Flores is positioned as a high-growth, frontier tourism and real estate investment market, distinct from Bali. It offers faster percentage growth and lower entry prices, supported by government initiatives such as the “New Bali” agenda for 2026–2027.
Flores Land Investment 2027: Freehold vs. Leasehold Options Compared
As Flores continues its trajectory as a high-growth, frontier tourism and real estate investment market, understanding land tenure options is critical for investors. This briefing focuses on freehold (Hak Milik) and leasehold (Hak Sewa or Hak Guna Bangunan for foreign investors) structures, providing a factual comparison for the 2026–2027 investment horizon within the Indonesian context.
1. Market Size & Growth: Flores vs. Bali
Direct, island-specific investment data for Flores remains limited, often aggregated at the provincial level (East Nusa Tenggara) or within “super priority” destination programs. Therefore, the 2026–2027 investment landscape for Flores must be inferred from broader national strategies and comparative analyses with Bali.
- Indonesia’s National Strategy: The Indonesian government is actively diversifying tourism investment flows beyond Bali, explicitly targeting eastern islands such as Flores.
- “New Balis” / Super Priority Destinations: Flores, particularly Labuan Bajo, is branded as part of the “New Balis” initiative. These destinations are framed as primary engines for aggressive growth, contrasting with Bali’s mature market profile.
Bali’s Market Profile
Bali consistently ranks among Indonesia’s most active foreign investment markets. In 2025, it attracted IDR 25.60 trillion in PMA (foreign investment) realization. Between 2021 and 2025, Bali accounted for 19,262 PMA business actors, representing approximately 40% of all PMA Business Registration Numbers (NIB) issued nationally, leading to 55,458 registered projects. By 2026, Bali is largely described as a capital preservation market, offering low-risk, steady yields.
Flores / Labuan Bajo / East Nusa Tenggara (NTT) Market Profile
Flores, Labuan Bajo, Sumba, and Sumbawa are categorised as emerging destinations, functioning as high-growth, frontier markets compared to Bali’s established profile. These eastern islands are considered “New Balis” by government and private analysts, offering higher appreciation potential and significant infrastructure focus. However, investors should be aware of potentially increased regulatory complexities, particularly concerning ESG and zoning constraints within Labuan Bajo’s conservation zones. While Bali absorbs the majority of tourism PMA, the central government’s diversification agenda and super-priority status for Flores indicate a concerted effort to direct significant investment towards these regions.
2. Land Tenure Options for Flores Investment (2026–2027)
Understanding the legal frameworks for land ownership and usage in Indonesia is paramount for foreign investors. The primary options are Freehold (Hak Milik) and various forms of Leasehold (Hak Guna Bangunan, Hak Pakai, Hak Sewa).
Freehold (Hak Milik – Right to Own)
Freehold is the strongest form of land title under Indonesian law, granting full ownership rights indefinitely. However, Hak Milik can only be held by Indonesian citizens. Foreign individuals and foreign-owned companies (PT PMA) are generally prohibited from holding Hak Milik directly.
- For Indonesian Citizens: Provides absolute, perpetual ownership.
- For Foreign Investors: Direct acquisition of Hak Milik is not permitted. Foreigners can, however, indirectly control Hak Milik land through specific legal structures, such as nominee arrangements with trusted Indonesian citizens. This method carries inherent risks, as the legal owner remains the Indonesian nominee.
Leasehold Options for Foreign Investors
Foreign investors typically access land through various leasehold structures, which provide long-term usage rights without outright ownership.
Hak Guna Bangunan (HGB – Right to Build)
HGB is the most common and robust long-term land title for foreign investment in Indonesia, particularly for PT PMA companies. It grants the right to construct and possess buildings on state-owned land or land owned by another party (e.g., Hak Milik land).
- Initial Term: Typically 30 years.
- Extensions: Renewable for an additional 20 years, and then extendable for another 30 years, totalling up to 80 years.
- Transferability: HGB is transferable and can be mortgaged.
- Who Can Hold: Indonesian citizens, Indonesian legal entities, and foreign-owned companies (PT PMA).
- Practical Application: For Flores land investment in 2026–2027, PT PMA entities commonly acquire HGB over Hak Milik land, providing a secure, long-term tenure for commercial developments such as hotels, resorts, or residential complexes.
Hak Pakai (HP – Right to Use)
Hak Pakai grants the right to use and/or collect produce from land owned by the state or another party. It is a weaker right than HGB but can be held by foreign individuals and PT PMA companies.
- Initial Term: Typically 25 years.
- Extensions: Renewable for an additional 20 years, and then extendable for another 30 years, totalling up to 75 years.
- Who Can Hold: Indonesian citizens, Indonesian legal entities, foreign individuals domiciled in Indonesia, and foreign legal entities (PT PMA).
- Practical Application: Often used for residential purposes by foreign individuals or for specific commercial activities where building rights are not the primary focus.
Hak Sewa (HS – Right to Lease)
Hak Sewa is a straightforward lease agreement between a landowner (e.g., holding Hak Milik) and a lessee (e.g., a foreign individual or company). It is a contractual agreement, not a land title registered with the National Land Agency (BPN).
- Term: Negotiable between parties, typically 25–30 years, with options for extension.
- Transferability: Depends on the terms of the lease agreement.
- Security: Less secure than HGB or HP as it is a private contract rather than a registered land right. Disputes are resolved via contract law.
- Practical Application: Common for shorter-term rentals or when investors prefer a simpler, less bureaucratic arrangement, particularly for smaller plots or residential villas.
3. Comparative Analysis: Freehold vs. Leasehold for Flores Land Investment 2027
The choice between pursuing indirect freehold or direct leasehold options in Flores for 2027 depends on investment goals, risk tolerance, and the scale of the project.
| Feature | Freehold (via Nominee) | Leasehold (HGB / HP) | Leasehold (Hak Sewa) |
|---|---|---|---|
| Legal Holder | Indonesian Citizen (Nominee) | PT PMA / Foreign Individual | Foreign Individual / Company |
| Security of Tenure | High (for nominee), but significant risk for foreign investor due to nominee structure. | High (registered land right). | Moderate (contractual, not registered land right). |
| Max. Term (approx.) | Perpetual (for nominee). | Up to 80 years (HGB), 75 years (HP). | Negotiable (typically 25–30 years). |
| Transferability | Complex, subject to nominee’s cooperation. | Transferable, can be mortgaged. | Depends on contract terms. |
| Direct Control | Indirect, dependent on nominee agreement. | Direct control over usage rights. | Direct control over usage rights. |
| Regulatory Burden | Lower initial, higher ongoing risk. | Moderate to high (PT PMA setup, BPN registration). | Lower. |
| Cost | Potentially lower initial acquisition cost. | Higher initial acquisition cost (land premium, PT PMA setup). | Lower initial cost (rental payments). |
2027 Note: The Indonesian government’s continued emphasis on attracting foreign direct investment (FDI) into super-priority destinations like Flores means that the regulatory environment for PT PMA entities holding HGB or HP titles is expected to remain stable and supportive. However, potential changes in land use planning and zoning within conservation areas, particularly around Labuan Bajo, will require diligent due diligence for any new acquisitions.
4. Due Diligence and Regulatory Considerations
Regardless of the chosen tenure, thorough due diligence is indispensable for Flores land investment in 2026–2027. This includes:
- Land Title Verification: Ensuring the authenticity and legality of the land title with the National Land Agency (BPN).
- Zoning and Spatial Planning: Confirming the land’s designated use (e.g., residential, commercial, tourism) aligns with planned development, especially crucial in areas with environmental protection overlays.
- Environmental Impact Assessments (AMDAL): Required for larger developments to comply with Indonesian environmental regulations.
- Local Community Engagement: Addressing potential customary land rights and ensuring community acceptance, particularly in areas less accustomed to foreign development.
- Tax Implications: Understanding property taxes (PBB), transfer taxes (BPHTB), and income tax (PPH) obligations.
5. Conclusion and Investment Outlook
Flores presents a compelling high-growth, frontier investment opportunity for 2026–2027, positioning itself as a complementary market to Bali with significant appreciation potential. For foreign investors, direct freehold ownership is legally restricted, making long-term leasehold options like Hak Guna Bangunan (HGB) or Hak Pakai (HP) held through a PT PMA the most secure and recommended pathways for substantial developments. Simpler lease agreements (Hak Sewa) offer flexibility for smaller-scale projects but with less legal security.
Navigating the Indonesian land tenure system requires expert guidance. Flores Investment specialises in providing tailored advisory services to foreign and domestic investors, ensuring compliance and optimising investment structures in this dynamic market.
For a detailed discussion on your specific Flores land investment strategy, book an investment consultation on WhatsApp.
Continue reading: Flores Investment vs. Competitors: 2027 Comparison of HSA Platform Fees and Returns · Flores Property Investment 2027: A Buyer’s Guide to High ROI Real Estate · Flores Investment: 18 Questions Answered