Derawan Land Investment, as a specific asset class, is not formally tracked in 2025–2026 market data. This analysis therefore provides a factual 2026–2027 land and real estate investment briefing for Indonesia and Bali, detailing market size, costs, and tax implications relevant to such a project.
1. Indonesia Real Estate & Land Market Size (2025–2027)
Indonesia’s total real estate market was valued at USD 100.4 billion in 2025. Projections indicate a rise to USD 156.2 billion by 2034, reflecting a 5.03% Compound Annual Growth Rate (CAGR) from 2026–2034. Other consultancies estimate the market at USD 149.2 billion in 2024, USD 169.9 billion in 2025, with a projection to USD 248.7 billion by 2030, at a 7.9% CAGR from 2025–2030. Residential real estate holds the largest share, at 58% in 2025, with commercial and industrial properties comprising the remaining market segments.
Reconciling these forecasts, the broader Indonesian real estate and land market is anticipated to experience annual growth of approximately 5–8% through 2030. This implies an incremental market size increase of roughly USD 8–12 billion per year in national real estate value for 2026–2027.
2. Commercial Land-Linked Real Estate Overview
For land designated for offices, retail, logistics, hospitality, and mixed-use developments, the Indonesian commercial real estate market was valued at USD 26.88 billion in 2025, increasing to USD 28.55 billion in 2026. This sector is projected to reach USD 39.02 billion by 2031, with a 6.22% CAGR from 2026–2031. Offices constituted 39.45% of the commercial market share in 2025, and rentals generated 62% of sector revenue. Logistics represents the fastest-growing subsector, demonstrating a 9.12% CAGR.
Jakarta accounts for 25.2% of commercial real estate activity. The ‘Rest of Indonesia’, which includes Bali and other secondary cities, is projected to grow faster, at an 11.22% CAGR to 2031. This growth trajectory for regional areas is relevant for land investors considering commercial development potential in tourist-heavy zones or emerging economic centres beyond the capital.
3. Bali Real Estate & Land Market Dynamics (2025–2027)
Bali’s real estate market, a primary focus for many foreign investors, demonstrates robust performance. The market was valued at USD 7.8 billion in 2023, with a projection to reach USD 11.5 billion by 2028, showing an 8.09% CAGR. Residential property dominates, holding 65% of the market share. The average property price in Bali in 2024 was IDR 2.5 billion (approximately USD 155,000), with land prices averaging IDR 12 million/sqm (approximately USD 740/sqm).
In 2024, Bali’s property market saw a 10.3% year-on-year price increase, with investment property values rising by 12.5%. Rental yields ranged from 5–8% annually, with luxury villas achieving 8–12% yields. The occupancy rate for villas was 70–80%. Forecasts for 2025–2027 indicate continued appreciation of 8–15% annually, driven by tourism recovery and infrastructure development. The market is projected to reach USD 9.5 billion in 2025 and USD 10.3 billion in 2026. The estimated 2027 market size is approximately USD 11.1 billion.
Bali’s land prices vary significantly by location: South Bali (Seminyak, Canggu, Uluwatu) commands IDR 15–30 million/sqm (USD 930–1,850/sqm), while Central Bali (Ubud) ranges from IDR 8–15 million/sqm (USD 500–930/sqm). North and East Bali, including areas near Derawan, are more affordable, approximately IDR 2–5 million/sqm (USD 120–310/sqm), but offer differing liquidity and development readiness.
2027 Note on Bali Land Development:
By 2027, the ongoing development of the North Bali International Airport (NBIA) is expected to have a tangible impact on land values and investment interest in North Bali. This infrastructure project, if progressing as planned, will likely increase land appreciation and attract further development capital to regions historically less accessible than the south. Investors should monitor construction timelines and associated regional master plans for specific land use zoning changes around the proposed airport site.
4. Foreign Ownership & Leasehold Structures
Foreigners cannot own freehold land in Indonesia directly. The prevalent mechanisms for foreign investors are:
- Right to Build (Hak Guna Bangunan – HGB): This allows the right to construct and own buildings on state-owned or private land for a period of up to 30 years, extendable for 20 years, and then another 30 years. This effectively provides 80 years of control.
- Right to Use (Hak Pakai): This grants the right to use state-owned land for 25 years, extendable for 20 years, then another 30 years, also totalling 75 years. This is commonly used for residential purposes.
- Leasehold (Sewa): A direct lease agreement with a landowner, typically for 25–30 years, with options for extensions. This is the most straightforward method for foreign individuals.
For significant investments, establishing a foreign-owned company (PT PMA) is often advised. A PT PMA can hold HGB rights, providing a more robust legal framework for larger-scale developments and ensuring asset protection.
5. Transaction Costs and Taxes
Investors must account for various costs and taxes when acquiring and holding land in Indonesia:
Acquisition Costs:
- Buyer’s Transfer Duty (BPHTB): 5% of the transaction value (or NJOP – Nilai Jual Objek Pajak, the government-assessed value, if higher).
- Notary Fees: Approximately 0.5–1.0% of the transaction value.
- Legal Fees: Varies by complexity, typically 0.5–2.0%.
Holding Costs:
- Land and Building Tax (PBB): An annual tax, usually around 0.1–0.2% of the NJOP, payable to the local government.
Exit Costs (Seller):
- Income Tax on Property Sale (PPh Final): 2.5% of the gross transaction value. This is borne by the seller but can sometimes be negotiated into the buyer’s costs, particularly in specific market conditions.
Additional Considerations:
- VAT (Value Added Tax): 11% on new property sales from developers. Resales between individuals are exempt.
- Rental Income Tax: 10% for individuals. For PT PMAs, corporate income tax rates apply, typically 22%.
6. ROI and Holding Period Estimates (2027 Perspective)
Given the general market conditions, a typical holding period for land investment in Indonesia, particularly in high-growth areas like Bali, is 3–7 years to realise substantial capital appreciation. Shorter-term speculation carries higher risk and may yield lower returns after transaction costs.
Based on the projected annual appreciation rates for Bali (8–15%) and the national real estate market (5–8%), a conservative ROI calculation for a 3–5 year holding period, assuming a hypothetical Derawan-area land investment, would be:
| Metric | 3-Year Holding Period | 5-Year Holding Period |
|---|---|---|
| Annual Appreciation (Conservative) | 8% | 8% |
| Total Capital Appreciation (Before Costs) | 25.97% | 46.93% |
| Initial Acquisition Costs (Approx. 6.5%) | -6.50% | -6.50% |
| Annual Holding Costs (0.15% x 3 / 5 years) | -0.45% | -0.75% |
| Exit Tax (2.5% of appreciated value, seller’s cost) | -3.25% | -3.67% |
| Net ROI (Approximate) | 15.77% | 36.01% |
Note: This table provides a simplified illustration. Actual returns depend on specific land parcel location, development potential, market demand, and precise cost calculations. The 2.5% exit tax is a seller’s liability, but its impact on potential buyer willingness to pay should be considered.
For land suitable for commercial development (e.g., hospitality, retail), the ROI can be significantly higher, especially if a development project is executed. Rental yields from developed properties in Bali average 5–8%, with luxury villas achieving 8–12%. This provides an additional income stream beyond capital appreciation.
The ‘Rest of Indonesia’ (excluding Jakarta) commercial real estate CAGR of 11.22% to 2031 suggests that land in promising secondary cities or tourist regions like Derawan, if aligned with commercial development, could exceed the general Bali land appreciation rates. However, liquidity and development readiness in these areas must be thoroughly assessed.
7. Risk Factors and Due Diligence
Investors should be aware of several risk factors:
- Regulatory Changes: Indonesian property laws can evolve. Staying updated on regulations affecting foreign ownership and land use is crucial.
- Infrastructure Development: While planned infrastructure can boost value, delays or changes in project scope can impact timelines and returns.
- Environmental Factors: Coastal properties are subject to environmental considerations, including erosion and climate change impacts.
- Market Liquidity: Land in less developed regions may have lower liquidity compared to prime Bali locations.
- Local Permitting: Obtaining necessary permits for development can be complex and time-consuming.
Thorough due diligence, including legal review of land titles, zoning regulations, and environmental impact assessments, is indispensable. Engaging local legal counsel and property advisors is strongly recommended to navigate the complexities of the Indonesian market.
Understanding the nuances of the Indonesian land market and the specific legal frameworks for foreign investors is crucial for maximising returns. For a detailed, bespoke analysis tailored to your investment objectives and to discuss specific Derawan coastal property opportunities, we invite you to book an investment consultation on WhatsApp with Sari Kusuma, Derawan coastal property advisor and senior content lead for Derawan Land Investment.
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