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What is happening in Surabaya’s real estate market? Are prices on the rise or decline? Is Surabaya still attracting foreign investors? How are local government policies and taxes shaping the real estate landscape in 2025?
These are the questions we hear every day from professionals, buyers, and sellers across Surabaya and beyond. Maybe you’re curious about the same things.
We know this because we stay closely connected with local experts and individuals like you, exploring the Surabaya real estate market daily. That’s why we crafted this article: to offer clear answers, insightful analysis, and a comprehensive view of market trends and dynamics.
Our aim is straightforward: to make sure you feel informed and confident about the market without needing to search elsewhere. If you think we missed something or could improve, we’d love to hear your feedback. Feel free to message us with your thoughts, and we’ll strive to enhance this content for you.
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1) Foreign investment in Surabaya’s residential real estate will increase due to favorable exchange rates
Surabaya is turning into a prime spot for foreign real estate investment thanks to favorable exchange rates.
In 2023, the Indonesian Rupiah weakened against major currencies, making it a sweet deal for foreign investors. For example, the exchange rate hovered around 15,416 IDR per USD, which was quite appealing for those looking to invest from abroad.
Foreign direct investment in Indonesia, especially in real estate, has seen a boost. By September 2024, FDI in real estate hit $55.18 million, showing a jump from the previous quarter. This uptick signals growing interest from foreign investors, with Surabaya being a hot spot.
International real estate agencies are buzzing about Surabaya. Colliers' report for H2 2024 highlighted a surge in interest from international investors, thanks to Surabaya's stable economy and better infrastructure. These elements, along with the favorable exchange rates, make Surabaya a magnet for foreign investment.
Surabaya's appeal is not just about numbers. The city is experiencing steady economic growth and infrastructure improvements, which are big draws for investors. This combination of factors is making Surabaya a top choice for those looking to invest in residential real estate.
With all these elements in play, it's no wonder that foreign investors are eyeing Surabaya as a promising destination for real estate ventures.
Sources: Statista, CEIC Data, Colliers
2) Property prices in some Surabaya areas will drop as supply exceeds demand
In some parts of Surabaya, property prices are dropping due to a few key reasons.
One major factor is the rising number of unsold properties. For example, apartment sales in Surabaya fell by about 50% in the second half of 2023 compared to the first half, leading to a significant increase in unsold inventory. This means more properties are sitting empty, which can push prices down.
There's also been a boom in new housing developments, especially in areas like Pasuruan and Sidoarjo. This construction surge has led to an oversupply in the market, causing prices to drop as there are more homes than buyers. Real estate agencies have noticed a slowdown in buyer interest, partly because of events like the Presidential Elections and Ramadan, which can temporarily shift market dynamics.
Young people are also changing the game by preferring to rent rather than buy. This trend among younger demographics can reduce the demand for purchasing properties, adding to the price decline. Property market experts are hinting at potential market corrections in Surabaya, driven by the drop in apartment sales and an expected brief downturn in the hotel sector.
Sources: Indonesia Expat, HousingWire, Global Property Guide
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.
3) Surabaya's luxury waterfront properties will attract more interest from foreign buyers
Foreign buyers are increasingly eyeing Surabaya's luxury waterfront properties for a variety of compelling reasons.
In 2023, the value of luxury waterfront homes in Indonesia saw a remarkable surge, with an impressive 118% growth. This boom highlights a thriving market for high-end real estate, making Surabaya a hotspot for those seeking premium properties.
Surabaya's economic landscape is also a magnet for foreign investment. The city has been actively fostering international partnerships, like a Memorandum of Understanding with the Japanese government, to boost economic cooperation. Such initiatives make Surabaya an attractive destination for global investors.
The Indonesian government has been making it easier for foreigners to own property, which is a game-changer. By easing restrictions on foreign property ownership, the government has opened the doors wider for international buyers, fueling interest in Surabaya's luxury waterfront offerings.
Infrastructure development in Surabaya is another draw. With projects like the expansion of Juanda International Airport and a new seaport terminal in the works, the city is set to become even more appealing to investors and tourists alike, further boosting the allure of its waterfront properties.
Sources: Unique Living, Seven Stones Indonesia
4) Surabaya's emerging neighborhoods will attract foreign buyers seeking better investment returns
Foreign buyers are eyeing Surabaya's emerging neighborhoods for better investment returns.
While established areas have seen property prices climb, these up-and-coming neighborhoods still offer room for growth. The median sales price in Surabaya is around Rp2,210,000,000, with a median price per square meter of Rp20,800,000. This suggests that less developed areas could see significant appreciation.
Surabaya's population is growing, and with it, the demand for affordable housing. Emerging neighborhoods are perfectly positioned to meet this need, making them a hot spot for investors. The Indonesian government is also pouring money into infrastructure projects here, like the development of the Indonesian National Capital (IKN), which is boosting the outskirts of the city.
Commercial properties in these areas are offering higher rental yields than their established counterparts. For instance, commercial properties boast a rental yield of 40.2%, while land averages 37.1%. This makes these neighborhoods particularly attractive for those seeking high rental returns.
Urban development plans are spotlighting new growth areas, drawing in foreign investment. New residential and commercial projects are expected to drive economic growth and increase property values, making these neighborhoods even more appealing.
Investors are keen on these areas not just for the potential returns but also because of the government's commitment to development. With infrastructure improvements and urban planning, these neighborhoods are set to become the next big thing in Surabaya's real estate market.
Sources: BKPM, FazWaz, WRI, Own Property Abroad
5) New government incentives will draw more foreign buyers to Surabaya’s residential market
Surabaya is quickly becoming a hotspot for foreign property investors.
In 2023, a wave of foreign direct investment (FDI) projects began to reshape Surabaya, turning it into a bustling economic center. This transformation is making the city increasingly attractive to international investors. The Indonesian government has been instrumental in this shift by rolling out policies that foster a business-friendly atmosphere. These policies include incentives specifically designed for foreign property buyers, such as easing property purchase qualifications and enhancing the types of titles foreigners can hold.
These government initiatives are making it much simpler for international investors to dive into the market. Surabaya's property market is also gaining attention due to its competitive pricing and impressive rental yields. For instance, the average buy price is around IDR 2.4 billion, or $160,685, with rental yields exceeding 30%. This makes Surabaya a standout choice for real estate investment when compared to other cities in Indonesia.
For those considering a property purchase in Surabaya, the combination of government incentives and market conditions offers a promising opportunity. The city's economic growth, coupled with its attractive property market, is drawing in more foreign buyers. With the government's continued support, Surabaya's residential market is poised for further growth, making it an appealing option for international investors.
As the city continues to evolve, the potential for high returns on investment is becoming more evident. The government's efforts to simplify the buying process and offer better property titles are key factors in attracting foreign interest. This, along with the city's economic dynamism, positions Surabaya as a prime location for property investment.
For those looking to invest in a vibrant and growing market, Surabaya offers a unique blend of opportunity and potential. The city's transformation into an economic hub, supported by government incentives, is likely to continue attracting foreign buyers. Surabaya's property market is set to thrive as more international investors recognize its potential.
Sources: Aparthotel, Incorp Asia
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6) Stricter building codes in Surabaya will raise construction costs, affecting property prices
Stricter building codes in Surabaya are set to push up construction costs, which will likely affect property prices.
These new regulations, part of the 2025 Building Code, focus on safety, requiring builders to use fire-rated materials and components. Developers will need to install fire-rated vents and meet updated standards for structural materials, which means higher compliance costs.
When building codes tighten, compliance costs usually rise. Take Bali, for instance, where medium-class properties cost between 6-8 million IDR per square meter. This price range reflects how compliance costs are factored into property prices. Historical data shows that when regulations change, construction costs often follow suit, a trend that could soon be seen in Surabaya.
Experts have noted that increased construction costs, driven by stricter codes, often lead to higher house prices. The Federal Housing Finance Agency observed a significant rise in U.S. house prices from 2023 to 2024, partly due to these increased costs. This suggests that Surabaya's property prices might also rise as a result of the new building codes.
In Surabaya, developers are bracing for these changes, knowing that stricter codes will impact their bottom line. As they adapt to the new standards, the costs will likely be passed on to buyers, affecting the overall market.
For potential buyers, understanding these dynamics is crucial. As construction costs rise, so will property prices, making it essential to consider these factors when planning a purchase in Surabaya.
Sources: Brandguard Vents, Statista, FHFA, Bukit Vista
7) Suburban rental yields in Surabaya will rise as families look for larger living spaces
Remote work is reshaping how families choose their homes, with many now eyeing the suburbs for more space.
In Surabaya, families are increasingly moving to the suburbs, drawn by the promise of better living conditions and more room to accommodate their work-from-home needs. This trend is making suburban areas more appealing, as they offer larger living spaces at a more affordable price compared to the city center.
Suburban areas in Indonesia, including Surabaya, are seeing higher rental yields than urban centers. For instance, Surabaya's average gross rental yield stands at a competitive 6.47%. This makes investing in suburban rental properties a potentially lucrative opportunity as demand continues to rise.
Surveys reveal that families prefer suburban living due to factors like better quality of life, more space, and lower costs. This preference is expected to keep driving up demand for suburban rentals in Surabaya, as families seek these benefits over the city's hustle and bustle.
As more families prioritize space and affordability, suburban rental properties in Surabaya are poised for a yield increase. This shift is fueled by the growing desire for larger living spaces that can accommodate both family life and remote work.
With the ongoing trend of families moving to the suburbs, investors might find suburban properties in Surabaya increasingly attractive. The combination of higher yields and rising demand suggests a promising future for these investments.
Sources: Global Property Guide, RealPage Analytics, Arbor
8) Central Surabaya will lose appeal as congestion and pollution concerns grow
Central Surabaya is losing its charm because of worsening traffic and pollution.
Once ranked fourth globally for traffic congestion, Surabaya still struggles with this issue. Daily commutes are a nightmare, with speeds dropping below 10 km/h during rush hours. Even with the Surabaya Intelligent Transport System in place, traffic jams are a daily reality.
The air quality isn't any better, with an AQI of 113, which is considered poor. This level of pollution poses health risks, especially for those with asthma or heart conditions. Locals are advised to stay indoors, use air purifiers, and wear N95 masks to minimize exposure.
People living in the city are voicing their dissatisfaction. Social media is buzzing with complaints about the poor quality of life due to pollution and traffic. This discontent is also affecting property values, which are on the decline in central areas.
Many are choosing to move away from the city center, seeking better living conditions elsewhere. The trend of moving out is growing, as people look for cleaner air and less crowded spaces.
As congestion and pollution continue to rise, the appeal of Central Surabaya is fading, making it less attractive for potential property buyers.
Sources: AQI Monitoring Station, GovInsider
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Indonesia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
9) Surabaya’s affordable housing prices will rise due to strong demand from first-time buyers
Surabaya is seeing a big jump in demand for affordable housing.
As more people move from rural areas to the city, urbanization and population growth are driving this trend. The city is bustling with newcomers, all looking for a place to call home, which has made affordable housing options more sought after than ever.
First-time homebuyers are a big part of this story. In Indonesia, the average age of these buyers is about 35, and many are eager to purchase their first homes. This group is significant, fueling the demand for affordable housing as they step into the property market.
However, there's a catch. The supply of affordable housing in Surabaya is limited, and this scarcity is pushing prices up. Developers are capitalizing on the strong demand, and government initiatives like the One Million Houses program are only adding more interest to these projects.
With Surabaya's population growing at a rate of 1.2% due to urbanization, the need for housing isn't slowing down. Rising incomes among the middle class mean people are ready to spend more on housing, and experts predict that prices in the affordable segments will continue to climb.
Sources: World Population Review, ET Edge Insights
10) Rental yields in Central Surabaya will drop due to an oversupply of rental properties
Central Surabaya is seeing a decline in rental yields due to an oversupply of rental properties.
Real estate agencies in Indonesia have noticed a surge in available rental units, which means there are more properties than tenants. This oversupply is a key factor in the current market situation. When there are too many options, landlords often have to lower prices to attract renters, which naturally leads to reduced rental yields.
Adding to the issue, there's been a significant rise in construction permits, indicating more residential buildings are popping up. This increase in housing stock without a matching demand means more empty properties. Landlords are then forced to drop rental prices, further impacting their returns.
Tenant preferences are also shifting. Many are now looking towards suburban areas, which means less demand in central locations like Surabaya. This trend is making the vacancy problem worse, as more people opt for life outside the city center.
With fewer people interested in renting in Central Surabaya, landlords are facing longer vacancy periods. This situation is another reason why rental yields are dropping. The longer a property stays empty, the more it costs the owner, pushing them to lower rents even further.
Source: Global Property Guide
11) Compact apartments in Surabaya will become more popular as urban living gains appeal
Compact apartments are gaining traction in Surabaya as more people are drawn to urban living.
Surabaya is bustling, with a population density of 8,458 people per km², which means there's a big demand for housing right in the city center. As the city grows, folks are looking for smart and affordable places to live.
Young professionals and students are on the hunt for budget-friendly homes, and compact apartments fit the bill. These micro-apartments are perfect for those who care more about being in the heart of the action than having tons of space. Plus, with more people living solo or in smaller households, these efficient spaces are just what they need.
With property prices climbing, traditional homes are getting pricey. Compact apartments offer a wallet-friendly option for city living. The trend of mixed-use developments, where living and working spaces blend, makes these apartments even more appealing.
Surabaya is investing in things like public transport and bike lanes, making city life easier without a car. This boosts the appeal of compact apartments, as everything is within reach. Plus, the global trend of compact living is catching on here, too, pushing up demand.
Sources: Arch Inspires, World Bank, ITDP
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12) Property values in southern Surabaya will increase with the opening of new educational institutions
Property values in southern Surabaya are set to rise as new educational institutions open their doors.
With more students heading to this area for their studies, the demand for housing is expected to surge. This mirrors what happens in other university towns where student housing is always in high demand, leading to higher property values.
Adding to this, the Indonesian government is pouring money into infrastructure projects, like the development of Nusantara Capital City. This will make getting around easier and boost the area's appeal to both locals and investors.
Southern Surabaya is becoming a hotspot, not just for students but for anyone looking to invest in property. The improved transportation links will make it a more convenient place to live, further driving up property prices.
Sources: Student Housing Business, Yield Pro, Global Property Guide
13) Surabaya’s property prices will rise moderately with steady economic growth
Surabaya is on the rise, with steady economic growth fueling a moderate increase in property prices.
Thanks to a consistent GDP growth of 4.6% to 5.4% annually, the city is becoming a magnet for newcomers, which naturally boosts housing demand. This economic upswing is not just a number; it's a sign of a thriving city that's drawing more people in.
Investments are pouring in from both foreign and domestic sources, especially in areas like West, East, Central, South, and North Surabaya. This influx is not just about money; it's about transforming the city with new infrastructure and business opportunities, which in turn is heating up the property market.
The Indonesian government is playing a big role too, with a record-breaking budget for infrastructure. They're not just building roads; they're enhancing education and health facilities, making Surabaya even more attractive and likely to see property prices climb.
Surabaya's population is growing, with the metro area expected to surpass 3 million residents. This isn't just a statistic; it's a wave of new people needing homes and jobs, which is driving up demand for residential and commercial properties.
As more folks move in, the need for housing and rentals is rising, nudging property prices upward. It's a simple equation: more people equals more demand, and that means higher prices.
Sources: Wikipedia, Indonesia Real Estate
14) Surabaya's suburban rental yields will rise as more people relocate from the city center
Rental yields in Surabaya's suburbs are set to rise as more people opt for life outside the bustling city center.
Why the shift? Well, for starters, Surabaya's metro area is expected to grow to 3,138,000 by 2025, showing a clear trend towards suburban living. People are drawn to the suburbs for a variety of reasons, and it's not just about escaping the city hustle.
One big factor is the massive infrastructure development happening in these areas. With a whopping Rp422.7 trillion budget for 2024, the government is enhancing roads and connectivity, making it easier and more appealing to live outside the city center. This kind of investment boosts mobility and productivity, which is a huge plus for potential residents.
City center property prices are climbing, pushing people to look for better value elsewhere. Suburban areas offer more bang for your buck and a laid-back lifestyle that many find attractive. It's not just about cost; it's about quality of life.
The rise of remote work has also played a role. People now want larger living spaces, and the suburbs can deliver. This aligns perfectly with the growing preference for suburban living, where space and comfort are more readily available.
Lastly, the city center's issues with overcrowding and pollution are nudging residents to seek out healthier living conditions in the suburbs. It's a move towards a better quality of life, away from the congestion and smog.
Sources: Macrotrends, Housearch
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.
15) Surabaya's coastal rental market will grow as tourism increases
The rental market in Surabaya's coastal areas is set to experience a boost as tourism picks up.
In 2024, Juanda Airport in Surabaya saw a surge in tourist arrivals, with 28,182 visitors in October alone. This increase shows a growing interest in the city, especially its beautiful coastal areas. As more tourists flock to Surabaya, they naturally explore the coastal regions, making them prime spots for rental opportunities.
Hotel occupancy rates in Surabaya have been climbing, reaching 58.07% in October 2024. This trend indicates that more tourists are not just visiting but also staying longer, which could lead them to seek out alternative accommodations like coastal rentals. The demand for these rentals is likely to rise as visitors look for unique experiences by the sea.
The local government is actively promoting tourism in these coastal areas. By creating a business-friendly environment and offering incentives for foreign property buyers, they are making Surabaya's coast more attractive. New tourist attractions are being developed along the coast, adding to the area's appeal for both tourists and investors.
These efforts are expected to further boost tourism, drawing more visitors to the coastal areas. As tourism grows, so does the potential for rental properties, making it an exciting time for investors. Surabaya's coastal areas are becoming a hotspot for those looking to capitalize on the tourism boom.
Sources: Travel and Tour World, AirDNA
16) Student influx in Surabaya will boost demand for rentals near universities
Surabaya is experiencing a steady rise in student enrollment at major universities like the Sepuluh Nopember Institute of Technology and Airlangga University.
This influx of students is naturally leading to a higher demand for off-campus rentals, as many students seek affordable and convenient housing options.
With Surabaya's population expected to grow from 3,088,750 in 2024 to 3,137,620 in 2025, there's a larger potential student population on the horizon, further boosting the need for rental properties near universities.
Students often prefer off-campus housing because it's more affordable and convenient than on-campus options, which are limited in availability.
Universities in Surabaya face challenges in providing enough on-campus accommodation, making off-campus rentals a popular choice for students.
As the student population continues to grow, the demand for rental properties near educational institutions is expected to remain strong.
Sources: World Population Review, Wikipedia
17) Green neighborhoods in Surabaya will become more desirable due to new environmental initiatives
Surabaya is investing heavily in green infrastructure, transforming the city into a more eco-friendly place to live.
With 142 active parks, Surabaya is not just improving air quality but also enhancing the city's ecological and social fabric. These green spaces are making neighborhoods more attractive to residents who value a healthier lifestyle.
There's a noticeable shift in consumer preferences, with 48% of individuals and 64% of companies in Surabaya showing interest in eco-friendly materials. This trend highlights a growing demand for sustainable living options, making green neighborhoods increasingly desirable.
Surabaya's international recognition, like winning the UN Sustainable City and Human Settlements Award, has put a spotlight on its green initiatives. This kind of media attention boosts the appeal of living in environmentally conscious areas.
Local programs, such as the Surabaya Green and Clean Program, are engaging citizens in waste management and sustainability efforts. These community-driven initiatives are vital in creating appealing green spaces that attract new residents.
Sources: Global Covenant of Mayors, PalArch's Journal, Clingendael
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18) Flood mitigation projects will raise property values in Surabaya's previously at-risk areas
Flood mitigation projects in Surabaya are transforming once risky areas into attractive spots for homebuyers and investors.
These projects are not just about keeping water at bay; they’re about making neighborhoods safer and more appealing. When people see that their homes are protected from floods, they feel more secure and are willing to invest, which naturally drives up property values.
Take a look at cities like Banjarmasin and Manado. After they implemented similar flood resilience projects, property values shot up. These areas, once seen as risky, turned into prime real estate, drawing in more buyers and investors.
Another perk of improved flood defenses is that flood insurance premiums often drop. Lower insurance costs mean more savings for homeowners, making these properties even more attractive. Surveys highlight that homebuyers are keen on areas with strong flood defenses, boosting demand and property values.
In Surabaya, these changes are expected to follow the same trend. As flood risks decrease, the appeal of these areas increases, turning them into sought-after locations. This shift is a game-changer for the local real estate market.
With these projects, Surabaya is not just protecting its homes but also enhancing its real estate landscape, making it a win-win for everyone involved.
Sources: World Bank, Today's Homeowner, PreventionWeb
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.