When it comes to buying a property in Lombok, buyers might find the scene slightly different than in Bali if they used to buy a property in Bali. The government spent a lot of investment to attract property investors. However, it is still sometimes difficult for foreigners to understand how to buy a property in Lombok.
Lombok is one of the fastest-growing areas in Indonesia for foreigners to invest in. The price is cheaper than Bali and the return on investment starts to be interesting. Find out how to buy a property in Lombok as a foreigner.
Buying a property in Lombok
Leasehold versus Freehold in Lombok
While in Bali leaseholds are the most common practice, Lombok offers a more straightforward and secure solution for buying a property. Most of the transactions in Lombok are done on a freehold property (SHM). The foreigner establishes a PT PMA and purchases the land and the property under its company.
The buyer and the seller do a sales and purchase agreement (Akta Jual Beli) in order to transfer the land title under the company. At the difference with the leasehold, the buyer acquires the right to build on the property and registers the land under its company. This brings some advantages as the ability in the future to leverage and eventually get a loan with the property.
Can a foreigner buy a property in Lombok?
A foreigner can buy a property in Lombok if they own a company or they purchase a leasehold (Hak Sewa). However, there are several types of property ownership in Indonesia, from the HAK MILIK to the HGB and HAK PAKAI.
The highest level of ownership is HAK MILIK and only Indonesian individuals can own the HAK MILIK and transfer the ownership to the next generation. Foreigners willing to own land need to set up the company (PT PMA) and purchase under the HGB to own rights to build and do business on the land. The HAK PAKAI is a right to use with no real advantages except being able to own some rights to use the property.
The process of buying a property in Lombok
The process to buy a property in Lombok is simple and follows the different steps:
- Make an offer or review the offer of the seller and sign the offer
- Set up a PT PMA, open a bank account and inject the funds
- Pay a deposit to an escrow account
- Make an independent due diligence
- Proceed with the sales and purchase agreement
- Pay tax on the transaction
- Change the land title under your company
- Get the building permit
The difference with a leasehold property is that the terms and conditions on the purchase are straightforward as the buyer becomes the registered holder of the land title. However, due diligence on the land is an important step to ensure the land can be developed properly for construction, the buyer can get the proper building permit (PBG), and the property is located in an area where the buyer can do short term rental on platforms such as Airbnb or Booking.com.
Make navigating real estate in Indonesia easy
Save time and money by letting ILA’s team of experts guide your real estate journey in Indonesia. We can help with due diligence, land title transfers, notary services, contract drafting and reviewing, building permits, various licences and more.
Find more information about our broad range of real estate services, or reach out today for a free consultation.
Things to consider before buying a property in Lombok
Lombok is a new place of investment and the process to buy a property in Lombok can be confusing. Here are the things to consider before purchasing a property in Lombok.
Real estate agent
The easiest way to buy a property is to go with a real estate agent. There are several legitimate property agents in Lombok, but there are also several ones working closely with developers and having interests with the seller. We recommend always doing due diligence on the Lombok real estate agent and making sure they have the proper licence to work as a real estate agent. The occupation is regulated by the Indonesian government and a real estate agent is supposed to be part of the AREBI association.
Developers
Lombok is a new playroom for a lot of developers. New projects are growing fast without a proper study on the Return On Investment for the buyer and proper legal due diligence on how the buyer can obtain the licence to get a legit revenue.
Several big players are now investing in Lombok and are offering legitimate projects that are interesting to look at.
Infrastructure
The infrastructure in Lombok is still not as developed as the one in Bali or Jakarta. Despite the road being in good condition, the access to the property is sometimes unclear or not well-defined. Some villas or projects are still not connected to the public water system or the public electricity.
Locations
Lombok is a wide island and most of the new Lombok real estate projects are concentrated in the south of the island. Despite Kuta Lombok being the epicentre of this new development, lot of projects start to emerge on the South West of Lombok along Selong Belanak since the new road is connecting it with Kuta Lombok. The East of Kuta Lombok is not surrounded by the moto circuit which makes the area noisy for property owners who want to rent out their property. Business in Kuta Lombok is growing and Lombok is certainly a place to look out even if the occupancy rate and ROI is not yet as in Bali.
Also read: Can Foreigners Rent Out Property in Bali? Key Regulations (2024)
Help to buy a property in Lombok
With experience in Indonesia, we have overlooked several property purchases on the buyer and developer side. We can assist buyers and sellers in reviewing the contract for property in Lombok, doing due diligence, providing notary assistance in Lombok, and inspecting the property.
FAQ
Is Lombok a good place for real estate investment?
The south of Lombok is certainly a new place to consider for medium-term investment. Prices are more affordable than in other places like Bali, and the ROI in the medium-term can be more advantageous.
How much do I need to invest?
Property investment in Lombok starts at around 80 000 USD, making the place an attractive location for property investment. Investors with more than 150 000 USD can find luxury villas with Seaview, which is rare to find in Bali now.
