Buying and owning property in Surabaya as a foreigner

Authored by the expert who managed and guided the team behind the Indonesia Property Pack

Everything you need to know before buying real estate is included in our Indonesia Property Pack

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Surabaya. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At BambooRoutes, we explore the Indonesian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Surabaya, Jakarta, and Bali. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What types of properties can foreigners legally buy in Surabaya?

Foreigners can legally purchase apartments, condos, commercial buildings, and landed houses in Surabaya, but only through specific property rights structures that differ significantly from what Indonesian citizens can access.

The key difference lies in ownership rights: Indonesian citizens can obtain Hak Milik (freehold ownership), which grants permanent, full ownership of both the property and the land beneath it. Foreigners cannot access this type of ownership and must work within limited legal frameworks.

Foreign buyers typically acquire property through Hak Pakai (Right to Use) which lasts 25-80 years, Hak Guna Bangunan (Right to Build) for 30 years with extension possibilities, or by establishing a PT PMA (foreign investment company) to hold the property. Leasehold arrangements are also available, though these carry higher legal risks.

As of September 2025, minimum investment thresholds apply to foreign property purchases, with the Second Home Visa requiring a minimum property investment of IDR 2 billion (approximately $130,000 USD). This ensures that only substantial investments qualify for foreign ownership rights.

It's something we develop in our Indonesia property pack.

What are the residency or visa requirements for owning property in Indonesia?

The Second Home Visa is currently the most accessible path for foreigners to purchase property in Surabaya, requiring a minimum investment of IDR 2 billion and allowing residence for 5-10 years.

KITAS (Temporary Stay Permit) and KITAP (Permanent Stay Permit) holders also qualify for property purchases, with these permits often linked to employment, investment, or family relationships in Indonesia. The KITAS typically requires renewal every 1-5 years depending on the category, while KITAP offers more long-term stability.

Tourist visa holders can technically enter leasehold arrangements, but this approach carries significant legal risks and is not recommended for substantial investments. Full residential status through proper visa channels provides much greater legal protection and security.

The visa application process involves submitting financial documentation, health certificates, and background checks to Indonesian consulates. Processing times vary but typically range from 2-8 weeks depending on the visa type and applicant's nationality.

Do you need to be physically present in Indonesia to complete the purchase?

Physical presence in Indonesia is not required to complete a property purchase, making remote transactions legally possible for foreign buyers.

Foreigners can appoint a legal representative through a properly executed power of attorney to handle document signing, notarial processes, and government office visits on their behalf. This power of attorney must be notarized and legalized by Indonesian consular offices in the buyer's home country.

The appointed representative, typically a lawyer or qualified agent, can complete all necessary steps including property inspections, contract negotiations, payment processes, and title transfers. However, the foreign buyer must still provide all required documentation and meet visa/residency requirements.

Remote purchases require extra caution in verifying property ownership, conducting due diligence, and ensuring all legal requirements are met. Video calls for property inspections and digital document verification have become standard practice since 2024.

What is the exact step-by-step process for foreigners to buy property?

The property purchase process for foreigners involves several mandatory steps that must be completed in sequence through Indonesian government offices and legal institutions.

1. **Establish Legal Entity**: Set up a PT PMA (foreign investment company) if purchasing through corporate structure, or confirm visa status for individual ownership2. **Property Search and Due Diligence**: Verify property ownership, check title certificates, and conduct physical inspections3. **Purchase Agreement**: Sign preliminary purchase agreement with deposit (typically 10-30% of property value)4. **Obtain BPN Certificate**: Apply for property certificate through the National Land Office (Badan Pertanahan Nasional)5. **Complete Payment**: Transfer remaining funds with proper documentation for money transfer compliance6. **Verify Rights Compliance**: Ensure Hak Pakai or Hak Guna Bangunan requirements are fully met7. **Building Approval**: Request PBG (building permit) for rights to build, use, or modify the property8. **Final Registration**: BPN issues final certificate under PT PMA or individual name

Required documents include valid passport, appropriate visa (Second Home/KITAS/KITAP), proof of funds showing legal source, company incorporation documents (if using PT PMA), and notarized power of attorney if purchasing remotely.

The entire process typically takes 2-6 months depending on property type, legal structure chosen, and government processing times in different districts of Surabaya.

Is hiring a lawyer mandatory, and what are the risks of not having one?

Hiring a lawyer is not legally mandatory under Indonesian law, but it is highly recommended due to the complex regulatory environment and significant financial risks involved in foreign property purchases.

The risks of proceeding without legal counsel are substantial and can result in complete loss of property rights or investment. Common issues include problems with title transfers, misunderstanding of legal ownership structures, incomplete due diligence on property history, and failure to obtain proper permits and approvals.

Lawyers specializing in Indonesian property law typically charge 1-3% of property value for full transaction services, which includes document review, government liaison, title verification, and post-purchase compliance. This cost is generally considered essential insurance against much larger potential losses.

Many foreign buyers who attempted to save on legal fees have faced costly disputes, discovered nominee structure violations, or found themselves unable to legally transfer or sell their properties. The complexity of Indonesian property law makes professional legal guidance nearly indispensable.

Are mortgages available for foreigners, and what are the conditions?

Mortgages for foreigners in Indonesia are rarely available and typically limited to those with established residency and significant financial history within the country.

Most foreign property purchases in Surabaya are completed as cash transactions, as Indonesian banks generally require extensive local credit history, income verification from Indonesian sources, and significant collateral beyond the property itself. When mortgages are offered, interest rates typically start around 10-13% annually, significantly higher than rates for Indonesian citizens.

International banks with Indonesian operations, such as HSBC or Standard Chartered, may offer limited financing options to their existing high-value clients, but eligibility requirements are strict and often include minimum income thresholds of $100,000+ annually and substantial down payments of 40-50%.

Foreign buyers seeking financing should establish Indonesian banking relationships early, maintain strong credit profiles, secure proper residency status, and consider alternative funding sources such as home equity loans from their country of origin or private lending arrangements.

What are the taxes, fees, and other costs involved in property transactions?

Cost Category	Percentage/Amount	When Paid
Transfer Tax (BPHTB)	5% of property value	At purchase
VAT (if applicable)	10% of property value	At purchase
Notary Fees	1-2% of property value	At closing
Agent Commission	2-5% of property value	At closing
Land Registration	0.5-1% of property value	At closing
Annual Property Tax (PBB)	0.1-0.3% annually	Ongoing
Legal Fees	1-3% of property value	At closing

Total transaction costs typically range from 8-10% of the property purchase price, though this can vary based on property type, location, and specific circumstances. These costs are generally higher than what Indonesian citizens pay due to additional compliance requirements for foreign ownership.

Annual ongoing costs include property tax (PBB), building maintenance fees, insurance premiums, and potential management fees if using property management services. Rental income tax applies at approximately 10% of gross rental income, while capital gains tax on resale is typically 5-10% of profit depending on holding period.

Unexpected costs often arise from required repairs, infrastructure improvements, or government fee changes, so budgeting an additional 2-5% cushion beyond standard fees is advisable.

How do property prices compare across Surabaya and other Indonesian cities?

Surabaya property prices are generally more affordable than Jakarta or Bali, but higher than smaller Indonesian cities like Lombok or Yogyakarta.

In central Surabaya business districts and upscale areas like Pakuwon City, apartment prices typically range from $50,000-$250,000, while landed houses vary from $100,000-$500,000 depending on size, location, and amenities. Prime locations command premiums of 30-50% over suburban areas.

Compared to Jakarta, Surabaya offers similar property quality at prices 20-40% lower, making it attractive for investors seeking Indonesian exposure without Jakarta's premium costs. Bali properties command significantly higher prices due to tourism demand, often 2-3 times Surabaya levels for comparable properties.

Price appreciation in Surabaya has averaged 5-8% annually over the past five years, driven by infrastructure development, population growth, and increasing foreign investment. The city's position as East Java's economic center continues to support steady price growth.

It's something we develop in our Indonesia property pack.

Which neighborhoods in Surabaya are most attractive for foreigners?

West Surabaya, Pakuwon City, Citraland, and Darmo represent the most popular areas for foreign property buyers due to their developed infrastructure, international schools, and expat-friendly amenities.

Pakuwon City stands out as a master-planned development with modern shopping centers, international restaurants, and high-quality residential complexes that appeal to foreign residents. Property values here remain stable with good rental demand from expatriate families.

The Darmo area offers established neighborhoods with easy access to Surabaya's business district, hospitals, and international schools. This mature area provides a balance of urban convenience and residential comfort that many foreign buyers find appealing.

Citraland attracts foreign investors with its newer developments, golf courses, and family-oriented facilities. The area has seen consistent growth in both property values and rental yields, making it attractive for investment purposes.

Areas near Surabaya's international airport and major shopping districts like Tunjungan Plaza also command strong rental demand, particularly from business travelers and short-term residents.

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.

What are the rental yields and growth forecasts for Surabaya?

Gross rental yields in Surabaya typically range from 5-7% for prime apartments and landed houses, making it competitive with other major Indonesian cities for rental income generation.

Prime residential areas like Pakuwon City and West Surabaya consistently achieve yields toward the higher end of this range, supported by steady demand from expatriate families, business travelers, and local professionals. University areas also provide strong rental demand from students and academic staff.

Surabaya's economic growth outlook remains positive, driven by its role as East Java's commercial hub, ongoing infrastructure investments, and government initiatives to promote the region. The city's port expansion and planned high-speed rail connections to Jakarta are expected to boost economic activity through 2027.

Tourism numbers in Surabaya continue recovering from pandemic lows, though they remain below Jakarta or Bali levels. Business travel constitutes the primary driver of short-term rental demand, with medical tourism emerging as a growing sector due to the city's healthcare facilities.

Growth forecasts for Surabaya real estate market indicate continued appreciation of 4-7% annually through 2026-2028, supported by urbanization trends, infrastructure development, and Indonesia's overall economic expansion.

What are common mistakes foreigners make when buying property in Indonesia?

Using nominee arrangements without proper legal protection represents the most dangerous mistake, as these structures violate Indonesian law and can result in complete loss of property rights.

1. **Inadequate Due Diligence**: Failing to verify clear property titles, existing liens, or ownership disputes before purchase2. **Underestimating Ongoing Costs**: Not budgeting for annual taxes, maintenance, insurance, and management fees3. **Ignoring Zoning Regulations**: Purchasing property without understanding permitted uses or development restrictions4. **Insufficient Legal Representation**: Attempting to navigate complex regulations without qualified Indonesian legal counsel5. **Currency Risk Miscalculation**: Not hedging against exchange rate fluctuations for large USD/EUR to IDR transactions

Many foreign buyers also make the mistake of choosing inappropriate ownership structures for their specific situation, leading to unnecessary complications or reduced legal protections. The choice between PT PMA, Hak Pakai, or leasehold arrangements should align with investment goals and risk tolerance.

Failing to complete proper land registration with BPN (National Land Office) creates ongoing legal vulnerabilities that may not surface until resale attempts. This registration process requires specific documentation and compliance steps that vary by region.

It's something we develop in our Indonesia property pack.

How do fiscal implications apply to foreigners?

Foreigners face specific tax obligations on Indonesian property that differ from domestic taxpayers, with rental income taxed at approximately 10% and capital gains at 5-10% depending on holding period and circumstances.

Rental income tax applies to all rental earnings from Indonesian properties, with foreigners required to file annual tax returns and pay quarterly advance payments. Deductions may be available for property management, maintenance, and depreciation, though documentation requirements are strict.

Capital gains tax on property resale varies based on holding period, with properties held longer than five years often qualifying for reduced rates. The calculation considers purchase price, improvements, transaction costs, and sale proceeds to determine taxable gain.

Double taxation treaties between Indonesia and many countries may provide relief from duplicate taxation on the same income, though specific treaty provisions vary by nationality. Professional tax advice is essential to optimize tax efficiency and ensure compliance.

Additional fiscal considerations include wealth taxes, inheritance taxes if applicable, and currency reporting requirements for large international transfers. These obligations continue as long as the property is owned and may affect overall investment returns.

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.

Sources

1. Own Property Abroad - How to Buy Property in Surabaya
2. BambooRoutes - Indonesia Real Estate for Foreigners
3. JLL - Domestic vs Foreign Buyers in Indonesia
4. Let's Move Indonesia - Property Guide for Foreigners
5. Indonesia Incorp - Property in Surabaya
6. Immigrant Invest - Indonesia Second Home Visa
7. Golden Visas - Indonesia Visa Guide
8. Wise - Buying Property in Indonesia
9. DSG Pay - Property Guide for Foreigners
10. Cekindo - Buy a House in Indonesia