Sumba is an island rich in natural beauty and cultural heritage, and it is emerging as a promising destination for property investment in Indonesia for those looking for unique opportunities outside of Bali or Lombok. With 1hour direct flight from Bali, the pristine beaches, hills, and authentic cultural heritage, Sumba offers a different landscape than Bali or Lombok. The island was sought and visited by backpackers or a specific clientele who could afford the luxury hotels on the south coast of Sumba.
Why Invest in Property in Sumba?
Sumba is often considered as one of Indonesia’s last frontier in the archipelago. While other islands like Bali and Lombok have seen rapid development, Sumba retains its rustic charm, offering investors early opportunities.
Growing Tourism Appeal
Most tourists heading to Sumba stay in the south coast natural beauty near the pristine beaches like Nihiwatu and Marosi. The island has two main airports in the two main cities, Tambaloka and Waingapu. This strategy works particularly well as demand for property investment in Sumba continues to rise, especially as the region is at the early stages of a growing trend.
Tourism in Sumba is rising, with visitors drawn to surfing, horseback riding, and exploring traditional villages. This trend points to increasing demand for accommodations, restaurants, and recreational facilities, creating investor opportunities.
Land Opportunities: Sumba offers hectares of land at the price of a villa in Bali. It is a good opportunity for investors looking to buy asset and develop properties or just sit on the land waiting for capital gain.
Untapped Market Potential: Unlike Bali, where the market starts to be saturated and land prices are at a premium, Sumba offers an untapped property market with vast tracts of affordable land. This affordability allows investors to purchase larger parcels for development or speculation.
Infrastructure Development: The lack of infrastructure allows contractors and service providers to be part of the development process.
Cultural and Natural Uniqueness: Sumba’s cultural richness offers a perfect setting for eco-friendly resorts, boutique hotels, private villas. Despite the accommodation, investors can also look for opportunities for surfing (surf shop, surf school), restaurants, travel agencies, taxis, etc.
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.
The island is now promoted by some developers and offers cheap opportunities, and it might be the time to purchase hectares of land at the price of a small apartment in Europe or even Bali.
However, investing in Sumba requires some legal, due diligence and good strategic planning to maximize returns.
Legal Framework for Property Investment in Sumba
Foreign investors looking to purchase land or open a business in Sumba must comply with Indonesian regulations. Investments as foreigners are structured through the following legal mechanisms:
Establishing a PT PMA for property and land investment
With PT PMA, foreigners can acquire land in Sumba in two ways:
- Acquire land under a Hak Guna Bangunan (HGB). The land title is granted to the foreigner under its company rights and ownership for a total period of 80 years. The company can then develop and operate on the land with an additional business licence.
- Acquire a land under leasehold (Hak Sewa). The company gets right on the land based on a contract between the landlord and the company. This private agreement defines the terms and conditions. The parties define the duration of the contracts.
Once established, the PT PMA acts as a legal entity that can hold land titles and conduct business operations.
We recommend to avoid Nominee Arrangements. Some investors attempt to acquire freehold land by using Indonesian nominees, but this practice is fraught with legal risks. The last few years have demonstrated investors being scammed by local persons once they wanted to resell or the business started to work well. Big developers have been scammed by even partnering with certain local companies. We always recommend having strong agreements and always working in Indonesia on legality to avoid any further complications and having those types of arrangements turned against the investors.
To know more about PT PMA you can visit our page How To Establish A PT PMA In Bali
Things to Consider When Investing in Sumba
Due diligence: The due diligence process is important on several aspects. It is a crucial part of the acquisition process if you want to buy land, invest in a business or partner with someone. The process includes verifying land titles, ensuring compliance with zoning regulations, and confirming that the seller has the legal right to transfer ownership, road access, building authorisation, building permit etc.
Independent third party to handle the process: Sumba is a small island, and the connection between people is strong. We do recommend to use a third party to avoid collusion between parties.
Contracts and notary: Notary is a key person, but a notary, unfortunately, sometimes does not have the time or experience to negotiate contracts and write a proper contract. Their role is not to work on making the best contract for the buyer or the seller. Working with a legal or lawyer is recommended to review or redact the contract.
Strategic Investment Approaches
Sumba’s growing tourism and untapped market present several lucrative strategies for property investors:
Acquiring and Subdividing Land
Purchasing large parcels of land at lower per-square-meter rates and subdividing them for resale or lease is a profitable approach. This strategy works particularly well as demand for property investment increases, especially in Sumba, where the trend is just beginning to take shape.
Developing High-End Resorts or Villas
Sumba has always been a secret gem for HNWI. Sumba is the perfect spot for buying a piece of land and developing Resorts and vills.
Act As The Developer and offering Off Plan project in Sumba
Sumba is a perfect place for developers willing to attract investors and sell off-plan villas with Seaview they cannot offer any more in Bali. As a developer, it is the perfect timing to buy land, subdivide the land, and sell off plan projects.
How ILA Global Consulting Can Assist
Investing in Sumba requires navigating legal complexities and developing sound strategies.
We can provide comprehensive support to property investors, including:
- PT PMA Setup: Guidance on registration, licensing, and compliance.
- Due Diligence: Ensuring the legitimacy of land titles and zoning regulations
- Permit Acquisition: Streamlining the process for obtaining development permits.
- Market Insights: Identifying high-potential areas and opportunities.
- Contract review: Protecting your investment and getting the best agreement for you
- Land opportunities: with our network, we can introduce you to an interesting project
