Why Invest in Medan? Reasons German Investors May Find It Attractive

 

Monday, 14 September 2026

 

When investors look at Indonesia, Jakarta and Bali often get most of the attention. But there is another city that deserves a closer look: Medan.

 

Located in North Sumatra, Medan is one of Indonesia’s biggest economic centers and an important gateway to western Indonesia. For German investors looking for opportunities in Indonesia, the city offers several interesting advantages, especially in property, trade, services, and infrastructure.

 

So, what makes Medan attractive?

 

A Large and Growing Market

 

Medan has a city population of around 2.5 million people, while its wider metropolitan area has about 4.2 million residents. This creates a large market for housing, offices, retail, services, and other businesses.

 

A growing population also means continuing demand for property. For investors, this can be an important factor when looking at long-term opportunities.

 

Strong Economic Activity

 

Medan’s economy is not based on tourism alone. The city is closely connected to major industries in North Sumatra, including palm oil, rubber, tobacco, manufacturing, trade, and logistics.

 

This diversified economic base can make Medan interesting for investors who prefer a city supported by several business sectors rather than relying on just one industry.

 

The source also reports that Medan’s economy grew by 5.1% year-on-year in 2025, while North Sumatra recorded 4.98% growth in the first quarter of 2026.

 

Strategic Location

 

One of Medan’s biggest advantages is its location.

 

The city has strong connections with Malaysia and Singapore and sits relatively close to the important Strait of Malacca shipping route. Direct flights to Kuala Lumpur, Singapore, and Penang also make international connections easier.

 

For German businesses, this regional connectivity could be useful when considering Indonesia as part of a wider Southeast Asian strategy.

 

Property Prices Are Still Attractive

 

Another reason investors may consider Medan is the relatively low property entry price.

 

According to ASEAN Estates, property prices in Medan range from around $800 to $1,900 per square meter, depending on location. The source also estimates gross rental yields of around 4% to 8% across the city, with some high-demand areas potentially reaching 5% to 9%.

 

Compared with cities such as Jakarta and Bali, this creates an opportunity to enter the Indonesian property market at a lower starting price.

 

Infrastructure Is Improving

 

Infrastructure is another important factor. Medan is benefiting from developments involving the Trans-Sumatra Toll Road, public transportation, and the expansion of the Mebidang Bus Rapid Transit network.

 

Better transportation can make previously less-accessible areas more attractive for residential and commercial development.

 

A City for Long-Term Investors

 

Medan may not have the international tourism image of Bali, but that can actually be part of its appeal. Its economy is supported by residents, businesses, universities, hospitals, trade, and industry.

 

For German investors, Medan could therefore be worth exploring as part of a long-term Indonesia strategy. The key is to study the market carefully, choose the right sector, and understand local regulations before investing.

 

Medan may not be the loudest investment destination in Indonesia, but sometimes the quieter markets offer some of the most interesting opportunities.