Buying property during the construction stage (pre-sale) in Indonesia often appears to be an opportunity to invest in a project at the most attractive price.
Developers promise strong potential for the property to increase in value, favourable terms for early investors, and attractive returns once construction is complete. However, pre-sale transactions remain one of the most common causes of disputes between buyers and developers.
The key feature of this model is that the investor commits funds long before construction is completed, while the developer retains full control over the project, its financing, and the timeline. In effect, the buyer finances a future property while assuming a significant share of the risks.
Based on years of working with property in Indonesia, three of the most common scenarios faced by investors can be identified.
Construction delays
The most common problem is a failure to meet the completion deadline. The project falls behind the stated schedule, deadlines are repeatedly postponed, and the buyer must choose between continuing to wait and attempting to recover the invested funds.
Even if the developer has officially breached the contract, a favourable court ruling does not guarantee that the money will actually be recovered. If the company is experiencing financial difficulties, enforcing the ruling may become a separate problem.
Changes to the project specifications
Another common situation is when the property’s specifications are changed after construction has already begun.
During the sales stage, buyers are shown renderings, plans, and the concept for the future complex. However, the property’s size, layout, infrastructure, finishes, or other important specifications may later change. As a result, the investor receives a property that differs from the one on which the purchase decision was based.
Construction suspension
The highest-risk scenario is the complete or partial suspension of the project. This may be caused by insufficient financing, internal conflicts between the business owners, debt obligations, or flaws in the developer’s financial model.
Many projects are built using funds raised continuously from new buyers. Construction continues as long as sales remain strong. But as soon as the flow of investors declines, the project’s completion is put at serious risk.
In such situations, the buyer may be left with a signed contract but no completed property and no clear completion date.
What investors should consider
Buying property at the pre-sale stage should be viewed not as the acquisition of a completed asset, but as an investment carrying completion risk. The earlier the project stage, the higher the potential return—but also the greater the uncertainty.
Before signing a contract, it is important to check not only the property itself but also the developer: its financial stability, track record of completed projects, land ownership structure, any legal disputes, and the terms on which construction is financed.
Legal due diligence at the transaction stage can identify risks in advance and determine whether the developer is genuinely capable of completing the project.
The Legal Indonesia team assists with property transactions in Indonesia, helping investors assess project risks, check the developer, and conduct a legal review of the contract before documents are signed.
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