Most Profitable Types of Property to Invest in Indonesia

May 30, 2025

Most Profitable Types of Property to Invest in Indonesia

Indonesia’s property market has gained serious traction in recent years, thanks to a fast-growing middle class, increased foreign interest, and a thriving tourism industry. From luxury villas in Bali to high-rise apartments in Jakarta, real estate opportunities are booming. But not all properties offer the same return on investment (ROI). So, what types of property are worth your money in Indonesia?

Here’s a breakdown of the most profitable property types you should consider.

1. Vacation Rentals in Bali

Profitability: High (12–20% annual ROI)
Bali remains Indonesia’s crown jewel for short-term rental income. With a steady stream of international tourists, remote workers, and digital nomads, there’s constant demand for stylish villas and modern apartments, especially in hotspots like Canggu, Seminyak, and Ubud.

Platforms like Airbnb and Booking.com make it easy to list properties, and yields can be extremely high during peak seasons. The key is location, quality, and amenities. Think private pools, contemporary design, and walkable access to beaches or cafes.

Risk Factor: Moderate — heavily dependent on tourism trends and international travel policies.

2. High-Rise Apartments in Jakarta

Profitability: Moderate to High (6–10% annual ROI)
Jakarta is the business and financial hub of Indonesia. With a population of over 10 million and a dense urban core, high-rise apartments are a staple investment for long-term leasing to white-collar professionals, expats, and students.

Areas like SCBD (Sudirman Central Business District), Kuningan, and Menteng offer the highest rental returns. Investing in well-managed buildings with strong amenities (security, gyms, pools) attracts stable tenants and ensures consistent cash flow.

Risk Factor: Low — Jakarta's real estate is relatively stable, though traffic congestion and oversupply in some zones can impact rental prices.

3. Commercial Shophouses (Ruko)

Profitability: High (7–15% annual ROI)
Shophouses, known locally as ruko, are a hybrid of commercial and residential property. They’re especially profitable in dense urban or suburban zones where small businesses thrive—think local cafes, convenience stores, beauty salons, and online retail pick-up points.

With Indonesia’s booming SME (small and medium enterprise) sector, these properties are often in high demand. Tenants usually sign long-term leases and handle their own interior fit-outs, reducing costs for the landlord.

Risk Factor: Moderate — location is everything; off-street or low-traffic areas may sit vacant for long periods.

4. Landed Houses in Surabaya and Bandung

Profitability: Moderate (5–8% annual ROI, plus capital appreciation)
Outside Jakarta, cities like Surabaya and Bandung are emerging investment hotspots. Landed houses in these cities cater to a growing middle class and offer solid rental income along with good appreciation potential.

They’re especially attractive for investors looking for lower entry points compared to Jakarta or Bali, and they can often be used for mixed purposes—residential, home-based businesses, or boarding houses (kosts).

Risk Factor: Low to moderate — less rental turnover risk but slower liquidity compared to apartments.

5. Boarding Houses (Kosts) for Students and Workers

Profitability: High (8–15% annual ROI)
Kosts are small-scale rental units, often with shared amenities, that cater to students, blue-collar workers, and low-to-middle-income tenants. They’re typically located near universities, industrial zones, or transit hubs.

A well-run kost with multiple units can yield high returns thanks to volume-based income. Costs to build or convert a property into a kost are relatively low, and demand remains stable in urban areas.

Risk Factor: Moderate — managing tenant turnover and maintenance can be labor-intensive unless handled by a property manager.

6. Industrial Warehouses and Logistics Hubs

Profitability: Very High (10–18% annual ROI)
The rise of e-commerce in Indonesia has supercharged demand for warehousing and last-mile delivery spaces. Locations near Jakarta, Tangerang, and Bekasi are especially lucrative for this type of investment.

Tenants are usually corporations with long-term contracts, meaning fewer headaches for landlords. However, the initial capital required is significantly higher than residential investments.

Risk Factor: Low to Moderate — high entry costs but long-term contracts provide stable income.

Key Considerations Before You Invest

  • Legal Restrictions for Foreigners: Indonesia has regulations on property ownership for foreigners. Typically, foreign investors go through leasehold titles or set up a PMA (foreign-owned company). Always consult a local legal expert.

  • Due Diligence: Title clarity, zoning laws, and development regulations vary regionally. Work with reputable agents and lawyers to avoid scams or surprises.

  • Property Management: Especially for rentals, having a good local management team can make or break your ROI. Don’t underestimate this.

  • Market Timing: Property cycles are real. Monitor local economic indicators, interest rates, and tourism trends to decide when and where to invest.

Final Thoughts

Indonesia is full of real estate potential—if you pick the right kind of property in the right place. Whether you're in it for high-yield vacation rentals or stable commercial leases, the country offers a diverse range of opportunities that fit different risk appetites and investment styles.

If you’re ready to invest, start by narrowing down your goals: cash flow, appreciation, or both. Then focus your search on high-demand areas and property types with a proven track record. The Indonesian real estate market isn’t just growing—it’s maturing. And with smart choices, you can be part of that growth.


Popular Feeds
Categories