Apartments can be a strategic investment option for those who have extra funds. Investing in apartments can generate a fairly decent income over the long term. However, it cannot be denied that the current pandemic has had a significant impact on the buying and renting of apartments.

Regardless of the pandemic, risks are inherent in any kind of investment. No investment comes without risk. But with careful calculation, you can minimize potential losses.

Apartment Investment Opportunities in Indonesia

According to Colliers Indonesia, a commercial property services provider, developers are regaining confidence to launch new property projects in 2024. However, the apartment sector has not yet met expectations based on data from January to March this year.

Programs such as the government’s VAT DTP incentive, which are intended to stimulate the market, have not been fully leveraged. Although there is optimism for improvement this year, recovery is expected to be gradual rather than rapid.

One of the main obstacles is the stagnation in purchase rates observed in the first quarter. This hesitation is due to consumers taking a cautious stance toward current market conditions.

The current trend shows that consumers prefer ready-to-occupy apartments over new developments. This is partly due to government incentives like the VAT DTP, which only apply to completed or nearly completed units.

So, before investing in apartments, it’s important to understand the pros and cons, so you can be better prepared for the risks and rewards.

Read: Don’t Invest Blindly – The Importance of Diversifying Your Investments

Benefits of Investing in Apartments

Based on many people's experiences, investing in apartments offers several advantages:

1. Apartments Are a Popular Housing Option in Big Cities

In major cities like Jakarta, which attract people for work or study, there's a strong demand for comfortable and strategically located housing. Due to land scarcity and high prices of landed houses, apartments become an ideal alternative.

Moreover, apartments often come with security and entertainment facilities. Instead of buying a more expensive house, renting or purchasing an apartment is often the better choice, making apartments quite popular.

2. Offers Stable and Reliable Income

Renting out your apartment on a daily, weekly, or monthly basis can generate a steady income stream. Long-term rentals, in particular, can offer high and reliable returns.

Compared to the volatility of stock investments, property is generally considered a safer investment that can yield reasonable returns.

3. Personal Use Potential

Even if you choose not to rent out your apartment, you can always live in it yourself. As property values increase over time, you have the option to sell it later at a higher price.

For example, if you purchase an apartment for IDR 200 million and its value increases to IDR 300 million over five years, you could earn a profit of IDR 100 million.

Read:Choosing the Right Type of Online Investment for Beginners and How to Start

Disadvantages of Investing in Apartments

Like any investment, apartments also have downsides that you should be aware of so you can plan ahead:

1. Potential Price Drops

Property prices don’t always rise—they can fall too. Apartment business calculations must include this possibility. So, you need to be smart in assessing the market.

If prices are down, it’s best to hold the property by living in it or renting it out until the market recovers. Then, you can sell when the price goes up. This is a useful tip for beginners looking to invest in apartments.

2. Maintenance and Other Costs

You’ll need to budget for extra monthly costs such as maintenance fees, parking, electricity, water, etc. These are part of the pros and cons of renting or owning an apartment.

Maintenance fees usually cover building operations, security staff salaries, and so on. They are typically calculated per square meter, so the larger your apartment, the higher the maintenance cost.

3. Delayed Construction

Buying an apartment during its early development phase (before completion) in hopes of getting a better deal can backfire if the project faces delays. Be prepared for the possibility of extended construction timelines. What was expected to be finished in two months could be delayed until the next year.

4. Takes Time to Sell

Property generally takes a long time to sell due to its high value, complex processes, and multiple considerations like location and condition—just like buying a new house. It takes time.

You won’t get your money back quickly. If you want a quick sale, you might have to lower your asking price, which could result in a loss instead of a profit.

Once again, all investments come with both risk and reward—including property investment. You just need to be prepared and anticipate any potential losses. If you're looking for a safer investment option, time deposits can be a good choice.

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PT Bank Neo Commerce Tbk is licensed and supervised by the Indonesia Financial Service Authority (OJK) and Bank Indonesia (BI), and an insured member of Deposit Insurance Corporation (LPS).