Bali Property Blog

Ways to Own Real Estate in Indonesia

Indonesia is an archipelago located in South East Asia. With around 17,000 islands, including Sumatra, Java, Bali, Kalimantan, Irian Jaya, Sulawesi, and the Moluccas Islands. The diverse landscape of these Indonesian islands feature unspoiled beaches, lush green forests and majestic volcanic mountains. Making Indonesia a very popular exotic destination.

The popularity of Indonesia as a destination is not just limited to tourists. Many come here for job opportunities or to take advantage of the excellent educational opportunities available. Robust consumer spending and low interest rates have lead to spectacular economic growth. Indonesia also has over 10 million barrels of oil reserves and an additional 150 trillion cubic feet of potential energy reserves, that are being well managed by the innovative measures taken by the Indonesian government.

The popularity of Indonesia and it’s intelligent management of natural reserves has not gone unnoticed by global investors. Because of this the property and Bali real estate sector is hot. Everything from single family residential units, to commercial office buildings and industrial plants can be seen sprouting up all over these islands.

While the majority of real estate investments in Indonesia have been in the metropolitan areas like Jakarta, all most every type of real estate investment can be found here. From luxury villas and homes, to guest houses and hotels. Even undeveloped land can be invested in.Bali holiday villas

As with every other nation, there are laws and regulations governing the acquisition of real estate. There are several different types of titles associated with the purchase of Indonesian real estate, each with it’s own set requirements and permissions.

Foremost among these is Freehold Title or Hak Milik. This is the most complete and all inclusive type of title. It allows the owner complete rights to sell, exchange, bequeath, or transfer to an eligible recipient. This type of title can only be held by an Indonesian national. Although foreigners may not hold a Hak Milik title, there are three other options available to non-Indonesians. These are Hak Pakai or leasehold title,  Hak Guna Bangunan, also known as PMA Foreign Investment Company Structure, and Indonesian nominee power of attorney.

Hak Pakai or leasehold investment provides complete protection to the non-resident real estate investor for the term of the lease agreement. The initial term is usually 25 years with an option to renew at the end of the initial term. This title allows the foreign investor to build, renovate or demolish.

The next title, the Indonesian Nominee Power of Attorney is mechanism where by foreigners can enter into a legal agreement through a nominee who is a permanent resident. Though the nominee is the registered owner of the property, the foreign investor holds the land certificates. Upon purchase, both the investor and the nominee sign a power of attorney. Once signed by both parties, the nominee’s rights to the property are waived and the investor is given complete right to build, sell, lease or even transfer the property.

The last type of title available to foreigners is the PMA (Penanaman Modal Asing) Foreign Investment Company Structure, as it is known, was primarily designed to enable foreign businesses or corporations to purchase an Indonesian property. This type of title, however, does not provide for complete ownership. Read more about Indonesia property law.

Real estate transactions in Indonesia consist of several steps. There is an examination of the land certificate at the Land Office, payment of transfer tax by the salesperson at a commercial banking establishment, payment of an acquisition tax by the buyer based on the value of the land and any building currently on the land, execution of a Sale and Purchase of Land Deed through a legal representative appointed by the National Land Office, registration of the Land Deed in the name of the buyer with the local Land Office and at the Tax on Land and Building Office. In Indonesia real estate sales people are not required to have a license, but most foreigners utilize the services of one to assist with finding quality property at a good value and because these individuals are familiar with the various steps that must be taken to make a legal transaction.

So whatever particular real estate needs may be, whether it is purchasing your dream home or acquiring office or industrial space, there are many Realtors and real estate firms available to assist you with achieving your goal of owning a piece of Indonesian land.


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