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Surabaya's property market has shown remarkable resilience with 6-8% annual price growth over the past five years.
As Indonesia's second-largest city, Surabaya continues to attract both local buyers and increasing foreign investment, driven by infrastructure development and competitive rental yields that outperform Jakarta.
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Surabaya residential property prices have grown 33-43% from 2020 to 2025, with current average prices at IDR 20 million per square meter.
The city offers attractive rental yields of 7.21% on average, significantly higher than Jakarta's 4.27%, while maintaining lower entry prices than the capital.
| Market Indicator | Current Status (2025) | Comparison |
|---|---|---|
| Average Price per sqm | IDR 20 million | 26% below Jakarta |
| Annual Price Growth | 6-8% | Above national average |
| Rental Yield | 7.21% | 69% higher than Jakarta |
| Affordability Ratio | 21.83 | Better than Jakarta (25+) |
| Mortgage Rate | 6% | Stable policy environment |
| Foreign Investment Growth | +35% (2022-2023) | Strong momentum |
| Market Outlook | Positive growth trajectory | Infrastructure-driven expansion |
What has been the average annual price growth rate of residential properties in Surabaya over the past five years?
Residential property prices in Surabaya have experienced consistent growth with an average annual rate of 6-8% over the past five years.
This translates to a total cumulative growth of 33-43% from 2020 to 2025, significantly outpacing inflation and demonstrating the market's resilience even during challenging economic periods. The growth has been driven by several key factors including infrastructure development, increased foreign direct investment, and steady urban migration from surrounding regions.
As of September 2025, this growth trajectory positions Surabaya as one of Indonesia's most stable property markets outside Jakarta. The consistent performance reflects strong underlying demand fundamentals and the city's growing economic importance as East Java's commercial hub.
The 6-8% annual growth rate compares favorably to other major Indonesian cities and demonstrates sustained investor confidence in Surabaya's long-term prospects.
How do current property prices in Surabaya compare to Jakarta and other major Indonesian cities per square meter?
Surabaya property prices are positioned competitively within Indonesia's major city hierarchy, offering better value than Jakarta while commanding premium over smaller cities.
| City | Price per sqm (IDR) | Median Property Price |
|---|---|---|
| Jakarta | 27.17 million | IDR 3.8 billion |
| Surabaya | 20 million | IDR 2.21 billion |
| Bandung | 12.33 million | IDR 1.38 billion |
| Medan | 15-18 million | IDR 1.8 billion |
| Yogyakarta | 11-14 million | IDR 1.5 billion |
| Semarang | 13-16 million | IDR 1.7 billion |
| Makassar | 12-15 million | IDR 1.6 billion |
What is the current rental yield in Surabaya, both for apartments and landed houses?
Surabaya offers attractive rental yields that significantly outperform Jakarta and most other major Indonesian cities.
Apartments in Surabaya generate an average gross rental yield of 6.62%, with a range spanning from 4.76% to 8.45% depending on location, property age, and amenities. Premium apartments in central locations typically yield on the lower end, while newer developments in emerging areas can achieve higher returns.
Landed houses and the overall city average deliver even stronger performance at 7.21% rental yield. This represents a substantial 69% premium over Jakarta's 4.27% average yield, making Surabaya particularly attractive for income-focused property investors.
The higher yields reflect Surabaya's lower entry prices combined with strong rental demand from the city's growing professional population and urban migrants.
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How many new housing units and apartment towers are being built or planned in Surabaya in the next two to three years?
Surabaya is experiencing a significant construction boom with a surge in residential development permits and new project launches.
The city is seeing particularly strong activity in the apartment tower segment, with multiple high-rise projects under development across central and suburban districts. However, this rapid expansion has created concerns about potential oversupply, especially in the apartment segment within central Surabaya.
While exact figures for planned units are not publicly disclosed, industry reports indicate that construction permits have increased substantially, with developers responding to strong demand from both local buyers and foreign investors. The development pipeline includes projects ranging from affordable housing to premium residential towers.
This supply increase is concentrated in key growth areas including Gubeng, Darmo, and Rungkut, where infrastructure improvements are driving demand. Investors should carefully evaluate specific locations and project timing to avoid oversupplied submarkets.
What percentage of transactions in Surabaya are driven by local buyers versus foreign investors?
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How does mortgage interest rate policy in Indonesia affect property affordability in Surabaya right now?
Indonesia's current mortgage environment significantly supports property affordability in Surabaya with favorable lending conditions.
As of September 2025, typical mortgage rates stand at 6%, aligned with Bank Indonesia's policy rate of 5.5%. This represents a stable and moderate interest rate environment that has made property financing more accessible to local buyers compared to previous years when rates exceeded 8-9%.
The central bank's monetary policy has maintained these supportive conditions alongside relaxed loan-to-value requirements, enabling more buyers to qualify for financing. Government initiatives including VAT relief on property purchases up to IDR 2 billion (100% exemption until June 2025) have further enhanced affordability.
For buyers, the current 6% mortgage rate translates to manageable monthly payments, though the city's price-to-income ratio of 21.83 still requires substantial down payments. The stable rate environment provides predictability for long-term financing decisions.
What is the vacancy rate for apartments and commercial properties in central Surabaya compared to suburban areas?
Vacancy rates in Surabaya show a clear divergence between central and suburban areas, reflecting changing tenant preferences and supply dynamics.
Central Surabaya is experiencing rising vacancy rates for apartments due to oversupply conditions, with landlords facing longer periods to secure tenants and increased competition among property owners. This trend is particularly pronounced in newly completed tower developments where multiple projects have delivered simultaneously.
In contrast, suburban Surabaya maintains lower vacancy rates as tenant demand has shifted outward toward these areas. Families and long-term tenants increasingly prefer suburban locations for better value, larger spaces, and improved livability, creating sustained occupancy in these markets.
The suburban advantage reflects changing lifestyle preferences post-pandemic, with tenants prioritizing space and value over proximity to central business districts. This trend benefits investors who have positioned themselves in emerging suburban nodes.
How is population growth and urban migration into Surabaya projected to affect housing demand over the next decade?
Surabaya's demographic trends strongly support continued housing demand growth throughout the next decade.
The city is set to experience robust population growth driven by continued urbanization and its role as East Java's economic center. Urban migration from surrounding regions and smaller cities across East Java provides a steady influx of new residents seeking both rental and purchase opportunities.
This migration pattern particularly benefits the family housing segment, as many newcomers eventually transition from rental to ownership once established in the city. The demographic influx spans multiple income levels, from young professionals seeking apartments to established families purchasing landed houses.
The sustained population growth ensures underlying demand for housing will continue expanding, supporting both property values and rental markets across different segments. This demographic foundation provides long-term investment security for property owners.
It's something we develop in our Indonesia property pack.
What are the government's planned infrastructure projects in Surabaya, and how are they expected to impact property values?
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 average household incomes in Surabaya compare to the average property price, and what is the affordability ratio?
Surabaya's property affordability presents both challenges and opportunities when compared to household income levels.
The city's price-to-income ratio stands at 21.83, meaning the average property costs over 21 times the average household annual income. While this indicates significant affordability constraints for typical residents, it positions Surabaya more favorably than Jakarta, where ratios exceed 25.
Compared to other major Indonesian cities, Surabaya falls in the middle range - more affordable than Jakarta but less accessible than cities like Bandung (ratio 12.33). This positioning reflects Surabaya's status as a major economic center with correspondingly higher property values.
The affordability challenge primarily affects first-time buyers and middle-income households, though government incentives and favorable mortgage rates help bridge the gap. Foreign investors and high-income local buyers find the market reasonably accessible.
What is the trend in transaction volumes—are more properties being bought and sold today than three years ago?
Property transaction volumes in Surabaya have increased substantially compared to three years ago, driven by favorable market conditions and policy support.
Post-pandemic recovery has brought renewed buyer confidence, with transaction activity supported by government VAT incentives and strong underlying demand. The VAT relief program offering 100% exemption on property purchases up to IDR 2 billion (effective until June 2025) has particularly stimulated sales activity.
Both local and foreign buyer participation has increased, with foreign investment in real estate growing 35% between 2022 and 2023. This surge reflects relaxed ownership regulations and growing international awareness of Surabaya's investment potential.
The volume increase spans multiple property segments, from affordable housing benefiting from government incentives to premium developments attracting foreign capital. Market liquidity has improved significantly compared to the slower conditions experienced during 2021-2022.
How are international and domestic economic factors, like foreign direct investment and rupiah fluctuations, influencing Surabaya's real estate market outlook?
International economic factors are creating a generally favorable environment for Surabaya's property market, though currency volatility adds complexity.
Foreign direct investment (FDI) is rising substantially, particularly in real estate sectors, with continued expansion expected as Indonesia's economic reforms attract international capital. This FDI influx supports both demand and development financing, contributing to market growth and modernization.
Rupiah fluctuations present both risks and opportunities for the property market. During periods of currency weakness, real estate becomes an attractive hedge for domestic investors, while stronger rupiah conditions may reduce this defensive demand unless matched by corresponding wage growth.
For foreign investors, rupiah weakness can create attractive entry points, while currency strength may compress returns when converted back to base currencies. The overall trend toward increased foreign investment suggests confidence in Indonesia's long-term economic trajectory despite short-term volatility.
It's something we develop in our Indonesia property pack.
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 presents a compelling investment opportunity with robust fundamentals supporting continued growth.
The combination of competitive pricing, strong rental yields, and infrastructure development creates favorable conditions for both investors and residents looking to enter this dynamic market.
Sources
- BambooRoutes - Surabaya Price Forecasts
- AsiaGreen - Indonesia's Second-Tier Cities on the Move
- Global Property Guide - Indonesia Rental Yields
- Global Property Guide - Indonesia Price History
- BambooRoutes - Surabaya Real Estate Trends
- Trading Economics - Indonesia House Price Index
- Investasian - Indonesia House Prices
- Statista - Indonesia Residential Real Estate Outlook