Brokerage fee-> 2.5% for sales, 5% for rentals
Borne by the seller or landlord, i.e., the party earning profit.
For sales, notarization fees are split equally between seller and buyer.
Indonesia legally requires holding an Agent/Broker Properti license issued by a state-recognized certification authority. However, in reality, it appears there are virtually no real estate agents holding such credentials. Unlike Korea, where people partner with or borrow the name of someone holding a licensed real estate broker's license, this doesn't happen here. The reality of Indonesian real estate is that while the law has the appearance and form, the vast land area lacks the cultural and social infrastructure to enforce it, so the market is controlled more by practice than by law.
When you actually rent apartments or houses in Indonesia due to assignment, posting, or business travel, you realize that beyond the lack of basic knowledge among people in the real estate business, the bigger issue is the absence of a system. Korea has a real estate listing system where properties are connected through a network in each agency, achieving a somewhat integrated system, and the infrastructure like the Ministry of Land's electronic contract system supports it well. In contrast, Indonesia sadly has virtually no such system.
About a decade ago, during Indonesia's real estate boom, the concept of in-house agents (official agents) at Botanica in South Jakarta first emerged. Soon after, a few other apartment buildings began having unofficial but openly recognized exclusive real estate agencies, growing into a monopoly form where they hold most of the listings for the apartment. This developed into a form of real estate quite different from Korea. However, as mentioned earlier, most of these agents don't operate with any legal certification, authority, or responsibility in the real estate business, so when critical issues or ambiguous situations arise during property transactions, the real estate agents bear no responsibility. In short, Indonesian real estate brokers operate at the administrative level of Korea's 1970s neighborhood grandfathers doing brokerage for cigarette money, yet appear to be professional brokers on the surface. That's the reality of Indonesian real estate brokerage.
Most Korean real estate transactions in Jakarta prefer sales over rentals, and prefer expatriate residents to Korean community members. Brokers collect brokerage fees from both the homeowner and the tenant. For rentals, they receive 5% of the annual rental fee; for sales, 2.5% of the sale amount as brokerage fee. For example, if the homeowner is a client of Real Estate A and the tenant is a client of Real Estate B, A receives a 2.5% fee from the homeowner, and B receives a 2.5% fee from the tenant. If both the homeowner and tenant are clients of Real Estate A, they receive 2.5% each, totaling 5%.
The problem is that while they should provide service commensurate with the fees received, they often don't. Real Estate B, which has the tenant as a client, receives less fee and instead passes the bothersome tasks of the rental process to Real Estate A, which has the homeowner as a client. It seems like the thinking is that it's more profitable to handle more introductions quickly with less commission than to do the troublesome work yourself.
There is a considerable difference between the average condition of properties that business travelers and expatriates think of and the average condition that homeowners think of. For Korean community members, this temperature gap isn't as large, perhaps because they've lived in Indonesia longer. However, for people who have just started living in Indonesia and seem to have expectations about overseas living, those who came on business travel or posting for their company have quite a significant gap. The tenant's requirements arising from this gap usually become negotiation items before the contract. If such tenant's negotiation items are not fulfilled before actual move-in, complaints arising from this should be conveyed through the tenant's real estate agent B to the homeowner's real estate agent A and then to the homeowner. When step-by-step delivery works well, it's fortunate, but often the communication itself gets buried in the middle, and troubles frequently arise. However, neither real estate agency takes responsibility for resolving such troubles, which is the reality here.
Then, if you use the official agent(?) who holds most of the listings for that apartment, would such problems not occur? Not necessarily. Agents with many listings have become giant dinosaurs and are not particularly kind or attentive to tenants. Some dinosaurs even mark up in the middle to earn additional profits.
As I write this, it becomes confusing what the main topic is. To summarize in one sentence: if you think about Indonesian real estate in comparison with Korean real estate, you could get seriously hurt. You need to take your time and personally run around to directly check and compare multiple properties to find a desired property at an appropriate price. Usually, expatriates or business travelers don't have the time to prepare for relocation and have to make decisions reluctantly after viewing a limited number of properties from a limited perspective. If you really want to find a property at the price and quality you desire, I strongly recommend taking at least a week, going around checking various properties directly, and then deciding.
During the recent pandemic period when there were many vacant homes, homeowners went through very difficult times. Even when vacancies occurred, fixed management fees were still an expense for homeowners, and as the pandemic progressed, rental rates fell, creating a double bind where some situations reached a point where there was almost no profit after paying management fees from rental income. However, as real estate prices have recovered to previous levels, recently rental activity has become active enough that homeowners are now in a position to choose the nationality of their tenants.
I am neither an expert in Indonesian real estate nor someone engaged in real estate brokerage. Because of this, I cannot claim that everything I say is correct and professional in nature. What I post here is simply what I have felt while living in this place, sometimes from the perspective of a landlord... and sometimes from the perspective of a tenant, experiencing Indonesian real estate.
Indonesia has a large land area and many undeveloped regions, so there is no concept of redevelopment, and development takes the form of pioneering new development areas. Because apartments are not a common residential choice for local Indonesians, I want to strongly advise against real estate investment aimed at capital gains for various reasons. However, if you plan to reside long-term and annual rental payments feel like money disappearing, I would recommend purchasing. Moreover, if you want rental income, I recommend purchasing apartments preferred by expatriates and business travelers and generating rental revenue, rather than real estate targeting local residents. Since there is no capital gains tax yet in this place, it can be a good source of income. Unlike before, deposit and bond returns are not favorable, so I think apartment rental with good cash flow is not a bad passive income source. Conversely interpreting my recommendation of apartments preferred by expatriates and business travelers proves that real estate prices in areas where local middle to upper-class Indonesian families reside are cheaper. Apartments preferred by expatriates and business travelers actually have a lot of bubbles and pretense because they are paid for by company housing allowances. However, since not all criteria are the same, for some people, the location of schools and companies can be the top priority, and for others, a quiet and spacious place can be the top priority. And if you are starting a new life in a foreign country, many people prioritize areas with good security infrastructure above all else. These needs have come together to form what are now apartment complexes in downtown Jakarta where many expatriates and business travelers live. And recently, the expatriate commercial market has grown to a level that cannot be ignored. You can tell just by seeing how many people doing business and giving lessons targeting only them are popping up like mushrooms.
While I may have rambled on, making this seem like a pointless article, what I want to conclude with is that if you compare Indonesian real estate to Korean real estate, you might get frustrated or have things backfire on you, so the best approach is to verify and judge for yourself. I want to emphasize that this is a place where you should absolutely not engage in speculative real estate investment.
