Golden Visa
- Boris, the Broker
- Jul 3, 2023
- 3 min read
Speaking on property boon, (yes - that's not a typo), a topic of much interest today is the potential of Indonesia implementing the Golden Visa.
What is the golden visa and how has it played out in different countries historically?
Let's take a look.
A decade ago, Lisbon's real estate market was characterized by semi-abandoned buildings and affordable prices. However, the 2012 introduction of the "golden visa" program in Portugal, offering expedited residency to non-European investors who spent a minimum of €500,000 on property, sparked a transformation.
The program gained immense popularity among Chinese investors, and the initiative played a crucial role in revitalizing the city's stagnant real estate market, which had been grappling with the aftermath of a severe recession and an international bailout in 2011.
Today, Lisbon's city center is bustling with new hotels, short-term rentals, and upscale stores, resembling other cosmopolitan capitals. The program has also attracted around 30,600 individuals and generated €6.8 bn in investment.
Moreover, the impact on property prices has been substantial, particularly in prime areas like central Algarve, where prices rose by 60% between 2012 and 2022. Recent years have seen even stronger growth, with a 12% increase in 2021 and an additional 16% increase in 2022.
Recognizing the significance of investment in maintaining the stability of the Indonesian economy, President Joko Widodo is actively striving to enhance the attractiveness of Indonesia as a destination for foreign investment.
In line with this, Indonesia is planning to introduce the Golden Visa program as part of its strategy to attract foreign investors and global talent, providing them with longer-term travel permissions and making Indonesia a more appealing investment destination.
By implementing this program, Indonesia aims to attract more foreign workers and investments, particularly in the digitalization, health, research, and technology sectors.
Currently, there are over 60 countries worldwide that have implemented golden visa programs, including Singapore, USA, Canada, New Zealand, and Spain.
Indonesia presents an attractive prospect for global talents in the emerging sectors of the new economy, as our country is still in the early stages of development and offers significant business opportunities and potential for attractive investment returns.
Our country benefits from a large and expanding consumer market with increasing affluence, as well as a steady inflow of FDI.
Additionally, the geopolitical tensions between the United States and China have prompted multinational companies to diversify their operations and reduce reliance on China as a global manufacturing hub, leading to a solid influx of investment into Indonesia.
Based on our Chief Strategist Officer’s analysis, we recommend that investors maintain an overweight position in the property sectors, as Indonesia’s residential properties present even more attractive investment opportunities with the introduction of golden and second-home visas.
Our top picks in this sector are BSDE and CTRA, as they are market leaders and currently undervalued.
BSDE is trading at a significant 38% discount to its 12-month DCF value of IDR1,800 per share. Thanks to its extensive land holdings of around 4,600 hectares, based on our property analyst Benyamin, BSDE is in a favorable position to achieve a commendable compound annual growth rate (CAGR) of 8.4% in marketing sales from 2023 to 2028.
This impressive growth is projected to be primarily driven by a robust CAGR of 9.4% in the residential segment.
Similarly, CTRA is trading at a substantial 34% discount to its 12-month DCF value of IDR1,700 per share. CTRA is adopting a careful approach to land acquisition and instead focusing on utilizing its existing landbank portfolio while prioritizing the expansion of joint operations.
In the medium term, we anticipate that joint operation projects will contribute approximately 60% to the company's marketing sales.
There you have it - I'm sold! Contacting my property agent stat.
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