(5/22/2010)
Expectations that the promised changes in property ownership rules in Indonesia would open wide the doors to expatriate property purchases appear to have been overly optimistic for those predicting a 1,000% increase in property sales to foreigners.
The Jakarta Post reports that the new regulations will only slightly loosen Indonesia's current absolute prohibition against foreign land ownership by limiting purchases of landed houses to foreign retirees. Indonesia's Minister of Public Housing, Suharso Monoarfa, confirmed that the new regulations now being prepared would allow retirees to finance up to 50% of a property purchase for a maximum repayment period of 3 years.
The Minister said that those purchasing an apartment for investment purposes would not be allowed to use bank credits to conclude a purchase, required instead to pay cash. Foreshadowing more confusion ahead for foreigners desirous of purchasing land in Indonesia, a property consultant from Cushman and Wakefield, Arief Rahardjo, warned that it will prove difficult to distinguish between those purchasing land for investment purposes and those seeking a personal residence.
Teguh Satria, Chairman of Real Estate Indonesia (REI), is apparently unhappy with the lack of opportunities the new rules will provide to foreign property purchasers. Saying the new rules are "unclear," Satria complained, "the criteria of elderly or retiree and the considerations behind the plan are not clear yet." He felt the low cost of property in Indonesia made cash purchases by foreigners easy, but questioned if those wishing to purchase an apartment for personal occupancy would be allowed three years credit.
The new regulations were rumored to allow for 70 years ownership for those foreigners allowed under the new regulations to purchase property in Indonesia. This now appears in question, with Satria saying the lease period tenure will not be for 70 years, as was originally hoped.
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