Indonesia will next week draft new rules that allow foreigners to own luxury apartments as the country seeks to bolster economic growth.
The government plans to set conditions, including size restrictions, on purchases of real estate by non-Indonesians with the new rules to be effective in two to three months, Sofyan Djalil, the coordinating minister for economic affairs, said in Jakarta on Thursday. Currently foreigners aren’t allowed to own property in Indonesia.
Southeast Asia’s largest economy has erased taxes on luxury goods and lowered minimum down payments for homes and automotive purchases to revive growth from a five-year low. House prices rose 5.24 percent last quarter from a year ago, the least since 2012, central bank data show.
“If people from developed nations want to retire here or spend their winters here, then that will create jobs and boost spending power,” Djalil said. “It will make the property market live again.”
Foreigners can get around the law by using local citizens as proxies or by structuring the purchase as a long-term lease. Some developers sell properties with a 100-year lease.
The government will allow foreigners to buy only luxury apartments and no landed property, he said. The ministry will coordinate with the immigration and tax offices in drafting the rules, citing Malaysia as an example.
The relaxation will benefit developers with exposure to high-rise projects, including PT Lippo Karawaci, PT Lippo Cikarang, PT Intiland Development, PT Agung Podomoro Land and PT Ciputra Property, according to a June report by PT RHB OSK Securities Indonesia.