Singapore’s recent decision to double the additional buyer’s stamp duty (ABSD) by 60 percent on property purchases by foreigners has the potential to stimulate Indonesia’s property market, offering a promising opportunity for local developers.
Marine Novita, the Country Manager of Rumah.com, highlighted the significant increase in property taxes in Singapore, rising from 30 percent to 60 percent.
This policy shift presents an advantageous moment for Indonesian property developers to attract foreign buyers.
Marine emphasized the importance of capitalizing on this opportunity, stating, “We should make the best use of this chance, considering that stamp duty in Singapore has surged by 60 percent. This can be instrumental in luring foreign buyers to Indonesia, thus boosting the economy,” Marine shared during a press event in Jakarta on Tuesday (16/5/2023).
The recent adjustment in Singapore’s customs duty rates, enacted on April 27, 2023, aims to stabilize the residential property market by curbing soaring prices and ensuring local residents can still afford homes. Singapore’s real estate sector has long been viewed as a safe investment haven for foreign investors.
Consequently, the government decided to double the stamp duty for foreign homebuyers, effectively increasing the tax rate from 30 percent to 60 percent.
While purchasing property in Indonesia remains somewhat challenging for foreign nationals due to existing regulations, the newly implemented Job Creation Law in 2023 strives to simplify the process and facilitate home acquisitions for foreigners.
Based on the latest data from the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN), property ownership in Indonesia between 2017 and 2023 reached a substantial 131 properties.
A comparative analysis reveals that foreign ownership stood at a modest 52 properties during the 2020-2019 period.
However, following the enactment of Law No. 6 of 2023 concerning Job Creation, the number of foreign-owned properties has experienced a remarkable increase of 52 percent, equivalent to an additional 79 plots of land within the period of 2020-2023.
The Job Creation Law, encompassing various provisions, has introduced more lenient guidelines for employing foreign workers and offers tax benefits for foreign nationals earning income overseas. These provisions can effectively serve as incentives for foreign property ownership.
Moreover, in addition to its positive impact on property ownership, the new law is also expected to aid in the recovery of Indonesia’s tourism sector by increasing the number of tourist visits to the country. It is anticipated that the relaxed regulations will attract more foreign investors and multinational companies, leading to a surge in investments, particularly in manufacturing and industrial sectors.
As reflected in the Rumah.com Property Market Report Q2 2023, Indonesia’s property market has shown encouraging signs of recovery following the seasonal slowdown experienced at the end of the previous year.
The report highlights a notable increase in demand for apartments, which has grown by 15 percent quarter-on-quarter, surpassing the demand for traditional housing options.
Remarkably, this growth occurred alongside relatively stable price trends in comparison to other regions within the Jabodetabek area.
Overall, Singapore’s policy adjustment regarding stamp duty presents an exceptional opportunity for Indonesia’s property market to attract foreign buyers, encouraging further growth and investment in the sector.
With the implementation of the Job Creation Law and the country’s focus on economic recovery, Indonesia is well-positioned to tap into its potential as an appealing destination for foreign property ownership and investment.
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