Indonesia has increased its minimum spend for foreigner property investors.
Some of the world’s property hotspots that include cities such as London, New York and Sydney have seen values rocket in price. Great for homeowners who are firmly on the property ladder, but not good news for those trying to make their first move in the market. In these cities, the influx of overseas investors are being blamed for driving up prices. All three destinations are considered to be a safe haven providing the ideal place for people to park money as well as receive capital appreciation on their investment.
In a bid to attempt to cool the market in London, developers now have to market their properties overseas simultaneously as marketing them in the UK. Previously they were free to market new residential projects overseas where many investors in Asia snapped up properties. For a city with an acute housing shortage this measure was to prevent investors buying property that they use a few times a year and the rest of the year stands empty.
In Indonesia, similar attempts are being made to ensure that foreign investors do not propel the market to a point where the local market are unable to afford to own property. A move that has received positive responses from those professionals working in the Indonesian property market that even include Eddy Ganefo, chairman at Association of Housing Development in Indonesia, who praised this regulation.
Currently, any foreigner wishing to purchase property in Bali and Yogyakarta on Java, must spend a minimum of IDR 5 billion. This in an increase of 2 million from a prior regulation. Amounts that have been set by the Agrarian and Spatial Planning Ministry. For West Nusa Tenggara and North Sumatra, there has also been an increase in minimum spend from IDR 2 billion to IDR 3 billion.
These tactics should play out well for the domestic market in Indonesia simply foreigners are forced to focus on the higher tier of the market. The UK have introduced additional taxes for individuals purchasing a second home, but the argument is that those wanting to buy an additional property are unlikely to be put off by this simply by this measure. Only time will tell if Indonesia’s new tactics will work but by forcing investors into the top end of the market thus not generating prices increases at the lower end of the market.
