Property Market Overview

For foreigners with a desire to purchase real estate in Indonesia, ownership is the biggest concern. Much like Thailand, foreigners in Indonesia typically receive rolling lease contracts and are not allowed to buy land. They are, however, allowed to purchase condominiums, but not the land on which the building sits.

Recovering from the effects of the 1997 Asian Crisis and the subsequent political crisis, Indonesia is slowly getting back on track. But a number of setbacks continue to plague its growth. Terrorism is a continuing threat in Indonesia, with bombing happening sporadically throughout the capital. Other setbacks have occurred to the detriment of the real estate industry, from tsunamis and earthquakes to the 2007 floodings that wreaked havoc in Jakarta .

In terms of foreign investment, Bali and Jakarta are the two main areas attracting interest, both for very different reasons.

BALI
Bali is Indonesia's premier resort island, boasting all the major five-star hotel brands and spas that are continuously voted among the world's best. Its coastlines are a surfer's haven, and it has the culture and additional services to make it an ideal second home market. For this reason, the market is dominated by high-end villas, with many owners opting to rent them out for the greater part of the year.

A variety of villa developments are on offer throughout the country, with styles and prices for high-end beach front villas with garden and a swimming pool ranging from US$400,000 to US$2,000,000 plus.

One incident that had an unfortunate effect on Bali's property market took place in 2002, when several bombs exploded in and outside two nightclubs killing 202 people and injuring 209 more. In October 2005, several more bombs exploded again in Bali killing 23 people including three bombers. Today, however, it is picking up as buyers look for new alternatives from the pricier European locations and some of the more popular Asian markets, such as Thailand.

Popular locations in Bali include Jimbaran Bay, Bukit, the area from Batubelig to Tanah Lot on Bali's West coast, the inland town of Ubud, and near the Handara golf course and Lake Bratan near Bedugul. Real estate pundits in Bali says these locations promise in to produce the highest increase in value over the next few years.

JAKARTA
At the moment, property development in Jakarta is centered around the middle end of the market. Apartments are a strong growth area, and during the fourth quarter 2006, cumulative apartment supply increased by 1.8% to 41,772 units.with a 55% share, according to Colliers International. Most of this market segment is located in West Jakarta and the fringe of the CBD, and are aimed at middle class working professionals.

Colliers International recorded that around 8,340 units from a total of 16 projects were launched during the year 2006. A large portion of these projects (81%) were comprised of total units below 1,000 and 69% of them were created for single residential use. It is projected that the total strata title apartment supply in 2007 will increase by 55% representing the completion of around 25 apartment projects totaling 22,900 units. An increase of about 10.4% annually is predicted to occur over the following two years. Thus, the total apartment supply should increase to about 78,800 units by the end of the year 2009.

While the middle-low segment projects, with an offering price of between Rp6 and Rp10 million/sq m, command the market with a 55% portion, high-end and luxury projects (with a price of above Rp15 million/sq m) share only 9% of the pie. Luxury projects are only found in the CBD area (four projects) and the South Jakarta area (two projects).

In 2007, tight competition is predicted to occur in certain locations such in Kelapa Gading, Permata Hijau and the Kemang area due to a bulk of supply. In addition, some locations that are currently growing are going to become new high-rise residential areas such as Pluit, Simatupang and Kemayoran.

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Essential information

Location
Indonesia is a country consisting of thousands of islands in Southeast Asia on an archipelago between the Indian and Pacific Oceans. It is bordered by East Timor, Malaysia and Papua New Guinea.

Area
1,919,440 square kms.

Population
245,452,700 (UN, 2006)

Language
The official language is Bahasa Indonesia, a modified form of Malay. Other languages widely spoken include English, Dutch and hundreds of local dialects.

Religion
Muslim 88%, Protestant 5%, Roman Catholic 3%, Hindu 2%, Buddhist 1%, other 1%. Indonesia has the world's largest Muslim population.

Currency/Money
Indonesia's currency is the Indonesian rupiah. Major credit cards are widely accepted. Traveller's cheques are accepted at banks, large hotels, and shops.

Climate
Indonesia's climate varies due to its diverse terrain. In general it's tropical, humid and hot, with cooler temperatures found in the highlands. Because of Indonesia's location near the equator and its island geography, the climate along coastal areas is hot and humid year-round. The average daily temperature range of Jakarta is 21 to 33 C (69 to 92 F) and varies little from winter to summer. Temperatures in upland areas tend to be cooler.
Indonesia has two monsoon seasons: a wet season from November to March and a dry season from June to October. Between monsoons, the weather is more moderate. The northern parts of the country have only slight differences in precipitation during the wet and dry seasons.

International dialling code
+62

Capital
Jakarta

Electricity
220v

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History

Indonesia, officially the Republic of Indonesia, is made up of 17, 508 islands in the Malay archipelago, making it the world's largest archipelagic state. With a population of over 200 million, it is the world's fourth most populous country and the most populous Muslim-majority nation. It shares land borders with Papua New Guinea, East Timor, and Malaysia.

The Indonesian Archipelago, home of the Spice Islands, has been an important trade destination since at least the time of the Srivijaya Kingdom with whom Chinese sailors traded with in the seventh century.Indonesia's history has been influenced by numerous foreign powers that were drawn to the archipelago by its wealth of natural resources; these have included Indians, under whose influence Hindu and Buddhist kingdoms flourished beginning in the early centuries CE, Muslim traders who spread Islam beginning in the thirteenth century, and Europeans who fought for monopolization of the spice trade during the Age of Exploration.

Indonesia was colonized by the Dutch in the early 17th century, and later occupied by Japan from 1942 to 1945 in WWII. Indonesia declared its independence following Japan's surrender, beginning a four year process of negotiations until the Netherlands finally agreed to let go of its colony.
Indonesia's post-independence history has been anything but smooth, with political instability including separatism and corruption, periods of rapid economic growth and decline, environmental catastrophe, and a recent democratization process.
Indonesia is a unitary state consisting of numerous distinct ethnic, linguistic, and religious groups spread across its numerous islands that have not always been united. However, a shared history of colonialism, rebellion against it, a national language, and a Muslim majority population have helped to define Indonesia as a state.

Indonesia's national motto, "Bhinneka tunggal ika" ("Unity in diversity", derived from Old Javanese), reflects the amalgamation of a myriad cultures, languages, and ethnic groups that shape every aspect of the country. Sectarian tensions and separatism, however, have threatened political stability in some regions, leading to violent confrontations.

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Government

Indonesia is the world's third largest democracy after India and the United States with a democractically elected parliament and president.Its chief of state and head of government is President Susilo Bamban Yudhoyono, who was elected in 2004. Vice president of Indonesia is Muhammad Yusuf Kalla. Yukhoyonyo received 60% of 2004 vote, ousting former president Megawati Sukarnoputri from her position. The president and vice president are elected for five year terms and eligible for a second. The next presidential election will be held in 2009.

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Economy

A member of the Association of Southeast Asian Nations (ASEAN) since the group's formation in 1967, Indonesia is the world's fourth most populous country after China, India, and the United States. More than half the population lives on the island of Java, home to capital city Jakarta.

Prior to independence, Indonesia's economy was oriented to providing raw materials to The Netherlands. Subsistence agriculture, primarily the production of rice, was the mainstay of most of the population, but the economy also relied on plantation agriculture, including the production of sugar and rubber. Industry was not promoted so as to avoid competing with The Netherlands.

The first few decades after independence were plagued with economic mismanagement. The government focused on unifying the country politically, not on rebuilding Indonesia's crumbling infrastructure or improving the economy. President Suharto's 'New Order' government gave much more priority to the economy, instituting a series of five-year plans (Repelita) which began in 1969. The aims of Suharto's economic policy were to expand foreign investment and increase trade. When export revenues from oil declined in the early and mid-1980s, Indonesia was forced to expand other exports. To make these exports more competitive on an international level, the government deregulated parts of the economy such as coastal transportation, finance, and banking.

Indonesia's economy grew impressively during the 1980s and much of the 1990s, largely on the strength of its natural resources, which include a large population, solid energy reserves, substantial mineral deposits, and fertile farmland.

In mid-1997, when the economic crisis hit, the Indonesian currency plummeted, and the government, banks, and businesses struggled to repay their foreign debts. The government negotiated an aid package with the International Monetary Fund (IMF). In exchange for massive loans, Indonesia agreed to implement austerity measures such as reducing government spending and reforming the financial sector. The crisis deepened in 1998 when the IMF halted funds, claiming that the Suharto regime had failed to abide by IMF terms, and as social unrest began to spread. By late May 1998 the economic and social crisis had caused President Suharto to resign.

Of all the countries hit by the Asian crisis, Indonesia was hit the hardest. Its GDP fell 13.2 percent in 1998 and shrank again in 1999. Nearly half of all corporations were insolvent in 1999, and unemployment increased. After the authoritarian Suharto regime ended, the IMF agreed to resume a multimillion-dollar loan program with the Indonesian government.

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Visas

Any foreign national who enters territory of Indonesia is required to possess a valid Travel Document and the Entry Permit or Visa. Some foreign nationals do not need to apply for a visa. All other foreign nationals are required to possess a Visa. Nationals of many European and North American countries can apply for their Transit (7 days maximum stay) and/or Tourist visa upon arrival at the majority of Indonesia's airports/seaports for a maximum visit of 30 days

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Healthcare

Given Indonesia's vast size and remote jungle terrain, travelers need to take a variety of precautions before heading away from the capital Jakarta or the main tourist resorts of Bali. Health threats include dengue fever, giardiasis, hepatitis,

Japanese B encephalitis (low-risk, found only in rural rice-growing areas), malaria, typhoid and rabies. Jakarta and Bali both feature international hospitals.

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Travel

Indonesia's main entry points are Jakarta and Bali, both serviced by international airlines. Land crossings to Indonesia exist at Entikong, between Kalimantan and Sarawak; at Motoain between West and East Timor; and the road from Jayapura or Sentani (Papua) to Vanimo in PNG. Sea connections can be found between Malaysia and Sumatra, and there is a high-speed ferry from Penang to Medan. The other main ferry connection is between Dumai (Sumatra) and Malaka (Malacca). Ferries also run from southern Malaysia (Johor Bahru) to the Riau Islands. There are also speedboats from east-coast Kalimantan to Sabah in Malaysia.

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