If you’re contemplating entering the Surabaya property market, this city presents a distinctive fusion of culture, opportunities, and natural beauty. This makes it an ever more enticing prospect for global real estate investors.
In this article, we will guide you with insights and tips to navigate the complexities of purchasing real estate in this vibrant city.
Property investment opportunities in Surabaya for foreigners
Surabaya is known as the second-largest city in Indonesia after Jakarta. The city has stable economic growth and significant potential for property investment. Surabaya is also recognized as a center for industry and trade, which has led to increasing demand for properties.
Some of the most promising areas for property investment in Surabaya include Gubeng, Darmo, and Rungkut. These three areas are strategically located business districts with easy transportation access.
The advantages of property investment in Surabaya
Starting property investment in Surabaya offers several advantages, among others are:
1. Second largest city in Indonesia
According to Ministry of Home Affairs data, Surabaya’s population reached 2.9 million in 2022, making it Indonesia’s second most populous city.
2. Metropolitan area in Indonesia
Gerbangkertosusila is the second-largest metropolitan area in Indonesia after Jabodetabek, covering an area of 6,673 km2 with a population of 9.9 million.
3. Business and industrial hub
Surabaya is renowned as a business and industrial hub, home to several major companies.
4. Educational hub
The city is home to prestigious public institutions such as Airlangga University and the Sepuluh November Institute of Technology (ITS).
5. Diverse rental property options
A wide range of rental properties, including residential properties in Surabaya, are available for residential and commercial purposes, catering to various investor preferences and budgets.
6. Comprehensive public and social facilities
Pakuwon Mall in Surabaya is the largest shopping center in Indonesia, surpassing those in Jakarta.
7. Good infrastructure
Surabaya is a major city with a network of toll roads connecting it to the surrounding areas.
Best place to invest property in Surabaya
Several strategically located areas in the Surabaya housing market offer enticing amenities that attract housing consumers.
1. Rungkut area
The Rungkut area benefits from the rapid development of the Middle East Ring Road (MERR). The area is dubbed as a new growth center in Surabaya.
2. Wiyung area
Wiyung attracts property hunters mainly due to its proximity to renowned shopping malls and excellent educational facilities like Unesa.
3. Gununganyar area
Neighboring Rungkut, Gununganyar, is also conveniently located near the Waru-Juanda Toll Road.
4. Citraland area
Citraland is in a favorable position as the Surabaya City Government actively promotes the West Outer Ring Road (JLLB) development.
5. Lakarsantri area
It offers a quieter atmosphere and convenient access to public facilities and toll roads.
6. Medokan Ayu area
It is also not far from MERR and is adjacent to the UPN Veteran Surabaya campus.
7. Mulyorejo area
Several prestigious universities in Surabaya surround Mulyorejo. The area can be a strategic neighborhood for those who want to reside with family.
8. Sukolilo area
Situated between Mulyorejo and Rungkut, Sukolilo is advantageous for property hunters.
9. Kenjeran area
Kenjeran is renowned for its attractive coastal and beach tourism. It also serves as the gateway to Madura Island, as the Suramadu Bridge connects it.
10. Gunung Anyar Tambak area
Located near the Tambak Oso Kali Estuary, the Gunung Anyar Tambak area benefits from easy access to Sidoarjo, Rungkut, and MERR.
How foreigners can buy property in Surabaya
A PT PMA is the safest and easiest way for foreigners to invest in Surabaya real estate. This foreign-owned company enables foreign investors to use their foreign funds for property investment in Indonesia.
It is worth noting that the PT PMA owns the property, not the individual who holds the PT PMA (which can be a foreigner). Moreover, PT PMA can also facilitate obtaining a residency permit, such as a Working KITAS or Investor KITAS.
Once PT PMA is established, it can apply for Hak Pakai and Hak Guna Bangunan licenses to purchase, construct, and use the property, which is essential for property utilization.
Steps for foreigner to buy property in Surabaya
- Establish a PT PMA (A notary, accountant, or visa agency can assist with this).
- Apply for the property certificate at the Indonesian National Land Office (BPN).
- Complete the payment and furnish evidence of payment.
- Verify that the conditions for Hak Guna Bangunan or Hak Pakai are satisfied.
- Request the building permit (PBG) to obtain construction rights.
- BPN will issue the property certificate in your PT PMA’s name.
Challenges to property investment
Albeit Surabaya offers several advantages for property investment, there are challenges that investors should be aware of:
1. Significant initial capital requirement
Investing in real estate demands a substantial initial capital outlay for property acquisition.
2. Unpredictable market changes
Market fluctuations can impact property prices and investment returns. Hence, investors need to closely monitor market developments and take appropriate actions in response to significant market changes.
3. Rental risks
For those investing in rental properties, it is essential to consider rental-related risks, such as tenants’ inability to pay rent and potential property damage caused by tenants, among other factors.
4. Unexpected additional costs
Additional expenses like repair costs, property taxes, insurance premiums, and other charges can add to the overall cost of property investment.
5. Government regulations and policies
Government regulations and policies can influence property prices and investment profitability.
Guide to Doing Business in Batam & Surabaya
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