The term “Derawan Land Investment” refers to a specific brand or project rather than a recognised asset class within Indonesia’s real estate sector. This guide provides a factual overview of the broader Indonesian land and real estate market for 2026–2027, relevant for investors considering opportunities such as those in Derawan.
1. Indonesia Real Estate & Land Market Overview (2025–2027)
Indonesia’s total real estate market was valued at USD 100.4 billion in 2025. Projections indicate growth to USD 156.2 billion by 2034, reflecting a Compound Annual Growth Rate (CAGR) of 5.03% from 2026–2034. An alternative estimate from another major consultancy places the market at USD 149.2 billion in 2024, rising to 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 maintains dominance, holding a 58% market share in 2025, with commercial and industrial properties comprising the remaining proportion. Reconciling these forecasts, the wider real estate and land market is expected to experience annual growth of approximately 5–8% through 2030. This implies an approximate annual increment in national real estate value of USD 8–12 billion during 2026–2027.
2. Commercial Land-Linked Real Estate Outlook
For land supporting offices, retail, logistics, hospitality, and mixed-use developments, the Indonesian commercial real estate market was valued at USD 26.88 billion in 2025, growing to USD 28.55 billion in 2026. It is projected to reach USD 39.02 billion by 2031, with a CAGR of 6.22% from 2026–2031.
Offices constituted 39.45% of the commercial market share in 2025, and rentals generated 62% of revenue. Logistics is currently the fastest-growing subsector, demonstrating a 9.12% CAGR. Jakarta accounts for 25.2% of commercial real estate activity, but the “Rest of Indonesia,” which includes Bali and secondary cities, is projected to achieve faster growth at an 11.22% CAGR until 2031. This trend is significant for land investors, as commercial land values in tourist-centric and developing regions are anticipated to appreciate.
2027 Note:
By 2027, investors should observe a continued decentralisation of commercial real estate growth away from Jakarta, with increased opportunities in secondary cities and key tourism destinations. Infrastructure developments, particularly outside Java, will increasingly influence land value appreciation in these areas, making due diligence on local development plans crucial.
3. Bali Real Estate Market Insights (2025–2027)
Bali’s real estate market operates as a distinct segment within the broader Indonesian context, heavily influenced by tourism, foreign investment, and local development policies. While specific market size figures for Bali alone are not consistently disaggregated in national reports, its growth trajectory often outpaces the national average in certain segments.
3.1. Tourism-Driven Growth
Bali’s property market is intrinsically linked to its tourism sector. With international tourist arrivals recovering steadily post-pandemic, demand for villas, hotels, and tourism-related land continues to strengthen. This drives both land prices and rental yields in prime locations.
3.2. Foreign Investment Dynamics
Bali remains a primary destination for foreign direct investment in real estate and hospitality. Regulatory frameworks, while complex, provide avenues for foreign ownership and long-term leases, attracting a diverse range of international buyers from individual investors to large funds.
3.3. Key Investment Areas
- Southern Bali: Continues to command the highest prices due to established infrastructure and proximity to major tourist hubs.
- Central & Eastern Bali: Offers opportunities for eco-tourism, wellness retreats, and larger land parcels at comparatively lower entry points, with potential for significant appreciation as infrastructure improves.
- Northern Bali: Emerging as a growth area, particularly around plans for new airport development and improved connectivity, offering long-term speculative investment potential.
4. Legal Framework for Land Ownership in Indonesia
Understanding Indonesia’s land law is paramount for securing titles, particularly for foreign investors. The Basic Agrarian Law No. 5 of 1960 (UUPA) forms the foundation of land rights.
4.1. Key Land Rights for Foreigners and Domestic Entities
| Right Type | Description | Applicability | Maximum Term | Renewability |
|---|---|---|---|---|
| Hak Milik (Freehold Title) | Strongest and fullest ownership right. Only available to Indonesian citizens. | Indonesian citizens only | Perpetual | N/A |
| Hak Guna Bangunan (HGB) – Right to Build | Right to construct and own buildings on state land or land with Hak Milik. | Indonesian entities, foreign-owned companies (PT PMA) | 30 years | Extendable for 20 years, renewable for 30 years |
| Hak Guna Usaha (HGU) – Right to Cultivate | Right to use state land for agriculture, plantations, or fisheries. | Indonesian entities, foreign-owned companies (PT PMA) | 35 years | Extendable for 25 years, renewable for 35 years |
| Hak Pakai (HP) – Right to Use | Right to use state land or land owned by others, for a specific purpose. | Indonesian citizens, foreign individuals (for residential), Indonesian legal entities, foreign-owned companies (PT PMA) | 25 years | Extendable for 20 years, renewable for 30 years |
| Leasehold (Sewa) | Contractual right to lease land or property. | Foreign individuals, Indonesian entities | Negotiable (typically 25–30 years, extendable) | Negotiable |
4.2. Securing Freehold Titles for Foreigners (Indirectly)
Foreign individuals cannot directly hold Hak Milik (Freehold Title). However, several established legal structures allow foreign investors to control land with freehold characteristics:
- Through an Indonesian Nominee (Not Recommended): Historically, some foreigners used Indonesian nominees to hold Hak Milik. This practice carries significant legal risks, including potential for fraud and lack of enforceability in Indonesian courts. Derawan Land Investment strongly advises against this method due to its inherent insecurity and illegality under current regulations.
- Through a Foreign-Owned Company (PT PMA) with HGB/HP: The most secure and legally compliant method for foreign investors is to establish a PT PMA (Perseroan Terbatas Penanaman Modal Asing – Foreign Investment Limited Liability Company). A PT PMA can acquire Hak Guna Bangunan (Right to Build) or Hak Pakai (Right to Use) titles. These rights, while not Hak Milik, provide long-term control over the land (up to 80 years combined for HGB) and allow for construction and commercial operations. This structure is recognised and protected under Indonesian investment law.
- Leasehold Agreements: Long-term lease agreements (Sewa) with Indonesian Hak Milik owners offer another secure option. Leases can be structured for periods of 25–30 years, often with options for extensions, providing effective long-term control over the property. This is a common and transparent method for foreign individuals seeking residential or commercial property use without forming a company.
5. Due Diligence and Regulatory Compliance
Thorough due diligence is indispensable for any land investment in Indonesia. This includes:
- Land Title Verification: Confirming the legitimacy and boundaries of the land title with the National Land Agency (BPN).
- Zoning and Spatial Planning: Ensuring the land’s designated use aligns with investment objectives (e.g., residential, commercial, tourism).
- Environmental Impact Assessment (AMDAL): Required for larger projects to assess and mitigate environmental effects.
- Permits and Licences: Securing all necessary building permits (IMB/PBG) and operational licences.
- Local Community Engagement: Understanding and addressing local community interests and customary land rights.
Engaging reputable legal counsel and property advisors specialising in Indonesian land law is critical to navigating these complexities and ensuring compliance.
6. Future Trends and Opportunities
The Indonesian government’s focus on infrastructure development, particularly outside Java, and the promotion of tourism in regions like Derawan, indicates sustained growth in land values and investment opportunities. The shift towards digital nomad visas and ease of doing business initiatives are further catalysts for foreign interest.
Investors should monitor regional development plans, particularly those related to tourism zones and Special Economic Zones (SEZs), which often offer incentives and streamlined processes. The increasing demand for sustainable and eco-friendly developments also presents a growing niche for conscientious investors.
For further assistance with your investment strategy in Derawan or other strategic locations in Indonesia, 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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