Property Business Opportunities in Indonesia

Prospects of the property business in Indonesia, especially in Jakarta, classified Psangat bright. According to research Pricewaterhouse Coopers (PWC) and the Urban Land Institute (ULI), in 2013 in Jakarta, including the first order cities in the Asia Pacific region chosen for the investment property sector, defeating the city of Shanghai, Singapore, Sydney and Kuala Lumpur.
Jakarta also occupies the eleventh position on the world stage as a property investment destination. In fact, both institutions are projecting property market in Indonesia will enter the seventh world in 2021

Jakarta and surrounding cities become the main magnet of investment in the property sector because of a slowing economy in China and India, as well as start the property market opportunities in Japan and Australia. Indonesia's economic progress which continues to grow in the range of 6 percent per year also encourage foreign investors to invest in the property sector homeland. Even three developers from Australia, New Zealand, and Hong Kong became interested in targeting the property market in Jakarta and several cities in Indonesia.

Prospects of property in Indonesia is getting brighter due to the high number of requests compared to the number of supply. Currently there is a shortage house (backlog) of approximately 15 million units. The average occupancy requests each year to reach 700-800 thousand units, but the developers are only able to provide the maximum supply of 400 thousand units per year. With the existence of such inequality, the prospects of the property obviously still very good. Indonesia now has 50 million middle-class society, which 1,000 people of which have assets of over 300 billion. Property in Indonesia is also interesting because this country is a producer of natural resource potential is incredible.

On the other hand, the development of the property business in the country is considered too fast so that is feared to be a bubble (bubbles) which at any moment might break and cause property crisis, even the economic crisis. Bank Indonesia worried over the increasing credit in the property sector which is growing rapidly at 30% per year. However, business people consider the properties of the phenomenon is still limited to a relatively positive booming. They claim that the property market is being good-good or are in a boom period because of high demand. The price offered was still reasonable, even tend to be low compared to other countries in the Asia Pacific region.

From the data available, the property sector is still far from signs of experiencing a bubble, because the demand is still high, the supply is still limited, and the price is still within reasonable limits. Property loans ratio to total bank credit was 14%, far less than the 1998 economic crisis, which reached 21%. Non-performing loans in the property sector is still low, at less than 5%. In addition, the portion of the property in the form of mortgage loans more dominant (80%) than construction loans (20%). It is different with the current state of the economics crisis in 1998 in which it mondominasi construction loans (80%) compared with mortgages that only around 20%.

Mortgage ratio to Gross Domestic Product (GDP) is less than 3%, far below Malaysia, which reached 27%, Singapore 45%, and the United States 68%. Nevertheless, the government still has homework, the foreign ownership rules were not yet settled until today. Another issue that also must be resolved is the legal status of the land is often unclear and overlapping, and permits are still convoluted. Although the current prospects of the real estate business is booming, but prudence still needs to be prioritized in order not to happen destruction of the property sector, which could trigger the economic crisis as had happened in Indonesia in 1998 or in the United States in 2008.

In order to prevent the property crisis, Bank Indonesia (BI) to make regulations about the ratio "loan to value" (LTV) which will apply from 1 September 2013. The rules were intended to control mortgage (KPR) and Apartment Ownership Loan (KPA) in order not be used as a speculative tool that can harm the banking sector and the property sector. BI banned banks extra credit, such as credit advances, as well as limiting the granting KPR / KPA more than once for the same customers. Husband and wife will also be considered as a single debtor, unless husband and wife who have a separation agreement treasures.
BI is currently indicated activities began rampant property speculation tefutama for home purchases footprint size above 70 m2 that credit growth rate reached 45, l% as of April 2013. Many of the customers who got KPR / KPA more than one, there are even customers who got mortgages / KPA up to 12 housing units. The phenomenon needs to be suppressed to prevent property crisis and a banking crisis, and to prevent a surge in property prices that may reduce access to lower-class people to have a decent and affordable housing.
Banking consumer credit channeled to the property sector reached a total of Rp 263 triliundengan details: KPR area of ​​over 70 m2 of Rp 98.3 trillion in mortgages spacious 22-70 m2 of Ro 109.6 trillion, mortgage spacious 21m2 Rp 21.3 trillion, KPA area over 70m2 of 4.5 trillion.

With the LTV rule, consumer interest in buying property is expected to be reduced. Advances for KPR / KPA for the second and subsequent units will be set greater. For example, the first home mortgage down payment types specified above 70m2 30%, 40% second home, while the third house and beyond 50%. REI tried to anticipate LTV to encourage consumers to buy a house in cash (cash-installment) or in cash-direct (hard-cash).
In the 2009-2012, speculative property reaches 45% of the total pen] ualan property, while property investment activity reached 35%, and alsanya (20%) live alone by the end user. LTV policy considered too late because at this time the property has entered a period of slowdown in price increases. Moreover, the portion of the sale of upper-middle-class property is very little, which is only 30000-50000 units per year. In 2013-2014 is predicted to shift the composition of the purchase of the property, which is 30% speculation, investment of 45%, and end users 25%
The development of real estate business more rapidly with the progress of the Indonesian economy. Foreign investors are interested in investing in the property sector in the country, by buying the product properties or purchase securities of property companies nationwide. Local investors grabbing no less nimble investment opportunities in the property. Several explanations were offered regarding the advantages to invest in the property sector, one of which is due to ever-increasing asset values ​​of its properties with the passage of time.
Although there are still many problems that convolute the real estate business, but it does not diminish the interest of developers and contractors to continue to build housing and other property products in the country. Currently the community is also increasingly freely buy property products because of credit facility (KPR and KPA) offered by banks. The Government through the SMF has also issued Property Asset Backed Securities (ABS Property) which can be traded in the capital market.

With a very large population, Indonesia is a potential market for products marketing the property. The developers and contractors have managed to build a wide range of property products, such as simple houses, luxury homes, townhouses (town house), cluster homes, home store (shop), home office (home office), simple flats (rusunami, Rusunawa), apartment, condominium, condotel, hotel, hotel strata, motel, villa, modern shops (minimarket, supermarkets, hypermarkets, wholesalers, specialty stores), shopping centers (malls, plaza, square, trade centers, shops), superblock, offices, factories , warehouses, and others.
No property products destined for Upper-Income Communities (MBA), Middle-Income Communities (MBM), and the Low-Income Communities (MBR). The government provides low-income housing facilities, such as construction Cheap houses for Rp20-25 million per unit, and Rusunawa Rusunami development, and the provision of Housing Finance Liquidity Facility (FLPP). With FLPP, people can enjoy cheap mortgages flowering (less than 10% per year) and long term (15 years or over).

Source: http://memulaibisnisproperti.com/prospek-bisnis-properti-di-indonesia  

About Real Estate Agents

What is Real Estate Agents

A real estate broker or real estate agent is a person who acts as an intermediary between sellers and buyers of real estate/real property and attempts to find sellers who wish to sell and buyers who wish to buy. In Indonesia, The existence of property broker is very helpful for the sellers or buyers who want to buy, rent, and sell properties.

Types
There are 2 types of real estate agent
1. Real Estate Agent Freelance
2. Real Estate Agent Certified (Under the auspices of the company)

Comission
According to the regulations of the Minister of Trade of the Republic of Indonesia Number 33 / M-DAG / PER / 8/2008 concerning trade Intermediary Company Property determine the amount of commissions for real estate broker at least 2 percent of the transaction value. In the deal process of buying and selling rental houses, land, and other properties of certified real estate broker is usually the company sets the standard commission.
     * 3% for the selling price is less than or equal to 1M.
     * 2.5% for the selling price is greater than 1M to 3M.
     * 2% for the selling price is greater than 3M
     * And 5% to rent house

The difference between salespersons and brokers
Trade Minister R.I. Mari Elka Pangestu has issued regulation No. 33 / M-DAG / PER / 8/2008 concerning property brokerage. There are many things that stipulated in Decree No. 33 of 2008 is. Among others, the most important is that each brokerage firm must have a business license Intermediary Company Trading Estate (SIU-P4). The permit issued by the Director of Business Development and Corporate Registration Department of Commerce. SIU-P4 and every five years SIU-P4 should be listed.To get it, there are several requirements that must be met. Among other things, have at least 2 experts as head of the company and a real estate broker. All forms of companies can apply for SIU-P4, both PT, CV, cooperatives, firms, or individuals. So the traditional broker also be accommodated in this regulation.With the holding SIU-P4, each company must submit a report of activities of the company, such as annual sales, to the Director of Director of Business Development and Corporate Registration Department of Commerce, once a year.

Co-Broke

What does co-broke means?

The co-broke means an agent close a deal with another agent.

"Co-broking" is a term that has special meaning for those selling "by owner". First off, it is "co-broking," not co-brokering. As those in the field know, this refers to agents sharing a listing. For example, an office with a listing will "co-broke" with another office, which may have a buyer. If there's a sale, the agents will split the commission.

When it comes to selling "by owner", it is possible, even desirable, for you as the seller to co-broke your own property.

But, you may be wondering, how can I do this when I'm not an agent? The answer is that when you're selling "by owner", you're performing the functions of the listing agent (or, at least, you should be!). You've put a sign in front, you're advertising, you're taking phone calls, you're showing the property and on and on. Therefore, you can claim the equivalent of half the commission.

In a typical real estate sale where there's a 6 percent commission, the listing office gets half the commission (3%). The other half (the other 3%) goes to the selling office, the agency that produces the buyers. Your half is the same as the listing office's half, when you deal with an agent while selling "by owner" (source: http://www.owners.com/fsbo-articles/home-selling-tips/co-broking-your-property).

Terms in Properties

Some terms in properties in Indonesia
1. Primary = New House
2. Secondary = Second House
3. Owner = People who own a house
4. Buyer = People who buy houses
5. Broker = property agent
6. PPJB/SPJB = surat pengikatan jual beli (preliminary agreement before buying and selling)
7. SHM = sertifikat hak milik
8. Surat Girik/letter C = The certificate of ownership of the land / building of a district or village heads
9. Co-broking = an agent close a deal with another agent
10. AJB = Akte jual beli, proof of purchase and sale transactions of property made by a notary
11. HGB = hak guna bangunan, meaning that the land is owned by the government and can only be used within a certain time in the range of 20/30/40 years.
12. Hak sewa = Land owned by the government and must pay rent every year
13. NJOP = Nilai jual obyek pajak

Property Investment in Indonesia

Investment is something to invest to other instruments by expecting to get profits in the future. One of the investment which gets profit is an invesment property.The investment property such as land, bulidings which can be rented. Beside that, invesment property business also will get opportunities and challenge, the opportunities of the property price has incrased every year.

So, that bussiness has ensured profits.

And here, some advantages of investing in Property Sector
1. The risks are relatively small, there is not a no-risk investment, but property investment arguably more secure than financial investment instruments. Why? Because you can manage your own investments so that complete control in your hands. Of course the risks in the property investment remain, such as the possibility of damaged buildings, tenants are late paying the rent, and it remains to be anticipated.

2. Not overly affected by external factors, compared with financial investment instruments such as stocks or bonds whose value fluctuates influenced by political economic situation, inflation and interest rates, investments in property although also affected by external factors, but the changes are not going too fast. For example, house prices will not necessarily change overnight but need the to change from monthly to yearly.

3. Profit / big profit. Investments in property gives the opportunity to gain a very big advantage. Many world renowned entrepreneurs successful investing through the property. Especially for the property market in Jakarta, chances are very promising. In the financial education classes organized by Citibank some time ago, Luke Rowe of Jones Lang Lasalle Indonesia stated that the occupancy rate of commercial properties such as office buildings in Jakarta reached 90%, which led to rising rental prices had risen rapidly. Similarly, the residential property market and apartments at a purchase price in the range of $ 200000-250000 can be rented at a price Rp20-25 million per month. It will be able to gain revenue in the range of 8-10%. When compared with other major cities such as Singapore or Hong Kong, the price of rent in Jakarta is still much cheaper. Therefore, Luke Rowe assured that for at least 3 years, property prices in Jakarta will continue to rise and will not experience oversupply problem.

4. Can use other people's money to invest - this is one of the most attractive features of the investment property is the system allows us to use other people's money to finance our investments. Unlike other investments that will depend on how much cash you have, property investment can be done by paying an advance only 20-30% of the property price. If we invest in the stock market, such as stocks, bonds, mutual funds, or investment gold or artwork, everything will depend on how much cash we have. Meanwhile, property investment can be done only by 20-30% property prices. The rest can be financed through bank loans. The implication is that the same nominal money (eg Rp20 million) You can acquire property assets valued at 100 million, but if you buy other investments, the number of stocks / bonds / mutual funds / gold / artwork remains only Rp20 million. Thus, property investment provides greater opportunities and quick to double assets.

5. Income cash flow (cash flow) routine, the results of the rent, you can obtain a regular cash flow as revenue to ensure your financial stability. The more properties you have, the greater the cash flow you will receive.

Rules for Foreigners buying properties in Indonesia

Expatriate business people in Indonesia have rightful concern regarding land use and ownership rights for business purposes. Act No. 5 of 1960 regulates the umbrella law regarding rights over land ownership. The law covers some rights - mostly those to Indonesian citizens - namely rights of ownership (hak milik), building rights on land (hak guna bangunan), cultivation rights on land (hak guna usaha) and rights of use (hak pakai).

With the emergence of foreign investment and business in Indonesia, many foreign investors need buildings or land for their company. A foreign investor who wants to run their business in Indonesia can obtain building/office or land under these following rights:

Building Rights on Land

The right to build and possess a structure on land owned by others: The duration of right for the building is maximally 30 years, extendible for 20 years (article 30 Act No. by 5/1960). This right can be transferred to other persons selling and inheriting, who also can secure a loan, as a Hypothec Right.

Those who may obtain right-to-build deeds are Indonesian citizens and legal entities (such as a PT/limited liability company) established under Indonesian law and domiciled in Indonesia, either for 100 percent foreign-owned, joint venture or 100 percent Indonesian-owned companies.

Foreign investors who desire to establish their business in Indonesia can have their building/office under a "rights to build" deed for a stipulated period.

Cultivation Right on Land

This is a right to cultivate on state land for agriculture and farming enterprises. The duration is maximally 25 years, extendable for 35 years, and should be registered at the Land Register at the National Land Agency (Badan Pertanahan Nasional/BPN). As in Right to Build, Cultivation Rights can secure a loan by delivering the certificate of Cultivation Rights to the lender.

Indonesian citizens can own these rights, as can legal entities (such as PT/limited liability companies) established under Indonesian law and domiciled in Indonesia, either for 100 percent foreign-owned, joint venture or 100 percent Indonesian-owned companies.

Right of Use

This is the right to use and/or harvest from land directly owned by the state (rendered by authorized official government deed), or private land (by agreement with the owner of the land). This may be applied to land for use as a building site or for agricultural purposes. The transfer of this right must have local government authorization.

Right of Lease of Building

A person or Indonesian legal entity has rights to lease another's land. This right belongs to Indonesian citizens, foreigners, and legal entities (such as PT/limited liability companies) established under Indonesian law and domiciled in Indonesia or the representative office from a foreign legal entity. The leasee and the leaser can make an agreement to arrange it.

Hak Guna Bangunan vs. Hak Milik

Hak Guna Bangunan is only the right to use a building for a fixed period of time, which then has to be extended. The owner of Hak Guna Bangunan land is the Indonesian government. Meanwhile, only with Hak Milik do you actually own the land or the building. Hak Milik does need to be extended.

Purchasing Properties (Strata Title, Convertible Lease Agreement or indirect purchase)

By Indonesian law, a foreigner cannot own land in Indonesia but purchasing apartments or office space is possible through a strata title deed. The 1996 regulation (No. 41/1996) states that an expatriate who resides in Indonesia or visits the country regularly for business purposes can purchase a house, apartment or condominium, as long as it is not a government subsidized development. The title is only for right of use. In reality, the regulation No. 41/1996 is still somewhat unclear and no foreigner has actually been able to receive a strata title as a certificate of ownership. Despite this unclear legal ownership, foreigners sign a convertible lease agreement with property management companies or indirectly by using the names of an Indonesian citizen whom they have a separate agreement with.

Convertible Lease Agreement

One manner for a foreigner to proceed with property purchases, despite legal ambiguities, is to sign a Convertible Lease Agreement to purchase an apartment. Under the forgoing agreement, the foreigner may purchase the apartment, but the title is still held in the name of the developer or property management firm. This lease agreement is for a definite period.

The Convertible Lease Agreement states that, if and when the prevailing laws and regulations permit, the lessee becomes the legal owner of the apartment/strata title unit. Both the lesser and the lessee will be obligated to sign a deed of sale and purchase and the title will be transferred to the foreign owner.

If you are interested in purchasing a condominium through this type of agreement, investigate the property management company thoroughly. In the current economic downturn, many developers are bearing serious economic pressures and construction costs on many properties that have been delayed or canceled. Consult with a reputable lawyer to ensure that all legal implications are thoroughly covered.

Indirect Ownership

Another way to purchase a condo is in the name of an Indonesian citizen. But the person must be someone you really trust. The person would be the legal owner of the property according to the law.

Suggestion

It is strongly suggested that before making any property purchases or signing any property agreements, foreigners should consult bona fide lawyers that are experts in Indonesian property ownership to understand the legal status of the ownership and prevent any regrets in the future.

Source: http://www.expat.or.id/

How to choose a property for investment

For you are an investor who wanted to invest in property, this time we will inform about some tips that you can consider when choosing a property right field where if it were able to generate profits for you for the future. In this article we focus on the value is a return on an investment, just for more details the advantages and disadvantages of each well was land, apartments and houses.

1. Land Investment

Advantages:

• Its resale value will increase big enough, because we know that the price of land from year to year is always increasing.
• Only the costs for the treatment of very small
• Soil also does not require any insurance given the relatively safe investment.

Deficiency:

• Can not for rent, so a land investor can not obtain additional revenue from this investment.
• Difficult to use as collateral the bank
• If the land area of ​​the land area, it will also be difficult to resell because given infrequently, there are buyers who have a lot of money.

2. Apartement Investment
Advantages:

• The selling price of an apartment will be much higher than a house, it makes a lot of people prefer to buy an apartment with a strategic location rather than a strategic home.
• The apartment can we add to our revenue by way of rent it back.

Deficiency:

• For maintenance costs to be incurred relatively more expensive
• Its resale value relatively smaller than other types of investment house or land, this is due to the shrinking of the value of an apartment each year.
• The apartment we can not renovation. Usually not infrequently there is a problem with the owners of other apartments, such as the occurrence of a leaky pipe in the end we also need to be repaired apartment.

3. House Investment
Advantages:

• Although the resale value of its moderate, yet very promising. For the rise in house prices alone did we know is smaller when compared with the increase in land prices.
• A home will be easier to sell than the ground. So of course people will choose to buy a house instead of a land.
• We can make the collateral in the bank.
• The house can be utilized to increase monthly income by way of rent.

Deficiency:

• Sale value of a home is also shrinking each year.
• Require the funds to pay property taxes, so it is relatively more expensive than a land.
• There should also be a home to be insured for the sake of precaution, this will add to your expenses.