The Growing Potential of Property Investment in Surabaya

In 2023, the Indonesian property investment market is expected to continue its growth trajectory. The growth will be driven by urbanization, population growth, and increasing demand for housing and commercial properties. 

Therefore, to gather more market, the Indonesian government shift the focus to promoting foreign investment. Infrastructure development initiatives and economic policies around the new direction will likely create new opportunities for property investors. 

The Indonesian property market is diverse. It offers investment opportunities in both residential and commercial sectors, with the potential for high returns.

However, to succeed, investors must also understand the challenges, such as regulatory changes, inflation, and market volatility. 

Property Investment Has Great Potential in 2023

Despite the downturn global economic forecast for 2023, Indonesian property industry players remain optimistic and confident about the sector’s growth. 

Many developers in Indonesia are launching new projects, believing their business will grow positively next year through various breakthroughs and new initiatives. 

The Head Economist of PT Bank Central Asia Tbk (BCA), David E. Sumual, stated that the government would maintain positive economic growth trends. As a result, some investment instruments, such as gold and property, are expected to increase. 

The Rising Demand for Property in Indonesia

The Commercial Property Demand Index in the second quarter of 2022 also rose by 1.58%, giving confidence that the property sector will continue to grow. 

Epic Property Founder & CEO M. Gali Ade Nofran said that housing is a primary need, and there is still a significant demand for it. 

He added that over the last 40 years, 90% percent of Indonesia’s upper-middle-class population’s wealth came from property ownership. Therefore, investing in property is crucial to protect wealth from inflation.

Read more: The Ultimate Guide to Property Investment in Bali

Indonesian Property Sector Thrives with Government’s Continued Support

The Ministry of Public Works and Housing (PUPR) continues its Program Sejuta Rumah or One Million Houses program. It functions to support the growth of the real estate sector in Indonesia. 

With continuous support, the ministry hopes that it will lead to the innovation of housing schemes to address the backlog of housing for low-income communities. 

According to Mohammad Zainal Fatah, the Secretary-General of PUPR, the One Million Houses initiative is a joint effort involving all housing stakeholders. It has led to the construction of 6.9 million housing units since 2015. 

Initiatives To Support The Market

To support housing provisions for low-income communities, PUPR has implemented several initiatives, including using conversion funds to accelerate the construction of low-income housing and establishing the Affordable Green Housing Program. 

In addition, the ministry has developed information systems to synchronize data and facilitate monitoring construction and developer information. 

As a vital collaborator of PUPR, REI has played a crucial role in advancing subsidized housing development in Indonesia. From 2015 to 2022, REI members constructed 47% of all units, underscoring their significant contribution to this effort.

The government targets to finance 220,000 housing units through the FLPP program and 10,000 units through Tapera in 2023, with Subsidized Down Payment Assistance and Subsidized Interest Rate Assistance also available.

Surabaya is Implementing Million Houses and SKBG Programs

The Surabaya government is one of the city officials that remains committed to delivering cost-effective high-rise residential units.

It is there to prove to its constituents to achieve this objective by implementing SKBG. Developers also utilize this opportunity to attract investors into the residential and property sector by collaborating with the Surabaya Government. 

Using the SKBG alternative, developers can use the city government’s land to erect flats under a land lease system for 60 years, which may be extended for up to 30 years, provided that the technical service verifies that the building remains viable.

Likewise, as consumers, the public need not be concerned since the Sarusun SKBG serves as evidence of lawful building ownership protected by the law. It may also serve as collateral for banks.

What Is Surat Kepemilikan Bangunan Gedung (SKBG)?

In celebration of National Housing Day 2022, the Ministry of Public Works and Public Housing (PUPR) organized a National Seminar with the aim of “Realizing Dream Dwellings in SKBG-Owned Rusun in Urban Areas” on Thursday (18/8/2022) at the Auditorium Building of the Ministry of PUPR.

The Ministerial Expert of PUPR for Technology, Industry, and Environment pointed out that the growing population and escalating land prices necessitate efficient land use through vertical means.

In response to this concern, a Building Ownership Certificate Instrument (SKBG) has been established for flats (Sarusun) to provide affordable long-term residency options for individuals.

Iwan Suprijanto, Director General of Housing, explained that the SKBG Sarusun is a new legal framework to provide proof of ownership of dwelling units designed explicitly for MBR.

Through this program, development actors can rent government-owned land in State/Regional Property (BMN/D) for a lease period of 60 years to construct flats with their participation and involvement.

Once the flats are erected, they are sold to low-income communities (MBR) with the issuance of an SKBG, which serves as proof of ownership for the unit without ownership of the land.

Program Sejuta Rumah 

As per records, the One Million Houses Program has exceeded 1,060,486 units nationwide in Indonesia. 

Iwan elaborated that this milestone encompasses 787,215 houses for low-income communities (MBR) and 273,271 for non-MBR groups, with various locations across Indonesia.

How InCorp Indonesia Can Assist

InCorp Indonesia (formerly Cekindo) offers guidance and assistance for land and property ownership and company registration to support businesses and potential investors seeking to benefit from the fresh opportunities presented in this industry.