"Indonesia’s real estate industry, particularly within the residential market, is currently feeling the effects of the country’s economic slowdown and regulatory uncertainties, according to Deal Street Asia. Controversial new tax rules, such as the so-called luxury tax, have also put a stopper in Indonesia’s growth prospects.
As such, sales are lagging: the rate of growth in residential sales in Q1 2015 dropped by 13.5 percent quarter-on-quarter, reported a Central Bank of the Republic of Indonesia (BI) survey.
The country is not accepting this status quo, however, and is taking steps to reinvigorate its property sector. Property prices are low and there is a growing Indonesian middle class waiting to take advantage of what’s on offer.
Following this important change in Vietnam, Indonesian authorities are also planning to loosen rules on foreign ownership to encourage overseas investment. Foreigners can currently only own Indonesian property under the ‘right of use’ rule for a maximum of 25 years (extendable for an additional 20 years). The new regulations would see the said rule become a permanent duration, with no need to extend, and such property could be inherited by heirs upon the owner’s death.
Ferry Mursyidan Baldan, Minister for Agrarian Affairs and Spatial Planning, confirmed that “the state allows foreigners to own living spaces in Indonesia for as long as they live, and they’ll be able to trade the properties or pass them down to their children. [Ownership] is classified as ‘right of use’, though. It will not be ‘freehold’.”
Foreigners are also restricted in only being able to buy luxury apartments above the threshold of IDR5 billion (USD375,000), according to Jakarta Globe.
Additionally, BI will be loosening their lending regulations for residential home buyers in a bid to kickstart sales, reports Deal Street Asia. Whereas previously purchasers were required to put down a 30 percent downpayment, regardless of the size and value of the property, the terms are now more flexible with purchasers putting down between 10 and 40 percent depending upon the size of the property.
Purchasers looking to buy in Indonesia will be assisted by developments in the online real estate industry. According to Tech in Asia, real estate listing hub Lamudi has recently acquired Indonesia’s own PropertyKita and so will be adding 100,000 extra listings across the country to its retinue.
Image is by Stenly Lam and is used under a Creative Commons licence"
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