Indeed, In fact some of my Indonesian friends ,whom were quite wealthy brokers in property and land here ,1 has opened a wholesale shop, another bought a tourism speedboat and moved to rajah ampat , another unfortunate person was left with a few hectares of overpriced land , went bankrupt , unfortunately lost his mind and is now in bangli hospital, the local mental institution . Bad time to be a broker. !
INFORMATION AND COMMUNITY FOR EXPATS IN INDONESIA
Property Prices in Indonesia
- Thread starter Daniel50
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Indeed, In fact some of my Indonesian friends ,whom were quite wealthy brokers in property and land here ,1 has opened a wholesale shop, another bought a tourism speedboat and moved to rajah ampat , another unfortunate person was left with a few hectares of overpriced land , went bankrupt , unfortunately lost his mind and is now in bangli hospital, the local mental institution . Bad time to be a broker. !
I would be very surprised if you can get 10jt a month rent for a 2bed in Thamrin - going rate seems to be about 6 or 7 and there's hundreds if not thousands of empty units there
It is a renter's market - if your budget is 10jt you can get a much nicer larger place than Thamrin - even in Puri Casablanca you can get a furnished 3 bed for 10jt or a very very nice refurbished big 2bed
Remember Thamrin units are tiny, like Kalibata
Plus the traffic is horrendous
Look at Bellagio, Kun City, etc etc so many empty units everywhere, rental prices dropping, that has a knock on effect on sale prices, owners are happy to sell at break even to get out and not have to pay mortgage,s/c, tax, maintenance etc every month
Most of my Indonesian friends every week asking me if know anyone want to buy their family house / land etc in Jakarta, Java, Bali etc etc
Read beneath the lines and pr spin headlines, the country is in recession and economic downturn, and it will get worse before it gets better
Why would I buy a place for $300,000 here when the tradition rental yield of 7-10% doesn't add up to the fact I can rent that same place for $15,000 a year ? And leave my $300,000 safely in the bank in case we all get kicked out next week
Property is still a good LONG term solid investment in a civilised and organised economy, where you can rent it to cover mortgage etc, but it is NOT liquid and in a developing economy like Indonesia, it is a big risk, even just regarding the ownership and tax issues later on
Unless you are married to an Indo and settled here with kids, family, etc and no plans to relocate or get laid off next year, there is no reason or incentive for a bule to buy a property here - most are short term expats and those on packages get rent paid anyway
Just my opinion but I do have a pretty good view on this
It is a renter's market - if your budget is 10jt you can get a much nicer larger place than Thamrin - even in Puri Casablanca you can get a furnished 3 bed for 10jt or a very very nice refurbished big 2bed
Remember Thamrin units are tiny, like Kalibata
Plus the traffic is horrendous
Look at Bellagio, Kun City, etc etc so many empty units everywhere, rental prices dropping, that has a knock on effect on sale prices, owners are happy to sell at break even to get out and not have to pay mortgage,s/c, tax, maintenance etc every month
Most of my Indonesian friends every week asking me if know anyone want to buy their family house / land etc in Jakarta, Java, Bali etc etc
Read beneath the lines and pr spin headlines, the country is in recession and economic downturn, and it will get worse before it gets better
Why would I buy a place for $300,000 here when the tradition rental yield of 7-10% doesn't add up to the fact I can rent that same place for $15,000 a year ? And leave my $300,000 safely in the bank in case we all get kicked out next week
Property is still a good LONG term solid investment in a civilised and organised economy, where you can rent it to cover mortgage etc, but it is NOT liquid and in a developing economy like Indonesia, it is a big risk, even just regarding the ownership and tax issues later on
Unless you are married to an Indo and settled here with kids, family, etc and no plans to relocate or get laid off next year, there is no reason or incentive for a bule to buy a property here - most are short term expats and those on packages get rent paid anyway
Just my opinion but I do have a pretty good view on this
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Post # 42 also reflects my experience.
We own a 2 bed/bath in Bellezza, Permata Hijau and notice many empty apartments. We bought ours from off-plan some 10 years ago, consequently cheap, and is only used when we visit from Bali for family events etc.
A friend, married to a WNA, bought two apartments for rental investment there and they've both remained empty for about two years already.
We own a 2 bed/bath in Bellezza, Permata Hijau and notice many empty apartments. We bought ours from off-plan some 10 years ago, consequently cheap, and is only used when we visit from Bali for family events etc.
A friend, married to a WNA, bought two apartments for rental investment there and they've both remained empty for about two years already.
sumyunggai
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To be clear many millions of Indonesians do not make minimum wage. For example, where I am people work 7 days a week with no holidays for 0.9 million a month cooking in a restaurant from morning till night. Also labourers can be found for around 60,000 to work for a day. And that's with not working another day.
And people working on daily wages around the minimum wage still prefer to to get paid a true minimum wage given the opportunity, given that they may get health insurance, pension, etc., which most people do not have.
The informal sector is vast, and I guess most Indonesians do not make minimum wage.
Of course most do not own 1 billion rupiah properties either (although those that they do own have certainly risen, I guess around 300% over the last 15 years for land without any particular prestige).
sumyunggai
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Rising capital values happen at the margins, as only a small % of properties change hands. People wearing rags may be worth billions of rupiah as agricultural land they own rises from say 20 million per hectare to 200 million per hectare over a decade or so. However until they sell the land that huge rise in net worth is never realised.
Money is effectively created from nothing in the sense that the land rises in value without any property changing hands, the market is established by few transactions.
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I am fully aware of this problem in Indonesia however your post is way off-topic. In this thread we don't talk about those who cannot get min. wage. This thread is about middle class and their affordability of "middle class" properties.
My calculation was only to show the MIN. Salary in legal job sector.
Your property is only worth what someone is willing to pay for it - you could be a millionaire on paper only until you need to sell it quickly for a less than market price
I had property in Dubai that doubled in value in the first year I had it (2006) of course I tried to sell it, but everyone else was buying property to flip for a profit, now 2017 I still can't sell it even for LESS than I paid 11 years ago - so yeh property is a great investment IF you can rent it and IF it does increase in value
Of course the over supply of property in Dubai was what made them go bankrupt in 2009
I had property in Dubai that doubled in value in the first year I had it (2006) of course I tried to sell it, but everyone else was buying property to flip for a profit, now 2017 I still can't sell it even for LESS than I paid 11 years ago - so yeh property is a great investment IF you can rent it and IF it does increase in value
Of course the over supply of property in Dubai was what made them go bankrupt in 2009
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The property bubble and sub-prime mortgages was epic in USA....
Many saw the rise in valuations and extended their debt to buy Hummers, holidays etc. and when the valuations declined they owed more than the property's value and many couldn't afford the mortgage re-payments. The banks foreclosed and they lost their homes....terrible times.
I believe that some areas of Canada and Australia may be facing the same situation soon, if not corrected. However, the banks there don't offer those toxic sub-prime mortgages so maybe that will save some.
http://business.cch.com/bankingfinance/focus/news/Subprime_WP_rev.pdf
"The current mortgage meltdown actually began with the bursting of the U.S. housing
“bubble” that began in 2001 and reached its peak in 2005. A housing bubble is an
economic bubble that occurs in local or global real estate markets. It is defined by rapid
increases in the valuations of real property until unsustainable levels are reached in
relation to incomes and other indicators of affordability. Following the rapid increases are
decreases in home prices and mortgage debt that is higher than the value of the property."
Many saw the rise in valuations and extended their debt to buy Hummers, holidays etc. and when the valuations declined they owed more than the property's value and many couldn't afford the mortgage re-payments. The banks foreclosed and they lost their homes....terrible times.
I believe that some areas of Canada and Australia may be facing the same situation soon, if not corrected. However, the banks there don't offer those toxic sub-prime mortgages so maybe that will save some.
http://business.cch.com/bankingfinance/focus/news/Subprime_WP_rev.pdf
"The current mortgage meltdown actually began with the bursting of the U.S. housing
“bubble” that began in 2001 and reached its peak in 2005. A housing bubble is an
economic bubble that occurs in local or global real estate markets. It is defined by rapid
increases in the valuations of real property until unsustainable levels are reached in
relation to incomes and other indicators of affordability. Following the rapid increases are
decreases in home prices and mortgage debt that is higher than the value of the property."
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I have a very stupid but serious question. Frist of all we do not live any where near jarkarta, in fact I guess we live about as far as you can get from Jakarta and still be in indonesia. We also dont live in a city but in a village.
Ok my question is , in the housing part of the forum they have houses listed from 1,700 USD to 14,000 USD per month ! Is this a true sampling of the market in Jakarta area ? I mean for that kind of money I can rent a house in San Francisco or New York. ( well maybe not for 1,700 ) .
Am I misunderstanding something about these ads ?
We pay about 200 USD per month for a very nice 2 bedroom 2 bath 2 story house with a great yard. We do not have a pool or a gym but live 3 blocks from the beach. We are paying a bule price but we are ok with that. We pay our rent once a year.
So are we lucky or are those prices in the housing section out of line?
Ok my question is , in the housing part of the forum they have houses listed from 1,700 USD to 14,000 USD per month ! Is this a true sampling of the market in Jakarta area ? I mean for that kind of money I can rent a house in San Francisco or New York. ( well maybe not for 1,700 ) .
Am I misunderstanding something about these ads ?
We pay about 200 USD per month for a very nice 2 bedroom 2 bath 2 story house with a great yard. We do not have a pool or a gym but live 3 blocks from the beach. We are paying a bule price but we are ok with that. We pay our rent once a year.
So are we lucky or are those prices in the housing section out of line?
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This is a good question, I'd like to know the answer too. I know where I live, there is the inflated asking price people ask because a neighbor down the road is trying their luck (they have heard about the high prices asked for by another neighbor) , and the real price people actually get.
The two prices can be pretty far apart - but it has led to a pretty sharp increase over the last few years.
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It's the same where I live but I'm in a city. Under US$200 per month for 4 bedroom, 3 bath in a secure private complex. 20 minutes to ocean, 40 minutes to untouched ocean front. No pool and don't want one. A gym? I have a yard and it's very private.
I doubt much of anywhere compares to Jakarta or it's surrounding areas like Bogor or Bandung for housing prices. Beyound me why anyone besides those that absolutely have to would live there. I can breath easier, my eyes don't spend days iffitated, I can just jump on my motor and go anywhere here and get there in 30 minutes or less. If I were forced to work in Jakarta and had my family with me, I would move them to a different city and just get a kost for myself in Jakarta. Don't really need to get that far away to have it better economically and more healthful.
Of course, those that get a free ride with their companies don't need to care. Those numbers are dwindling and the evidence is in the lowering of house rents. A lot of empty houses for rent in Jakarta and it's going to get worse.
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I'm currently in our apartment in Jakarta...thankfully I will return to Bali later today.
I know that, in our apartment block, there are numerous apartments for rent but the asking price is too high. My friend has two such apartments and he hasn't rented either for two years.
Big houses in the Pondok Indah area are also empty waiting for the oil/gas expat community to return and blow their big salaries on rent...fat chance!
I know that, in our apartment block, there are numerous apartments for rent but the asking price is too high. My friend has two such apartments and he hasn't rented either for two years.
Big houses in the Pondok Indah area are also empty waiting for the oil/gas expat community to return and blow their big salaries on rent...fat chance!
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I have a couple family members with vacant appartments in Poins Square. Have only had monthly renters from time to time. Been mostly empty for 2 years also. Do they think of lowering the price? No, they raise it every year just like many do that have empty houses and apartments. Now the terminal for the new mass transit rail or whatever it is, is being built at the base if them. Oooo, raise rent because with the terminal there, people will come and want to be close. Ah yeah, right.
You also need to remember that many of those large properties were purchased with some pretty dirty money and put in names of drivers, gardeners, housekeepers, whoever to hide the real buyer. They could care less if they rent them or not. The houses have little value, the property it sits on is what has the real value.
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Not so long ago I have seen an advert of apartment trivium in Cikarang on this forum. The yearly rental fee blew me away. For micro-size 56 m2 180 jt per year (nego of course but still). I know Lippo is trying to be the "premium space" seller but you have far better and more affordable options for rent in nearby Jababeka or Deltamas.
Yet the same "premium seller" is now building 100 towers meikarta and you can own your own apartment for 180 jt. (tiny maybe 25 m2 but still you own it). Meikarta complex and trivium is about 1-2 km apart. So much for being premium. Unless we talk about being "premium" sucker.
Yet the same "premium seller" is now building 100 towers meikarta and you can own your own apartment for 180 jt. (tiny maybe 25 m2 but still you own it). Meikarta complex and trivium is about 1-2 km apart. So much for being premium. Unless we talk about being "premium" sucker.
I feel the bubble may finally burst soon in Jakarta. I'm noticing about 4x more for sale signs up then a year ago. I know from friends in the property business that houses are not moving and the new apartments are definitely harder to sell (as they should be with the marked up prices and crappy building quality especially Lippos). I think the economy is not in as good a shape as the published numbers but that maybe finally because there is less of the unofficial economy anymore and that was probably the biggest driver of all of this for Indonesia.
This is the point I was trying to make on another thread - without causing offence. Someone was trying to sell an as yet unbuilt tiny 2 bed (55m2) apartment that won't be completed until 2022 for around $300,000
I stated that I would find it extremely unlikely that they would even get anywhere near $1,000 if they could even find a tenant - lets assume that they did miraculously rent it for $12,000 a year (very unlikely)
Now work out the rental investment return / yield etc - they would have to rent it for 25 years + to get their initial investment back (I am excluding any capital increase for arguments sake) and again that is assuming they could rent it every month for 25 years at $1,000 exc any costs for s/c, maintenance, etc etc etc
In reality such an apartment in today's prices and market, a 55m2 2bed apartment, assuming you can even find a tenant you would happy to get 8jt or 10jt a month max.
So now tell me why would I as a bule spend / waste / invest $300,000 of my money to buy a property here with these sort of numbers
I would rather waste $1,000 a month on a big 2bed or a reasonable 3 bed and have the flexibility to walk away with a couple of months notice and have $300,000 safely in the bank (making me 8% a year - which pays for my rent anyway!) in case we all get kicked out next week
Do you understand the numbers now? Yes it is a messed up scenario and demonstration, but sadly it is true, Jakarta is a renter's marker, not an owners market. Every big block, old and new, has dozens and dozens of empty units. A smart owner will spend a few million, clean, paint, modernise, and then rent out at whatever they can get. Any income is better than no income.
Expats in Indonesia would very unlikely commit to investing a huge amount on buying a property unless they have family, wives, etc and usually they buy land and build their own property anyway
Other expats get rent paid by company sometimes
The rest of them / us really are not so bothered about the fancy bits, we need somewhere to sleep, we are at work 100 hours a week then either away for business or on holiday. Better to have a decent unit in an older block, nice refurbished etc than waste thousands to stay in e.g four seasons residence when you are only there to use the bedroom.
Sorry to ramble on but every week friends asking me why I rent and don't buy and they don't understand my logic
On top of which, my $300,000 in the bank is making me enough interest to cover my rent anyway easily, with some to spare AND I still have my cash there, in the bank, 24/7, liquid and available and untouchable should the sh1t hit the fan
If I did buy a property, there are so many scenarios with which later on I could lose it - change of ownership rules and such
It is just not worth the risk for me (personally) to buy a property on the offchance it will double in value in 10 years and then I can try and sell it like 1000's of other people
This is precisely what happened in Dubai - over supply saturated a non existant market. $300,000 for a 2bed?
If you live on your own, or just with a working partner, once you are inside your apartment, and everything works, and is clean and tidy and modern and fresh, you can just imagine you are in the 4 seasons if you really want.
Anyway my point was / is not to be offensive to the owners trying to sell properties, just curious about their thoughts and business strategy. My post was fairly deleted on the thread / post in question, ironically that was an agent posting, not even the owner, trying to sell units in a development not even started yet due to complete in 5 years
So again, if you had $300,000 cash would you really buy a 55m2 2bed unit or would you keep it in the bank, get 8% a year interest ($24,000 a year) and rent a lovely 2bed for $12-15,000 a year instead and STILL have money left and STILL have your $300,000 in the bank?
Where is the logic?
Curhat finished. Lol
I stated that I would find it extremely unlikely that they would even get anywhere near $1,000 if they could even find a tenant - lets assume that they did miraculously rent it for $12,000 a year (very unlikely)
Now work out the rental investment return / yield etc - they would have to rent it for 25 years + to get their initial investment back (I am excluding any capital increase for arguments sake) and again that is assuming they could rent it every month for 25 years at $1,000 exc any costs for s/c, maintenance, etc etc etc
In reality such an apartment in today's prices and market, a 55m2 2bed apartment, assuming you can even find a tenant you would happy to get 8jt or 10jt a month max.
So now tell me why would I as a bule spend / waste / invest $300,000 of my money to buy a property here with these sort of numbers
I would rather waste $1,000 a month on a big 2bed or a reasonable 3 bed and have the flexibility to walk away with a couple of months notice and have $300,000 safely in the bank (making me 8% a year - which pays for my rent anyway!) in case we all get kicked out next week
Do you understand the numbers now? Yes it is a messed up scenario and demonstration, but sadly it is true, Jakarta is a renter's marker, not an owners market. Every big block, old and new, has dozens and dozens of empty units. A smart owner will spend a few million, clean, paint, modernise, and then rent out at whatever they can get. Any income is better than no income.
Expats in Indonesia would very unlikely commit to investing a huge amount on buying a property unless they have family, wives, etc and usually they buy land and build their own property anyway
Other expats get rent paid by company sometimes
The rest of them / us really are not so bothered about the fancy bits, we need somewhere to sleep, we are at work 100 hours a week then either away for business or on holiday. Better to have a decent unit in an older block, nice refurbished etc than waste thousands to stay in e.g four seasons residence when you are only there to use the bedroom.
Sorry to ramble on but every week friends asking me why I rent and don't buy and they don't understand my logic
On top of which, my $300,000 in the bank is making me enough interest to cover my rent anyway easily, with some to spare AND I still have my cash there, in the bank, 24/7, liquid and available and untouchable should the sh1t hit the fan
If I did buy a property, there are so many scenarios with which later on I could lose it - change of ownership rules and such
It is just not worth the risk for me (personally) to buy a property on the offchance it will double in value in 10 years and then I can try and sell it like 1000's of other people
This is precisely what happened in Dubai - over supply saturated a non existant market. $300,000 for a 2bed?
If you live on your own, or just with a working partner, once you are inside your apartment, and everything works, and is clean and tidy and modern and fresh, you can just imagine you are in the 4 seasons if you really want.
Anyway my point was / is not to be offensive to the owners trying to sell properties, just curious about their thoughts and business strategy. My post was fairly deleted on the thread / post in question, ironically that was an agent posting, not even the owner, trying to sell units in a development not even started yet due to complete in 5 years
So again, if you had $300,000 cash would you really buy a 55m2 2bed unit or would you keep it in the bank, get 8% a year interest ($24,000 a year) and rent a lovely 2bed for $12-15,000 a year instead and STILL have money left and STILL have your $300,000 in the bank?
Where is the logic?
Curhat finished. Lol
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Smart investors in Indonesia invest in land and not buildings. With a shortage of vacant land in Jakarta and surroundings, the land values will continue to rise as opposed to the developments which must fall at some stage given that supply exceeds demand.
Just a comment and I am aware it is not on the subject of this thread.
Just a comment and I am aware it is not on the subject of this thread.
I did mention that in my post actually - those that live here with family etc etc
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