Driven by Indonesia’s growing economy and demand for residential and commercial properties, starting a real estate agency in Indonesia has become an attractive prospect for local and foreign investors.
According to a recent study, the country's real estate industry will grow at an annual rate of 1.21% from 2024 to 2029, reaching a market value of USD 9.61 trillion.
In this article, we’ll provide you the essentials of starting a real estate agency in Indonesia including mandatory licenses and other legal requirements.
Required Licenses for Starting a Real Estate Agency in Indonesia
When starting a real estate agency in Indonesia, you must obtain several licenses from the relevant authorities to ensure your business complies with local regulations. These licenses include the following:
1. Business Identification Number (NIB)
The NIB is a crucial registration document obtained through the Online Single Submission (OSS) system. It serves as the primary business license, allowing the agency to operate legally in Indonesia.
The NIB consolidates various licenses into one, including the company registration certificate and social security programs. Having an NIB is crucial for establishing the agency's legal status and facilitating interactions with government authorities.
Note that you can only apply for an NIB after registering your company in Indonesia.
2. SIU-P4 (Real Estate Trading Brokerage Company Business License)
The SIU-P4 license is mandatory for all real estate agencies in Indonesia. This license certifies that the agency is authorized to conduct real estate transactions, including buying, selling, and leasing properties.
To obtain this license, the agency must employ at least two certified real estate professionals who possess a Property Trade Intermediary Competency Certificate.
3. Spatial Utilisation License
The Spatial Utilisation License is required to ensure that the agency's activities align with regional spatial planning regulations. This license governs how land can be used and developed in specific areas, helping to prevent conflicts with local zoning laws. Obtaining this permit is crucial for real estate agencies in Indonesia to operate within legal boundaries and contribute to sustainable urban development.
4. Location License
A Location License is necessary for foreign-owned businesses seeking to acquire land for their operations. This permit allows the agency to secure land rights and ensures that the intended use of the land complies with local spatial plans.
5. Utilisation & Function Plan License
This license outlines how a property will be utilized and its intended function within a specific area. It’s necessary for real estate agencies involved in condominium or other residential and commercial development. It ensures that the proposed use of a property aligns with local development plans and zoning regulations.
6. Environmental license
An Environmental License may be required if the agency's activities have potential environmental impacts in air, water, soil, and biodiversity, especially for large construction or development projects. This permit ensures compliance with environmental protection laws and regulations, promoting sustainable practices in real estate development.
Legal Framework for Real Estate Agencies in Indonesia
Investors looking to own and operate real estate business in Indonesia usually establish a local Perusahaan Terbatas (PT) company or a foreign investment company (PT PMA) depending on local or foreign ownership.
Here is a comparison between the two:
| Criteria | Perusahaan Terbatas (PT) | Perusahaan Terbatas Penanaman Modal Asing (PT PMA) |
|---|---|---|
| Ownership | Exclusively owned by Indonesian citizens or entities. | Can be fully or partially owned by foreign investors, depending on the sector. |
| Purpose | Designed for local entrepreneurs to operate businesses in Indonesia. | Tailored for foreign investors to establish a legal presence in Indonesia. |
| Capital Requirements | Generally lower minimum capital requirements. | Higher minimum capital requirements (e.g., IDR 2.5 billion or approx. $150,000). |
| Regulatory Oversight | Governed by Indonesia Company Law No. 40 of 2007, with less stringent regulations. | Subject to specific regulations from the Indonesia Investment Coordinating Board (BKPM). |
| Business Activities | Can operate in various sectors without foreign ownership constraints. | Some sectors are restricted by the Negative Investment List; must comply with BKPM approvals. |
How to Start a Real Estate Company in Indonesia?
To start a real estate agency in Indonesia, you need to register your company and secure the necessary licenses and permits from relevant government authorities.
Emerhub’s local experts will register your company and secure all the relevant permits on your behalf. Here’s how we can guide you through the company registration process:
- Reserving a business name – provide a name in both English and Bahasa Indonesia to the Ministry of Law and Human Rights. Emerhub can facilitate this process by helping you secure your desired business name for your real estate agency.
- Deed of Establishment – This essential document, which must be drafted in Indonesian, details the company's Articles of Association, intended business activities, and shareholder information. Emerhub will handle the drafting of this document.
- Application submission – submit all the necessary documents to the Ministry of Law and Human Rights. Emerhub can help you with all the necessary requirements including drafting the Articles of Incorporation and even finding a company secretary if needed.
- Tax Identification Number (NPWP) – After incorporation, Emerhub will assist you in registering for a Tax Identification Number (NPWP) for your real estate agency with the Directorate General of Taxes.
- Business Registration Number (NIB) – serves as your company registration certificate and enrolls your business in social security programs (BPJS) for your real estate agency.
- Secure Real Estate Agency Related Licenses: required to operate a business in the real estate sector. Our experts will secure all necessary licenses such as SIU-P4.
- Opening a bank account — Once your real estate company is officially incorporated, we will handle the necessary submission to help you open a corporate bank account in Indonesia.
Tax Obligations for Real Estate Businesses
In addition to Corporate Income Tax obligations, real estate agencies are responsible for the Property Transfer Tax (Bea Pengalihan Hak atas Tanah dan Bangunan - BPHTB) if they are buying property. This tax is a one-time fee paid by the property buyers, calculated at a flat rate of 5% on the Tax Object Acquisition Value (Nilai Perolehan Objek Pajak - NPOP), after deducting any non-taxable property values.
If you plan on developing and reselling the property, you would also need to pay a Land and Building Tax (Pajak Bumi dan Bangunan - PBB) at 0.5% of the assessed value of the land and buildings (known as Nilai Kena Jual Pajang - NKJP).
Establish Your Real Estate Agency in Indonesia with Emerhub
Setting up a real estate company in Indonesia requires a thorough understanding of local regulations and requirements. Therefore, It is highly advisable to partner with experienced professionals such as Emerhub who understand these procedures.
Emerhub assists entrepreneurs and investors in setting up and expanding their business to Indonesia and other Southeast Asian countries. Our local advisors will draft the deed of establishment and secure all the necessary licenses and permits for your real estate agency.
Ready to start a real estate agency in Indonesia? Fill out the form below, and one of our local experts will reach out to you!
References: https://www.statista.com/outlook/fmo/real-estate/indonesia