Investing in apartments can be a strategic option for those with extra funds. Apartment investments can generate substantial long-term income. However, it cannot be denied that the current pandemic has negatively impacted the buying, selling, and renting of apartments.

Regardless of the pandemic, risks are inherent in all types of investments. No investment offers profits without risks. However, you can minimize the risk of loss with careful calculation.

Apartment Investment Opportunities in Indonesia

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

Offers like the VAT DTP incentive intended to stimulate the market have not been fully utilized. Although there is optimism that this year will show improvement, recovery is expected to be gradual rather than rapid.

One of the challenges faced is the stagnant purchase rate seen in the first quarter of this year. This hesitation stems from consumers' cautious attitude towards market conditions.

The current trend shows that consumers prefer ready-to-occupy apartments over new ones. This is because government incentives like VAT DTP only apply to units that are completed or nearly completed.

So, before investing in apartments, you should understand the pros and cons of apartment investments. This will help you be better prepared to face the gains and losses of apartment investments.

Read also: Don't Just Invest, This is Why Investment Diversification is Important

Benefits of Apartment Investments

Based on the experience of many apartment investors, apartment investments offer several benefits, including:

Apartments as a Living Choice in Big Cities

In big cities like Jakarta, many people come to work or study. They need a strategic and comfortable residence. Due to limited land and high house prices, apartments can be a perfect choice for living.

Moreover, apartments offer adequate security and entertainment facilities. Instead of buying a more expensive house, it's better to rent or buy an apartment. Therefore, apartments have a significant number of enthusiasts.

Offers Stable and Reliable Income

Renting out your apartment daily, weekly, or monthly can provide a consistent source of income. Long-term rentals, in particular, offer substantial and reliable income potential.

Compared to the fluctuating stock investments, property investments are generally considered safer and can provide decent returns.

Potential for Personal Use

Even if you choose not to rent out the apartment, you can live in it yourself. As the property's value increases over time, you have the option to sell it later at a higher price.

This allows you to profit from the difference between the purchase price and the eventual sale price. For example, buying an apartment for IDR 200 million and its value increasing to IDR 300 million over five years will yield a profit of IDR 100 million.

Read also: Choosing Online Investment Types for Beginners and How to Start

Drawbacks of Apartment Investments

Apartment investments also have some drawbacks that you need to be aware of to manage potential losses in the future.

Potential Price Drops

Property prices don't always go up. There are times when prices drop, including in the apartment business. There is a possibility of price decline, so you need to be smart in observing the situation.

If prices are down, it's better to hold onto the apartment by living in it or renting it out. When prices go up, you can sell it. This strategy can be used as a tip for buying an apartment for beginners.

Maintenance and Other Costs

Every month, you have to bear additional costs such as maintenance fees, parking, electricity, water, and others. These costs are part of the pros and cons of renting an apartment that needs to be considered.

Maintenance fees cover building operations, security salaries, and more. Usually, maintenance fees are calculated per square meter. So, the bigger the apartment, the higher the maintenance costs.

Delayed Apartment Construction

Buying an apartment that hasn't been built yet because you see more profit compared to buying a completed one can be disrupted if the construction is delayed. Be prepared for potential construction delays. The apartment should be ready in two months, but it could be delayed until next year.

Time Required to Sell

Property sales take a long time because of high prices, complicated processes, and considerations such as location and condition. Just like buying a new house, the process is lengthy.

Therefore, you can't get money quickly. If you want to sell quickly, you have to lower the selling price, which might result in a loss rather than a profit.

Once again, all investments have their ups and downs, including in the property sector. You just need to be prepared and anticipate possible losses. If you want to invest in a safer instrument, deposits can be an option.

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PT Bank Neo Commerce Tbk is licensed and supervised by the Financial Services Authority (OJK) and is a participant bank in the Deposit Insurance Corporation (LPS).