Foreign buyers will be allowed to purchase an apartment in Indonesia for the first time since 1960 before the end of the year. Several media outlets reported that president Joko Widodo will pass a special law that gives buyers from abroad the ability to purchase an apartment unit in the country. Landed houses will still be off limits.
Doing this will help Indonesia’s overstocked property sector and hopefully help the entire economy improve, coordinating minister for Political, Legal and Security Affairs Luhut Pandjaitan said during a press conference.
The reforms have been in the works for several months now after much debate and look set to finally take effect. According to local media, Indonesian property agents are already fielding inquires from foreign buyers. The country is looking to model the scheme after those of some of its ASEAN counterparts who already have similar policies in place.
“This is a good opportunity for Indonesia,” Luhut explained. “We are actually copying from Singapore and Malaysia, but with our own formula that fits the conditions here.”
This move could help kick start the property market in Indonesia and serve as a catalyst for the economy as whole. The new ownership law, along with the government’s recently launched tax amnesty program, is expected to increase property prices and demand. It is not all smooth sailing, however.
Some critics of the move have raised concerns that the new ownership rules might affect middle-income Indonesians who could soon find themselves unable to afford apartments amid rising prices.
“If, let’s say, foreigners are allowed to buy apartments worth IDR5 billion above, this would still affect lower-priced homes,” a Jakarta-based property market specialist recently explained to The Straits Times. “Those priced at IDR1 billion would immediately increase to, probably, IDR1.2 billion. This would impact the home affordability for average Indonesians.”
