Sometimes I am really confused about investment decisions here. From a developer in our area we heard that he is building a few ruko now. He said the price for a ruko in this area is around 800 million IDR - and we heard that a ruko (if you rent it) is around 25 million IDR per year.
So, if these numbers are correct, then it seems to be a very poor business decision to buy a ruko in this area. Even if you found a person who rents it the whole year and who is always solvent to pay the rent, it would be a yield of only around 3% p.a. - there are plenty of banks that are willing to pay more interest if you put 800 million IDR into a bank account. And compared to that, a ruko is quite risky (earthquakes, finding a reliable tenant, costs for repairs, etc.). Also you have much higher acquisition costs and you are not as flexible if you need the money later short-term.
I really wonder why someone thinks about buying a ruko in this area, and I suppose the expected return in other areas of this beautiful country is not much different. Maybe they speculate that the rental prices increase in the next years or so. But still, if it were me and I had to choose between putting it into a deposito or a ruko, I would not need much time for that decision. (not to mention that there are of course other, even more attractive alternatives like bonds, stocks, and so on...).
When it comes to property, it is illogical to compare it with savings; or to be more specific, Treasury bonds, gilts, corporate bonds, savings. They are different asset classes.
In bonds and savings, your only gain comes from yields and the interest rate. The original value, purchasing power of your money is actually depreciating due to inflation. With property, you can gain both from renting, which could be converted to yield, and asset appreciation. Not to mention, the rent will keep creeping up to match inflation.
Just look at the people who have inherited property from their parents, grandparents in the golden triangle of Jakarta a few decades ago. It is frequently mentioned in the news that they have become sudden millionaires when their property (land) is acquired as part of the central business district development.
However, the disadvantage of property, compared to short-term bonds and easily accessible savings, is that it is not easy to sell. Also, short-term bonds especially if it is T-Bonds, gilts are generally considered as risk free.
The general consensus is to have a mix of different asset classes such as property, stocks, shares, bonds, or other asset classes as long as you understand the fundamentals of that asset to make money. This is what is so called assets diversification. Billionaires investors are doing a 'small' degree of diversification but most of their assets are in equity or own their own business.
Treasury bonds, savings, and gilts might be suitable for short-term needs for money you will need to access in the near future, while property and equity are better suited for the long term.
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