Top 5 Mistakes Foreign Investors Make in Indonesian Real Estate
Indonesia’s real estate market like Bali, Sumba, Lombok, Labuan Bajo, and Jakarta attracts foreign investors seeking high ROI and long-term growth. But without the right knowledge, many foreign investors fall into the same traps, losing time, money, and legal certainty.
This guide outlines the most common mistakes and how to avoid them with a fact-driven, strategic approach.
Relying on Verbal Agreements
Many foreign investors agree to land deals based solely on trust or verbal promises. This is a fast path to disputes. You must ensure:
All agreements are written and notarial
Land boundaries are clear
Payment terms are legally binding
Ownership or lease rights are documented
Verbal deals “based on trust” are the root of most property conflicts in Bali, Lombok, and Sumba.
Buying Land Without Checking Zoning
Indonesia’s zoning regulations (RTRW & RDTR) determine whether your land can be used for tourism, residential, or commercial development. Investors often buy beautiful land that cannot legally host:
Villas
Hotels
Restaurants
Resorts
Without zoning alignment, you cannot build or operate legally—no matter what the seller promises.
Not Performing Legal Due Diligance
Due diligence ensures your land or villa is legally safe. Skipping this step exposes you to risks like:
Overlapping certificates
Fake ownership claims
Hidden disputes
Undocumented heirs
Unpaid taxes
Professional due diligence protects your capital and keeps your investment legally clean.
Using Wrong Ownership Structures
Foreigners cannot hold freehold land (Hak Milik). Many investors still attempt to buy through local nominees—this is illegal and risky. Safer legal structures include:
PT PMA (for development & commercial use)
HGB under PT PMA
Hak Pakai for long-term residential use
Leasehold agreements
Choosing the right structure ensures compliance and long-term security.
Ignoring Long-Term Costs and Maintenance
Indonesia’s tropical climate means higher costs for:
Waterproofing
Structural repairs
Pool maintenance
Pest control
Road access improvements
Many foreign investors underestimate these expenses, lowering ROI and impacting operational profitability.
Conclusion
Indonesian real estate offers exceptional growth opportunities—but only for investors who approach it strategically. Avoiding these common traps ensures your investment is safe, profitable, and future-proof.
Want expert support with due diligence, zoning checks, and land acquisition? Request a free consultation with Indoned Consultancy.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
Foreign investors often rely on joint ventures to access Indonesia’s fast-growing market while staying compliant with local ownership rules. However, structuring a joint venture in Indonesia requires careful planning, legal
Indonesia’s real estate market attracts thousands of foreign investors every year—but strict land ownership laws mean that any illegal land purchase exposes foreigners to serious legal, financial, and criminal consequences.
Indonesia’s real estate market like Bali, Sumba, Lombok, Labuan Bajo, and Jakarta attracts foreign investors seeking high ROI and long-term growth. But without the right knowledge, many foreign investors fall
Hotel investments in Indonesia offer strong potential returns, especially in fast-growing markets like Bali, Lombok, and Labuan Bajo. But one mistake can result in legal disputes, project delays, or total
Indonesia’s tourism landscape is evolving fast, and two islands—Lombok and Sumba—are rising as premium investment destinations for hospitality, real estate, and lifestyle businesses. Both offer stunning landscapes and growing demand,
prev
next
INDONED CONSULTANCY
The Indoned Team is committed to driving societal change and promoting environmental sustainability. Working in innovative ways with government, non-profit organizations, and civil society, we are designing and delivering solutions that contribute to a sustainable and prosperous future for all.
