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Surabaya's property market presents compelling opportunities in September 2025, with steady price appreciation and attractive rental yields averaging 7.2%.
As Indonesia's second-largest city experiences infrastructure upgrades and foreign investment inflows, property values have grown 33-43% since 2020, while mortgage rates remain at multi-year lows around 6-7% annually.
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Surabaya's average property price currently sits at IDR 20 million per square meter (USD 1,330), with districts like Gubeng, Darmo, and Rungkut leading price growth.
Rental yields of 7.2% average, combined with favorable mortgage conditions and government VAT incentives, create attractive entry conditions for both investors and owner-occupiers.
| Property Metric | Current Status (Sept 2025) | Market Outlook |
|---|---|---|
| Average Price per sqm | IDR 20 million (USD 1,330) | 5-8% annual growth projected |
| Rental Yield Average | 7.2% (range 4.91-9.82%) | Stable, outperforming Jakarta |
| Mortgage Interest Rates | 6-7% annually | Lowest since 2022, favorable |
| Price Growth (12 months) | 1.05% YoY moderate | Stabilizing short-term |
| Price Growth (since 2020) | 33-43% cumulative | Strong medium-term trend |
| Entry Budget Apartments | IDR 500 million (USD 35,000) | Accessible compared to Jakarta |
| Entry Budget Houses | IDR 1 billion (USD 70,000) | Premium areas require higher budgets |
What's the current average property price per square meter in Surabaya, and how has it changed over the last 12 months?
Surabaya's average property price currently stands at IDR 20 million per square meter (approximately USD 1,330) as of September 2025.
Over the past 12 months, property prices in Surabaya have experienced moderate growth of roughly 1.05% year-over-year. This represents a stabilization phase after the stronger growth momentum seen in previous years.
The current pricing reflects substantial long-term appreciation, with property values climbing 33-43% since 2020 and nearly doubling from IDR 10 million per square meter recorded in 2015. This translates to a compound annual growth rate of approximately 6-8% over the past five years.
Market data indicates that while short-term price movements have moderated, the underlying fundamentals supporting Surabaya's property market remain robust.
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How do short-term price trends compare with medium-term (3–5 years) and long-term (10 years) outlooks?
Surabaya's property market exhibits distinct patterns across different time horizons, with short-term stabilization contrasting with stronger medium and long-term growth prospects.
Short-term trends (1-2 years) show price stabilization with the 1.05% year-over-year growth indicating a cooling from previous rapid appreciation. This moderation reflects market maturation and buyer adjustment to higher price levels.
Medium-term outlook (3-5 years) presents significantly stronger growth potential, with forecasted annual appreciation rates of 5-8% driven by continued infrastructure development and foreign direct investment inflows. Government infrastructure budgets and simplified foreign investment procedures support this optimistic medium-term trajectory.
Long-term prospects (10 years) remain bullish, supported by Surabaya's position as Indonesia's second-largest city, ongoing urbanization trends, and strategic infrastructure projects. The city's doubling of property values over the past decade demonstrates its capacity for sustained appreciation.
Population growth, economic development, and infrastructure investment create a foundation for continued long-term property value increases, making current entry points potentially attractive for patient investors.
Which areas of Surabaya are seeing the strongest price growth right now, and which ones are lagging?
Three districts currently lead Surabaya's property price appreciation: Gubeng, Darmo, and Rungkut, each offering distinct growth drivers and investment characteristics.
Gubeng experiences strong price growth due to its central location and proximity to major business districts. The area benefits from established commercial infrastructure and high demand from professionals seeking convenient access to employment centers.
Darmo shows robust appreciation driven by its strategic commercial positioning and well-developed amenities. This established district attracts both owner-occupiers and investors seeking stable, appreciating assets in proven locations.
Rungkut demonstrates significant price growth momentum as a suburban area benefiting from targeted infrastructure investment. New developments and improved connectivity make this district attractive for families and long-term investors.
Peripheral areas without major infrastructure development or new construction projects face slower price growth compared to these leading districts. Areas lacking planned government investment or private development initiatives generally underperform the city average.
What types of properties are performing best in terms of value appreciation?
| Property Type | Performance Level | Key Drivers |
|---|---|---|
| Landed Houses (Suburban) | Strongest Appreciation | Family demand, land scarcity, lifestyle preferences |
| Tech-Smart Apartments | High Growth | Young professional demand, modern amenities |
| ESG-Compliant Apartments | High Growth | Sustainability focus, premium positioning |
| Traditional Apartments (Central) | Mixed Performance | Location-dependent, strong in prime areas |
| Traditional Apartments (Oversupplied) | Weak Performance | Supply excess, limited differentiation |
How does rental yield compare across different districts and property types in Surabaya?
Surabaya's rental market offers attractive yields averaging 7.2% across the city, with significant variation by district and property type.
Rental yields range from 4.91% to 9.82%, providing investors with diverse options depending on their target returns and risk tolerance. The city's average yield of 7.2% compares favorably to Jakarta's 4.27% average, making Surabaya an attractive rental investment destination.
Suburban and more affordable areas typically deliver the highest rental yields, often reaching the upper end of the 9.82% range. These areas benefit from lower property acquisition costs while maintaining steady rental demand.
Mid-tier apartments across various districts provide balanced yield opportunities, combining reasonable acquisition costs with stable rental income streams. These properties appeal to both local professionals and expatriate tenants.
Prime central districts may offer lower percentage yields due to higher property values, but provide greater capital appreciation potential and tenant stability.
What's the current vacancy rate for rentals in Surabaya, and how has it shifted recently?
Residential vacancy rates in Surabaya remain moderate and stable, though specific residential data isn't comprehensively tracked compared to commercial sectors.
The broader real estate market shows positive occupancy trends, with retail occupancy reaching 76% in 2025 and growing annually. This commercial strength indicates healthy underlying demand that typically correlates with residential rental stability.
Market indicators suggest residential vacancy rates remain manageable, supported by Surabaya's growing population and continued economic development. The city's status as a major economic center maintains steady rental demand from both local professionals and migrating workers.
Recent trends indicate stability rather than significant shifts in vacancy patterns, with new supply generally absorbed by population growth and economic expansion.
Investors should focus on properties in areas with confirmed demand drivers such as proximity to business districts, universities, or major employment centers to minimize vacancy risk.
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How do mortgage interest rates and lending policies in Indonesia affect buying now versus waiting?
Current mortgage conditions strongly favor property purchases in Surabaya, with interest rates at multi-year lows and lending policies remaining accommodative.
Mortgage interest rates currently average 6-7% annually, representing the lowest levels since 2022 and creating attractive borrowing conditions for property buyers. Bank Indonesia's policy rate sits at 5.0% as of August 2025, following several rate cuts that support mortgage affordability.
Lending conditions have relaxed with improved loan-to-value ratios and stable rate environments making property acquisition more accessible. Banks maintain reasonable lending standards while supporting real estate market activity through competitive mortgage products.
Government incentives add to the favorable buying environment, with VAT relief of 100% on properties under IDR 2 billion available through June 2025. This tax incentive provides significant savings for eligible purchases.
Waiting carries opportunity costs given current favorable conditions, though buyers should prioritize proper due diligence and deal selection for long-term value creation rather than timing market entry.
What government regulations, taxes, or incentives could influence property investment in Surabaya in the near term?
1. **VAT Relief Program**: 100% VAT exemption on properties valued under IDR 2 billion, available until June 2025, providing substantial tax savings for eligible purchases.2. **Foreign Investment Facilitation**: Simplified qualification procedures and streamlined approval processes encourage international property investment in Surabaya.3. **Infrastructure Investment**: Record government infrastructure budgets support property values through improved connectivity and urban development projects.4. **Transaction Cost Structure**: Standard property taxes and fees apply, requiring consultation with qualified local professionals for current transaction breakdowns.5. **Investment Incentive Framework**: Government policies actively promote foreign direct investment, creating supportive regulatory environment for property investors.How does Surabaya's property price-to-income ratio compare with other Indonesian cities like Jakarta or Bandung?
Surabaya's property price-to-income ratio of 21.8 positions it between Jakarta and Bandung in terms of local affordability metrics.
Bandung offers significantly better affordability with a price-to-income ratio of 12.3, making it nearly twice as accessible for local buyers compared to Surabaya. This lower ratio reflects Bandung's more affordable property prices relative to local income levels.
Jakarta's price-to-income ratio generally exceeds Surabaya's, particularly in prime districts, though specific current ratios vary by area within the capital city. Jakarta's premium locations typically show higher ratios due to elevated property values.
Surabaya's 21.8 ratio indicates moderate affordability challenges for local buyers while remaining more accessible than Jakarta's most expensive zones. This positioning reflects the city's economic importance and property value appreciation.
Foreign investors face different considerations as their purchasing power depends on international income levels rather than local Indonesian salary scales, making ratio comparisons less relevant for international buyers.
What entry budgets are realistic for different property types in different districts today?
| Property Type | Entry Budget (IDR) | Entry Budget (USD) |
|---|---|---|
| Entry-Level Apartments | 500 million | 35,000 |
| Standard Houses | 1 billion | 70,000 |
| Townhouses | 800 million | 56,000 |
| Luxury Homes | 1.5-2 billion+ | 100,000-130,000+ |
| Prime District Premium | 20-30% higher | Gubeng, Darmo areas |
| Suburban Developments | 10-20% lower | Rungkut, outer areas |
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.
If you plan to buy for living, renting out, or reselling, how should your property choice differ?
Property selection strategy should align closely with your intended use, as different objectives require distinct location, type, and feature priorities.
For owner-occupiers planning to live in the property, focus on landed houses or tech-smart apartments in established districts like Gubeng, Darmo, or Rungkut. Prioritize areas with strong infrastructure, quality amenities, and convenient access to employment centers, schools, and lifestyle facilities.
Rental investment strategies should target affordable apartments or landed homes in up-and-coming areas offering high rental yields and low vacancy rates. Verify tenant demand among local professionals and expatriate communities while considering proximity to business districts and transportation hubs.
Resale-focused purchases should emphasize growth districts undergoing infrastructure upgrades with proven foreign direct investment interest. Property size, modern features, and ESG compliance enhance resale value and appeal to future buyers.
Each strategy benefits from different risk-return profiles, with rental properties requiring ongoing management, resale investments demanding market timing, and owner-occupied properties prioritizing lifestyle and convenience factors.
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Based on today's market data, what's the optimal positioning for a buyer in September 2025?
Optimal property investment positioning in Surabaya centers on three high-growth districts offering distinct opportunities: Gubeng, Darmo, and Rungkut.
Gubeng provides central location advantages with proximity to business districts and established infrastructure, making it ideal for both owner-occupiers and rental investors. Properties here benefit from strong demand and steady appreciation potential.
Darmo offers established commercial positioning with proven track record of value appreciation, suitable for conservative investors seeking stable returns in a well-developed area with quality amenities.
Rungkut presents suburban growth opportunities with new infrastructure development, appealing to families and long-term investors willing to benefit from area transformation and future connectivity improvements.
Property type selection should favor family-sized landed houses for maximum value appreciation potential, or tech-smart and environmentally compliant apartments targeting younger professional markets and rental demand.
Budget positioning ranges from IDR 500 million entry level for apartments to IDR 1 billion for houses, with premium locations requiring higher budgets but offering better long-term prospects. Match asset type and location to your specific exit strategy while prioritizing areas with confirmed infrastructure investment and sustainable end-user demand.
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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 in September 2025 presents attractive opportunities for both investors and owner-occupiers, with moderate pricing, favorable financing conditions, and steady growth prospects.
The combination of 7.2% average rental yields, low mortgage rates, and government incentives creates compelling entry conditions, while infrastructure development supports medium to long-term value appreciation.
Sources
- Bamboo Routes - Surabaya Property Analysis
- Bamboo Routes - Surabaya Price Forecasts
- Bamboo Routes - Indonesia Property Market Outlook
- Global Property Guide - Indonesia Price History
- Statista - Indonesia Mortgage Interest Rates
- Trading Economics - Indonesia Interest Rate
- Numbeo - Property Investment Comparison
- Juwai Asia - Property Investment Guide