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Is Now the Best Time to Get in on Lombok Property?

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When it comes to investing in property in Indonesia, Bali is often the most common choice. That said, people are starting to look elsewhere for a more efficient alternative.

Another promising development lies in an island east of Bali and west of Sumbawa. Lombok has been steadily gaining traction over the past few years, so you begin to wonder: is now the time to invest in Lombok property?

When Indonesia Expat  interviewed Jean-Marc Reynier, the founder and CEO of Naga Indo Investment Limited in 2015, Silk Air had just requested a direct route from Perth to Lombok – an indication that the world was taking notice of this travel destination.

On the potential of the property development industry, particularly in South Lombok, the Frenchman had this to say:

“Lombok has for too long been in the shadow of Bali, just 40km away. However, Bali has reached a tipping point where mass tourism dictates uncontrolled and polluting developments. Five years ago, the Gilis in northwest Lombok started their boom and now it is spreading across South Lombok. The opening of the international airport and the government’s commitment to building infrastructures in a more civilized manner offer bright prospects.”

Two years later and a spike in global interest cannot be denied. In fact, efforts to make West Nusa Tenggara (NTB) especially Lombok Island as a favourite destination for tourists and investors continues to be initiated.

South Korean airlines Korean Air, Jin Air and Hanjin Travel have began exploring opportunities to open direct flights from Incheon to Lombok. As reported by Bisnis, representatives from the airline companies met with NTB Deputy Governor Muhammad Amin to express their interest in launching low-cost carrier services, which will be initiated by charter flights before introducing scheduled flights.

Amin has welcomed the plan and told local officials to monitor and facilitate the planned direct flights.

Also, according to Suarantb, the number of Muslim tourists to NTB increased by 20 percent this year. After declaring itself as a halal tourism destination, the NTB government kept on aggressively promoting to attract more Muslim tourists. This is evident in the increasing number of tourists who visit the District of North Lombok.

Aside from the focus on tourism, Lombok has also been included in the government’s programme to develop 10 new cities and improve their respective infrastructures.

The new city in Lombok, West Nusa Tenggara (NTB) namely Bandar Kayangan in North Lombok Regency is still being developed.

“One of the main factors in the development of new areas is the development of road connectivity,” said Rido Matari Ichwan, Head of Regional Infrastructure Development Agency (BPIW) KEMENPUPR, as quoted from Detik.

He adds that “the width of the road to the Bandar Kayangan area needs to be improved because most still have a width of 7 metres.”

Geographically, Bandar Kayangan is one of the world’s strategic trajectory locations. Therefore, the development of this new city can be directed as an industry strategy and trade between nations that come from other countries.

Is Lombok an up-and-coming resort investment frontier?

This was the question raised in an article by The Edge Property in 2016. Lombok can hold its own against tourism giant Bali with its pristine waters, lush greenery, great hiking trails and its reputation as a prime surfing spot.

The managing partner of Indonesian resort developer Selong Selo Group, Andrew Corkery, first saw the island’s potential as a resort destination in 2009 when he visited with his business partners. He said they felt Bali has “become saturated and commercialized.”

Lombok saw a boom in domestic tourism of 32 percent in 2012. And the previous years of 2008 to 2011 had a consistent growth in arrivals.

Lombok

Lombok is becoming more popular with foreign tourists | Photo Courtesy of Atoll Haven

According to the report by the Central Statistics Agency (BPS) in 2016, Lombok is becoming more popular with foreign tourists. During the first three months of 2016, a total of 18,702 foreign tourist arrivals through Lombok International Airport was recorded.

Jean-Marc Reynier points out the big change he has noticed in the property market in Lombok and the Gilis saying more mid-scale businesses are entering the market as well as a few boutique hotels; many coming from overcrowded Bali.

He then adds: “this has attracted much attention from expatriates across Asia seeking a holiday home destination at a fraction of Bali’s prices.” According to him there are two kinds of investors – those looking for pure investments and those looking for a family home.

Should you go for it?

It’s inevitable that foreign investors would be wary of investing in Indonesia for several reasons – the economy being one of them.

When asked if Lombok is a safe region to invest in, Reynier responds, “Emerging markets carry more risk than developed ones but the return goes with it. Expect a 30 percent net return a year. If you perform with proper due diligence and you have the right team around you, you will be safe.”

Despite the fact that Lombok isn’t as highly developed as Bali yet – considering its lack of diverse shopping, dining and recreation sites – it still has its own perks and charm.

Reynier enumerates the positive aspects of investing in property development in Lombok such as having an international school, international standard hospital, an international airport close by – and pure beauty. To many, Lombok is among the top ten most beautiful places in Asia.

Bali may be its superstar neighbour, but Lombok’s low-key grandeur silently calls out to anyone willing to take a chance.

Article from indonesiaexpat.biz Jun 05, 2017

 

Dubai to Lombok Direct With Emirates Airline

Lombok International Airport has been granted the status to allow overseas visitors visa free entry from 159 countries around the world. This is huge milestone and shows the Indonesian government's commitment to promoting the tourist industry in the region and encouraging investment and development opportunities in the West Nusa Tenggara.

After the Hospitality Investment Conference 2016 in Jakarta, The Dubai based Emirates Airlines announced it is to start flights form Dubai to Lombok "within a few months". This will make Lombok accessible in two flights from any global city serviced by Emirates or their partner airlines. Best of all this is a huge boost for Lombok's tourist industry and will spur other airlines to make the same commitment.
source: Jakarta Globe


Foreigner Property Ownership Regulations Being Drawn Up

Jakarta Globe 28/6/15
Jakarta. Foreigners living in Indonesia will be able to secure the “Right to Use” property in the country for as long as they live under a newly planned state policy, according to a government official.

Minister for Agrarian Affairs and Spatial Planning Ferry Mursyidan Baldan revealed that his office had been tasked with drafting a new regulation on the matter.

“The regulation will include details on ownership periods, requirements, and rights and obligations of expatriates who will be granted the right to purchase and own property in Indonesia,” Ferry said in Jakarta last week.

He added, however, that foreigners would only be allowed to own luxury apartments; they are still prohibited from purchasing landed property or low-cost apartment units.

Foreigners also will be only entitled to “hak pakai,” or the Right of Use; not “hak milik,” the highest form of ownership in Indonesia, or Freehold. The Right of Use is permanent and will not have to renewed every 25 years as specified in the current regulations.

“The state allows foreigners to own living spaces in Indonesia for as long as they live, and they’ll be able to trade the properties or pass them down to their children. [Ownership] is classified as Right of Use, though. It will not be Freehold,” Ferry said.

Freeholds are permitted for foreign embassies operating in the country, he added

The minister further said he disagreed with the proposal of a “zoning” regulation in the planned policy, which would allow foreign nationals to own property in certain areas of the country.

He pointed to the capital, saying foreigners would only be interesting in purchasing apartments in Kemang or the Central Business District areas of South Jakarta.

“Foreigners wouldn’t want to buy apartments in, say, Kebon Jeruk [West Jakarta] and other areas. It’s useless to limit the areas where they can purchase [a piece of property].”

The draft regulation will replace a 1996 government regulation on foreign ownership of properties in Indonesia, and is expected to be complete by the end of the year, Ferry added

Finance minister Bambang Brodjonegoro earlier said that the government would allow foreigners to own property in Indonesia, but they would be restricted to luxury apartments that cost at least Rp 5 billion ($375,000) per unit.

The decision was made after President Joko Widodo met with officials from property group Real Estate Indonesia (REI) last Tuesday.

Presidential spokesman Teten Masduki said Joko had approved the suggestion from REI officials to support the domestic property sector following the slowdown of Indonesia’s economy. The policy is also expected to bolster the confidence of developers in staying competitive in the regional market.

Property developers have welcomed the plan. Rudy Margono, president director of private developer Gapura Prima said the new policy could boost property growth by 20 percent.

Property observers like Ali Tranghanda, however, expressed concerns that the regulation would only trigger a property bubble if not handled carefully, pointing out the absence of an instrument to control land prices in Indonesia.

“I am concerned that if the market is fully open, we will have a property bubbles within five years,” he warned.

The Indonesian expatriate community, meanwhile, seems skeptical of the reported plan, with some saying the proposed Rp 5 billion benchmark was too high and others claiming the policy is no different from a changing lease scheme.

“In the short run, economy gets a boost from new construction; in the long run, [price of] land in high-rise zoning [areas] skyrocket and the adjacent real estate will follow suit. Yes, most low-income earners will be further marginalized,” one opponent of the proposed policy commented on Facebook.

“Perhaps what [the government] means is legal ownership of property by foreigners… Foreigners have already purchased many plots of land in Bali,” tweeted another.

“If foreigners are allowed to own property in Indonesia, it will be no different from pawning off the nation’s sovereignty. Where will they send the locals to??” another commenter posted on Twitter.

Vice President Jusuf Kalla, however, defended the planned policy, saying last week: “There are a lot of foreigners working in Indonesia now… some have been working well, some have been developing businesses. It is normal for them to purchase, instead of continually leasing properties,” Kalla said.

Investment Coordinating Board (BKPM) head Franky Sibarani, meanwhile, said foreign purchases of properties should be encouraged in eight special economic zones, or KEK, currently under development in Indonesia.These include: Sei Mangkei in North Sumatra; Tanjung Api-Api, South Sumatra; Tanjung Lesung, Banten; Mandalika in West Nusa Tenggara; Maloy Batuta Trans Kalimantan, East Kalimantan; Palu, Central Sulawesi; Bitung in North Sulaewesi; and Morotai, North Maluku.

“We fully support the policy, but all we ask is for it to apply to special economic zones, particularly those designated for tourism, in order to guarantee investment in those regions,” Franky said, as quoted by cnnindonesia.com.


FOREIGNER PROPERTY OWNERSHIP IN INDONESIA

Jakarta Globe 25/6/15
Jakarta. Developers have applauded the government’s planned policy that will allow foreigners to own properties in Indonesia as they say it will bring more opportunities to the property sector, which is facing sluggish growth.

Iwan Sunito, chief executive officer of Crown Group, said the new policy would boost developers from national to global players. Foreign ownership could help expand the market to international buyers amid economic slowdown.

“The developers had only been focused on the domestic market. When the economy is weakening, the property market is impacted and shows a decline.

“With the new market for foreigners, it will encourage developers to have more developments with international standards.”

Still, Iwan warned the government to keep an eye on the policy’s implementation to secure local property prices.

Finance minister Bambang Brodjonegoro said on Wednesday that the government would allow foreigners to have property in Indonesia, but would restrict it to luxury apartments that cost at least Rp 5 billion per unit. His ministry is currently working on revising the 1996 government regulation on foreign ownership of property.

The decision was made after President Joko Widodo met with officials from property association Real Estate Indonesia (REI) on Tuesday.

President Joko Widodo’s spokesman Teten Masduki said that the president approved the suggestion from REI officials to support the domestic property sector following the slowdown of Indonesia’s domestic economy. The policy is also expected to bolster the confidence of developers to compete in the regional market.

Rudy Margono, president director of private developer Gapura Prima Group, also welcomed the new policy, which he said could boost property growth by 20 percent.

“We hope the regulation will arrange that foreigners can only own property that is more than 100 square meters and located above the second floor of the apartment,” he said on Wednesday.

Director of Megapolitan Development Desi Yuliana said he expected the government to complete the regulation as soon as possible.

“If the regulation is put into effect the sales of Megapolitan property will increase whether [the projects] in Cinere, Depok of West Java, Karawaci in Tangerang and Bogor in West Java,” she said.

Amran Nukman, the head of REI’s Jakarta branch, said the new regulation was important because Indonesia will be entering the Asean Economic Community in the next six months.

He claimed that if the government did not allow foreign ownership, Indonesia’s wealthy people would buy properties overseas due to the high return of investment. The result would be no additional flow of investment to Indonesia that would ultimately impact on economic growth and property sector.

The regulation will have multiplier effect on property’s supporting industries, such as cement, ceramics and also the construction work force.

Separately, Andi Rukman Karumpa, secretary general at the Indonesia Builders Association or Gapensi, said the new policy would help boost the construction market, which he said will be “even sexier.” The construction sector is one of 138 industries related to property.

Before the government announced the policy, Andi said, the construction market was projected to grow 14.26 percent, or about Rp 446 trillion, this year following the government’s plan to accelerate infrastructure development.

Indonesia’s construction market was valued at $267 billion last year, the fourth biggest in Asia after China ($1.78 trillion), Japan ($742 billion) and India (427 billion).

However, property observer Ali Tranghanda said the regulation must contain clear restrictions, such as on zoning and price. The government must also limit the ownership to apartments, not landed property, he said.

Ali added that there was no instrument to control land price in Indonesia such as land banks, which should be of concern.

“I am concerned if the market is fully open, we will be in the property bubbles state within five years,” he said.

Investor Daily & GlobeAsia

 

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