The government should revise rules to allow foreign nationals to buy apartments and houses in Indonesia before an international real estate forum in Bali in May, the head of a real estate association said on Monday.
Teguh Satria, chairman of the Indonesian Real Estate Developers Association (REI), told the Jakarta Globe that he hoped the regulation prohibiting foreigners from owning property would be revised sooner than May or June - the time frame suggested by the housing minister last week.
“The REI has chosen Nusa Dua, Bali, as the host for its 61st World Congress from May 24 to May 28. It would be good to revise the regulation by then so Indonesia could not only act as the host, but could open its doors to the participants interested in purchasing property here,” Teguh said.
“Currently there are many Indonesians who own property abroad. It’s about time we open our doors [to foreign nationals],” he added.
Housing Minister Suharso Monoarfa said on Thursday that the ministry was considering changing the rules to allow foreigners to buy condominiums in large cities and houses in special economic zones such in Batam and Kalimantan. The regulations would be revised in May or June, he said.
Experts told the Jakarta Globe that allowing foreign nationals to buy property would improve the overall investment climate.
“As well as increasing tax revenue from foreigners, it will stimulate the country’s property market, which will have effects on other economic sectors such as industry,” said Anton Sitorus, head of research at PT Jones Lang LaSalle Indonesia.
The market for condominiums and homes in Jakarta slumped during the first half of last year due to the global financial crisis and stubbornly high mortgage rates, according to Jones Lang LaSalle.
However, a PT Procon Indah survey in November said both sectors had bounced back in the third quarter. It said condominium pre-sales had surged by 30 percent, and the average monthly uptake in homes had risen by more than three quarters, to 850 units from 480 units the previous quarter.
Muhammad Yu’san, vice chairman of the Investment Coordinating Board (BKPM), said revising the regulation would increase Indonesia’s attractiveness in the eyes of the world.
“This is because they will see Indonesia as a country that’s more open to foreign investors, just like the neighboring countries that have conducted these procedures,” Yu’san said, referring to countries such as Malaysia and Singapore.
“By owning property, foreigners will feel more at home in Indonesia.”
Teguh, however, noted that foreigners would be required to meet certain regulations to buy property here, to avoid what might be considered excessive foreign ownership.
“First, the price of the property should ideally be $100,000 or higher. Second, the owner must spend at least two weeks in the country every year,” he said.
“There must also be limitations on how much property foreigners can own in a single apartment building. For example, a limit of 49 percent of units that are foreign-owned would be ideal,” he added.
When asked how the change would benefit the many Indonesians who do not own proper housing, Teguh explained that investment in the property sector by foreign nationals would provide the government a greater tax base to spend on public housing projects.