Indonesia’s property market has potential simply due to its hundreds of millions residents. This also make the year 2025 a good opportunity for expats in Indonesia to invest in real estate.
Why Invest in Indonesian Real Estate?
Despite being Southeast Asia’s most populous nation, it has remained largely overlooked by foreign investors—making it one of the region’s best-kept secrets.
Indonesia also expected to experience steady economic growth in 2025.
The economic is predicted with GDP projections to grow between 4.7% to 5.5%. This economic stability creates a conducive investment climate, including the property sector.
The living sector is still the main sector driving the national property growth today.
A variety of housing needs that are the primary needs of humans are driving transactions, ranging from middle-class housing, dormitories, and residences around universities.
In addition, the growth of co-living in urban areas makes investment in the residential sector still attractive, and is expected to continue to grow positively this year despite the weakening of people’s purchasing power.
Competitive Interest Rates for Home Ownership Loans (KPR)
Banks in Indonesia offer competitive mortgage interest rates with easier terms, making it easier for you to own your dream home with affordable financing.
The Indonesian government also supports the growth of the real estate market. The Indonesian government continues to support the property sector with various strategic policies, including:
- Extension of 100% VAT DTP until June 2025, which reduces the tax burden for first home buyers.
- Decreased BI rate, making property loan interest lower and thus more affordable.
Subsidies and support for subsidized housing, ensuring the availability of housing for low-income people.
A number of policies and incentives that benefit them include:
- 3 Million Houses Program, encouraging an increase in the supply of simple houses at affordable prices.
- Extension of 100% VAT DTP until June 2025, which provides tax incentives for property buyers.
- BI rate reduction, enabling lower and more affordable mortgage rates for young people.
Property price increase 2025
Property prices in Indonesia tend to increase from year to year. Real estate is one line of business whose prices rarely go down.
By buying property in 2025, you can anticipate potential price increases in the future, thus increasing the value of your investment.
Real estate is also a relatively stable asset that is not affected by stock market fluctuations. Owning property can provide a sense of security and financial stability for expats in Indonesia.
Green Property Opportunities
There is a growing demand for green-certified buildings and residences from consumers, investors and companies as part of the global commitment to ESG principles. ESG concept buildings have several indicators.
Quoting Knight Frank, the environmental side includes energy efficiency through the use of LED lighting and energy-efficient HVAC systems, water management with recycling systems, and the selection of environmentally friendly and recyclable building materials.
From the social aspect, the indicators assessed include the provision of green space, indoor air quality, and designs that support the health and well-being of residents.
In the governance aspect, important indicators include transparency in operations, compliance with sustainability regulations, and the presence of green certifications that demonstrate commitment to environmentally friendly practices.
A number of property initiatives and innovations continue to be intensified by developers to capture opportunities and answer market needs. Initiation of green property products, both commercial and residential, as well as AI-based homes is starting to be intensified.
Property in Indonesia – Market Growth Potential
A report from Mordor Intelligence projects that the size of the real estate market in Indonesia will grow from USD 64.78 billion in 2024 to USD 85.97 billion in 2029.
This reflects a compound annual growth rate (CAGR) of 5.82% over the period. This growth indicates that investment in Indonesian real estate has excellent long-term prospects.
Jabodetabek and several major cities on the island of Bali are predicted to continue to grow as metropolitan areas with high potential for property growth. In addition, Makassar, Semarang and Surabaya are on the property investment radar in 2025.
Real Estate Trend 2025: Renting is More Appealing than Buying Property
Renting a house is considered more economical than buying a second or used house. For young people who financially support their children and parents, aka the sandwich generation, this option is a more affordable solution.
In addition, the increasing trend of rental property is also driven by the lifestyle of Gen Z, many of whom work as freelancers. Digitalization makes work possible remotely without having to come to the office. The demand for mobility also encourages them to prefer renting over buying property.
This trend of renting property can be a stable source of income for investors. Moreover, in 2025 the government continues the VAT DTP discount for the purchase of houses with a selling price of up to IDR5 billion. This discount is given on the first IDR2 billion at 100% for January-June 2025 and 50% for July-December 2025. This incentive can ease the cost of buying a house next year.
By buying property and then renting it out, investors can earn passive income every month or every year from rental profits. Not only that, property prices that continue to rise are also an added value of property investment.
Location close to the business center, easy transportation access, and complete public facilities are some of the important things that tenants look at before deciding to rent a property. Therefore, investors should buy properties in strategic locations that have these advantages.
Invest in Indonesian Real Estate with LMI Consultancy
With strong economic growth, increasing housing demand, competitive mortgage rates, and long-term market potential, 2025 is an ideal time to invest in Indonesian real estate. Whether you are looking for rental income or long-term appreciation, the current market conditions offer excellent opportunities for both expats and investors alike.
LMI Consultancy is a trusted advisory firm specializing in the Indonesian real estate market, offering in-depth service, strategic guidance, and expert assistance to help investors and expatriates navigate the complexities of property investment in Indonesia.
With a team of experienced professionals who possess extensive knowledge of local regulations, market trends, and investment opportunities, LMI Consultancy ensures that clients find the best properties suited to their needs, from residential real estate to commercial real estate, while maximizing their investment potential with confidence and ease.
