Govt must let foreigners buy property: Analyst
Govt must let foreigners buy property: Analyst
JAKARTA (JP): The government must allow foreigners to own both
private and commercial property in Indonesia to help boost the
dormant property sector, a property analyst has said.
Panangian Simanungkalit said on Thursday that foreigners were
potential buyers of property in the country, and this could help
local developers and property firms overcome their financial
problems.
"Foreigners' interest in buying property here is abundant. The
only problem is that they face legal uncertainty in property
ownership," Panangian was quoted as saying by Antara on Thursday.
In 1996, the government issued a regulation allowing foreign
companies or foreign nationals, with stay permit cards, to buy a
house, an apartment or a condominium.
Panangian said the regulation should be amended so that even
nonresidents were allowed buy houses.
"The only thing they must not be allowed to buy are
(government-subsidized) low-cost houses or very cheap houses, and
very large plots," he said.
Property could be offered to foreign tourists who regularly
visit Indonesia, he said.
If about 1 percent of the total foreign visitors to the
country bought property at an average price of US$100,000, it
would add up significantly, he said.
Foreign nationals who work in Indonesia, totaling about 60,000
people, are also potential buyers of upmarket properties in the
country, he said.
Most expatriates do not stay long in a country. Within three
to four years, they would most likely sell their property if
there were gains to be made, he said.
He said, however, that priority should be given to the sale of
supermarkets, apartments and condominiums for commercial use to
foreign investors.
Panangian cited the Golden Triangle commercial district in
South Jakarta as being worth over $18.5 billion, out of a total
of about $50 billion worth of commercial properties throughout
the country.
"If foreign investors were to purchase 10 percent of the total
$50 billion worth of commercial property, the sector could rake
in about $5 billion," he said.
The property sector is among the worst hit by the prolonged
economic crisis, which has seen the rupiah drop in value by about
70 percent since August last year.
While developers are burdened by foreign debts, their markets
drop as purchasing power sharply diminishes.
Panangian said 80 percent out of about 2,500 developers had
technically gone bankrupt or had temporarily suspended operation
since the monetary crisis struck.
He estimated that the amount of loans that developers had
obtained from local banks reached about Rp 75 trillion ($10
billion), while their offshore debts amounted to about Rp 35
trillion, he said.
He said developers mostly obtained short-term loans to finance
long-term projects. (das)