Indonesia conjures up idyllic memories of gorgeous villas and people relaxing around plunge pools surrounded by frangipani while eating mangosteen - all set against vistas of Balinese rice-terraces and white beaches.
This country of 250 million has experienced its gross domestic product quadruple in the last 10 years and is now one of the hottest property markets in Southeast Asia.
With an average square foot cost of USD$240 and rental yield of around 7%, Indonesia on the whole seems highly compelling.
Jakarta is a bustling home to ten million people and some of the most spectacularly terrible traffic in Asia – but has a rental yield of up to 11%, making it one of the world’s best to buy into. Top of a Singaporean investor’s list are the areas of Sudirman (condominiums), Kemang (landed property/houses in South Jakarta), and Kebayoran (condominiums and landed property/houses).
“The low price point makes it attractive because you don’t need to be a millionaire,” Charlie Lee, a Singapore-based banker who bought a condominium for rental in Jakarta said. “You can get an apartment in the Golden Triangle [a smart spot in the centre of town] for USD$70,000, with a yield of more than 10% and good prospects for capital appreciation.”
The Indonesian island of Bali is popular with foreign buyers looking to invest in beachside property and luxury villas - prices there shot up nearly 25% over the last two years. Nusa Dua, Sanur, Seminyak, and Jimbaran are popular places to start researching. Bali's idylic beaches and rustic charm also make it one of the most popular holiday destinations for Singaporeans - so villa rentals should be kept in mind.
Bali is beginning to experience some of the same infrastructural problems as Indonesia’s capital city and, with the flood of tourists, developers, and construction, Bali’s rural roads are beginning to become choked with traffic.
It is worth getting a reputable lawyer from an international firm like Norton Rose Fulbright as the legal waters in Indonesia are compacted to navigate.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Alexander Knight is a Singapore-based property commentator.