Southeast Indonesia, A guide For Investors and Developers

8/11/2019 Southeast Indonesia, A guide For Investors and Developers

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A Guide for Investors and Developers 2014 | Issue

S o u t h e a s t I n d o n e s i a

• Lomboks Tourist Hot Spots • The Gilis • Kuta and Southern Lombok • Senggigi • Lombok Tourism Growth• Villas and Villa Plots • Bonus: Foreign Buyers Guide to Indonesian Property Law



Welcome to Southeast Indonesia 01

Focus On Lombok 02

Lombok Tourist Development 03

News Bites: New projects, Rumors and Hot Areas 04

Lombok’s Growing Tourist Market 06

Villa Plots Take Off 09

Villa Plot Market in Lombok 09

Senggigi Area 10

Gilis 14

Kuta Area 18

Bonus: Foreign Buyers Guide to Indonesian Property Law 22

CONTENT





F o c

u s o n

L o m b

o k

Bali’s sister island has come alive this year with new projects,increases in tourism arrivals, infrastructure improvementsand steadily rising property values.

Outside factors have also helpedto raise interest in Lombok.Much of Bali’s prime land is onlyavailable for lease; this fact,when coupled with prevailinghigh prices, has shrunken theprot margin signicantly inBali. With opportunity costrelatively lower and hoteloccupancies often higher thanthose in Bali, Lombok hasbecome a more attractivelocation.

Nationally, Indonesia’s middleclass of over 100 million peoplecontinues to become moreafuent, pumping more andmore discretionary spending intothe national economy.

All of these factors combine tomake Lombok’s ascendance as anew prime tourist destination nolonger a dream but a reality.

bet on Lombok over the last 20years for a number of reasons.The physical and culturalproximity to Bali being a majorone. The west of the island,for instance, supports a largeBalinese population, who havebrought many of their traditionsand culture to Lombok.

Physically, Lombok containshundreds of small whitesandy bays backed by ruggedmountains, creating virtuallyunlimited picture perfectbeachfront areas. This islandalso sports Mt. Rinjani, one ofthe tallest peaks in Indonesia,visited by thousands of trekkingenthusiasts each year. Rinjanias well as the well established

tourist areas of Senggigi and theThree Gilis also give Lombok anexisting tourism infrastructurewhich will enhance and supportthe future growth of the island.

For years, Lombok has beenhailed by visitors and investorsas “The Next Bali”. While touristgrowth and property valueshave consistently risen, theisland has yet to see explosivegrowth of the sort experiencedby Bali over the last six years.

In 2013-14, however, wehave witnessed a new waveof property investment,many completed projects,skyrocketing visitor numbersand hotel occupancy rates, aswell as greatly improved accessto the island and regions withinthe island. All of these indicatorssuggest that real change isconverging on Lombok, likelyleading to a tipping point within

the next 3 – 5 years.

While Indonesia possessesthousands of beautiful islands,many locals and foreigners have

02



Lombok’sTourist

DevelopmentThe Three Gilis and Mt. Rinjaniof North Lombok, and Senggigiof West Lombok have hostedvisitors for many years, providingthe foundation for Lombokstourist industry.

The Kuta area in the southis now growing fast, whileSekotong, Tanjung Ringgit andthe small giilis surroundingLombok are attracting interest asfuture destinations.

Well EstablishedTourist Areas

Rapidly GrowingTourist Areas

FutureTourist Areas



04

Aston BrandedLuxury Villa ProjectAttracts Attentionto West Lombok

Royal Kamuela Villas, a 50 unitresidential villa complex locatedin Meninting, Lombok, betweenSenggigi and Mataram, isreporting over 70% of units soldin the projects starting phaseof development. The project isbeing managed by ArchipelagoInternational, formerly the AstonGroup.

The success of the project,with units reportedly pricedbetween US$400,000-800,000,signals Lomboks coming of ageas a destination, as it beginsto attract high prole projects

which formerly were only seenin Southern Bali. The locationsuggests that suburban Menintingmay be moving towards becominga higher end villa and residentialarea, and that other propertieson the less expensive outskirts ofthe tourist epicenters of Senggigi,

Kuta and the Gilis may holdstrong potential as well.

Private IslandDevelopment in EastLombok Slated for2014

Ocean Blue Resort on Gili Sanut,East Lombok, will completesometime in 2014, according toOcean Blue Group. The resortwill be a unique development

in the area, as it is formed by aworking partnership between thegroups Singapore based investorsand the local government. OceanBlue will develop and managean entire 7.5 hectare island fortheir high end private resort. Inorder to fulll their obligations,

the developers were requiredto meet certain environmentalqualications, as well as buildnew residences and infrastructureon the mainland for the islandsformer residents.

The project will undoubtedlynot only open up East Lombokssecluded beaches and islands tomore high end development, butpave the way for similar projectson government owned land inthe future. N e

w s B i

t e s

N e w p r o j e c t s , r u m o r s a n

d h o t a r e a s



New Projects OpenUp the NorthwestLombok Coastline

Lomboks northwestern coastlineprovides spectacular ocean cliffs,white sand beaches fringedby coconut palms, and tallmountains covered in tropicalfoliage. Colorful sunsets over theocean and Bali’s Mt. Agung area popular draw for both localsand tourists, who are served bythe hundreds of small food stallsoffering fried corn, sh and otherlocal avors along this popular

route between the Three Gilis andSenggigi. Until recently, the areasported only a few hotels andvillas among the shing villages;new developments, however,suggest that this area will soonbecome a new tourist hub forWest Lombok.

KERANDANGANUp until the 1990s, the bay and

small village of Kerandanganmarked the end of the pavedroad in the north; its small valleywas and still is known as a haven

for expats in search of privacy.2013 saw both the soft openingof Svarga resort, a high endbungalow and hotel complex,as well as the construction ofa new large seaview villa plotdevelopment. A seperate large

hillside development was startedin Q2 2014.

TELUK NARE AND BANGSALThese bays are known primarilyas the jumping off point forprivate and public boats headingbetween Lombok and the ThreeGilis. In the future, however,they may become known asdestinations themselves. While

the Gilis abound in restaurants,bars and guesthouses, theinfrastructure on the islands isstill limited, as is the amount ofsmall plots available for privatevillas. With their lower prices,fantastic views and proximity tonot only the Gilis but the towns ofTanjung, Senggigi and Mataram,the hills around Teluk Nare andBangsal have begun to be noticed

by investors. Several new villaprojects are currently underconstruction in the area, fromprivate units to larger complexes.

NIPAH

Situated almost perfectly halfway between the Gilisand Senggigi, Nipah bay may be the area to watchover the next several years. The areas brilliant whitsand beach, turquoise waters, sunset views of Mt.Agung and rugged mountainous backdrop add evenmore to its attraction. 2012-13 has seen a urry ofactivity and improvements on the beachfront andnearby hillsides, suggesting this area may become crucial link between the already developed areas ofSenggigi and the Three Gilis.

Half of the beachfront has already been broken intosmall plots for boutique hotel developments, withone already in progress. Villa plots are currentlybeing sold on one of the nearby hillsides, with manymore planned in the future.



Lombok’s Growing Tourist Market New direct flights and greater awareness fuels a sharp rise in visitor numbers and hotel occupancy

The hotel sector in Lombok has experiencedstrong positive growth over the last fewyears, which can easily be seen in risingoccupancy rates, construction of new cityand beach hotels, as well as growing touristarrivals. These strong fundamentals, aswell as new infrastructure development,government promotion of local tourism andthe development of new regions for touristexpansion all contribute to the areas strongoutlook.

Lombok lies directly to the east of Bali and

has many cultural similarities to its famous

neighbor. In fact, Lombok’s diverseblend of Balinese Hindu, Sasak, Arab,Javanese and Chinese cultures makesit unique in the area; simultaneouslyfamiliar to visitors who have alreadyexperienced Bali, as well as a newexperience in and of itself. As Baliexperiences more overcrowdingand infrastructure problems, manyvisitors are being drawn to the morepristine island of Lombok as analternative.

Lombok features well establisheddestinations such as Senggigi, theThree Gilis (Gili Trawangan, GiliAir, and Gili Meno), Mt. Rinjani,and Kuta. Sekotong and EastLombok also feature many as yetuntapped potential resources fordiving, trekking and surng, whilethe city of Mataram attracts localbusiness travelers and students fromthroughout Eastern Indonesia.

In addition to these advantages,Lombok serves as a hub and gatewayto other growing destinations inSoutheast Indonesia, such asSumbawa and Flores.

VISITOR ARRIVALSBetween 2001 and 2012, totalarrivals to Lombok by plane grew ata compound annual growth rate of15.2%, according to data releasedby Badan Pusat Statistik Indonesia(BPSI).

208%Increase in visitor

arrivals, November 2013over November 2012

In 2001, air arrivals totaled 181,429passengers. By 2012, arrivals byplane had grown to 858,710. Bythe end of 2013 the early effectsof the new airport and increaseddirect ights was even more evident;Lombok International received 5,386

new visitor arrivals in Novemberalone, a 208% increase over theprevious year.

These numbers are expected toincrease signicantly by 2015, with



HOTEL VISITORS ANDOCCUPANCY

The most dramatic growth seen inrecent years was the 61.8% jumpin international guests to star ratedhotels from 2011 to 2012. Thisincrease could continue over thenext several years, as more directights make the island accessibleto growing numbers of internationalvisitors. In 2012, the most popularcountry of origin for internationalvisitors was Singapore, followed

by the UK, Malaysia, Germany andFrance. These numbers reect thefact that prior to the addition ofdirect ights from Australia in late2013, the potentially lucrative Aussiemarket was largely untapped.

61.8%Growth of internationalvisitors to star ratedhotels, 2011-2012

While international arrivals,particularly Australian, may providethe strongest growth over the nextseveral years, Indonesia’s robust andincreasingly well-heeled domestictravelers still form the bulk of hotelarrivals. With domestic guestsnow outnumbering Australians andJapanese in Bali, we could expect tosee this trend continue in Lombokas well.

According to BPSI, total arrivals tostar rated hotels grew from 165,953to 369,855 between 2007 and 2012,a compound growth rate of 17.4%.

Of the 369,855 arrivals in 2012,253,642 were domestic visitors, withthe remaining 116,213 from abroad.

2010 to 2012 saw a 20% increasein 1-5 star hotel rooms, from 1,931rooms in 2010 to 2,794 in 2012.Three and four star hotels constitutethe bulk of these rooms, with 35%and 40%, respectively.

the anticipated additions of more directights from Australia, Malaysia, HongKong and Singapore, as well as increaseddomestic ights.

Currently the newly completed LombokInternational Airport sees 8 direct ightsper week from Singapore, 7 per weekfrom Kuala Lumpur and 4 per week fromPerth, Australia. Domestic destinationssuch as Jakarta Bali, Surabaya, Sumbawa,Jogjakarta and Makassar are served by over220 direct ights per week.

Additionally, many visitors from Bali opt fora direct speed boat either to the Three Gilisor to Senggigi. There are currently dozensof operators ferrying passengers every dayof the week, with rates and travel timescompetitive with local ights.

The new Lombok International Airport currentlyhosts 239 regular scheduled domestic andinternational lghts per week.



According to data published byHVS research, hotel occupancyin Lombok grew from 56.4% in2010 to a healthy 70.2% in 2012.

70.2%Avg. occupancy 2012

Due to a number of factors suchas increasingly better access,overcrowding in Bali, a growingdomestic market, well established

tourism areas and increasedinternational exposure, the futureof the hotel business in Lomboklooks very positive both in theshort and long term. Silent watcher over Mataram’s Mayura Hindu temple

Far Left : Total arrivals to star rated hotels,2007 and 2012

Left : Star hotel guests point of origin, 2012

08



Villa Plots Take Off

The supply of build-readyvilla plots in West Lombok

is still very limited despiterising customer demand.This, coupled with viewsthat are simply unavailablein much of Bali, as well asprices that are far lowerthan Bali, will continue tocontribute to rising valuesand buyer interest inLombok villa plots.

The upper right graphcompares the rising valueof undeveloped plots(average size 5000 M2) inSeminyak, Jimbaran, andCanggu with the price of

undeveloped seaview hillside plotsin West Lombok (avg. size 1 Hectare+) and developed villa plots in WestLombok, from year-end 2007 toyear-end 2013. Bali data is based onsurveys published by Knight Frank,Lombok data is based on original

market research.

The discrepancy between the relativevalue rise of developed villa plotswith undeveloped hillsides in WestLombok likely reects the currentlimited supply of developed plots,which can be expected to continuefor the next several years.

As the upper left graph shows, while

the necessary initial investment ishigher than 2007, the relative protpotential from the development andsale of hillside villa plots in WestLombok is currently much greaterthan ever before.

VILLA PLOT MARKET

IN LOMBOK

Purchase of unimproved land in emerging areasfor the purpose of creating and reselling villa plotshas been an investor favorite in Bali and Lombokfor years. Signicant returns can be achieved

with, depending on the plot, a small amount ofinfrastructure work. Where to purchase, expectedreturns and turnaround time largely depends onthe area chosen.

MATURE MARKETSSenggigi, Montong, Meninting, Batu Layar,Kerandangan. Multiple completed, sold, andongoing projects. Most unimproved land has beenpurchased by investors.

EMERGING MARKETSMangsit, Malimbu, Kuta, Selong Belanak, Torok,Gerupuk, Nipah, Bangsal. Multiple projects inplanning, already begun, and for sale. Some locallowned land remaining, strong investor interest,expect to become mature market in 2-5 years.

M a t u r e M a r k e t s

E m e r g i n g M a r k

e t s

% Gross Prot West LombokVilla Plot Development

Rise in Value 2007 - 2013



010



Senggigi Area



012

Senggigi is the most wellestablished tourist hub on theisland of Lombok, with growthpicking up signicantly overthe last several years. Thetown itself is a small, densely

developed enclave situatedaround several crescentshaped bays, providing plentyof locations for sunset drinks,meals, walks and swimming.There are several popularhigher end restaurants,

A. Gili Trawangan, Air, MenoDense low to high end hotels

B. SireGolf course, low density Five Starhotels.C. Bangsal, Teluk NarePrivate boats to Gilis, new villaprojects

D. Malimbu, Nipah, PandanganPlanned boutique hotels and villas

E. MangsitHigh end hotels and villas, plannedhigh end hillside villasF. Central SenggigiDense low to mid range hotels,restaurants

G. MontongLocal entertainment, low to mid

range hotels,high end hillside villasH. MenintingMid range local housing, high endvilla projects, commercial

I. MataramMixed local housing, low to mid

range city hotels, dense commercial

although prices are still quite low comparedto Bali or Jakarta. These are supplementedby a variety of international bakeries, hotelrestaurants, seafood grills and more.

The road from Mataram and the new airportleads through the quickly developingareas of Meninting and Montong. Amongthe hills and valleys of these areas canbe found some of Lomboks oldest expatneighborhoods, while along the main roadnew clubs catering to tourists and localstudents pop up continually. Empty landdirectly off the main road as well as towardsthe beach is quickly being converted tosuburbs for the local housing market.

North of the town, towards the Three

Gilis and North Lombok, the highway runsthrough a series of breathtaking bays andhillsides loved by visitors and locals fortheir breathtaking views. Watch these areasaround Nipah, Malimbu, Kerandangan andPandangan to quickly ll up with hotels andvillas over the next several years.



Successful projects and private villasin Meninting, Kerandangan, Mangsitand around the northwest coastlinehave prompted a urry of newbuilding and roadworks for futureprojects. Before 2015, new projectsare expected to open up in Montong,Mangsit, Batu Layer, and Nipah.A limited number of small plotsavailable, rising demand and highoccupancies should keep the nishedvilla and villa plot market goingstrong for the next several years.

North of Senggigi features many halfmoon bays such as Malimbu, Nipahand Pandangan. These areas arealready famous for their panoramic

sunsets and street vendors of friedsh and corn, however developments

have so far been limited to small privatevillas. The rst larger projects to openup the area have begun in Nipah, withmore undoubtedly on the way over thecoming years.

Due to its well established status,growing villa and hotel market, andstrategic location between Mataram andthe Gilis, we can expect the Senggigiarea to remain as a premium and safeinvestment for some years to come.

Pictures (counter-clock wise) :1. Beachfront private villa in Kerandangan2. Antique wooden furniture

graces a hillside villa3. Beachfront villa plot in Teluk Bora,

north of Senggigi4. View from Malimbu Point



014



Gilis



016

Pictures (from top to bottom) :1. The small islands of East

Lombok, near Tanjung Ringgit2. The “Southern Gilis”

near Sekotong3. Government owned islands in

East Lombok and Sumbawa4. The famous “Three Gilis” or Air,

Meno and Trawangan inNorth Lombok

Thirty years ago, Lombok’s GiliTrawangan was a forgottenisland, occupied only byitinerant sherman. Todaythe small island is alive 24hours per day with nightlife,

diving schools, backpackerguesthouses and luxuryaccommodation. This car andmotorbike free island hasalways held a special drawwith visitors, whether they bedivers or simply backpackerswishing to relax with a beeron its white sand beaches.Trawangan’s neighbors, GiliAir and Gili Meno have also

taken off in recent years.Both support the same carfree getaway island culture,but with less of Trawangansfamous party-all-night

hedonism. Gili Meno isknown as the quietest,popular with honeymoonersand snorkelers who wish toexplore the reefs directly infront of their guest housedoor. Gili Air, the smallestof the three, offers acombination; while most ofthe perimeter is covered insmall wooden guesthousesand bars, the island stillsports a quiet, low key andexclusive vibe.

While the three Gilis ofNorth Lombok are theregions most famous, there

are also many other smallGilis in the Sekotong area,

just a 30 minute speedboattrip south of Senggigi. Witha new harbor in Sekotong,and the growing amountof speedboats servingSenggigi and the northernThree Gilis, the beautifulSouthern Gilis may not stayhidden for long either.

Eastern Lombok, NorthernSumbawa and Flores allcontain many small, almostdeserted islands similar tothe famous Gilis as well. Sunset over Bali from Gili Trawangan



The Three Gilis are famous for their coralreefs and native turtle habitats. Visitorscan view the underwater ora and faunathrough snorkels or by taking a dive courseat one of the many schools on the islands.Over the last several years, all three islandshave sprouted a number of high qualityrestaurants, villas and hotels as well. Whilethere are still plenty of the backpackerbungalows that the islands are famous for,quickly rising land values and limited areashould drive the opening of more high endfacilities in the future.

Gili Trawangans sunset side has remainedrelatively quite until recently. Today thereare several new hotels and villa projects,with plans for more over the next several

years. With stunning sunsets over BalisMt. Agung nightly, it’s easy to see why.

The land on Gili Trawangan, Meno andAir is all privately owned by individualsor PT companies. The other small islandsaround Lombok, Sumbawa and Floresoffer a mixture of privately owned andgovernment owned land. Several projectsare currently in the works around the area

to create government-private partnershipsfor the management of state ownedislands, with the aim of increasing tourismwhile conserving the areas unique naturalecosystems. Small Gili near Tanjung Ringgit

Gili Meno and Trawangan seen from Gili Air



018



Kuta Area



020

The Kuta area comprises aseries of large white sand baysstretching from East Lombok toSekotong in the west, all withinaround 45 minutes of the new

airport. Add to this dozens offamous surf breaks, hillsides withocean views from nearly everyangle, and a planned 300 hectareresort development to supportthe whole area, and it’s easy tosee why many investors havetheir eyes on Kuta.

The 300+ hectare Mandalikaresort area at the center of Kuta

has seen many starts and stopsover the years, mostly due tofallout from the Bali bombings

and the 2008 global nancialcrisis. As of 2013, however,French hotelier Club Med hadofcially announced a partnershipwith Indonesian developer MNC

group to manage the rst stageof the resort complex, whichwould be built by MNC underthe authority of the Bali TourismDevelopment Corporation (BTDC),the state owned company incharge of developing the site.Promoting even more speculationof big things to come, the entireTanjung Aan beach was cleared oftemporary restaurants and kiosks

in late 2013, creating a wide clearbeach for large developers.

While the BTDC project haslocked down most of thebeachfront in the central Kutaarea, there remain many beachesboth to the west and to the east

with plots still available. East ofKuta, Tampa, Mawun, SelongBelanak, Serangan and TorokAik Belik abound in hillsides andbeachfronts still available at lowprices. With new paved roadsputting these eastern bays as wellas the western bays of Bumbangand Awang all under an hour fromthe new airport, the entire southis now open and simple to access.

Kuta Area on Map



Selong Belanak features nearly year-round greenery, a classic white sandbeach, with jagged rock islands and hillsides peering out over the ocean. Withthese natural features it is easy to see why this bay west of Kuta has attractedattention over the years. New tarmac roads link the area directly to Kuta, theairport and later, Sekotong, making access better than ever. Prices have risen

dramatically on the beachfront and at land behind the beach, however thereare several pristine hillsides with views of the bay and surrounding area stillavailable from local owners, at relatively low prices.

Although less famous than nearby Selong Belanak, Torok Aik Belik maycontain some of the southern areas best “virgin territory”. Until recently

the area was largely inaccessible, whichmay explain the pristine look of Torok’scascading rice elds and long widebeachfront. Fortunately for potentialbuyers, land prices at Torok are still quite

low compared to other bays in the south.A tarmac road linking Torok to Kuta andSelong Belanak is set to complete this year,while another link road connecting the bayto Sekotong and Mataram-Senggigi is alsoin progress.

Tanjung Aan Beach of Central Kuta View of Selong Belanak from nearby Hillside

Torok Aik Belik



022

Bonus: Foreign Buyers Guide to

Indonesian Property Law

1. Indonesian Land TitlesThe three most common land titles used when investingin Indonesian Property are Hak Milik, Hak GunaBangunan and Hak Pakai.

Hak Milik (Right to Own)This is what is commonly referred to as a “freehold”title. Hak Milik titles may be held by Indonesianindividuals, state banks, agricultural cooperatives and

specic social or religious groups.

In order for a foreigner to have legal control over aproperty titled Hak Milik, they must have signed aset of legally binding documents with the Indonesianowner. Thee documents are commonly reffered to as a “Nominee Agreement”.

Hak Pakai (Right to Use)

A Hak Pakai titled property may be held by foreignindividuals, Indonesian citizens, as well as foreignembassies, international organizations and social orreligious organiza-tions.

A Hak Pakai title may be placed over either state ownedland or Hak Milik land. In the case of state ownedland, the initial rights of use are valid for 25 years andmay be extended for an additional 20. In the case ofHak Milik land, the rights to use will be valid for 20years, but may be renewed pending the consent of theunderlying owner. A Hak Pakai title can be considered aprimary land title and is registered with the federal landbureau.

Hak Guna Bangunan (Right to Build)A Hak Guna Bangunan (HGB) title may be held byIndonesian or foreign owned companies. These rightsare given for an initial period of 30 years, may beextended for another 20, and may be renewed.

All of the above titles may be sold, bequeathed ortransferred. In most cases a property may be convertedfrom one type of title to another. For example, if aforeigner wishes to purchase a Hak Milik property, they

may apply to have the title converted to a Hak Pakai.Later if the foreigner wishes to sell the Hak Pakai titledproperty to an Indonesian citizen, the title may beconverted back to a Hak Milik.



Other types of land titles in Indonesia include;Hak Guna UsahaCultivation rights over state owned land. May be held by Indonesian inviduals, corporations, and foreign jointventure corporations.

Hak PengelolaanRights to manage state owned land, given only to state owned companies and government institutions. It ispossible for a HGB to be placed over a Hak Pengelolaan.

Hak Memungut Hasil HutanRight to crop forest products.

Hak Membuka TanahRight to clear land.

Some properties have no title registered with the land ofce, but nonetheless are subject to a traditional claimwithin the village government. Properties have been claimed by a community or individual as their traditionalor ancestral lands are referred to as customary lands. A common form of customary land is designated as

“Sporadik”. These properties have been registered with the village head but not yet with the land bureau. Titlesmay be applied for and given over these properties following due process and payment of the applicable fees.



2. Foreign Property Ownershipin Indonesia

Foreign IndividualsForeign individuals are legally allowed to possess a HakPakai registered land title. Hak Pakai titles are utilized

by foreign individuals in order to possess a house orvilla in Indonesia.

A Hak Pakai may be held as the primary land title overa property, in this case the land is technically ownedby the state, with the rights to its use granted to theforeign individual. For instance, a Hak Milik propertythat was sold to a foreigner could be converted to aHak Pakai title. In this case the foreign individual’s titlewould be valid for an initial 25 year period with the

possibility for another 20 year extension. According toGovernment Regulation Number 40 of 1996, the initialperiod, an extension as well as a renewal period maybe guaranteed all at once following the payment of theUang Pemasukan, or up-front ofcial costs.

A Hak Pakai may also be placed over a Hak Milik title,in this case it is the Indonesian holder of the Hak Milikwho technically owns the land, while the foreigner

maintains the rights to its use. This is known as a HakPakai Atas Hak Milik. The owner of this type of title maywish to sign additional legal agreements with the ownerof the underlying Hak Milik title, granting the foreignowner sole rights to sell or transfer the Hak Milik title aswell as the Hak Pakai. One advantage to retaining the

original Hak Milik title instead of transferring ownershipto the state would be that the property could be resoldto an Indonesian buyer without the need to create a

new title.

It is technically possible for a Hak Pakai to bemortgaged, however it should be noted that at the timeof writing, Indonesian banks were not typically lendingmoney against Hak Pakai titles.

A foreign individual may only own one Hak Pakai title ata time, and the size limit for a Hak Pakai is 5000 squaremeters.

Foreign purchasers often leave their land with a HakMilik designation, and sign a series of papers grantingsole rights to sell, lease or otherwise alter the landexclusively to the foreign partner. The Indonesianpartner, whose name is on the original title, isgenerally paid a at fee, a percent from future sale,or a combination of both. The Indonesian partneris referred to as the “nominee”. Transactions of this

type are generally less costly than the creation of anew Hak Pakai title, but it should be noted that thesupporting documentation is not registered with theland bureau. To ensure the rights of all partners, anominee agreement should be drawn up and reviewedby reputable legal counsel.



We believe in enabling emerging market propertyinvestments that are safe, transparent

and accessible.

We extensively research the investment

prospects, local infrastructure, tourism potentialand other relevant information for every region

that we work in. We also aim to objectivelyassess the status, merits and drawbacks of everproperty that we list. To ensure transparency, wealways recommend a qualied third-party rm fo

due diligence and legal assistance.

To learn more about property investmentopportunities in Lombok, Sumbawa and Flores,

feel free to contact us via email:

[email protected]

Foreign Corporate OwnershipPartial or fully foreign owned companies registeredin Indonesia are given many of the same rights

as wholly Indonesian owned companies. NeitherIndonesian nor foreign companies are allowed toown Hak Milik land titles, they are however allowedto possess Hak Guna Bangunan (HGB) and HakGuna Usaha (HGU) land titles.

HGB titles allow a company to build on a property.The use of the building must match the statedpurpose of the company. I.e., in order to build ahotel, the possessing company would need to be a

hospitality provider.

A HGB is granted for an initial period of 30 years,with a 20 year extension. According to GovernmentRegulation Number 40 of 1996, the initial period,an extension as well as a renewal period may beguaranteed all at once, following the payment of theUang Pemasukan, or up-front ofcial costs. The totalperiod in this case would be 80 years.

If a foreign owned company wishes to purchaseland that is registered as Hak Milik, the originalHak Milik title must be cancelled and a HGB titlemust be created.



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Documents

Southeast Indonesia, A guide For Investors and Developers