to local government incentives for foreign investors
Medan is drawing in foreign investors thanks to local government initiatives.
In the first half of 2023, Medan saw a surge in foreign direct investment, boosting North Sumatra's investment by 15.75% compared to the previous year. This upward trend continued into 2024, with Indonesia attracting a mix of foreign and domestic investments, suggesting Medan's significant role in this growth.
The Indonesian government sweetens the deal for foreign investors with tax incentives, making Medan even more appealing. While specific details for Medan aren't highlighted, these policies, along with a streamlined company registration process, make it easier for investors to set up shop in the city.
Infrastructure is getting a facelift, thanks to foreign investments, which further enhances Medan's charm. Developments like the Special Economic Zones at Sei Mangke and the Medan Industrial Area are prime examples. Medan's strategic location, close to Malaysia, boosts its international trade and cooperation, giving it a competitive edge over other Indonesian cities.
Medan's proximity to neighboring countries not only facilitates trade but also positions it as a hub for regional collaboration. This geographical advantage, combined with government incentives, makes Medan a hotspot for investment.
With these factors in play, Medan is not just another city in Indonesia; it's a thriving investment destination with a promising future.
Sources: InCorp Asia, UNCTAD, ASEAN Briefing
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.
15) With many multinational companies in Medan, job opportunities boost the demand for housing
Medan is a key hub for multinational companies, standing alongside Jakarta, Surabaya, and Makassar as one of Indonesia's main cities.
With its population skyrocketing from 568,000 in 1968 to 2.474 million by mid-2023, Medan is buzzing with new job opportunities. This boom is largely due to the influx of multinational companies setting up shop, drawing people in for work.
Indonesia saw a surge of 65 million new online shoppers in 2022, a sign of a thriving economy. This economic upswing is likely to boost demand for rental properties, especially near the offices of these multinational giants, as more folks flock to Medan for employment.
Medan's infrastructure is a major draw for businesses. With Kualanamu International Airport and the Port of Belawan, the city is well-equipped to support business growth. This setup not only attracts companies but also increases the need for housing as employees and expatriates move in.
Sources: Statista, Macrotrends, Modern Diplomacy, Wikipedia
16) Medan’s status as an educational hub makes student housing highly sought after
Medan is becoming a hotspot for education, thanks to universities like the University of Medan Area and the University of North Sumatra.
These institutions boast large student bodies, with UMA hosting up to 14,999 students and USU accommodating 35,761 students. This surge in student numbers naturally boosts the demand for housing in the area.
USU has been experiencing a steady rise in enrollment, including a 2% international student population. These students, especially those from abroad, need places to stay, which increases the demand for student housing.
While there aren't specific reports from 2023 or 2024 about housing shortages in Medan, the trend is evident. As educational hubs grow, housing demand typically rises, often leading to shortages.
This pattern is not unique to Medan; other regions have faced similar challenges as their educational institutions expand. It's likely that Medan will follow suit, given the current trends.
Investing in property here could be a smart move, as the growing student population continues to drive housing needs. The city's educational reputation is a key factor in this demand.
Sources: 4icu.org, Unipage.net, GRC Global Group
17) With many universities, Medan attracts students who need places to stay
Medan is bustling with 11 universities, making it a vibrant hub for students.
Take the University of Medan Area, for instance, where the acceptance rate is just 30%, offering a range of programs from undergraduate to doctoral levels. With tuition fees between IDR 5,000,000 and IDR 10,000,000 per semester, students are on the lookout for budget-friendly housing nearby.
While we don't have exact numbers on student population growth, the sheer number of universities indicates a steady demand for student housing. This demand is likely to rise as more students flock to these institutions.
Properties for rent near these universities are often fully occupied thanks to the constant stream of students. This is a typical scenario in university towns, where student needs drive the housing market.
Medan's educational landscape ensures a constant influx of students seeking accommodation, making it a promising area for property investment.
Investing in rental properties here could be a smart move, given the high occupancy rates driven by the student population.
Sources: Free Apply, EduRank
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18) Medan’s political stability ensures a secure environment for long-term property investments
Medan offers a stable political environment that makes it a great choice for long-term real estate investments.
Over the past decade, Medan has enjoyed consistent economic growth, which has been a magnet for foreign investors. This growth is largely due to Medan's strategic location, making it a hub for business and trade. In 2023, the city saw a surge in foreign direct investment, highlighting its economic appeal.
The local government is also playing a big role in boosting real estate. They've rolled out policies that encourage development, focusing on infrastructure projects like new airports and public transport systems. These improvements not only increase property values but also make the city more accessible, creating a win-win for investors.
Historically, Medan has experienced minimal political unrest, which is a huge plus for anyone looking to invest long-term. A stable political climate means fewer surprises and more predictability, which is exactly what investors want. International agencies have given Medan favorable ratings, further cementing its reputation as a stable investment destination.
With these factors in play, Medan stands out as a city where real estate investments can thrive. The combination of economic growth, government support, and political stability creates a secure environment for investors.
For those considering a property purchase, Medan's proactive government policies and strategic location offer a promising landscape. The city's ability to attract foreign investment and maintain political stability makes it a compelling choice for real estate.
Source: The Diplomat
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.