P

roperty analysts welcome plans to allow foreigners to own houses as it will stimulate the property market despite the slowing economy.

"It's good news. I think if it is realized it will help stimulate the local market significantly," Djodi Trisusanto, a property analyst with Jones Lang Lasalle, told The Jakarta Post on Wednesday.

He was commenting on President Susilo Bambang Yudhoyono's statement that he would ask the National Land Agency (BPN), the home minister and the state minister for people's housing affairs to conduct an in-depth study into granting expatriates home ownership rights.

Unlike some other countries, such as Malaysia and Singapore, which allow expatriates to own property, Indonesia still bans such ownership. Based on the 1996 government regulation, foreigners cannot own houses, apartments, and condominiums in Indonesia. They are only allowed to have utility rights up to 20 years and are then eligible for another 20 year extention.

During the Tuesday dialogue with the president after the inauguration of 114,000 units of simple low-cost houses in Lamongan, East Java, the chairman of the Indonesian Real Estate Association (REI), Teguh Satria urged the government to revise the regulation by allowing foreigners to acquire a 70-year home ownership right, in order to help stimulate the local economy.

"Amid the slowing growth in the property market, allowing foreign ownership will certainly help push up the demand for property here," said Arief Rahardjo, a property analyst with PT. Cushman & Wakefield Indonesia, a property consultancy company.

Analysts have predicted that the property market this year will see slowing growth due to the global economic downturn. During the last quarter of last year property sales already dropped by between 10 and 20 percent.

But Djodi warned the government should regulate the categories of properties to be opened up to foreigners and the basic requirements for ownership so as to optimize their potential economic contribution.

"I think middle-to-lower market properties should not be allowed to be owned by foreigners."

"The government should design the foreign ownership regulation so as to avoid any speculative buying by foreigners," he noted.

To avoid speculative purchases, Djodi suggested government should make sure that ownership was only granted for permanent residence and not open the market too much.

Both Djodi and Arief noted that despite the foreign ownership ban, many expatriates in practice now owned houses, apartments, or condominiums, using loopholes in the existing laws.