How to Buy a Property in Lombok – The Most Secure Way

Bali has an unparalleled reputation as a top vacation and investment destination in Indonesia. Its popularity has been increasing for several decades, with a demonstrated ability to recover from any crisis. However, Lombok property market is also catching up swiftly and is expected to become one of Southeast Asia’s top luxury destinations, making it an ideal spot for investors for buying property in Lombok.

Lombok is also sometimes referred to as “Bali’s little sister”, however, with fewer tourists, less traffic, less construction activity, and a strong commitment to eco-tourism. It’s been compared to how Bali was 30 years ago, and similarly, it’s gaining appeal among tourists and savvy investors.

As the attention of tourists from all over the world shifts to Lombok, it presents a lucrative opportunity for foreign investors to have land ownership in Indonesia.

Lombok: Bali’s Little Sister

Lombok is in the immediate east of Bali and is only 30 minutes away by flight. Located between Bali and Komodo Island, Lombok is blessed with stunning natural beauty, calm beaches, and Mount Rinjani, one of the world’s most impressive climbs.

In 2019, 16 million tourists visited Indonesia, with Bali accounting for more than a third of them. As a result, the government is focusing on luring tourists to neighboring islands now, with Lombok prominently included in its “10 New Balis” plan.

In addition, in 2011, Lombok realized a new international airport, as well as a USD 3 billion in development of Kuta, a town on the south coast of this island, which includes 16,000 hotel rooms, 1,500 luxury villas, a 27-hole golf course, an eco-waterpark, and new clean energy initiatives, all while maintaining a 51% green zone.

Furthermore, land and property prices are now cheap, similar to those in Bali in the early 1990s. As a result, Lombok has attracted a slew of international investors buying property in Lombok who see the island’s worth and potential as a top luxury destination in Southeast Asia. They anticipate a significant increase in the value of their land and properties.

Is Lombok a Good Place to Live?

Lombok boasts a slower pace of life compared to Bali, offering a tranquil escape while still providing modern conveniences. The island’s breathtaking scenery, from pristine beaches and cascading waterfalls to majestic Mount Rinjani, creates a truly unique living environment. The friendly and welcoming culture adds another layer of charm, making Lombok an ideal place to call home.

Can Foreigners Buy Property in Lombok?

Foreigners cannot directly purchase freehold land in Indonesia. However, there are alternative ownership structures that allow foreigners to invest in Lombok property. The most common approach involves establishing a PT PMA, a foreign-owned limited liability company. This company can hold land with a Hak Guna Bangunan (HGB) title, granting land use rights for up to 80 years, renewable for additional periods.

Buying Property in Lombok: Understanding Land Ownership in Indonesia

Hak Milik (Freehold Title)

In Indonesia, freehold is a type of land title that can only be owned by those who are Indonesian nationals. The Hak Milik title owner can utilize the property for any purpose, subject to zoning regulations, but it does not entitle the owner to exploit the natural resources located on or beneath the ground.

Hak Pakai (Right to Use Title)

Right of Use is a title that grants the possessor the right to use the land, including the right to erect structures. Foreigners (with permits like KITAS and KITAP) and Indonesian nationals can both hold the Hak Pakai title.

Validity: 30 Years; Extendability: 20 Years; Renewability: 30 Years.

Hak Sewa (Leasehold Title)

Leasehold title entitles the holder the right to use an empty plot of land or a building on someone else’s land for a fixed period (generally 25 years). A Leasehold title can be granted over land currently held under a Freehold title, Right to Build title or Right to Use title.

Hak Guna Bangunan (Right to Build Title)

The bearer of a Right to Build title has the liberty to develop and own structures on state-owned property, freehold land, and HPL (Hak Pengelolaan) land. Indonesians, as well as Foreign Capital Investment Companies and Domestic Capital Investment Companies, can possess an HGB title.

Validity: 30 Years; Extendibility: 20 Years.

Right of Strata Title

Owners of residential, commercial, or retail units in multi-story structures such as condos, strata-title offices, and trade centers are given this title. The validity of the title is determined by the expiration date of the land right for the site on which the structure is situated.

Why Invest in Real Estate in Lombok?

Investing in Lombok real estate presents a multitude of opportunities. Here are a few key reasons to consider:

High-growth Potential

With the ongoing development of the island, property values are anticipated to rise steadily, offering a lucrative return on investment.

Tourism Boom

Lombok’s tourism sector is flourishing, creating a strong demand for holiday rentals and hospitality businesses. Investing in a villa or establishing a boutique hotel can generate significant rental income.

Business-friendly Environment

The Indonesian government is actively encouraging foreign investment, with streamlined regulations and attractive tax incentives.

Lifestyle Destination

Owning property in Lombok provides a chance to live in a paradise, surrounded by natural beauty and a rich cultural tapestry.

Buying Property in Lombok: A New Provision Based on Omnibus Law

In order to make the land acquisition process seamless, the Indonesian government introduced a document called Kesesuaian Kegiatan Pemanfaatan Ruang (Space Utilisation Conformity) with the implementation of the Omnibus Law. It requires each local government to upload a spatial plan to the Online Single Submission (OSS) system.

Businesses can now undertake a self-assessment to see if their proposed business operations in the intended region comply with the land’s specified use and then proceed to the OSS licensing process.

Despite the removal of onerous processes, some criteria and regulations still apply, particularly to foreign investors who want to construct apartments or villas from scratch. Before beginning construction, building owners must designate a group of building service providers that include a planner, a manager, and a supervisor, according to the new regulation. This might raise manufacturing costs, prompting foreign investors to consider purchasing existing properties as a more profitable way to boost their Return on Investment.

Secure Property Investment in Lombok with InCorp

When a foreign investor wants to acquire land under Leasehold title, property due diligence is highly recommended. InCorp offers quality due diligence that will help you gain insights into the land values and potential issues, giving you confidence in making a final decision for closing the deal. Moreover, InCorp will assist you in setting up your land and property investment plan in the most secure way.

Furthermore, if you want to buy land through PT PMA (Right to Use and Right to Build Title), InCorp will provide you with a seamless company registration experience. In case you want to acquire land’s Right to Use, you will need a KITAS (Work permit). Thanks to a decade of experience in the Indonesian market, InCorp can provide consultation to you during the preparation and the application process for both work permits and work visas.