Indonesia’s Real Estate Market in 2025: Between Mega Projects and Global Interest
By Olivia Rumi | Forbes Contributor
July 1, 2025
As Indonesia enters a new economic chapter with the relocation of its capital to Nusantara, the country’s real estate sector is witnessing one of its most dynamic periods in recent history. From luxury developments in Bali to the master-planned megaprojects of Kalimantan, domestic and international investors are eyeing opportunities across the archipelago.
Strong Fundamentals Despite Political Transition
Despite a major political transition in early 2024, investor sentiment in Indonesia’s property sector has remained bullish throughout the first half of 2025. According to the Indonesian Real Estate Investment Forum (IREIF), real estate investments surged by 11.7% YoY in Q1 2025 — with over 40% of funds directed toward residential developments and another 35% toward commercial infrastructure around Nusantara.
“Indonesia is undergoing a once-in-a-generation shift in urban development,” says Andreas Liem, CEO of PT Artha Capital. “The appetite for high-quality mixed-use projects is growing exponentially, especially in second-tier cities and new economic corridors.”
Nusantara: The Catalyst for Mega-Urbanization
The $34 billion relocation of Indonesia’s capital from Jakarta to Nusantara, East Kalimantan, has become the single largest driver of construction activity in the country. Developers such as Ciputra Group, Pakuwon Jati, and Sinar Mas Land have secured strategic land banks within the new capital zone.
Key developments in Nusantara include:
• A 300-hectare smart city project led by Ciputra Development
• Luxury residential clusters by BSD City (Bumi Serpong Damai)
• Government-backed green infrastructure projects aimed at achieving carbon-neutral targets by 2045
Bali and the Rise of Boutique Investment
While institutional players focus on Kalimantan and Jakarta’s urban periphery, private investors are turning to Bali — especially in Canggu, Uluwatu, and the less saturated Padonan and Tabanan regions.
According to Seven Stones Indonesia, Bali’s residential real estate prices grew 16% YoY as of June 2025, outpacing even Jakarta’s high-end condominium market. The introduction of simplified property ownership structures for foreigners and the rise of remote work continue to fuel this demand.
“Bali has shifted from a vacation market to a lifestyle and capital investment destination,” says Michelle Tan, regional director at Colliers Southeast Asia. “We’re seeing digital entrepreneurs and mid-sized funds entering at a pace we haven’t seen before.”
Foreign Ownership Reforms Fueling Growth
In late 2024, the Indonesian government implemented reforms to attract more foreign direct investment (FDI) in the real estate sector. These include:
• 30-year leasehold extensions with automatic renewal clauses
• Streamlined IMB (building permits) and PT PMA structures for property buyers
• VAT exemptions on new homes under IDR 2 billion (~$125,000 USD) until December 2025
These policies have helped stabilize the mid-market residential segment, particularly in Greater Jakarta and Surabaya, despite the central bank holding interest rates at 6.25%.
Smart Real Estate, ESG, and Proptech
Indonesia is also becoming a testing ground for proptech startups and ESG-integrated projects. In Jakarta, green-certified commercial towers and co-living models are becoming mainstream. Meanwhile, in Nusantara, developers are embedding smart water systems, solar grids, and carbon-credit tracking into their infrastructure from day one.
Startups like Urbanova and TerraBumi are leading the charge, with over $70 million in venture capital raised between them in the past 12 months.
Looking Ahead
As Indonesia’s middle class expands and urbanization accelerates, the real estate sector is set to play a defining role in shaping the nation’s long-term growth trajectory.
Top 3 Trends to Watch in 2025–2026:
1. Capital appreciation in Bali’s inland zones (e.g., Tumbak Bayuh, Seseh)
2. Co-investment platforms for foreign buyers (fractional ownership, tokenized assets)
3. Decentralized smart urban hubs beyond Nusantara — including in Sumatra and Sulawesi
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Indonesia’s real estate renaissance is no longer a future vision — it’s happening now. For investors with a long-term mindset, the archipelago offers more than just tropical sunsets. It’s an open invitation to help shape the cities of tomorrow.