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)