Land prices

You've been lucky.
Any land purchase would very probably have been illegal and could leave you losing all your cash.
You can always put it in an Indonesian's name, but there's not a lot stopping them ripping you off as you have to prove you did something illegal in order to prove they sold the house you didn't legally own.

Foreigners, at this moment in time, can't legally buy land here.

As for prices, estate agents all over the world wonder who their fathers were.

They've driven the prices to daft levels where businesses are unsustainable and private individuals can no longer afford houses.
Rental prices, especially in the most popular areas have skyrocketed over the last five years, commonly doubling or tripling over that time.

Mike, as Fred wrote, land prices have gone up, but the extent depends on where you are looking.  Generally speaking, land here is sold or leased on a per are basis (100 square meters) and priced on that basis.  You likely made a typo quoting prices from a year ago of 200,000 IDR per square meter, as land has never been that cheap anywhere here in decades.   

Also as Fred mentioned, land ownership by foreigners is not allowed, but one can accomplish close to the same thing as full ownership by way of what's called a Hak Pakai lease.  These can run for as long as 50 years, and with recent changes, they are also allowed to be passed on to family members by way of your will.

Things happen.

In "normal" circumstances, I really emphasize on the normal.... property values could increase by 10% annually.

However, things got heated up basically all over the world, beyond 2000.
On average property prices doubled in 5 to 7 years.

However, Jakarta in 2011/2012, property prices doubled in 2 years or more.....

In 2016, everywhere reached a plateau. Saturation point.
In China, many property prices didn't increase in value in 2015 and register almost zero growth in prices of new properties.
Where there is some movements still in Indonesia for growth. But dont expect to go crazy like last few years....

However, Jakarta in 2011/2012, property prices doubled in 2 years or more.....
In 2016, everywhere reached a plateau. Saturation point.

But the prices remain very high, too high for most.
Business are going bust at an alarming rate, and more and more people are moving out of the expensive clusters in favour of villages.
There are rows and rows of empty shop houses, and lots of private houses that simply won't sell because the estate agents are demanding silly money for them.

A good way to find properties at a good price is to avoid property agents. We bought our first two because my in-laws drove around on a motorbike asking around in the areas that we considered as good. The owners had money problems and had two houses to sell, and there were about 15 family members living in these two houses. They refused to sell only one so we negotiated the price and bought the two, side by side, for a song, way way below their asking price. We also chose our notaris and they paid for the notaris fees. They'd had an offer for 200 million more the previous year but they'd lost the number and then we came along.

If we'd have gone through an Agent there is no way that we could have gotten those two houses. The Agent would have sold them off to Jakarta people a long time before we'd ever have known about them.

There is a third house directly next door, a bit smaller than the other two, and the owner offered to sell it to us for the same price that we paid for the others pending the old relative moving out, but a few weeks later changed her price to double as she said Jakarta people had offered her much more.

So don't always look for houses with For Sale signs. There may be others that nobody knows about which are a lot cheaper.

Hansson wrote:

A good way to find properties at a good price is to avoid property agents..

Absolutely, yes.

The same goes for renting. Agents try to push up the prices as far as they can rip you off for, so it's far better to avoid them.
Looking in OLX and other online direct sales sites also tends to get you a good deal.

Rental Prices hasnt increased as rapidly in corresponding to the value of the property.
In good times, you could get 3 to 5 percent.
Now, you are lucky if you are getting 1 to 2 percent of the value of the property.
This happening internationally in Asian countries as well.

Surprisingly, those above is more on residential properties. Commercial prime properties are still holding out high prices. That is why businesses who do the renting are feeling the squeeze. They have to calculate turnover and bottom line. Restaurants business is a tough job if you are doing in malls.

Wow. Thanks for the replies everyone, especially the insights from Hansson.
My wife is from Surabaya so we have family who can do the purchase for us.
We had been searching in Sumbawa and other rural places. Seems like the only way to get land is buying in bulk. There are a lot of places available under 1 million per m2 but have to buy large blocks.
Thanks again all.

Real estate in Indonesia is no different than anywhere else in the world, the operative words being, “location, location, location.”  Thus, one can find land prices here from as low as 5 million IDR per are (100 M2) to well over 1 billion IDR per are (prime in Bali). 

What is a particular challenge, especially in the more remote areas, is to find reasonable comps, or recent prices paid for comparable land in the same area. 

“My wife is from Surabaya so we have family who can do the purchase for us.”

Many of us do precisely that, especially if within our marriage we have children…the ultimate and intended eventual owners of our property. 

However, with that being said, even for Indonesians buying land in provenances other than their own province, there are potential pitfalls.  The most important one to consider is the local village adat in effect where the land is located.  While village adat cannot take precedence over provincial or national laws, it is essential to understand that going against village adat has its own potential problems.  With that in mind it cannot be overstated that it is essential to establish a good relationship with the local kepala desa (head of village) and it is also wise to engage a good lawyer (not just a notaris) to ascertain that the land in question is not otherwise encumbered, and that the current “owners” in fact are in fact the legal owners.

Another thing to consider is that things can change radically, especially with costly real estate transactions, once it is known that a foreigner is involved.  With that in mind it is always best if the foreigner keeps as invisible as possible, or at least maintain a very low profile until the deal is done.

Just giving an overview. I did some interesting analysis on land prices on the SAME area in Jakarta.

I was doing some tax issues, thus could review the data easily. The only location that I can find easily over the same areas (within a few hundred metres away) and when the property are bought to be found as the following prices:

Prices in Rupiah per square metres (/m2):
1980:   25.000
2005:   5.900.000
2009:   12.900.000
2011:    16.500.000
2015:     70.000.000

As noted above, the capital gains are huge.
If I were to buy a property on the same area, The asking price on 2016, It will be up to
Rp 90.000.000 / m2

Do note that the extremely large gap discrepancy on 1980s could be due to currency fluctuations. In 1980s, 1 Usd = Rp 626.

Crazy world isn't it?  Right now 1 Usd = 13.500  (strengthening from Rp 14.000 a month ago)


https://id.wikipedia.org/wiki/Rupiah

Sejarah nilai tukar rupiah terhadap 1 dolar Amerika Serikat
1946–1965
Tahun            Per dolar AS
1946-1949   
Nov 1949    3,80
Mar 1950    7,60
Feb 1952    11,40
Des 1956    31,00
Des 1957    49,00
Des 1958    90,00
Jul 1962            1.205,00
Agt 1965             2.295,00
Nov 1965    4.995,00
Des 1965    0,25

1966–1996
Tahun             Per dolar AS
1966-1970      250,00
Apr 1970     378,00
Agt 1971      415,00
Nov 1978     625,00
Des 1980     626,00
Des 1982     702,50
Mar 1983     970,00
Des 1985     1.110,00
Agt 1986             1.334,00
Sep 1986    1.664,00
Des 1990    1.842,00
Des 1995    2.248,00

1997–2000
Tahun             Per dolar AS
Jun 1997            2.350,00
Agt 1997      2.955,00
Nov 1997    3.700,00
Des 1997    5.915,00
Jan 1998      14.800,00
Feb 1998    7.400,00
Apr 1998     8.000,00
Jun 1998             16.800,00
Jun 1999            6.800,00
Okt 1999    6.500,00
Des 1999    7.900,00
Des 2000    9.725,00

2001–sekarang
Tahun     Per dolar AS
2001    10.265,00
2002    9.260,00
2003    8.570,00
2004    8.985,00
2005    9.705,00
2006    9.200,00
2007    9.125,00
2008    9.666,00
2009    9.447,00
2010    9.036,00
2011    9.113,00
2012    9.718,00
2013    12.250,00
2014      ~ 12.550,00
Agt 2015  ~14.000,00
Sep 2015 ~13.500,00

1980:   25.000 -         Des 1980     626,00
2005:   5.900.000 -            2005    9.705,00 -    GNI 1.220
2009:   12.900.000 -          2009    9.447,00      GNI 2,150
2011:   16.500.000 -          2011    9.113,00      GNI 3,010
2015:   70.000.000 -  Sep 2015    13.500,00    GNI 3,630 (2014)

We see from the land prices against Dollar exchange rate, there is no serious comparison.
That means something else caused the problem, so I added GNI to the pot.
GDP has been falling since 2010, so that isn't it.
The numbers hardly account for the massive increase in land prices, so I return to my earlier suggestion concerning estate agents who are unaware of their father's identity.

Thats just insane. How will the locals ever afford to buy a home?
Its actually cheaper to buy land here in north america. At some point when the land stuation crashes, all the foreigners who bought that land will be bankrupt. Dont they see that?
And if that doesnt happen then the locals will likely evwntually create a pretty big social disturbance nce there are enoigh people who cant afford a place to live-- that could cause things to fall back in line. Either way not good for those who are accepting these nutty prices.
Canada is experiencing something similar in the Vancouver area where foreign buyers have been driving the market prices way too high so the government has been putting some controls in place.
Oh well. Maybe time to look elsewhere for something affordable.

mgardner wrote:

Thats just insane. How will the locals ever afford to buy a home?.

And there goes the problem, they can't.
Most people in this country earn Rp5 million/month or less, so that's a "Forget it, pal" for most trying to buy a house.
The house opposite mine is up for 2 billion, but no one that would be interested has enough cash to buy it, so it sits empty.
Buyers, sellers and government MUST get their heads together and cut out the illegitimate sods that are destroying the chances of so many normal families, and putting this country in a pickle.
Rural prices are even close to as stupid as city prices, so I see a lot of people moving away to smaller towns.
Perhaps estate agents should be regulated, preferably with a noose.
These people do it all over the world, as we saw with the sub prime market in the US. They hammer people and run off with the profits when it all comes down, but they get away without a problem.
The UK was exactly the same about 10 to 15 years ago, seeing massive increases but no significant increase in income, leading to a situation where most can't afford a reasonable house, or have to pay for 50 years to get one. It's mad.
It's estate agents and their greed every time.

Not that I have strong feelings on the subject, but I see so many people struggling to get a home, and a load of crazy priced houses no one can afford.
Capitalism is fine, but pure greed that leaves so many decent, hard working people with problems makes me puke.

The government is part to blame too. They partake in the forbidden fruits by raising the yearly land tax (PBB) like there is no tomorrow. Just check the 2000, 2010 and 2015 PBB yearly land tax. They are really scary.

Each land/property has NJOP, as the basis of the land tax. So basically every property has increased and set into stone the value. There is no way in hell... it would be go below NJOP. Thus you will see property values ever increasing and will not go down easily.

Government sets a rule to collect transactional tax 5 percent from buyer and seller respectively from this NJOP.

So the government is guilty as charged as well.

“Thats just insane. How will the locals ever afford to buy a home?”

Here in Bali, the answer to that particular question is unique…they hardly ever “buy” their homes in the first place.  Here, the vast number of Balinese live in their ancestral compounds which are never bought or sold.  Male offspring live in the same family compounds that their ancestors have lived in for countless generations.  Women follow their new husbands, and move to their compounds.

You can spend 18 years traveling about Bali and never once see a sign “Di Jual” on the side of a compound gate. 

I recently told my father in law that his 45 are compound is worth about 1.7 million US dollars (our village land currently trades hands at a minimum 500 million IDR per are).  He just shrugged his shoulders…as that is totally meaningless to him. 

For this reason alone, Bali will remain relatively free of any economic or social calamity due to real estate prices going up, or down.

It's not just the property agents pushing up the prices, it's the landlords too. It's not really greed either. It's sound business sense to want your investments to increase. Investors can risk their money on the stock market or on the -roprty market, and many investors prefer property because they believe that no matter how much property prices might drop, they will always rebound back and climb even higher. But of course they should not overextend. Of course smart property investors should rent out their properties rather than flip them, and ask slightly below the market rate and be prepared to negotiate. Those who are not prepared to negotiate will take longer to find a tenant or buyer and month by month will feel the pressure unless they are stinking rich.

Property investors are not looking to be fair to all potential tenants and buyers, they are only looking to make money. And there is nothing wrong with that.  If they ask too much (or are greedy as some might put it) then they will not find a tenant or a buyer.

You can compare to the Malaysian property market where the same situation applies where locals cannot afford to buy property. Despite government trying to step in and make controls, locals are being forced to buy further and further out of town in more remote areas in order to buy a place to live. Only the richer investors can afford to buy in town.

So this is nothing unique to Indonesia. Property investment and getting as much money as you can is normal for property investors the world over. If investors are greedy then obviously they will not be able to sell or rent out their properties and will be forced to adjust down their prices.

Hansson, I totally agree with you.  In any free market society it is the basic economic tenant of supply and demand which ultimately defines property prices…not real estate agents, nor government taxation.

Real estate is particularly unique, and most favorable because there is never a monopolistic control of supply.  And, as the old saying goes, “they ain't making it anymore.”  Demand on the other hand, is constantly increasing. 

Here in Indonesia, what is particular unique, and financially sound, is the low availability of mortgages.  Nothing can, or will overheat a real estate market more than “free money” to buy real estate.  The 1998 crisis in the US has proven that more than any singular past event.  The vast majority of Indonesians who own land, own it outright and without the encumbrance of a bank loan.  That is smart and very sound financial planning. 

It is primarily for that reason that whatever the current state of real estate is here in Indonesia at any given time, the current value is realistic, as it is not being driven by financial institutions where “greed is good.”

Wow.
I am a capitalist at heart tempered with reasonableness and a long range outlook. When people lack these lines in the sand they need to be drawn in place using oveesight by a more reasonable power.
Lets hope the indonesians who are being priced out of their own land dont turn the tables one day and take away ours.
There is a place and time for profit making. Seems it has been allowed to run rampant for too long and I fear trouble ahead.

"Lets hope the indonesians who are being priced out of their own land dont turn the tables one day and take away ours."

All the more reason why current Indonesian law prohibiting the sale of land to foreigners should remain in place.

Can you imagine the level of real estate prices if A) Foreigners could buy all the land they want, and B) Banks freely loaned the money for those purchases at zero to 5% down payment, and interest rates of 5%? 

In that scenario, land prices would explode, making today's pricing seem like a gift.

I think , one should never forget indonesia is a firecracker of a country , we sit on a string of volcanoes , if it blows say good bye to your land , and house . Further to this in the recent past at times of political strife the "worm turned " , and various groups were attacked , I wonder with the recent downturn in asia and the china crisis , which has still a long way to go, will it happen again ?

what will land be worth then ? very little I suspect

Major cities in Indonesia are not on the path of natural disasters.
You can be assured the land prices wont go down below drastically due to:
~ government sets in stone the minimum value of the land and property. With yearly tax,
~ property in urban areas are limited and thus high in demand. Residential bungalow or landed properties will always be high in demand.
~ there are no artificial bubble from house loans. Indonesia credit system needs good ratings to be able to satisfy kpr.
~ the global trend, property always increases in value yearly. Unless you have over supply. It is noted though the average wage earners to buy a property within a multiplication of years to annual wage ratio has been increasing.
~ Even with a downturn, property often bounces back.

On another note.
I do admit the gaps of the haves and the haves not in Indonesia are huge. And in terms purchasing power is boggles the mind.

However, in terms of country wise. Jakarta is still cheap compared to - for example Beijing and Shanghai.
I have properties in Jakarta and Shanghai, so I am able to compare. The growth rate of the property in Jakarta is rising rapidly indeed over the last couple of years (I calculated mine as five times from 2011). However it is still cheaper than Shanghai in comparison. People in China fork out alot of money just to be able to buy a small property in urban areas. It is a requirement to be married, to have a property family home.

If people over in China were able to buy properties in Jakarta - a "Big IF". The prices here are still considered peanuts.
However, one great case example would be Melbourne and Sydney, Australia.
I heard that the prices over there are ballooning. I heard that it is often foreign buyers who commanded the highest bidding auctions. That is why they are disliking migrants/permanent residents alot over there.

Take another example, Singapore properties. Singapore new properties are way overpriced, and offer little returns of investment and high maintenance costs. Singaporean developers often do little expos in Indonesia. Enticing local Indonesian to invest in there. One look at it, I found the prices are so ridiculously high. I could buy 2 to 3 homes nicely with an exchange of a single condominium.
So it is more of a "class prestige" for those who really buys into it.

In summary, Jakarta or urban properties prices are still in line with neighboring countries prices and cheaper (not so expensive) in comparison. However, might not be so affordable for local average Jakarta urbanites.
That is why the rise of apartments and rapid development of outlier satellite cities - Tangerang, Bekasi, Depok and Bogor. Just the roads network infrastructure is not up to par yet. We have employees travel to and forth each day, with each trip taking  more than 2 hours.
Boggles the mind....

"“I do admit the gaps of the haves and the haves not in Indonesia are huge. And in terms purchasing power is boggles the mind.”

That's an interesting point to consider.  But, is the gap actually that huge?  For certain there is great poverty here, and there is also great wealth…however, gauging the actual financial “worth” of Indonesians isn't always that easy.

Of course I can only speak for Bali…as that is what I know.  Here, while there is often the appearance of poverty with many Balinese, they often have a net worth far exceeding that of those tourists who might pity them.  That poor looking farmer emerging from his rice field dressed in rags and wearing a straw hat could very well be sitting on millions of dollars worth of land…and even though he knows it, he still prefers his days in the rice field.  The idea of taking a year off and spending it on luxury cruise ships touring the world isn't a thought that would be considered…even though he could very easily do just that.   

Their purchasing “power” is considerable, but for the Balinese, owning the symbolic icons demonstrating wealth is normally not appealing.  There are exceptions of course, but for the majority, a good car is fine…a luxury car is a waste.   

My point is simple.  When it comes to Indonesia, and in particular, Bali, trying to gauge or make conclusions based on perceptions that are forged from other cultural points of view is often pure folly and I find this to be true even with some ethnic Indonesians who frequently are far more used to their own ethnic values when trying to asses the actual wealth of others.

I do admit the gaps of the haves and the haves not in Indonesia are huge. And in terms purchasing power is boggles the mind.

to follow on from your comments , I live around 5 minutes from, at last count , the second richest family in bali , who have lived thro the earlier pogroms , it is interesting to note the walls around  the 1 hectare compound must be 15 metres high and the gates, which are solid teak ,  would stop a sherman tank , of course full security and 5 mins to the airport.

I have met personally really "rich" people and really "poor" people.
There are some rich people who are unassuming and sits on top of hundreds of millions of dollars worth - and you won't know it. They dressed casually but neat.
There are poor people who always goes for branded stuff and mistresses, and living beyond their means.

Those are appearances. Nothing to do with purchasing power of the haves/haves not based on appearance. Purchasing power doesnt depend on appearance.

tel522...and more to point, the thousands and thousands of more typical Balinese compounds ranging from 10 to 50 are would average out at around $150,000 to $750,000 using the low mean value of land here (200 million an are).  Use a higher mean, and the numbers just go up and up.  And those values of Balinese compounds are net…because they aren't mortgaged. 

On that basis, Bali has a very solid middle class…well in excess of the middle class in say the US where average net property values per family are far less.

It makes you wonder…just who are the “haves” and the “have nots?”   

tel522 wrote:

I do admit the gaps of the haves and the haves not in Indonesia are huge. And in terms purchasing power is boggles the mind.

to follow on from your comments , I live around 5 minutes from, at last count , the second richest family in bali , who have lived thro the earlier pogroms , it is interesting to note the walls around  the 1 hectare compound must be 15 metres high and the gates, which are solid teak ,  would stop a sherman tank , of course full security and 5 mins to the airport.

If you have 1 hectare home. Of course, you need a "fortress" like kind of place. It is natural to do. Security is an important feature.
Yeah I have been to several of those. I rather buy an island home, than a fortress though... 
More absolute security...
There are some island homes going for cheap on Greek islands on just a few million dollars.... 

There are some island homes going for cheap on Greek islands.... 

ha ha ha your right

"Something funny happened on my way to the farm"......

I just met someone for dinner. I was offered... There is 50 hectares block of land in Tangerang (500,000 m2) up for sale. Direct sale.
Anyone interested?
Price is 200.000/m2   

Could make a nice "fortress".   

Is it located in the flood prone area?  If so, buy it and then sub-divide it as “occasionally waterfront property.”   

Heh... I dont think it is flood prone area. Is Tangerang flood prone by the way?
It would be on the way to Aeon Mall Tangerang, and would have a highway nearby on plans.

University might be a good option. I remembered my overseas University days on a 100 hectares land and got lost inside several times.

Or residential clusters.

Anyway, it would be a waste for just a home "fortress".

I don't think there's any flooding in that area because it rapidly climbs from the South of BSD.
I dislike that mall (I assume you mean the one in BSD), but SMS is just up the road, and the roads are new and quiet.
However, it's a dead as a dodo in that area, so security could well be an issue.

"Is Tangerang flood prone by the way?"

I don't know the area, but it sure looked that way two years ago:

In Feb 2013:

http://www.thejakartapost.com/news/2013 … areas.html

In November 2013:

http://adinet.ahacentre.org/reports/view/294

In January 2014:

http://www.thejakartapost.com/news/2014 … erang.html

Ubudian wrote:

"Is Tangerang flood prone by the way?"

That's in a different area.
I got a piece printed in a newspaper about a flooding event near there.

Could make a nice "fortress". 

ya you could build a small town ,airport and waterpark if it floods ! , a nice gated community ha ha

Talking of land and flooding, if you are going to build a house, you should build a foundation of at least one meter above the surrounding land/road. This not only helps prevent you getting flooded, but also is one of the steps taken to prevent damp walls. Higher is of course better. Of course when choosing a place to build one should survey the possibility of floods in that area, and being on a hill is not always the best choice as roads may turn into a fast flowing river in heavy rain.

The same applies when you are looking for a house to rent, survey and ask around about the chances of flooding. Many new houses, especially those owned by the wealthy, will have a foundation of at least a meter off the ground.

Same here on Bali, although it's a platform rather than a foundation.  Any building here which will be used to house people is platformed around 40 or more cm high above the ground…not for any concern regarding flooding, but rather as an elevation above the ground, which can be a source of evil spirits and such.

I saw the layout of the land today.
It has 1 km long and 500 metres wide, with a river in the middle flowing. There are tollway and railway tracks on city plans.

Might hold a nice resort or future theme park. Residential clusters would be too far yet, on Bsd4.

I thought to myself why Disneyland hasnt thought of building in Indonesia. It certainly has the land size.
There are one in Japan, Hong Kong, and Shanghai.