Government Regulation no. 18 of 2021 - Right to own an appartment

[Samoerai]

If you are buying for investment, then yes. If you are buying for yourself & family to live in for the next few decades then I would say you should definitely buy what you like. Why would you buy something you don't like? Why would you buy something based on whether a Chinese person might like it or not?

Hmmm, I consider the .. 3 most important factors when buying a house .. it's location, location, location ..

 

[jstar]

If you are buying for investment, then yes. If you are buying for yourself & family to live in for the next few decades then I would say you should definitely buy what you like. Why would you buy something you don't like? Why would you buy something based on whether a Chinese person might like it or not?

What you say is of course somewhat ‘motherhood and apple pie’. Obviously you caught my drift. Now I have never bought something somewhere where I said “hmm, let’s stay here for the rest of our lives”. But everyone can do whatever they want; if they prefer to buy a yellow car realizing it will be worth less than the black version after 3 years just because they like it better, why not?

Hmmm, I consider the .. 3 most important factors when buying a house .. it's location, location, location ..

That is a bit of a weird one here. Normally the adage is of course to buy the ‘ugliest house in the best street’. Something like an apartment in the Bellagio building makes a lot of sense for its great location.
But here things, as so often, can be somewhat different. You see quite a lot that people build a huge and beautiful house in a street that‘s nothing special. And later the buyers are not so concerned about that. What is extremely important here, is the danger of flooding (but people forget fast). I have even seen houses stay empty because people thought they were haunted and have hantu and roh, and that in the city! Something that’s changing a bit, is that the houses on the main streets are no longer more popular than those in the smaller side streets. Which used to be the case but now people seem to realize less passing traffic and noise can be better. Talking about noise, and @Helpful Herbert will agree, is that the noise pollution seems to be much more an issue for westerners than for locals who are born in that and used to it. Specifically for apartments, people are more concerned about the building management (company) than the sneezing neighbor.

Sorry for the deviation from the original topic. On that; the certificate you get for a hak milik apartment is pink instead of green. Also, its title is SHMRS instead of SHM. The duration of making apartment certificates officially depends on the size of the land. But in reality that can take a long time. Sometimes even years; I’ve even seen a 2nd owner who was selling not having a certificate yet for the unit. That could become a nasty surprise since the handling of the final administration with the developer costs quite a lot.

Taking about timing; of course there is a fine stipulation in the PPJB (and AJB) if the developer can’t deliver on time. If that happens often they will offer a year free maintenance which is more profitable for the buyer and easier for them.

 

[pantaiema]

Interesting. Specially about renting an apartment. From what I learned here from neighbours: renting an apartment is cheaper than buying. Because there is still a gap between the rich people and middle class. The rich buy 1 or more apartments and rent out to ... (cannot to rich people, because they buy) .. middle class. Yet, middle class cannot afford to pay more than 5 -15 juta per month. So that keeps the rent low, because of the gap. So, that's also why renting an apartment is better than buying for now.

First of all. I never say that renting is better than buying. The link above is other people opinions who are on both sides. For other people imo, It will depend on the properties in question, and who are buying it, Indonesian vs foreign citizen, etc,
Each to their own. But if I am about to invest IDR2b, I will definitely not just follow what other people do, but I will do my own assessment, valuation analysis / calculation. Other people cases might not be applicable to our case. They might be getting a gem, a real bargain.

I understand, One of the simple, easy to understand evaluation technique in investment is the Payback Period (PBP).

Payback Period Explained, With the Formula and How to Calculate It

The payback period refers to the amount of time it takes to recover the cost of an investment or how long it takes for an investor to hit breakeven.

www.investopedia.com

Payback period - Wikipedia

en.wikipedia.org

You include all of the cost of capital and you take into account the time value money. This technique is also used when comparing, Solar/PV panel vs electricity bill, Ground Source heat pump vs Heating bill.
This is an example of all cost associated with purchasing properties in Indonesia to be included

TRANSACTION COSTS​
		Who Pays?
Transfer Tax	5%	buyer
Sale and Purchase of Land Deed	1%	buyer
Legal Fee	0.50% - 1.50%	buyer
Registration Fee	0.20%	buyer
Land and Building Transfer Duty	5%	seller
Real Estate Agent´s Fee	5%	seller
Costs paid by buyer	6.70% - 7.70%
Costs paid by seller	10%
ROUNDTRIP TRANSACTION COSTS	16.70% - 17.70%
See Footnotes Source: Global Property Guide

https://www.globalpropertyguide.com/Asia/Indonesia/Buying-Guide

And the alternative cost you will need to pay with renting, including all of the cost such as services charge.
Find out how many years you will need until you get your initial investment back. If say you get PBP of 25 years, it will mean after 25 years it is just for you to enjoy profit, as you have got all your money back. If your PBP is the same or lower than your estimated period of time you need to rent an apartment (say 25 years) than that is a very simple decision BUY.
There are a lot of PBP calculators on the web this is just random example.

Payback Period Calculator

Free calculator to find payback period, discounted payback period, and the average return of either steady or irregular cash flows.

www.calculator.net

But put in the context if we are talking about acquiring properties for the second home visa; The risk here is you might not get extension after 5-10 years, changing your plan, moving to another country/city. But the real risk is the regulatory risk, regulation change which in Indonesia, it is not uncommon just as simple as issuing a circular letter. So Indonesian citizens buying apartments are different with foreign citizens with residential permit buying apartments.

Many people do not like to buy flats, apartments, condos especially when they could easily buy a house with freehold where they could own both building and the land it stands on.
Land value will almost certain increase with time, an apartment in a building is not necessary so especially if you take inflationary rate into consideration, and end of life of the building, when the building will need to be destroyed at some point in the future shorter than you might expect.
Typically inflation rate in Indonesia is higher than other part of the world. This is a table of comparison comparing inflation rate in Indonesia and other part of the world

Inflation rates in Indonesia

Development of inflation rates over the last 61 years in Indonesia incl. comparison with the U.S.

www.worlddata.info

The quality of building in Indonesia is not necessary the same with other countries. In other countries, people are comfortable to buy a leasehold up to 99years. I doubt if there are a lot of condos, apartments, flats in Indonesia in high rise building could stand that long before the building is scheduled to be destroyed.

 

[Samoerai]

What you say is of course somewhat ‘motherhood and apple pie’. Obviously you caught my drift. Now I have never bought something somewhere where I said “hmm, let’s stay here for the rest of our lives”. But everyone can do whatever they want; if they prefer to buy a yellow car realizing it will be worth less than the black version after 3 years just because they like it better, why not?


That is a bit of a weird one here. Normally the adage is of course to buy the ‘ugliest house in the best street’. Something like an apartment in the Bellagio building makes a lot of sense for its great location.
But here things, as so often, can be somewhat different. You see quite a lot that people build a huge and beautiful house in a street that‘s nothing special. And later the buyers are not so concerned about that. What is extremely important here, is the danger of flooding (but people forget fast). I have even seen houses stay empty because people thought they were haunted and have hantu and roh, and that in the city! Something that’s changing a bit, is that the houses on the main streets are no longer more popular than those in the smaller side streets. Which used to be the case but now people seem to realize less passing traffic and noise can be better. Talking about noise, and @Helpful Herbert will agree, is that the noise pollution seems to be much more an issue for westerners than for locals who are born in that and used to it. Specifically for apartments, people are more concerned about the building management (company) than the sneezing neighbor.

Sorry for the deviation from the original topic. On that; the certificate you get for a hak milik apartment is pink instead of green. Also, its title is SHMRS instead of SHM. The duration of making apartment certificates officially depends on the size of the land. But in reality that can take a long time. Sometimes even years; I’ve even seen a 2nd owner who was selling not having a certificate yet for the unit. That could become a nasty surprise since the handling of the final administration with the developer costs quite a lot.

Taking about timing; of course there is a fine stipulation in the PPJB (and AJB) if the developer can’t deliver on time. If that happens often they will offer a year free maintenance which is more profitable for the buyer and easier for them.

Yes, been there. I saw these akward things since I have been living here for one year. We bought a house in a new perumahan, 15 km away from the "laut" in Tangerang area. We saw "renovasi" of new houses by the owners. Thinking "Hmm why would you do that, it's not very aestetic and will not help to increase the price of the house if you want to sell it later. Also thinking that it in a negative way effects the houses of the neighbours too". I don't feel comfortable living there, also nothing of social activity there. Thinking of selling the house after a while. For now we are renting an apartment in Jakarta South with direct access to a first class Mall. Menikmati di sini dan juga aktivitas sosial.

 

[fastpitch17]

Love all this buying vs renting chatter. When we first arrived we stayed in Jakarta. We knew Jakarta was not going to be in our long term plans so we rented a small place until we traveled around checking out various communities to see which one fit us and we fit in the best. While in Jakarta there were plenty of family trying to get us to buy. Especially one that would profit greatly on it. We said no. In our travels we pretty much knew that there was no way in hell we were going to pay rent or anything in Jakarta.

Finally we left that city and ventured North. We never had any desire to buy a house simply because of ages and no one to leave it too except family members that to this day say we can leave it to them. My wife always suggest that they buy the house we want, we pay them rent and when we are gone, it us still their house. No one has took up on that offer.

So we rent. Right now we pay 25 juta per year for our corner lot home. Our home runs on the market here for comparable at 750 to 850 juta. Triple or more in Jakarta. Must be why some live here with families and work in Jakarta and have a kos for work days. So, I sure don't have 30 years left after coming here so if we bought, we would be out a lot of cash. If the wood window frames go bad, someone else replaces them. If the roof leaks, someone else fixes it. I take care of small maintenance. Little problem with a fairly new house.

Once you get out of Jakarta food is a whole lot less. We also no longer drive and use Go and Grab cars. Would take more than a lifetime of those trips to come up to what a cheap car cost. Oh, and we have malls to and elephants.