View Full Version : Property Prices
Looking at prices for property on various Indonesian websites, they often quote in miliar. Am I right in thinking that one miliar is 100,000,000? One other question. It's well reported that house property prices in the US and Europe have dropped due to the economic downturn. Have house prices in Indonesia/Jakarta been affected in the same way? I can imagine that tourist areas like Bali have been hit as demand from foreigners has dropped off but what about non-tourist places like Malang or Bandung? Any knowledge on this? Thanks.
Looking at prices for property on various Indonesian websites, they often quote in miliar. Am I right in thinking that one miliar is 100,000,000?
Satu milyar rupiah (often written 1M) is 1.000.000.000 rupiah or if you prefer, a bit less than USD 90.000 or a bit less than EUR 70.000.
Prices of land in Bali are isolated from the housing price bubble in the so-called developed countries, partially due to the fact that cheap credit is not easily available and that legally and strictly speaking it is an Indonesian-only market where foreigners are not allowed to own property (hak milik). Another element that keeps land prices high in Bali is the island's high population density, a demographic factor not influenced by the property market across the oceans.
The price of luxury and semi-luxury apartments in Jakarta shows no sign of weakening. Just this weekend, I picked up a brochure and a price list for an apartment high-rise complex in Kuningan. Two bed-room apartments there are in the US$175,000 range. I am scheduled to take delivery of an apartment elsewhere in Kuningan in early 2011. Gauging from current prices and projecting into the future, I expect that it will have doubled in price by the time of delivery. There are several reasons for this. Indonesian markets appear to follow different supply and demand (in)elasticities, certainly different from developed markets in the West. The price of luxury and semi-luxury property doesn't seem to react a lot to a drop in demand. Used cars is another market where supply and demand seem a bit distorted. Second, there's a lot of excess Chinese money, from the Chinese mainland, flowing into Indonesia, and I would expect that to follow in the future. For good or for bad, in the future the engines that power Indonesia will be increasingly China (and Taiwan), Korea and Japan. Finally, similarly to Bali, Jakarta and its environs (JaBoDeTaBek) is one of the most densely populated in the planet. To that urban area you have to add Bandung within a two hour drive. Due to very high population density, land and housing will always remain at a premium in this area.
Another great post M.
Kamu milik di otak besar. No doubt you will correct my terrible attempt at indonesian, i'm trying sir.
PS, loving the pics with the Nissan truck. My kids have given it the name "Black Devil"
Thanks...I waste no opportunity to show off my nine month-old baby, the "Black Devil". Here's another one, sans canopy at home:
http://i286.photobucket.com/albums/ll96/mauricio_28/PICT0099.jpg
Tell the kids that when the time is right the Black Devil will come visit them in Cirebon!
Thanks for the feedback esp Mauricio with your detailed thoughts. I'm from the UK, my wife is from Malang and we're thinking about buying a house in the city. Neither of us has experience of buying property in Indonesia and we'll be going back soon to take a look. Any ideas on how best to go about finding places for sale? Do they have the equivalent of real estate offices on the high street with lists and photos or is there a different system. Any thoughts/experiences/tips welcome.
waarmstrong
29-01-09, 11:24
Prices of land in Bali are isolated from the housing price bubble in the so-called developed countries, partially due to the fact that cheap credit is not easily available and that legally and strictly speaking it is an Indonesian-only market where foreigners are not allowed to own property (hak milk). Another element that keeps land prices high in Bali is the island's high population density, a demographic factor not influenced by the property market across the oceans.
The price of luxury and semi-luxury apartments in Jakarta shows no sign of weakening. Just this weekend, I picked up a brochure and a price list for an apartment high-rise complex in Kuningan. Two bed-room apartments there are in the US$175,000 range. I am scheduled to take delivery of an apartment elsewhere in Kuningan in early 2011. Gauging from current prices and projecting into the future, I expect that it will have doubled in price by the time of delivery. There are several reasons for this.
Indonesian markets appear to follow different supply and demand (in)elasticities, certainly different from developed markets in the West. The price of luxury and semi-luxury property doesn't seem to react a lot to a drop in demand. Used cars is another market where supply and demand seem a bit distorted. Second, there's a lot of excess Chinese money, from the Chinese mainland, flowing into Indonesia, and I would expect that to follow in the future. For good or for bad, in the future the engines that power Indonesia will be increasingly China (and Taiwan), Korea and Japan. Finally, similarly to Bali, Jakarta and its environs (JaBoDeTaBek) is one of the most densely populated in the planet. To that urban area you have to add Bandung within a two hour drive. Due to very high population density, land and housing will always remain at a premium in this area.
While no one really knows what the residential property market will doing in two years, meaning it is possible that Mauricio is correct, it is also possible that he is dead wrong.
I call your attention to two somewhat recent articles: "Global Recession Overshadows Property Market," The Jakarta Post, 11/10/2008, which says, in-part, "Indonesia's property sector is already feeling the pinch from the global economic downturn as demand is slowing at a time when interest rate adjustments have become a necessity for developers to keep business going ...", and "House Prices in Jakarta Stagnate," Global Property Guide, 10/31/2008 says, "...house prices barely rose during the past few years. Though Indonesia’s national house price index rose 5.6% in the year to end-Q2 2008, adjusted-for-inflation prices fell 4.2%. In Jakarta the average price of strata-title apartments was IDR 10.7 million (US$1,060) per sq. m. in Q2 2008, according to Colliers, relatively unchanged since end-2007. Things are likely to get worse..."
Vested interest driven wishful thinking is what fueled the excesses of the property speculation boom in the US. You may be blowing smoke up your own posterior if you count on making a killing on a Jakarta apartment purchase.
I didn't buy with the intent of "making a killing" or turning a quick profit so my opinions are not so informed by wishful thinking or a speculator's mentality. I bought it with the intent of holding on to it for years to come since I have no plans to move out of Indonesia or to sell it as soon as I take delivery. It's nearly impossible to imagine that in three to five years I won't more than recoup the relatively little of what I paid for a semi-luxury apartment in the capital of Southeast Asia's largest economy, a stone-throw's away from China.
Global economy aside, JaBoDeTaBek and the island on which it sits is one of the planet's most densely populated areas. If I can't sell it for what I want, I'll live in it or rent it. The place is well-located, a 15-minute cab ride during rush hour from Mega Kuningan, 25 minutes from the Stock Exchange, 10 minutes from the Aussie embassy. At night, 15 minutes and you're at BATS. I'm sure many expats would love to rent it out if for no other reason that their commute anywhere in the Golden Triangle is a snap. A colleague is paying US$1,800 per month for a comparable place. The verifiable fact is that similar properties in south Jakarta are presently listed for about US$50k more than what I paid for my place a year ago. Even with stagnant prices, I already turned a profit. That being said, I think there is a rash of development in northern Jakarta, Ancol and Kelapa Gading, that is not a good bet due to location. My comments so far pertain only to north South Jakarta, the Kuningan, Setiabudi, Semanggi areas...
Real estate prices in Indonesia are not as transparent as compared to other countries. It is almost like barganing at a traditional market. The owner asks for a sales price as determined by the look of the prospective buyer and they start bargining from there. Although it seems to be getting better with internet home listings as of recent. It is not the same as back home in the USA, where the asking price is listed on a advertisement paper at the house along with details and pictures for the prospective buyer to take home with them. Also homes do not sell quickly here. It can take many months or years to sell a property.
Price lists are a standard attachment to the glossy brochures for new apartment buildings.
Price lists are a standard attachment to the glossy brochures for new apartment buildings.
True about new building, but I was refering more to existing home and land sales.
try www.rumah123.com (http://www.rumah123.com) for used housing numbers.
Dont forget to barter !
sumyunggai
31-01-09, 11:10
Prices of land in Bali are isolated from the housing price bubble in the so-called developed countries, partially due to the fact that cheap credit is not easily available and that legally and strictly speaking it is an Indonesian-only market where foreigners are not allowed to own property (hak milik). Another element that keeps land prices high in Bali is the island's high population density, a demographic factor not influenced by the property market across the oceans.
The price of luxury and semi-luxury apartments in Jakarta shows no sign of weakening. Just this weekend, I picked up a brochure and a price list for an apartment high-rise complex in Kuningan. Two bed-room apartments there are in the US$175,000 range. I am scheduled to take delivery of an apartment elsewhere in Kuningan in early 2011.
Delivery?
Gauging from current prices and projecting into the future, I expect that it will have doubled in price by the time of delivery. There are several reasons for this. Indonesian markets appear to follow different supply and demand (in)elasticities, certainly different from developed markets in the West. The price of luxury and semi-luxury property doesn't seem to react a lot to a drop in demand. Used cars is another market where supply and demand seem a bit distorted. Second, there's a lot of excess Chinese money, from the Chinese mainland, flowing into Indonesia, and I would expect that to follow in the future. For good or for bad, in the future the engines that power Indonesia will be increasingly China (and Taiwan), Korea and Japan. Finally, similarly to Bali, Jakarta and its environs (JaBoDeTaBek) is one of the most densely populated in the planet. To that urban area you have to add Bandung within a two hour drive. Due to very high population density, land and housing will always remain at a premium in this area.
In other news, salesman says 'Buy now!'
I don't know about Jakarta specifically, but I do know people that bought many 15 years ago with hard cash, and have made zero return when converting back to hard cash.
Indonesia has a credit problem just like everywhere else. Indonesia's biggest exports have been very badly hurt by the commodities bust. Prices have fallen by 50%, labour costs are the same, wealth disappears very quickly. Those people buying expensive real estate don't have so much money now.
Prices doubling between ordering and delivery is a sure sign of a bubble. If you want to gamble, have fun. Just look what happened last time. Investments in the Indonesian stock market are (in hard cash) below what they were in 1997. The Jakarta SE, by the way, has fallen by over 50%
And while real estate in Jakarta might be a local market, those properties in Bali are marketed heavily at foreigners, strictly legal or not, who's going to pay a million dollars for a beach front villa, when you can get a modest residence in Denpasar for a few thousand dollars.
The answer is foreigners who of course don't have so much money now. Villa in Bali? Not a luxury you can afford when you're an oil baron who finds oil has fallen 60%, a Russian millionaire who has been bankrupted by the 70% falls in the Russian stockmarket, or a now unemployed banker.
Personally, my recommendation if you are going to live in Indonesia, outside of Jakarta, is to live where the locals do and try not to show off your wealth. Why pay a fortune to live an enclave or development whose value is based on the fact that it's marketed to rich people, when you can live a mile away for a fraction of the price?
sumyunggai
31-01-09, 11:14
Real estate prices in Indonesia are not as transparent as compared to other countries. It is almost like barganing at a traditional market. The owner asks for a sales price as determined by the look of the prospective buyer and they start bargining from there.
This is correct. Buyer beware! White people have money, all Indonesians know this, so why not pay double? Don't buy at first, rent, and keep an eye on what you could pay elsewhere to make sure you're not getting ripped off.
And real estate agents may be marketed at foreigners and again be double the price. Houses in Indonesia start in the thousands dollars - not tens or hundreds of thousands. Admittedly this may only be a few hundred square feet, and not right in super-prime area, but $20,000 will buy you for instance a small pleasant house a few minutes from Kuta in Bali.
This is correct. Buyer beware! White people have money, all Indonesians know this, so why not pay double? Don't buy at first, rent, and keep an eye on what you could pay elsewhere to make sure you're not getting ripped off.
And real estate agents may be marketed at foreigners and again be double the price. Houses in Indonesia start in the thousands, not tens or hundreds of thousands, of dollars.
"Houses in Indonesia start in the thousands" : In kampungs some years ago this statement was definitively true. I think that rural Indonesia and smaller cities real estate situation is now somewhere in between the thousands and the tens of thousands for most houses all over the archipelago. If you are talking about JABODETABEK, then tens and hundreds of thousands is very often the case, even for indonesians.
How is the quality of build in these places though? Location is one thing, but will the building start to deteriorate after a couple of years due to the build? Do these condominiums get maintained properly? And how fickle is it in terms of the law? in the sense that one day the government could decide that all foreigners who own property in indo are going to be forced to leave. Or your rights to the property due to a new law, are now invalid. Etc. that would be my main concern buying in a place where you have to question the quality of the overall workmanship, ie did you buy something that in 10/20 years time will be falling to bits, and not really knowing where you stand when it comes to owning the property/land. Quite scary
I always dreamed of owning a beautiful place in Thailand by the beach with my wife, but when looking into it - it’s just a fantasy, as there are all of the above factors to consider. Now I wouldn’t dare, as I’ve seen how they build these 'luxury villas', and seen people get turffed out and left with nothing, and seen how they the areas are not maintained and these condominiums turn to sh1t after a number of years. The land can't be yours, the lease is only as good as the current government legislation at the time will allow, and the building itself (although beautiful on the outside and in), is built to an extremely poor standard. So to be these places are not ‘worth’ more than they have been built for (on the cheap but with pleasant finishing’s).
If it were me living in Thailand or indo, id rather rent, and keep the bulk of my money and investment out of indo. If it all goes 'tits up', you can just walk away at any time.
On the other hand my wife can buy a home in Thailand if she wants, as she can build something modest in her home town for next to nothing (in comparison to the west / places by the beach in Thailand / Bangkok), and I can put a deposit down on a place in London and rent it out regardless weather I ever want to return to London and live or not. Id rather do that than 'invest' a penny in any property or business in Thailand/other.
JMO of course
in the sense that one day the government could decide that all foreigners who own property in indo are going to be forced to leave. Or your rights to the property due to a new law, are now invalid. Etc.
Absolutely no risk of that happening... since NO foreigners can own property (S.H.M) under his name in Indonesia. :)
Absolutely no risk of that happening... since NO foreigners can own property (S.H.M) under his name in Indonesia. :)
haha ok then so i guess property 'owners' do know where they stand then when they 'buy' property in indo? ie they do not lol. the law is much more complicated in thailand where you sort of can but also sort of cant, and the law is forever changing...
fair enough then thats interesting to know
haha ok then so i guess property 'owners' do know where they stand then when they 'buy' property in indo? ie they do not lol. the law is much more complicated in thailand where you sort of can but also sort of cant, and the law is forever changing...
Agreed. I own a condo in Thailand through a company and I still don't really know if I own the company since I own only a part of it and if the company really owns the condo... :);):eek:
Thanks for the responses - some very useful advice here. Found the 'rumah' website to be among the best I've come across. Got to say that sumyunggai makes`a lot of sense with 'don't buy at first, rent'. Will keep looking at the thread to see if further info gets posted - got to think that others have experience of buying in Indonesia and that there must be plenty out there interested in the topic.
New construction of homes or condos in Indonesia is subject to the same possible building standard problems as all over the world. BUYER beware, because the builder just wants your money...
I find that in new complexes, where the homes are build by the developer of the project. The material for the homes are far from top quality. In about 4 to 7 years you will probably need to replace several things in the home amounting to about 10% to 15% of the original cost of the home. Typically the door and window frames are substandard and the kitchen will need remodeling.
Also of note is the fact that even thought the home or condo looks nice and modern. The workmen who buiult it may have had no idea what some of the items were that they installed. So if an fancy accessory does not work don't be surprised. An example I can jive is from an apartment I rented in Jakarta for a while. The cable TV line did not work because it was kinked too much in the wall and there was not way to fix it because the cable was locked tight in the concrete wall.
sumyunggai
03-02-09, 09:21
How is the quality of build in these places though? Location is one thing, but will the building start to deteriorate after a couple of years due to the build? Do these condominiums get maintained properly?
Are they built properly in the first place? Your guess is as good as mine. From what I've heard, Indonesian building standards are generally poor, and they don't bother with things like adequate foundations in general. All those numerous building regulations you might find in the West either don't exist or may be ignored.
Of course there's nothing to stop a company building a top-quality building to equal what might be built in New York or London, but I'd be concerned - there are no guarantees, and if things go wrong and your 'exclusive' development turns sour, you've lost a lot of money.
Freestanding properties might be poorly constructed (if you know what you're doing you can examine though), but at least you've got control.
I always dreamed of owning a beautiful place in Thailand by the beach with my wife, but when looking into it - it’s just a fantasy, as there are all of the above factors to consider.
Why bother? You can just rent somebody else's when you want to visit.
I don't see the appeal of a property that will be empty half the time.
Arriving at a luxury villa with a butler in situ who bows to you when you arrive, cooks you food and caters for your every need, then you go home and leave all the mess behind - that's a holiday.
Hiring said butler, repairing your property and trying to let the villa the 50 weeks of the year that you're not there - that's a chore.
Am I right in thinking that one miliar is 100,000,000?
1 miliar is 1.000.000.000. around USD100.000
I can imagine that tourist areas like Bali have been hit as demand from foreigners has dropped off but what about non-tourist places like Malang or Bandung?
I live in Malang. What kind of house are you looking for? a big one? urban or sub-urb area? or maybe rural area? ;-)
you can buy the small newly built housing complex with just up from 150.000.000.
If you want a decent one, you can get with under 1 Miliar. If you want palace-look housing, i think 3 M already extraordinary here.
again, it's all depend on the location, spacious, etc.
Definitely better to rent in most countries in Asia. I have seen so many articles on foreigners losing their life savings buying property, where they don't have 100% ownership rights.
You are so much better to invest in your own country. Japan is one exception in Asia where foreigners can buy property and I think Malaysia also.
If I am not mistaken, what I heard is that the foreigners are not allowed to own the properties in Indonesia, but you may (on the law papers/contract) "own" the properties on the name of Indonesian' citizen people, is that correct? And I just read it from www.ralton.be/bali (http://www.ralton.be/bali) that if you break the contract you got to pay that Indonesian person for several amount in 25 years long (If I am not misunderstood). Any other important knowlegde regarding own property in Indonesia?
think_tank
12-02-09, 14:37
Just some food for thought.
For 550,000,000 you can buy Aprox 600 square meters of land build a three bedroom house and install a swimming pool with a high fence and a security box.
For the same price you can get 150 square meters, 2 bedrooms, a pool shared by the rest of the complex, shared exterior walls, no back yard and a small patch of grass with only enough room to park one car out the front.
Both locations are 40mins from CBD
Funny enough most expats go for the 2nd or worse.
location, location, location...if the expats go for the second option, then by definition, it is the more prudent investment.
waarmstrong
13-02-09, 12:32
[quote=think_tank;16870]. For 550,000,000 you can buy Aprox 600 square meters of land build a three bedroom house and install a swimming pool with a high fence and a security box. quote]
If I could purchase a 600 square meter property with a 3 bedroom house and a pool withing a 40 minute drive of the Jakarta central business district for 550 Juta, I would likely jump at the chance. That would be an extremely good bargain for the buyer. But unfortunately if a deal is too good to be true, it probably is.
Think Tank, where is this fabulous bargain? I do not see anything approaching that combination of circumstances listed on Rumah123. More details would be appreciated.
Hi Anita - good to be in touch and I'm glad to have a friend in Malang! My wife and I will probably come over in May and rent for a few months before looking to buy a house. Will be in touch nearer the time so that we can meet up - looking forward to it.
think_tank
16-02-09, 12:41
[quote=think_tank;16870]. For 550,000,000 you can buy Aprox 600 square meters of land build a three bedroom house and install a swimming pool with a high fence and a security box. quote]
If I could purchase a 600 square meter property with a 3 bedroom house and a pool withing a 40 minute drive of the Jakarta central business district for 550 Juta, I would likely jump at the chance. That would be an extremely good bargain for the buyer. But unfortunately if a deal is too good to be true, it probably is.
Think Tank, where is this fabulous bargain? I do not see anything approaching that combination of circumstances listed on Rumah123. More details would be appreciated.
Your first mistake is looking only through websites and RE agents. You've got to get more local to get the full picture and the best deals. location isn't the biggest factor as even if you live in kemang or pondok indah it doesn't mean you can always miss the trafic. My advise is you move out to where the fresh air is and leave a little earlier to work. with the money you save on land tax and electrisity you can hire a good driver to drive you while you catch up on sleep. And then you can come home to your dream house. after all, you work to live right? also the kind of land I'm talking about can still go up in value at a steady pace, maybe not fast but selling in land in Indo aint exactly quick. With all the development in the houseing sector people have a huge range of choices. Basically supply far exceeds demand and most people get loans to buy even tiny homes now.
waarmstrong
16-02-09, 21:46
[quote=waarmstrong;16970]
Your first mistake is looking only through websites and RE agents. You've got to get more local to get the full picture and the best deals. location isn't the biggest factor as even if you live in kemang or pondok indah it doesn't mean you can always miss the trafic. My advise is you move out to where the fresh air is and leave a little earlier to work. with the money you save on land tax and electrisity you can hire a good driver to drive you while you catch up on sleep. And then you can come home to your dream house. after all, you work to live right? also the kind of land I'm talking about can still go up in value at a steady pace, maybe not fast but selling in land in Indo aint exactly quick. With all the development in the houseing sector people have a huge range of choices. Basically supply far exceeds demand and most people get loans to buy even tiny homes now.
Thanks for the advise. Rumah123 is only a quick reference for me; one source of property information among many I often use. The Bahasa Indonesian news papers, particularly the Pos Kota, are good references and gages of the market. As you condescendingly noted, it is often very instructive to simply drive around the neighborhood where you may be interested in purchasing property. Talking with the local residence during these excursions pays dividends, as well. I do not consult real estate agents as a rule, but have worked through them when they already represent a seller.
The fact that you provided no details about the specific property you mentioned earlier (LT 600 meters, three bedrooms, pool, 40 minutes to CBD for 550 jt) suggests to me that there is no such place. That this mystery bargain is too good to be true comports with my research and understanding of the Jakarta residential real estate market.
think_tank
17-02-09, 09:32
My first post on this was just an estimate and for fun. If you're really interested in the above property it can be yours new with great build quality but change the words 'cbd' into 'pondok indah' and the price to 600jt. Also remember you'll have to put the property into your wifes name.
I saw a three bedroom penthouse apartment (about 100 m2) in Cik Ditiro Residence in Menteng this weekend. Very nice units and building. The asking price is about US$250,000...
waarmstrong
02-03-09, 16:30
Mauricio, although a apartment Menteng may not be the best example (Menteng, I think, qualifies as one of the "old money" neighborhoods -- with the emphasis on 'money'), my best guess is the $250K or Rp. 3 M for a nice apartment (or house for that matter) is more representative of property values in places favored by expats than a theoretical 3 KT house in Pondok Indah for Rp. for 600 JT.
There's another 10-story apartment building going up about 200 meters north of Cik Ditiro Residence. A 120m2 unit goes for Rp$2.2m and a 49m2 unit goes for Rp$800juta...I like Menteng and its location.
waarmstrong
02-03-09, 21:38
There's another 10-story apartment building going up about 200 meters north of Cik Ditiro Residence. A 120m2 unit goes for Rp$2.2m and a 49m2 unit goes for Rp$800juta...I like Menteng and its location.
Agreed, Menteng has a lot to recommend itself; its toward the top of my wish list. Proximity to family was a big factor in our home search and, alas, the family abodes are not in Menteng.
I grew up in New York City so I am no stranger to inner-city, apartment family living...
waarmstrong
03-03-09, 09:50
I grew up in New York City so I am no stranger to inner-city, apartment family living...
My formative years were spent in a farm house in central Iowa. I guess you can take the boy out of the kampung, but not the kampung out of the boy. Besides, my wife is a Sundanese Jakarta girl, so we compromised -- we live where she wanted, but she let me "Westernize" the house a bit.
Johnathan,where are you based in UK, my wife is also from Malang,and currently we are in Edinburgh, have a house in Malang some can be cheap depends what you are looking for, but remember thateverything will have to be in your wifes name and it used to be you could not transfer to children but may have changed due to new laws
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