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With a population of around 30 million people, Jakarta is set to boom once the government changes the regulations of foreign ownership. But ownership regulations are not very transparent nor favorable, compared to other countries in the region, which has resulted in a more passive approach.
Still, many foreigners have already decided to invest here, as they’ve seen the great potentials that will follow the coming years.
In this article, I explain more about Jakarta’s property market, about local property developers and which areas you should have a look at when buying property.
Jakarta real estate market
It’s important that you understand how healthy the market is where you plan to buy property. You don’t want to buy at the peak and see your property value slump after just a couple of years.
So how’s it going in Jakarta?
Property is still undervalued according to many investors, including the Chinese, who plays a big role in its neighboring countries. Indonesia has a huge consumer market, a continuously growing middle class, which has resulted in a great shortage of property as well.
But the market has been stagnating for some years now, in fact, the demand and occupancy rate has decreased by double digits. A weakened demand from the Chinese and the introduction of a 20% luxury for properties worth more than USD 750.000 are two reasons.
Unfavorable regulations of foreign ownership discourage buyers
Regulations of foreign ownership is not very favorable (see my separate guide about buying property in Indonesia), and another reason why foreigners have been discouraged to buy.
Foreigners can’t get freehold ownership, not even of condos. Instead, they need to deal with a number of other title structures that give them the right to either use or lease.
Even if many foreigners like to buy new properties, you have no access to the established (second hand) property market which has huge potentials.
Fortunately, the government will need to change regulations in the coming years, if Indonesia is to compete with its rapidly growing neighbors.
The government has also tried to twist on existing regulations, but without great success so far. The regulations are simply not transparent enough yet and many investors stand on the sideline.
Why Jakarta’s property market has great potentials
Jakarta’s market has great potentials in the long run. Below I’ve listed some reasons why:
a. Jakarta’s ratio of housing loans to its GDP is surprisingly low and a fraction compared to neighboring countries
b. Interest rates are kept low, giving the opportunity for locals to borrow more money
c. New MRT and LRT projects will completely transform the market, as people will be able to buy in the outskirts, for example the Northern parts of Jakarta, that see great potentials
Due to the lack of an efficient public transportation system, many locals and expats have been forced to buy in the central areas, closer to work and schools. This will change once the MRT and LRT is up and running.
d. As mentioned, regulations of foreign ownership will most likely change, which will give greater incentive for foreigners to buy
Where should I buy property in Jakarta?
Jakarta is divided into 5 major districts, which are in turn broken down into a number of sub-districts.
The 5 districts (or should I say cities) are simply named as follows:
- South Jakarta
- West Jakarta
- East Jakarta
- North Jakarta
- Central Jakarta
Let’s have a look at the most promising and popular ones.
Buying in Central Jakarta
As you can probably hear by the name, Central Jakarta is a major commercial area, which is reflected in its property prices.
With influences from old colonial history, expats tend to live and work in this bustling area. The same as it goes in some of the more well off areas in Southern Jakarta, many local politicians reside in this district.
Menteng is a sub-district in Central Jakarta and is famous for having many high end residencies.
Not to blame, the infrastructure tends to be somewhat lower compared to less bustling areas in the South. Being the oldest area in Jakarta, with a history of hosting Dutch officials and other powerful people, it’s not strange.
Even Barack Obama used to live here when he was younger, attending a school nearby.
Menteng sometimes struggles with traffic congestions as many roads go through Menteng, continuing to other parts of the Central district.
Living here will result in an abundant lifestyle, including everything from encounters with street vendors selling fresh food and drinks, to local markets, proximity to shopping malls, restaurants and more.
Golden Triangle is not as old as Menteng but has become an increasingly popular area to expats and locals. Three major roads: JL Gatot Subroto, JL Rasuna and JL Sudirman all connect here.
The area is preferable if you want to “live close to office” and favor convenience instead of green areas and parks.
Buying in South Jakarta
South Jakarta has been one of the most popular districts next to Central Jakarta. The districts bring some similarities as they are more developed and have brought more attention over the years, compared to the others.
Jakarta is infamously known for being heavily congested, something it will likely be able to resolve partly with the new MRT and LRT lines. South Jakarta also deals with the same problem depending on daily times, smaller roads are generally less congested though.
Many politicians and locals with deep pockets decide to reside in Kebayoran, an area filled with larger houses and with proximity to the central district (where most business is being done).
The area is popular with expats as well for a number of reasons, maybe most notably because it’s more well structured and has a tradition of hosting many foreigners, building up local communities.
Old large trees dating back from time of affluence are standing beside the roads, bringing similarities to Xinhua Road and particular areas in French Concession, in Shanghai.
Sudirman is a large business district with many condos, office buildings and hotels.
Treasury tower, which is the second tallest building in Indonesia is located here. Signature Tower Jakarta is currently under construction and will be the fifth tallest building in the world, projected to finish in 2022.
With the new MRT line at Jalan Jenderal Sudirman, further connectivity is planned with neighboring areas.
Similar to Kebayoran Baru, Kuningan has many plush villas and where many foreign embassies are located.
The area is also renowned for being more structured compared to other parts of Jakarta, you’ll find many restaurants, shopping areas and schools that caters foreigners.
In addition to large villas, you’ll also find a number of apartment buildings.
Buying in North Jakarta
North Jakarta has received little attention previously, it’s not strange as the district is located a bit further away from the Central, where things happen. Living in North Jakarta, but working in the Central, has not been an option simply due to distances and less development.
However, times are changing and with the MRT up and running within a short future, investment and construction will spread over the city.
North Jakarta was where everything started in Jakarta and it’s strategically located, bordering next to the ocean. Both Jakarta’s harbors are located here.
Thanks to the developer PT Summarecon Agung’s initiative, Kelapa Gading went from being a sleepy area to become developed, currently having much commercial activity and residential areas.
Worth mentioning is that 65% who live here are Chinese Indonesians, which is comparably high for the city’s Chinese Indonesians population that averages at around 5%. Yields in the area are normally very good and you can find everything from villas, condos and apartments.
As Chinese tend to build up communities, similar to what we’ve seen in Johor Bahru and Sihanoukville, Kelapa Gading will most likely attract a big chunk of Chinese investors over the years.
Buying in West Jakarta
Much development is targeted towards the Western parts of Jakarta, to give similarities to the South district. Worth mentioning is that the Chinatown is located here, for those who wish to live in a Chinese community.
West Jakarta borders to another city, Tangerang, here you’ll also find the international airport conveniently located close by. Much residential properties and a dozen of shopping malls can be found in this developing area.
The same as it goes in North Jakarta, property has been in a lower demand, this is reflected in the prices as well. With the MRT and LRT up and running within a near future, you should definitely not neglect North and West Jakarta.
Property developers in Jakarta
You can buy established properties in Jakarta as a foreigner, but a common option is to buy directly from developers.
I’ve already written a complete article listing the biggest developers in Indonesia, many of them with headquarters in Jakarta. I recommend you to read the article for more information, below, I’ve included some of the biggest developers who operate in Jakarta:
- Agung Podomoro Land Tbk PT
- Agung Sedayu Group
- Duta Anggada Realty Tbk PT
- Permata Birama Sakti PT
- PP Properti PT
- Tokyu Land Indonesia PT
You can also visit their website directly to see what properties they have to offer.
Real estate agents
There are many real estate agents available in Jakarta, ready to help you buying property.
Some of the most popular include:
- Colliers International Indonesia
- PT Knight Frank Indonesia
- JLL Indonesia
- Ray White
Commissions normally lands at 2-5%.
Jakarta is set to become a major economic contributor, the city with 30 million people is the capital of a nation with an astonishing 260 million people.
Still, regulations of foreign ownership is not clear or favorable enough, putting many investors in the sideline. Once these changes, the market is set to boom.
Jakarta’s economy and property market still perform fairly well, even if there’s been some stagnation the past years. With the new MRT and LRT lines up and ready in a near future, investors can continue to ride on price appreciations.
The city is divided into 5 districts, where the Central and South district have attracted most foreigners. The Western and Northern part will see more investment, once the MRT and LRT lines are ready. Here, you’ll also be able to buy property with a lower price tag.
I hope you found this article interesting and recommend you to read my separate guide that explains how foreigners can buy property in Indonesia.