Foreign investment in Indonesia property sector is increasing



Data from the Investment Coordinating Board (BKPM) stated that the realization of foreign investment in the property sector in 2019 reached US $ 2.88 billion with a total of 1,313 projects. Although in value compared to 2018 which reached US $ 4.30 billion, in terms of the number of projects it has increased.

Indonesia is one of the countries that is the target of investors or developers in the property sector. Apart from fairly good political stability and security, the large demographic factors of the population, including the growing middle class, are also reasons for foreign investors to look to the domestic market.

A number of foreign investors who have entered to invest in the Indonesian property market mostly come from China, Singapore, Malaysia and Japan.

According to the Deputy Chairman of the DPP Real Estate Indonesia (REI) in the field of Foreign Relations, Rusmin Lawin, the property sector is predicted to improve in 2020, including in terms of investment. Last year foreign investors held back because it was a political year.

“REI is optimistic that the realization of property sector investment this year will be much better,” said Rusmin.

According to him, last year’s political year has successfully passed. In addition, investor confidence has increased due to the issue of relocating the country’s capital city (IKN) to East Kalimantan

Even so, it does not mean that the interest of foreign investors is unhindered, because they still have difficulties with bureaucracy and licensing, especially in the regions. In addition, because it is only the beginning of the year, investors are still waiting for market momentum, namely the increase in consumer confidence in the market

According to Rusmin, an indicator of increasing investor confidence can be achieved with a stable government and regulations that favor the business world

“Currently, the business world, including foreign investors, is waiting for the completion of the Omnibus Law which is expected to strengthen the business world in the country,” he said.

Rusmin stated that Indonesia is one of the investment destination countries which is quite attractive and should be taken into account. Therefore, this year REI will make visits to several countries to promote the potential of the Indonesian market and invite foreign investors to invest domestically.

From the various promotions that have been carried out by REI, Rusmin is optimistic that this year foreign investment can grow by around 20-30% compared to the value in 2019.

Based on BKPM data, foreign investment in the property sector in 2019 includes various sectors, including residential, office and industrial areas.

Responding to the decline in the value of foreign investment in the property sector in 2019 but in terms of the number of projects increasing, Rusmin Lawin argues this is because investors are still studying the potential of the property market in Indonesia. Moreover, last year there were political activities in Indonesia.

However, he is sure that if the market potential returns well, foreign investors will again add to their investment portfolios in Indonesia

Investors from Japan, Korea and Europe have high interest in property investment opportunities in Indonesia. If the initial stage is successful, they are

will definitely not invest. So this is actually a good signal for Indonesia.

It is said that there are six points that investors see, namely property rules and rights, access to credit, government efficiency, rational dispute resolution, financial transparency, and appropriate regulations.

Currently, Rusmin added, most of the investments come from large companies, not individuals anymore. Therefore, usually the investment that comes in is long term.

However, Rusmin expects foreign investors who will enter Indonesia to collaborate with domestic developers who are members of REI. Currently, REI has members of more than 6,000 property companies, both large, medium and lower middle scale. By partnering, they are more comfortable and do not need to look for land banks anymore.


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