Green Real Estate in Indonesia: Standards and Subsidies 2025

Published on May 4, 2026 and written by Cyril Jarnias

Indonesia and Green Real Estate: A Booming Sector

Indonesia, an archipelago of diverse landscapes and rapid economic growth, is increasingly turning to green real estate, a booming sector where sustainability and innovation meet.

Ambitious Standards for 2025

As 2025 approaches, the Indonesian government is implementing ambitious standards and attractive subsidies to encourage the construction of environmentally friendly green buildings.

A Model of Sustainable Development

As the country sets its sights on reducing its carbon footprint while addressing the increasing need for housing, this article explores the incentive policies and challenges Indonesia faces in becoming a model of sustainable development in real estate.

The Stakes of Green Construction in Indonesia

The main challenges of green construction in Indonesia revolve around major geographical and climatic hurdles, recent regulatory transformations, and significant economic and social impacts.

Specific Geographical and Climatic Challenges

• Indonesia is an archipelago of over 17,000 islands, exposed to high natural risks: frequent earthquakes, floods, volcanic eruptions, as well as rising sea levels threatening coastal areas.
• The tropical climate causes high humidity and abundant rainfall. This requires careful material selection (moisture resistance) and bioclimatic design to ensure natural ventilation and thermal comfort.
• Massive deforestation (mainly on Borneo/Kalimantan) reduces the country’s ability to regulate its local climate while destabilizing the soil.

Impact of Recent Environmental Standards

Standard/Measure	Effect on Green Construction
Mandatory green space reserve in urban projects	Encourages preserving or restoring local biodiversity
Prioritization of public transport & renewable energy	Promotes low-carbon urban development
Presidential regulation on reforestation	Fosters integration of buildings into a restored forest environment

These standards require urban planners to:

• Integrate 65–70% green spaces in certain flagship projects like Nusantara,
• Drastically limit the use of fossil fuels,
• Adopt urban planning oriented towards ecological well-being.

However, they sometimes hinder the private sector due to high costs or technical complexity.

Economic and Social Repercussions

Positive Effects

• Creation of specialized jobs (green construction, forest management).
• Increased property value for certified “green” buildings.
• Potential improvement in quality of life through a healthier environment.

Negative Effects/Potential Obstacles

• Higher initial costs for real estate developers.
• Risk of social exclusion if these new homes remain inaccessible to low-income populations.

List of observed repercussions:

1. Forced displacement or profound lifestyle changes for some local communities during large-scale ecological projects (e.g., Nusantara project).
2. Tensions between national/global ecological imperatives and immediate local socio-economic needs.

Government Initiatives: Subsidies & Incentives

The Indonesian government actively supports green construction through:

• Direct subsidies for certain sustainable materials (certified local bamboo, solar panels).
• Targeted tax breaks for “green” investments.
• Pilot programs aimed at demonstrating long-term economic viability & social benefits (e.g., Nusantara forest city).

Type of Incentive	Beneficiary	Target Objective
Material Subsidy	Builders	Reduce cost of sustainable construction
Tax Credit	Developers/Buyers	Make green real estate attractive
Technical Training	Local Craftsmen	Disseminate green construction know-how

Local Awareness & Training

Widespread adoption heavily depends on:

• Public campaigns explaining health/environmental benefits,
• Training adapted for workers/craftsmen to master new techniques & associated constraints,
• Strengthened dialogue with local communities affected by these structural transformations.

Building local skills is essential to ensure that ecological progress does not equate to social exclusion or cultural loss.

In summary:
Green construction in Indonesia must contend with a demanding yet potential-rich natural context; it progresses under strong regulatory impetus while needing to closely monitor local economic and social balances.

State Subsidies and Aid for Green Real Estate

Types of State Subsidies and Aid for Green Real Estate in Indonesia (up to 2025)

• Direct subsidies for ecological home renovation, notably through the BSPS program (Self-Help Housing Stimulant Assistance Program).
• Financial incentives for integrating green technologies and sustainable materials in construction.
• Concessional loans or microcredit to supplement state subsidies.
• Targeted support for renovations in vulnerable areas (slums, coastlines).

Aid / Subsidy	Target Audience	Amount / Benefit	Main Conditions
BSPS – Sustainable Renovation	Low-income, informal households	Up to Rp21.8 million	Compliance with ecological standards, primary residence
Technology Subsidy	Real estate developers	Reduced cost of green equipment	Use of renewable/local energy
Green Microcredit	Individuals/SMEs	Reduced rate on financing	Project meets sustainability criteria

Tax or Financial Incentives

• Tax reductions for investing in sustainable local materials or renewable energy systems.
• Tax relief on certain ecological equipment integrated during new construction or major renovations.

Specific Government Initiatives

1. Expanded BSPS Program:
   • Objective: Renovate two million homes by the end of 2025 with direct aid per home meeting environmental standards.
   • Allocated budget: Over Rp43.6 trillion (>2.6 billion USD).
   • Focus on ecological rehabilitation of precarious and coastal neighborhoods.
2. Eco-Responsible Architectural Standards Mandated from 2025:
   • Strict requirements for renewable energy, waste management, and increased use of locally certified wood.
3. Support for Access to Green Microcredit, supplementing public subsidies to ensure overall project financing.

Expected Results

• Significant improvement of the housing stock with a notable reduction in its carbon footprint.
• Rapid increase in the number of homes meeting international energy standards.
• Local economic development through increased involvement of Indonesian SMEs specialized in sustainable building.

Governing Legislation

• National laws governing tax incentives related to green real estate investments (reforms planned to harmonize practices in 2025).
• Technical regulations setting minimum thresholds for energy and environmental performance of new/renovated buildings from January 2025.

International Efforts & Influential Collaborations

Non-exhaustive list:

Just Energy Transition Partnership (JETP) Indonesia

• Mobilization of over 20 billion USD in combined concessional loans and international grants (EU, European Investment Bank…)
• Active technical cooperation with Denmark and the European Union for several years
• Priority target: Accelerate the decarbonization of the real estate sector through technology transfer and international financial support

Key Takeaway

Indonesian public schemes are reinforced by massive international support aimed at fostering a climate-friendly real estate model while promoting access to healthy housing for all. The whole system is steered by a national regulatory framework progressively aligned with global standards thanks to these strategic collaborations.

Understanding BREEAM Certification in Indonesia

BREEAM (Building Research Establishment Environmental Assessment Method) certification was created in 1990 in the United Kingdom by the Building Research Establishment (BRE). It constitutes the first method for assessing building sustainability, aiming to encourage more environmentally respectful design, construction, and management practices. Its holistic approach evaluates the entire building lifecycle, from design through operation and maintenance.

BREEAM has established itself as a global reference in the green building sector, used in over 80 countries and currently covering more than half a million certified buildings. Its international recognition rests on demanding criteria that encompass energy efficiency, sustainable water management, responsible material selection, carbon emissions, indoor comfort, and biodiversity.

In Indonesia, where environmental challenges are significant due to the humid tropical climate and rapid urbanization, BREEAM is primarily applied to large commercial or institutional real estate projects seeking to stand out for their ecological performance. Assessment categories particularly relevant to this context include:

• Efficient water resource management: systematic integration of water-saving systems adapted to extreme climate events.
• Adaptation to the local climate: passive optimization to reduce air conditioning needs while ensuring optimal thermal comfort.
• Sustainable local materials: preferential use to limit the carbon footprint associated with transportation.
• Responsible waste management: response adapted to local regulations that are sometimes less strict than in Europe but requiring a high level of exemplarity to obtain BREEAM.

Challenges Faced by Indonesian Developers:

• Relative lack of local accredited BREEAM assessors
• Additional costs related to certain imported technical criteria
• Need to adapt certain international requirements to national regulatory or technical realities

Opportunities:

• Increased international valuation with foreign investors sensitive to recognized labels
• Strong differentiation in the local market where few projects are certified to these demanding standards
• Easier access to certain local tax incentives for exemplary green buildings

Concrete Examples:

Project	Location	Category	Achieved Level
Sequis Tower	Jakarta	Commercial	BREEAM Excellent
BSD Green Office Park	Tangerang	Office	BREEAM Very Good

Integration with the local regulatory framework occurs notably through a link between BREEAM and national standards such as Greenship (the Indonesian equivalent developed by the Green Building Council Indonesia). Certain public programs also offer partial tax exemptions or direct aid to partially offset the additional costs associated with this pioneering approach.

BREEAM certification thus represents a powerful strategic lever to accelerate the ecological transition of the Indonesian real estate sector while meeting the growing expectations of the international market.

Summary List:

• Globally recognized British origin
• Necessary adaptations to the Indonesian tropical context
• Challenges related to lack of local expertise and high initial cost
• Major opportunities in terms of image and financial attractiveness
• Possible articulation with Greenship/national standards + existing incentive schemes