Jakarta’s emergency law to attract real estate investments

Two years ago, I was in Jakarta and I stayed in a condominium cum resort within the Jakarta city. As usual, I looked up the price of that condominium and I was extremely surprised at its affordability. When I checked, I realised that foreigners are not allowed to buy properties in Indonesia, unlike Malaysia, Singapore and even Thailand with some restrictions. Of course some would tell you that you can buy via a company etc etc but let’s be very direct here, the answer is NO.

This may change though. Reported in Jakarta Post was a quote from Coordinating Minister for Political, Legal and Security Affairs Luhut Pandjaitan. He said, “But the era has changed now. The property sector needs a reform so we could attract foreign investment. Foreigners should be allowed to buy apartments – but not landed houses – even if they don’t hold Kitas (Indonesia’s residence permit).” He further added, “It is similar to that in Singapore.” Indonesia intend to issue an emergency law known as a perppu which will break an impasse of more than a decade in efforts to streamline unfriendly laws for foreigners to purchase apartments in Indonesia.

enjoyjakartaCurrently, nothing much has progressed because the basic stipulation under Indonesia’s 1960 Agrarian Law is that foreigners just cannot own homes in the country. The Indonesian constitution gives the President the right to issue a rule in lieu of law (perppu) if he determines that it is needed for the country. Once the President signs the perppu it is effective immediately and Parliament can either let it remain effective or end it within a year after the perppu is issued. This particular perppu is for a new rule allowing foreign investors to buy apartments. Luhut added that perppu is a normal practise. For example, in the US, it is called “presidential Act”.

So, how many are waiting to snap up properties in Jakarta? If my good friend who’s a famous real estate personality is right, there are a lot of investors into Jakarta when this perppu becomes valid. Let’s just wait till end of 2016 to see what happens. I would love to visit Jakarta again next year. Based on the price I saw 2 years ago, Jakarta properties are definitely value for money. The potential is however another thing altogether because this depends a lot on foreign interest. If we are buying because we want to sell to the local Indonesians in future, this is much tougher than in Malaysia because of the accessibility of mortgage loans and the income levels currently. Happy following the Jakarta property developments.

written on 7 July 2016

Next suggested article: KL prime office spaces rental rates the way down, accelerating too

 

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