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What will happen in Surabaya’s real estate market? Will prices go up or down? Is Surabaya still a hotspot for foreign investors? How is Indonesia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who buy properties in Surabaya, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) More foreign investors will enter Surabaya’s property market as regulations become more favorable
Indonesia is making it easier for foreigners to invest in property, thanks to new regulations like Government Regulation 18 of 2021.
Foreigners can now own apartment units in special zones, which is a big deal for international investors. Surabaya is becoming a hotspot for foreign investment because of its business-friendly environment and local government initiatives.
In September 2024, foreign direct investment in Indonesia's real estate sector jumped to $55.18 million, showing growing confidence among international investors. Surabaya's Urban Corridor Development Program offers perks like better transportation and logistics, making it even more appealing.
The Indonesian government is actively encouraging foreign investment in real estate, with experts predicting more favorable regulations in the future. This is supported by initiatives like the Golden Visa and Second Home Visa, which make it easier for foreigners to buy property and stay long-term.
These changes are part of a broader effort to create a welcoming atmosphere for international investors. Surabaya's strategic location and infrastructure improvements are key factors driving this trend.
With these developments, Surabaya is positioning itself as a prime destination for foreign property buyers, offering a mix of opportunity and convenience. Expect more favorable regulations to boost foreign participation in the city's property market.
Sources: ASEAN Briefing, CEIC Data, Colliers
2) Mid-range property prices in Surabaya will grow steadily as they appeal to the largest group of buyers
Mid-range properties in Surabaya are set for steady price growth because they appeal to the largest group of buyers.
Surabaya's population is on the rise, with more people moving to the city for better opportunities. This growing population naturally leads to increased demand for housing, especially in urban areas. As more people flock to the city, the need for homes, particularly mid-range ones, continues to climb.
Urbanization is a big driver here. People are leaving the suburbs and villages, drawn by the convenience and opportunities of city life. This shift means more demand for mid-range properties that offer a good mix of affordability and quality, making them a hot commodity.
The Indonesian government is pouring money into infrastructure, with a whopping Rp422.7 trillion budget in 2024. This investment is making Surabaya more connected and accessible, which in turn makes the city more attractive to both residents and investors. As a result, property prices are getting a boost.
Looking at the numbers, Surabaya's property market has been on a steady rise. By mid-2023, the average house price hit 2.4 billion Indonesian rupiah, showing a clear upward trend. The middle class in Indonesia is also growing, up by 5% in 2024, which means more people are looking for affordable yet decent homes.
East Java's economy, where Surabaya is located, is growing too, with annual rates between 4.6% and 5.4%. This economic boost is raising incomes, drawing more people to the city, and further driving up housing demand. Real estate reports suggest that mid-range properties will continue to be in demand due to these trends.
In Surabaya, where living costs are relatively low, mid-range properties are a smart choice for many buyers. They offer a practical investment option, being more affordable than high-end properties, and cater to those looking to make a wise real estate investment.
Sources: Macrotrends, Indonesia Real Estate, World Population Review
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) Property prices in Surabaya will keep rising due to urbanization and economic growth
Surabaya's residential property prices are steadily climbing due to several compelling factors.
One major reason is the city's growing population, as more people move from suburbs and villages to settle in Surabaya. This influx naturally boosts the demand for housing, pushing prices upward.
East Java, where Surabaya is located, is experiencing strong economic growth, with annual rates between 4.6% and 5.4%. This economic boom is putting more money in people's pockets, making the city more attractive to both residents and investors who are eager to upgrade their living situations.
The government is also playing a crucial role by supporting urban development through projects like the Surabaya Urban Corridor Development Program. These initiatives enhance connectivity and accessibility, making the city a hotspot for international trade and investment, which in turn fuels the demand for residential properties.
Surabaya is becoming a magnet for foreign direct investment, transforming it into a bustling economic hub. This international interest not only boosts the local economy but also drives up property values as more investors look to capitalize on the city's growth.
All these elements—rising population, economic growth, government support, and foreign investment—are creating a perfect storm for continued increases in residential property prices.
Sources: World Population Review, InCorp Asia, Global Property Guide
4) Property values in Surabaya's central business district will stay high because of its strategic location
The central business district (CBD) of Surabaya is set to keep its property values high thanks to its prime location.
One big reason is the surging demand for commercial space. Back in March 2020, the Indonesia Commercial Property Demand Index for Surabaya hit a record high, showing just how much office space is needed. This demand is a key player in keeping property values up.
Then there's the influx of multinational companies moving in. Take the MNC Tower Surabaya, for example. It's the headquarters for MNC Group’s sub-holding companies and draws other businesses to the area, which boosts the demand for commercial properties. Plus, there's not much land left for new developments in the CBD, making existing properties even more valuable.
Location is everything, and being close to major transportation hubs is a huge plus. Just like in Jakarta, where properties near MRT lines have seen a big jump in value, Surabaya is expected to follow suit. Proximity to places like the MNC Tower Surabaya is a hot commodity. Government efforts to improve urban development and public transport, like the MRT and LRT systems, make commuting easier and add to property value.
In Surabaya, the limited land availability in the CBD means properties are scarce and highly sought after. This scarcity naturally drives up prices, making it a solid investment area.
With all these factors in play, the CBD of Surabaya is a promising spot for property investment, especially for those eyeing commercial spaces.
Sources: CEIC Data, MNC Land, Pakuwon Jati
5) More foreign families will move to Surabaya, boosting the rental market due to international schools
Surabaya is becoming a hotspot for foreign families, thanks to its 14 international schools offering top-notch education.
Schools like Surabaya Intercultural School are seeing a rise in foreign student enrollment, showing that more expatriate families are settling in the city. This trend highlights how crucial education is when these families decide to relocate, especially those working in fields like education, healthcare, and manufacturing.
With the influx of foreign families, there's a noticeable increase in demand for rental properties, particularly near international schools. Neighborhoods such as Pakuwon City, Graha Famili, and CitraLand are in high demand, causing rental prices to climb.
Real estate agencies are buzzing about this surge, attributing it to the presence of international schools that draw in these families. The rental market is feeling the impact, with more properties being snapped up quickly.
For those considering a move, these areas offer not just proximity to schools but also a vibrant community of fellow expatriates, making the transition smoother.
Surabaya's appeal is growing, and with it, the rental market is evolving to meet the needs of its new residents, driven by the educational opportunities available.
Sources: International Schools Database, International Schools Database, Seven Stones Indonesia
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6) More foreign buyers will invest in Surabaya’s real estate market because of favorable exchange rates
Foreign buyers are increasingly eyeing Surabaya's real estate market due to favorable exchange rates.
When the Indonesian Rupiah (IDR) fluctuates, it often makes foreign currencies like the US Dollar (USD) and the Euro (EUR) stronger. This means that foreign investors can get more value for their money when purchasing properties in Surabaya. Imagine getting a luxury apartment for what feels like a bargain because your currency is stronger.
Back in 2023 and 2024, Surabaya experienced a significant rise in foreign direct investment (FDI) projects. This influx of international investors has turned the city into a bustling economic hub. It's no wonder that Surabaya is becoming a hot spot for foreign property buyers looking for promising opportunities.
Experts predict that major currencies will continue to strengthen against the IDR. This ongoing trend makes it an ideal time for foreign investors to dive into Surabaya's real estate market. The buzz is real, with local real estate agencies reporting a noticeable uptick in inquiries from foreign buyers.
Surabaya's appeal isn't just about numbers; it's about the lifestyle and growth potential. The city offers a unique blend of modern living and cultural richness, making it an attractive choice for those looking to invest in a vibrant community.
With the current economic climate, foreign buyers are finding Surabaya to be a strategic investment choice. The combination of favorable exchange rates and a thriving local economy is hard to resist.
Sources: InCorp Asia, Colliers
7) New areas in West Surabaya will grow quickly as infrastructure improves
West Surabaya is booming thanks to major infrastructure upgrades.
With the government pouring resources into projects like the new monorail and tram systems, getting around is becoming a breeze. These improvements are not just about cutting down traffic; they’re making the area a hotspot for both living and business. Imagine hopping on a tram and reaching the city center in no time—it's a game-changer for daily commuters and businesses alike.
New highways and public transport links are popping up, making West Surabaya more connected than ever. This boost in accessibility is drawing in a crowd, from families looking for homes to entrepreneurs eyeing new ventures. The ease of movement is a big win for the area, opening doors to other parts of the city with minimal hassle.
As a result, property prices are climbing, reflecting a surge in demand for both homes and commercial spaces. People are catching on to the benefits of living in a well-connected area, and investors are keen to capitalize on this trend. The buzz around improved infrastructure is making West Surabaya a prime spot for real estate.
Look around, and you'll see new developments sprouting up, like the Pakuwon City Mall Phase 3, which is more than just a shopping destination. It’s a mix of condos, retail spaces, and hotels, signaling the rapid transformation of the region. These projects are not just about buildings; they’re about creating a vibrant community.
Insiders know that the west of Surabaya is where the action is, with growth fueled by infrastructure that’s setting the stage for a bright future. The area is evolving fast, and those in the know are already making their moves.
Sources: Future Southeast Asia, Pakuwon Jati, Global Future Cities
8) Rental yields for high-end properties in Surabaya will drop because the market is saturated
Surabaya's luxury home market has seen a 9.7% increase in inventory over the past year.
Despite the city's population growth, expected to hit 3,089,000 by 2024, not everyone is eyeing high-end rentals.
The influx of new luxury developments is saturating the market, leading to more available properties than tenants.
Surabaya's economy is growing at 4.6% to 5.4% annually, but this might not boost luxury property demand enough.
Economic slowdowns in key sectors could further impact rental yields for high-end properties.
High vacancy rates are a sign of oversupply in the luxury segment, affecting rental returns.
Source: Redfin Investors
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) Rental yields in Surabaya will rise as more people choose renting over buying
Rental yields in Surabaya are on the rise as more people choose to rent instead of buy.
In early 2024, the average gross rental yield in Surabaya hit 6.47%, a clear sign of strong demand for rental properties. This trend is largely driven by the fact that more people are finding renting to be a more attractive option.
One reason for this shift is the increasing property prices in Surabaya. By mid-2023, buying a house cost around 2.4 billion Indonesian rupiah, making it less affordable for many. With townhouses and apartments also priced high, renting becomes a more feasible choice for a lot of people.
Surabaya's appeal doesn't stop at property prices. The city boasts a well-developed transportation infrastructure and a low cost of living, making it a magnet for young professionals and students. This group often values the flexibility that renting provides, further fueling the demand for rental properties.
As more people lean towards renting, rental yields are expected to climb. The combination of high property prices and the city's attractive living conditions makes renting a smart choice for many.
With these factors in play, it's no surprise that rental yields in Surabaya are set to increase as the preference for renting over buying grows.
Sources: Global Property Guide, Indonesia Real Estate
10) Property prices in Surabaya's eastern suburbs will rise as accessibility improves
The eastern suburbs of Surabaya are becoming more accessible, leading to a likely increase in property prices.
Thanks to the Surabaya Urban Corridor Development Program, the city's infrastructure is getting a major boost. This program is not just about roads; it's about making Surabaya a hub for international trade by enhancing its logistics capabilities. Imagine smoother commutes and faster trade routes, all contributing to a more connected city.
The Indonesian government is also playing a big role here. With a record-breaking budget for urban development in 2024, they're focusing on projects like Nusantara Capital City and improving regional roads, schools, and hospitals. This kind of investment is a game-changer for property values, especially in the eastern suburbs.
New commercial and retail developments are popping up in these suburbs, making the area more attractive. These projects are not just about shopping; they create jobs and boost the local economy. With Surabaya's population expected to hit over 3 million in 2024, there's a growing demand for homes in these areas.
All these factors are making the eastern suburbs a hot spot for potential buyers. The combination of improved infrastructure, government investment, and economic growth is setting the stage for a property boom. If you're considering buying, this might be the perfect time to explore these suburbs.
Sources: FazWaz, Gema Wiralodra, Property Update
11) Demand for mid-range housing in Surabaya will rise as the middle class grows
The growing middle class in Surabaya is set to boost demand for mid-range housing options.
With rising income levels among Indonesia's middle class, more people in Surabaya can now afford to buy homes. This trend is highlighted by the World Bank, which notes that increased earnings are making mid-range housing more accessible.
Surabaya, a bustling urban center, is part of Indonesia's urbanization wave, with 58.57% of the population living in cities as of 2023. As more people flock to urban areas, the demand for housing, especially in the mid-range segment, is expected to grow. Government policies are also in play, promoting home ownership through infrastructure development for housing projects.
Mortgage financing options have become more accessible, easing the path for the middle class to purchase homes. This financial support is crucial as it aligns with the increasing number of mid-range housing developments, which cater to the middle class's desire for affordable yet quality living spaces.
Real estate market reports show a clear trend: mid-range housing developments are on the rise, driven by the middle class's demand. Consumer surveys back this up, revealing a strong preference for mid-range housing options among potential buyers.
In Surabaya, the combination of rising incomes, urbanization, and improved mortgage options is creating a perfect storm for increased demand in the mid-range housing market.
Sources: The Diplomat, Ipsos, Statista
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12) Demand for affordable rentals near schools in Surabaya will grow as more students move in
Surabaya is experiencing a surge in student enrollment at its universities and colleges.
Take the University of Surabaya, for example, which educates 12,000 students across various faculties. This influx of students is a major driver for rental property demand. With more students flocking to the city, the need for affordable housing near campuses is on the rise.
Looking ahead, the number of students in Indonesian universities, including those in Surabaya, is expected to grow significantly. By 2024, over 19 million students are projected to enroll, which naturally boosts the demand for housing, especially affordable options close to educational institutions.
Surabaya's population is also on an upward trend, adding to the housing demand. This growth includes a significant number of students, which further intensifies the need for rental properties. Many students are moving from suburbs and villages to the city, seeking off-campus housing that offers convenience and proximity to their schools.
For those considering investing in property, this trend presents a promising opportunity. The demand for student housing is not just a temporary spike; it's a growing need that aligns with the city's educational expansion. Investing in rental properties near universities could be a smart move, given the steady influx of students.
As Surabaya continues to develop as an educational hub, the demand for student accommodation will likely remain strong. This makes it an attractive prospect for property investors looking to tap into a stable and growing market. Understanding these dynamics can help potential buyers make informed decisions about where to invest in the city.
Sources: Education Data, World Population Review, Top Universities
13) Student accommodation rents in Surabaya will increase as more students enroll in local universities
Student enrollment at the University of Surabaya has been on the rise, creating a buzz in the local housing market.
With 12,000 students now attending the university, the need for nearby housing has skyrocketed. This surge is particularly felt in neighborhoods close to the campus, where students are eager to find affordable and convenient places to live.
The real estate scene in Surabaya is feeling the heat, especially around universities. The growing student population is driving up demand for accommodations, as more students seek housing options that fit their budgets and lifestyles.
However, there's a catch. Surabaya is facing a shortage of student housing units, which is putting pressure on the market. This scarcity, coupled with the influx of students, is creating a perfect storm for landlords.
Landlords are likely to capitalize on this situation by raising rental prices, given the limited supply and high demand. It's a classic case of supply and demand, where the scales are tipped in favor of property owners.
For those considering investing in Surabaya's property market, this trend offers a unique opportunity. The rising demand for student accommodations could mean promising returns for savvy investors who act quickly.
Sources: Top Universities, Property Pulse Asia
14) Rents in Surabaya will rise as more expats and professionals move in
Rents in Surabaya are climbing as the city becomes a magnet for expatriates and professionals.
Surabaya's appeal is growing thanks to its strong economy and abundant job opportunities. It's not just a gateway to tourist hotspots like Mount Bromo and Bali; the city also offers a tropical climate that many international residents find irresistible. This combination makes Surabaya a top choice for expats looking to settle in Indonesia.
With more multinational companies setting up shop in Surabaya, the city is buzzing with new opportunities. This influx of foreign investment has led to the rise of high-rise skyscrapers filled with apartments, condos, and hotels, all designed to cater to the growing number of expatriates. As more professionals flock to the city, the demand for rental properties is naturally on the upswing.
The Indonesian government is also playing a part by rolling out initiatives and incentives to boost real estate investment. These include tax breaks and other perks for foreign investors, creating a favorable environment for developing affordable housing projects. This, in turn, is driving up the demand for rentals, even as the supply of high-quality properties remains limited.
Despite these developments, the availability of top-notch rental properties hasn't kept pace with demand. This scarcity is a key factor in the rising rental prices as more people look for places to live in Surabaya. The city's growing reputation as a business hub only adds to the pressure on the rental market.
As Surabaya continues to attract a diverse mix of residents, from expatriates to local professionals, the rental market is set to remain competitive. The city's unique blend of economic opportunity and lifestyle appeal ensures that rents will keep rising as more people choose to call Surabaya home.
Sources: Internations, Bali Exception, Internations
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) Rents in Surabaya's suburbs will rise as families look for more space and amenities
In Surabaya, families are increasingly opting for suburban living due to changing lifestyle needs.
With the rise of remote work, many families now require extra space for home offices and other activities. This shift, which gained momentum during the COVID-19 pandemic, has made larger homes more appealing. Suburban areas offer the space needed for these new lifestyle demands, making them a popular choice.
Urban challenges like traffic congestion and pollution are pushing people towards the suburbs. Surabaya, like many bustling cities, faces these issues, making quieter and cleaner suburban areas more attractive. The government is also working on improving transportation, which further enhances the appeal of suburban living.
Suburban areas are becoming more self-sufficient with the development of schools, shopping centers, and parks. Families appreciate having essential amenities nearby, which boosts the demand for housing in these areas. As more people move to the suburbs, the demand for rental properties increases, leading to higher rents.
Suburban living in Surabaya is not just about space; it's about a better quality of life. The combination of improved amenities and less congestion makes these areas highly desirable. As a result, rents in suburban areas are on the rise, reflecting their growing popularity among families seeking more space and comfort.
For those considering a move, the suburbs offer a compelling mix of convenience and tranquility. With the ongoing development and government support, suburban living is set to become even more attractive in the coming years.
Sources: CBS News, Journal Keberlanjutan, GovInsider
16) Demand for high-rise apartments in Surabaya will grow because land is scarce
Surabaya is bustling, with a population density of 9,900 people per square kilometer.
As more folks flock to the city, the annual growth rate has been 1.46%, pushing up the demand for housing. In the heart of Surabaya, land is scarce and prices are climbing, making high-rise apartments a smart choice. They fit more people into less space, which is crucial given the limited land.
The Surabaya Urban Corridor Development Program, backed by the City Form Lab and the World Bank, is all about using land efficiently. This program underscores the potential for high-rise buildings, which are becoming increasingly appealing as the city grows.
Every year, about 10,000 new residents move to Surabaya, adding to the urban buzz. This wave of newcomers needs places to live, and high-rise apartments are a practical solution. Developers are playing it safe, focusing on selling existing units because there's just not enough land for new projects.
With land being so limited, the demand for vertical living is on the rise. High-rise apartments are not just a trend; they're a necessity in a city where space is at a premium.
As Surabaya continues to expand, high-rise apartments will likely become even more desirable, offering a way to live comfortably in a crowded city.
Sources: Kompas, World Population Review, City Form Lab, Kompas
17) Demand for eco-friendly properties in Surabaya will grow due to green initiatives
Surabaya is making big strides in green initiatives, which is set to increase the demand for eco-friendly properties.
The city government is heavily investing in projects like sustainable waste management and green buildings. One standout effort is the Surabaya Green and Clean Program, which has rallied thousands of neighborhood associations to get locals involved. This program is not just about cleaning up; it's about creating a community-driven movement towards sustainability.
There's also a noticeable shift in building practices, thanks to initiatives like the Kampung Improvement Program (C-KIP). This program encourages communities to tackle their unique challenges with sustainable solutions. The government sweetens the deal with incentives for green building certifications, such as the ‘Greenship’ rating system, which focuses on energy efficiency and environmental management.
Real estate developers are catching on, with more projects featuring green elements. The International Finance Corporation is even partnering with universities to offer the Design for Greater Efficiency (DfGE) course. This course is all about teaching students and young professionals how to design with resource efficiency in mind, which is driving the trend for sustainable properties.
Media coverage on sustainability in Surabaya is also on the rise, making people more aware and interested in eco-friendly homes. This heightened awareness is not just a trend; it's becoming a lifestyle choice for many residents.
With these green initiatives, Surabaya is not just cleaning up its act; it's setting the stage for a future where sustainable living is the norm. The city's efforts are creating a ripple effect, encouraging more people to consider properties with sustainable features.
Sources: Global Covenant of Mayors, Garuda Kemdikbud, SDGs United Nations, IFC Pressroom
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18) Real estate investment will surge in neighborhoods near the Suramadu Bridge
Neighborhoods near the Suramadu Bridge are turning into prime spots for real estate investment.
The Surabaya Urban Corridor Development Program has made a big difference by improving transportation, including a new mass rapid transit system. This upgrade has made the area more accessible, which is a huge plus for both businesses and residents. The Suramadu Bridge, completed in 2009, has cut travel time across the Madura Strait, making it easier for goods and people to move between Java and Madura. This boost in traffic is a sign of growing economic activity, which is great news for real estate.
There's more on the horizon with new infrastructure projects, like a planned port for container ships in Madura. These developments are set to enhance the region's connectivity and economic potential even further. The local government is also stepping up by creating a business-friendly environment. They're offering incentives for foreign property buyers and making it easier to purchase property, which is expected to drive up property prices.
Surabaya is seeing a rise in residential property prices, thanks to ongoing infrastructure and business development. The city is becoming a thriving economic hub with an influx of foreign direct investment. This transformation is pushing property prices higher, making it an attractive market for buyers. With more people moving to Surabaya each year, the demand for housing is on the rise, signaling a prime time for real estate investment.
Government development plans are a big part of this shift. A record-breaking infrastructure budget from the Indonesian government is set to attract more investors to the area. Surabaya's population is growing, and with it, the need for housing. This demand is a key driver for real estate growth, making neighborhoods near the Suramadu Bridge even more appealing.
All these factors combined make the area a hotspot for real estate investment. The improved transportation, government incentives, and rising property prices are creating a perfect storm for investors looking to capitalize on the region's growth.
Sources: ET Edge Insights, GIS Réseau Asie
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.