The Indonesian archipelago contains many regions that offer promising property investment potential. With its stunning natural beauty and rapid economic development, several areas in Indonesia are regarded as hidden gems on the real estate market.
Many people are already aware that Bali is the most famous island in Indonesia, not only as a tourist destination but also as an investment opportunity for investors. Here we will discuss other regions in Indonesia that also hold great potential on the real estate market.
Beyond Bali, several regions in Indonesia are showing significant property market growth and offer attractive investment opportunities for both local and foreign investors.
Lombok has become an attractive choice for property investment. This island, neighbouring Bali, boasts natural scenery every bit as stunning, with its white-sand beaches and Mount Rinjani in the background.
The real estate market in Lombok has experienced positive growth in recent years. This is due to several factors, one of which is the increase in the number of properties built and sold in Lombok. According to data from Statistics Indonesia (BPS), the number of houses built in Lombok rose by 10% in 2022 compared with the previous year.
The growing demand for property in Lombok has also led to rising property prices on the island. Based on data from Statistics Indonesia, house prices in Lombok increased by an average of 10.2% per year over the 2017–2022 period. This rate of growth is higher than the national average increase in house prices in Indonesia, which stood at 7.2% per year.
Surabaya is the second-largest city in Indonesia. Located in the province of East Java, the city offers strong investment potential thanks to its strategic position as a trading port and industrial hub. Ongoing development projects in Surabaya have attracted local and foreign investors looking to capitalise on the area’s growing business activity.
The Residential Property Price Survey (SHPR) for Surabaya and the surrounding area, conducted by Bank Indonesia, shows that the Residential Property Price Index (IHPR) stood at 107.25 in Q2 2023, growing by 1.14 per cent (year-on-year). Home sales in Q2 2023 contracted by 5.73 per cent (year-on-year).
Soesilo Efendy, Chairman of the East Java branch of the Indonesian Real Estate Association (REI), stated that this year developers in East Java are targeting a 30 per cent increase in project development.
The eastern part of Surabaya, particularly with the construction of the Outer East Ring Road (OERR), has become a key focus area for real estate developers. This is not only widening accessibility to the eastern region but is also creating substantial opportunities for promising property investment going forward.
Yogyakarta is the cultural and tourism hub of the island of Java, holding a special status as a province led by a Sultan. Alongside preserving traditional values, Yogyakarta has also grown into a metropolitan city in Java. This creates the dynamic of a modern society that continues to value nature and cultural heritage.
In terms of investment, the tourism industry is the city’s biggest driver. The real estate sector also attracts investors, thanks to the availability of large plots of land, beautiful scenery, and an environment conducive to living, studying, and doing business.
In recent years, property demand in Yogyakarta has continued to rise. According to data from Bank Indonesia, property loan growth in Yogyakarta reached 17.6% in 2021, higher than the national property loan growth rate of 15.5%. This indicates that demand for property in Yogyakarta keeps growing alongside steady economic development.
2024 is a political year worldwide, including in Indonesia, and this gives investors reason to wait and watch government policy. However, regions with strong economic growth are unlikely to be significantly affected. The market is also currently trending positively.
The Coordinating Minister for Economic Affairs, Airlangga Hartarto, has stated that the real estate sector is the main engine driving Indonesia’s growth. Airlangga explained that throughout the first half of 2023, the Indonesian economy grew by 5.17%, with inflation at 3.27%, accompanied by export performance that continued to grow by 3.12 million.
Airlangga also noted a surge in home sales, which grew by 15.11% over the same period. “The property industry is one of the flagship sectors that can drive the Indonesian economy. The contribution in the second quarter was 9.48% for the construction sector and 2.4% for the real estate sector,” he said at The International Real Estate Federation (FIABCI) Trade Mission 2023 in Jakarta in September 2023.
