Property rental yields in Indonesia
Asia stands out for foreign real estate investors because it offers some of the world’s most profitable markets. Despite varying laws regarding foreign land ownership, the increasing demand for housing units in densely populated countries like Indonesia presents a significant opportunity.
The property industry in Indonesia ranks fifth, with a rental yield of 5.75%. Foreign property investors can generate a stable income by investing in Indonesian real estate, as real estate rental yields in Indonesia are one of the highest in Asia. Besides that, Indonesian real estate offers a higher return on investment (ROI) than other Asian countries.
We look at popular property destinations in Indonesia to better understand the property rental yields in Indonesia and the ROI on properties in Indonesia.
Bali
Bali’s real estate market has significant profit potential because it is a well-known tourist destination becoming increasingly popular among remote workers, commonly called digital nomads. Bali’s relaxing environment, coupled with the affordable cost of living, makes it a desirable location for individuals who work remotely. As a result, the demand for Bali rental properties and residential real estate has increased significantly, creating lucrative opportunities for real estate investors.
Rental yield in Bali
According to the statistics, the average rental yield on residential properties in Bali is 42.4%. Commercial properties have a property rental yield in Bali of 44.5%, while land in Bali has a rental yield of 10.5%.
ROI on property in Bali
According to statistics, the average property ROI in Bali falls between 12% and 20% per annum.
Jakarta
Jakarta is currently the capital of Indonesia. However, Nusantara will be replacing it soon. Even so, Jakarta is still an excellent place to buy land in Indonesia because most people live there, and many businesses are also located here. Because of this, there is a high demand for housing.
Rental yield in Jakarta
According to statistics, the average rental yield on residential properties in Jakarta is 30.9%. Commercial properties have a rental yield of 10.8%, while land in Jakarta has a rental yield of 133.3%.
ROI on property in Jakarta
The average ROI on property in Jakarta ranges from 6% to 7% per annum.
Yogyakarta
Yogyakarta is an underrated location to invest. There has been a surge in demand for housing and office locations driven in part by the emergence of numerous fintech startups in the city. Yogyakarta’s real estate market is still relatively untapped compared to Bali or Jakarta, making it an attractive option for investors looking for a place that yields real estate profit significantly.
Rental yield in Yogyakarta
According to the statistics, the average rental yield on residential properties in Yogyakarta is 62.3%. Commercial properties in Yogyakarta have a rental yield of 45.5%. This makes Yogyakarta have one of the highest property rental yields in Indonesia.
ROI on property in Yogyakarta
According to statistics, the average ROI on property in Yogyakarta can increase to 50%.
Lombok
Lombok continues to emerge as a promising location for real estate investment, especially now that it is known as Bali’s little sister. It is getting attention because of its natural beauty, excellent infrastructure, and low cost of living. Property prices are still lower than in Bali, and many predict it will become a leading luxury destination.
Rental yield in Lombok
According to statistics, the average rental yield on residential properties such as villas in Lombok is 11% to 17%.
Surabaya
Surabaya is Indonesia’s second-largest city and is ideal for real estate investment. Investing in Surabaya mainly as a commercial enterprise is advisable because it has access to major transportation networks and, most significantly, is close to a large seaport. Currently, the cost of living remains relatively low and is not yet severely populated, making it an opportune time to invest.
Rental yield in Surabaya
According to statistics, the average rental yield on residential properties in Surabaya is 30.3%. Commercial properties in Surabaya have a rental yield of 40.2%, while land in Surabaya has an average rental yield of 37.1%.
Calculate the rental yield of your Indonesian property
Use our ROI and rental yield calculator to determine how profitable your Indonesian property investment could be. This tool gives you important information about the rental income from your home in Indonesia. Put in the necessary information, and our rental yield calculator will do the rest, giving you clear and accurate results.
How to buy property in Indonesia?
Foreigners can not obtain the highest land ownership title, called Hak Milik (HM). However, there are several ways to buy property in Indonesia as a foreigner. One way is leasing property or land as an individual, while most foreigners establish a PT PMA to buy or lease land or property. The PT PMA is a foreign-owned company that allows foreigners to generate rental income.
It’s also possible to buy property with the Hak Pakai (HP) title, as well as with the Hak Guna Bangunan (HGB) title. Since 2023, foreigners can buy property by only holding a valid passport, although special requirements exist.
Do you want to know how to buy property in Indonesia as a foreigner? This guide explains how to do it.
Buy property in Indonesia with Own Property Abroad
Are you looking to buy property in Indonesia? Own Property Abroad can assist you and ensure a seamless and hassle-free property journey. Thanks to our extensive knowledge and local experience in the Indonesian market, we can help with legal requirements, finding suitable properties, negotiating the best deals, and conducting due diligence.
With our expert team, you won’t have to navigate the complexities of the Indonesian market alone. For further information on how we can assist you, kindly drop your details below or email us at [email protected]. Let’s start working on your property success story today!
Conclusion
Indonesia is a prime location for foreigners looking to invest in real property, as they can find high property rental yields in Indonesia. Real estate investment is profitable with relaxed foreign ownership laws, government support, and competitive property prices. Before making the big step, we recommend engaging the services of reputable professionals such as Own Property Abroad. Our expert team can help you navigate Indonesia’s complex legal and administrative processes and ensure compliance with relevant regulations.
Frequently Asked Questions (FAQs)
What are reasonable property rental yields in Indonesia?
Reasonable property rental yields in Indonesia typically range between 5% and 10% annually, but these numbers can fluctuate based on factors like location, property type, and market conditions. You can find places with higher property rental yields in Indonesia.
Is Indonesia good for property investment?
Indonesia can be a good location for property investment, especially for those seeking growth in emerging markets. Foreigners can generate a high ROI and property rental yields in Indonesia. However, as with any investment, conducting in-depth market research and due diligence is crucial, considering factors like legal restrictions, market trends, and economic stability.
What is the property rental yield in Bali?
As a popular tourist destination, the property rental yield in Bali can be higher than other areas in Indonesia. On average, investors may expect rental yield in Bali to be 42.4% for residential properties, 44.5% for commercial properties, and 10.5% for lands. Again, these numbers can vary significantly based on the property’s location, type, and how well it’s managed.
What is the average ROI on property in Bali?
The average ROI on property in Bali highly depends on several factors, including the property’s location, type, and management. Historically, property investments in prime tourist areas of Bali have seen annual ROI between 12% and 15%.
One Response
I am questioning the credibility of what defines as “rental yield” in this article, since according to Natwest “Rental yield is the annual sum you can reasonably expect to receive in rent expressed as a proportion of the property’s market value.”, whereas the rental yield values for cities such as Bali and Yogyakarta in Indonesia is unreasonably high within this article (Bali with 44,5% and Yogyakarta residential rent yield is 62,3%).
Question;
1. What defines as a “rental yield” within this article?
2. If the meaning from the first question does resemble Natwest’s definition, then my second question, “from which source would you get those numbers?”