Australians Eye the Near North: Why Southeast Asia Is Reshaping How Serious Property Investors Build Wealth

Capital city yields are compressed. Borrowing conditions remain tight. And a generation of Australian investors has discovered that the obstacles once associated with offshore property — legal complexity, opaque ownership, uncertain exit — have largely been engineered away. The shift is structural, not cyclical. And the geography of opportunity is moving north.

The Australian Property Investor in 2026

For most of the past three decades, Australian residential property delivered something rare in global terms: strong capital growth, reliable yield and a transaction process that, while expensive, was broadly legible to retail participants. Investors who bought in Sydney, Melbourne or Brisbane between 2000 and 2020 typically saw substantial gains without needing to look further afield.

That era has not ended — but it has matured in ways that change the calculus for investors building or repositioning portfolios today.

Capital city prices, even after the corrections of 2022 and 2023, remain elevated relative to household incomes and rental returns. Gross yields in inner-city Sydney and Melbourne regularly fall below three per cent. The Reserve Bank's rate cycle, while potentially turning, has repriced debt significantly from the historic lows of 2020 and 2021. And investor lending conditions — buffeted by macroprudential settings, serviceability buffers and APRA oversight — are materially tighter than they were at the height of the last bull run.

The result is that the return-on-equity proposition that drew Australian investors to residential property has, in many submarkets, been substantially eroded.

"Investor behaviour hasn't really changed. Property investors have always focused on strong yield and prime locations. The difference today is that those opportunities are harder to achieve in Australia, so investors are looking internationally."
— Adrian Campbell, CEO, Kinnara Capital

Campbell, who has spent fifteen years based across Asia and leads Kinnara Capital's operations spanning Hong Kong, Singapore and Indonesia, argues that this shift is less a reaction to short-term conditions than a structural reorientation of how Australian capital thinks about real estate.

"Overseas property markets are now also far more accessible," he says, "with the buying process becoming increasingly seamless and comparable to purchasing property within Australia."

Why Southeast Asia — And Why Now

Southeast Asia has emerged as the focal point within this offshore turn, and Indonesia — the fourth most populous country on earth, the world's largest archipelagic nation and Australia's nearest large neighbour — has attracted particular attention.

The reasons are structural and compounding. Indonesia's middle class is expanding rapidly, driving domestic tourism alongside international visitor numbers. The country's digital infrastructure has transformed the ability of foreign investors to transact, manage and exit assets remotely. Legal frameworks governing foreign investment in property have been clarified and codified in ways that eliminate much of the uncertainty that characterised the market a decade ago.

And crucially: Indonesia is close. Flying time from Sydney or Melbourne to Bali is comparable to a domestic flight to Perth. For investors who want to combine ownership with personal use — a category that represents a significant and growing share of offshore property buyers — proximity to Australia is not incidental. It is a core part of the value proposition.

Bali led this shift. For years it served as the entry point through which Australian investors first encountered Indonesian property, first understood the legal structures available to them, and first built the networks — agents, lawyers, notaries, property managers — necessary to participate confidently.

But Bali, in the most relevant sense, has matured. Prime areas — Seminyak, Canggu, Ubud — are now well-developed markets. Infrastructure is strained in some areas. Land pricing in hotspots has increased substantially, compressing the yield advantage that originally made Bali attractive relative to Australian capital cities.

Lombok has emerged as the natural successor.

Lombok: The Infrastructure Story That Changed Everything

Ten years ago, Lombok was widely considered the quiet island next door — similar natural appeal to Bali, a fraction of the visitors, limited international connectivity and the infrastructure profile of a market at an earlier stage of development.

That description no longer applies.

The Lombok International Airport at Praya, significantly expanded and upgraded over the past decade, now handles direct international connections that have transformed accessibility for both tourists and investors. The Mandalika development zone — a government-designated Special Economic Zone encompassing a MotoGP-standard circuit, luxury resort development and world-class beaches — brought sustained international media attention and significant infrastructure co-investment to Lombok.

"Lombok has benefited from significant infrastructure investment over the past decade, including an international airport, improved road networks and global exposure through the Mandalika MotoGP circuit."
— Julie Noorman, Chief Operating Officer, Saraya Beach Resort and Residences

The road network connecting Mataram — Lombok's capital — to the southern and western coastal areas has been substantially improved, reducing travel times and opening previously inaccessible areas to development. Beach areas in West Lombok, including the Sekotong Peninsula, combine white-sand beaches, calm turquoise water and mountain backdrops that are geographically competitive with Bali's most desirable locations — but at land prices that reflect an earlier stage of the development cycle.

This is the combination that serious property investors recognise as rare: genuine natural endowment, accelerating infrastructure investment, and a pricing environment that has not yet fully absorbed the implications of both.

Understanding Indonesian Property Ownership: The PT PMA Framework

For many years, the single largest obstacle to Australian investment in Indonesian property was not yield, location or market access. It was legal uncertainty about how foreigners could hold property in a country that prohibits direct foreign land ownership.

That uncertainty has been largely resolved — but it persists as a perception among potential investors who have not engaged with the current framework.

The core structure available to foreign investors is the PT PMA — a foreign-owned limited liability company registered under Indonesian law. Under the Indonesian Investment Coordinating Board (BKPM) framework, PT PMA entities can be 100 per cent foreign owned. They can hold property under HGB title — Hak Guna Bangunan, or Right to Build — which is the closest Indonesian equivalent to freehold ownership.

"Foreign investors cannot hold land directly in Indonesia, but they can own property through a PT PMA company, which can be 100 per cent foreign owned. This structure allows the company to hold property under HGB title — widely regarded as the closest equivalent to foreign-style freehold ownership."
— Adrian Campbell, CEO, Kinnara Capital

Campbell emphasises that understanding this framework is the entry point for rational engagement with Indonesian property. "In the past there was a misconception that foreigners needed to use a local partner through nominee arrangements, which were often illegal and created uncertainty. In reality, the structure has long existed through PT PMA companies, which can be 100 per cent foreign owned."

The PT PMA structure also solves the exit problem. Because the asset is held within a corporate entity, resale can be transacted as either a direct property sale or a share transfer in the PT PMA entity, providing flexibility that direct land ownership models cannot replicate.

How Modern Developments Are Built for International Buyers

Beyond the legal framework, the structure of premium development projects in Indonesia has evolved significantly in response to international buyer demand. The current generation of premium projects is structured differently from the early leasehold era — ownership clarity, regulatory compliance and exit pathways are defined at the outset.

"More developments in Indonesia are now structured with international buyers in mind. That means clearly defining ownership structures, regulatory compliance and resale mechanisms from the outset."
— Adrian Campbell, CEO, Kinnara Capital

This includes professional resort management frameworks for villa and residence developments, where centralised management structures handle guest services, maintenance and hospitality operations. Owners enjoy passive income from rental returns without operational burden, and international guests receive the consistent service standards they expect from premium resort destinations.

Saraya Beach Resort and Residences: A Case Study

Saraya Beach Resort and Residences, located in Sekotong on the western coast of Lombok, represents the current application of these principles within a development specifically structured for international investment.

The project is positioned on a beachfront site within a designated tourism zone — a zoning classification that provides a defined regulatory framework and reduces the permitting uncertainty that has historically been a source of risk for property projects in Indonesia.

"While Lombok already has several established five-star resorts, Saraya Beach Resort and Residences is positioned on one of the island's most desirable beaches, known for its turquoise waters and natural coastline."
— Julie Noorman, COO, Saraya Beach Resort and Residences

Interest in the project is coming from a mix of lifestyle buyers and investors, particularly from Australia and nearby regions. Buyers are drawn to the combination of ownership and personal use, alongside exposure to a destination that is earlier in its development cycle than Bali — implying both lower entry pricing and greater potential for capital appreciation as infrastructure continues to develop and tourism numbers grow.

"Lombok's proximity to Australia is virtually identical to Bali in terms of travel distance, making it just as accessible for Australian travellers and property owners."
— Julie Noorman, COO, Saraya Beach Resort and Residences

"As Bali has matured and become increasingly crowded, Lombok is naturally attracting attention as the neighbouring destination offering similar natural appeal while still having significant room for tourism growth and associated property development," Noorman says.

The Yield and Return Profile

Gross rental yields on professionally managed resort villas in established Indonesian tourism destinations have historically ranged between six and twelve per cent, depending on location, management quality and occupancy rates. This compares to sub-three per cent gross yields available in many Australian capital city markets.

The entry price point is also substantially lower than comparable premium real estate in Australian markets. A freehold beachfront villa in a premium Lombok location — with resort facilities, professional management and the legal clarity of PT PMA ownership — represents a fraction of the capital required to acquire a comparable lifestyle asset in Australia's coastal markets.

Lombok, at an earlier stage of the same trajectory as Bali, offers investors the opportunity to access a comparable quality of asset and location at a price point that reflects current rather than fully matured market valuations.

Portfolio Context: Offshore Property in the Australian Wealth Framework

For Australian investors managing broader portfolios, the case for offshore property diversification extends beyond individual asset characteristics. Australian residential property, despite its strong historical performance, is structurally concentrated — most investors hold Australian assets, denominated in Australian dollars, subject to Australian regulatory and interest rate conditions.

Offshore property — particularly in markets with different interest rate regimes, tourism-driven demand drivers and currency exposure — introduces genuine diversification that cannot be replicated by adding domestic assets.

"For Australian investors, the broader shift is less about individual opportunities and more about how property fits within a changing portfolio framework. As access improves and ownership structures become more standardised, offshore property is moving from the margins towards the mainstream."
— Adrian Campbell, CEO, Kinnara Capital

What Comes Next

Lombok is, on most credible assessments, at an earlier stage of its arc than Bali. The infrastructure investment is ongoing and accelerating. International visitor numbers are growing from a base that remains well below Bali's. Development density in the premium beach locations is still low. And the pricing environment has not yet fully adjusted to the trajectory that the island's natural attributes, infrastructure investment and proximity to Australia imply.

For Australian investors prepared to engage with the legal framework, work with experienced operating partners, and take a medium-term view on capital appreciation alongside near-term yield, the opportunity is substantive.

"The combination of ownership and personal use, alongside exposure to a destination that is earlier in its development cycle, is genuinely unusual. It is the kind of opportunity that tends to look obvious in retrospect — and that rewards investors who are willing to do the work to understand it now."
— Adrian Campbell, CEO, Kinnara Capital

This article is produced by Kinnara Capital. It does not constitute financial advice. Readers should seek independent financial, legal and tax advice before making investment decisions. Past performance is not a reliable indicator of future results.