The hospitality industry, including property in Indonesia, continues to show exceptional growth, particularly in Jakarta, Bali and Semarang. With a substantial hike across the sector in recent years, the market is now maturing and thereby soothing the concerns of overheating.
Semarang is the capital city of Central Java. At first glance, it might not appear as alluring as Jakarta, but the city is on the way to becoming one of the top tourist hotspots in Java. Its diversity and grand architecture attract both international and domestic tourists.
Semarang has a great economic structure in hospitality, including property, hotels and restaurants. It is even considered to be a culinary centre of Java island.
In this article, we will dive into this promising market in Semarang and how investors go about starting their business ventures in this sector.
With one of the largest investments in tourism including hotels and restaurants, Indonesia experienced a tremendous economic growth in 2013.
The average economic growth is 6% to 8% annually from hospitality and contributes to more than 30% of GDP every year.
In the same year, visitor arrivals in Indonesia grew by 16.37% with 808 million visitors. 35% of the visitors are from the ASEAN (Association of Southeast Asian Nations) countries. According to the Australian Bureau of Statistics, Indonesia is also the second-most popular destination for Australians.
Continuous surge of visitor arrivals has provided the Indonesian government with the necessary momentum to enhance the hospitality and tourism sector, especially through the enhancement of facilities and infrastructure.
The average occupancy rates of hotels in Indonesia are around 50-70% per year and hospitality development, especially hotel development, is highly recommended in the many popular cities in Indonesia and Semarang is one of them.
Property and hotel investments in Semarang still have tons of opportunities. Therefore, Semarang not only attracts tourists, it also attracts foreign investors to monetise the opportunities by building more accommodations for tourists, as well as residents in Semarang.
The types of accommodation that are commonly built in Semarang are the budget hotel and boutique hotel. For more luxury accommodation, a 4-star and 5-star hotel, villas and resorts are recommended.
In order to jump-start your hospitality business in Semarang, you will need to plan beforehand. During the process of planning, there are things you need to take into consideration such as the right building permits and licenses, and if you are renting or owning the property.
In order to protect your property or land like a smart investor, knowing your property rights can define the success of your business. In Semarang, as well as anywhere else in Indonesia, certain restrictions apply for foreign investors.
If you are not an Indonesian citizen, you are not allowed to own any assets, i.e. land or property, as an individual.
However, don’t be desperate because by knowing your property rights, you will be able to have alternative access to the mentioned assets.
HGB is one of certificate you need to explore first. This certificate permits you to build on particular kinds of land.
These lands include the state-owned lands, and the freehold lands (for Indonesians only). With HGB, you can use the land for up to 80 years, build your property and operate it for 30 years with an extension of 20 years or renewal of 30 years.
Please note that HGB is valid 30 years only for freehold land. On top of that, it is solely designed for Indonesian nationals and companies in Indonesia such as PT PMA.
The best way to access lands in Semarang is to set up a PT PMA. However, if a foreign national is not able to set up a PT PMA, with HP, they can still utilise land in Indonesia as long as they hold a KITAS or KITAP.
This is done through renting the land for less than 25 years.
HP can be extended to up to 80 years depending on the agreement between the landlord and the renter.
HMASRS is considered new to expats, allowing them to own a unit of property, such as an office or an apartment, in a high-rise building without really owning the land of the property.
Depending on the land itself, the validity of owning the property may vary.
Other property rights and licenses such as Right of Full Ownership (Hak Milik), Right to Lease (Hak Sewa), and Right of Management (Hak Pengelolaan) are not open to foreign investors.
Renting a property in Semarang as a foreigner might be the easiest way to start your hospitality business. Of course, it does not come without any risks.
Renters, or tenants, need to take certain precautions into account before finalising the agreement. Besides, you should also understand your rights and duties to prevent any future disputes that might jeopardise your business venture.
Leasehold agreement can help simplify the renting procedure for foreign investors when it comes to renting a property. The renting period can be extended repeatedly and will not exceed 25 years.
You need to consider two licenses before running your accommodation business: accommodation license and building license.
Accommodation license includes homestay license and hotel license, depending on the number of rooms and the type of accommodation.
A property with more than 5 rooms requires a hotel license. Due to its many requirements, acquiring this license is considered complicated. It is required to be located 500m away from the beach and must be situated within a tourism area.
A homestay license allows you to run a property with 3-5 rooms. Homestay is defined as property that is rented to tourist to stay with the local family in Semarang for a smaller fee as compared to other types of accommodations.
A building license allows you to build a property on top of the land. The owner of the property is the one responsible to obtain this building license.
For example, if you are just a renter of the property, your landlord should be the one to acquire this license for you.
Ready to be part of the promising hospitality market in Semarang? For more details on the requirements of different property licenses and their procedures, please fill in the form below and our professional team will assist you.