Building a boarding house or a shophouse is a classic question for many people looking to invest in property. Both boarding houses and shophouses offer the promise of long-term profits when managed properly.
But before deciding, it is important to understand the needs, location, and development strategy.
As a contractor service business actor such as home building services or boarding house & shophouse contractors, we often meet clients who are still unsure about which investment option is more profitable between the two.
Understanding the Characteristics of Boarding Houses and Shophouses
Before comparing the advantages and disadvantages, let's first understand the basic differences between building a boarding house and a shophouse.
Boarding houses are typically designed for temporary housing, generally targeting students, workers, or small families. Meanwhile, shophouses (ruko) serve a dual purpose: as both a business and a residence.
To build both, you need a contractor or an experienced residential contractor, because the structural characteristics and functional needs are very different.
Boarding houses require a lot of partitions and an efficient water system, while shophouses require strong foundations and an open layout for flexible use as shops or offices.
Initial Construction Costs
In terms of costs, the cost of building a shophouse is generally more expensive per square meter than a boarding house, because it requires stronger materials and a prominent finish on the front.
However, the total number of units in a boarding house can make the overall cost higher depending on the capacity.
For example, to build a two-story boarding house with 10 rooms, you may need costs of around 700–900 million rupiah, depending on the location and building materials.
Meanwhile, building a two-story shophouse can cost between 600 and 800 million rupiah. This cost difference isn't absolute, as it depends heavily on the architectural design and material specifications.
To reduce costs, you can utilize the services of a home architect to make design planning more efficient, or use a contract contractor system to make the process and costs more manageable.
Potential Investment Profits
When it comes to benefits, both boarding houses and shophouses have their own advantages. Boarding houses provide a regular monthly income from room rental fees, making them suitable for those seeking a stable cash flow.
Meanwhile, shophouses tend to provide large profits from higher property sales and rental values, especially if they are located in strategic areas.
For example, boarding houses in campus or office areas can provide a profit of 8–12% per year from the initial capital.
Meanwhile, shophouses on main roads with high traffic can generate 10–151 TP3T per year. This means that, in terms of profit, the two can compete, depending on location and management.
Professional contractors like Bloka Build can help you devise a design and construction strategy to ensure your property is not only beautiful but also has high resale value and is efficient in the long term.
Location: The Main Determining Factor
Whether building a boarding house or a shophouse, location is a crucial factor. Boarding houses are more profitable if located near campuses, industrial areas, or offices. Shophouses, on the other hand, are more suitable along main roads, in business centers, or in commercial areas.
This location selection cannot be arbitrary. As a boarding house and shophouse contractor, we always advise clients to consider parking availability, vehicle access, and the development of the surrounding area. A location that is easily accessible and has a high traffic volume will accelerate the return on investment.
Building Design and Function
Design differences also determine the direction of development. Boarding houses emphasize space efficiency—many rooms with good ventilation and a running water system.
Meanwhile, shophouses emphasize an attractive facade appearance to attract customers and support commercial functions.
If you want to build a property with two functions at once, commercial fit out services could be a solution.
Fit out helps design the interior so that your shophouse can also function as a residence or office.
Meanwhile, for those of you who want to increase the capacity of your boarding room, the additional room service can be done without disturbing the main structure of the building.
Maintenance and Operational Costs
Boarding houses require higher routine maintenance costs than shophouses, because they have many residents and use shared facilities such as bathrooms, kitchens and water.
You need to pay attention to regular home repair services to maintain tenant comfort.
This is different from shophouses which are usually rented by one tenant for a long period, so maintenance is easier.
However, because shophouses are usually used for business, the exterior and security need to be maintained to keep them attractive and safe.
Working with a professional home renovation service will make it easier for you to carry out regular maintenance or minor repairs without having to spend a large amount of money all at once.
Risks and Challenges
Each type of property carries its own risks. For boarding houses, the main challenge is occupancy rates, which can decline if the location is not strategic or there is a lot of competition.
Meanwhile, for shophouses, the biggest risk is when the surrounding area loses its business appeal or changes occur in urban planning.
To reduce these risks, make sure you plan a design that is flexible and ready to adapt to future needs.
For example, a boarding house can be designed to function as a homestay, while a shophouse can be converted into an office or clinic. This is where it's crucial to use a specialized facility contractor who understands the various functions of a building.
Legality and Licensing Aspects
Building boarding houses and shophouses both require clear legal documents. You need to ensure the land has a proper land use permit and obtain a PBG (Land Use Permit).Building Construction Approval) to ensure the project is legally valid. Ignoring this can lead to legal problems in the future.
With experience as a contract contractor handling a wide range of projects, we always ensure complete permitting documentation before starting construction. This not only ensures legal compliance but also increases the resale value of your property.
Management and Administration
Once the building is complete, the next step is management. Boarding houses require a tenant management system, cleaning, and daily maintenance. You can appoint a manager or partner with a property management service for greater efficiency.
Meanwhile, shophouses are simpler because they are often managed by the tenants themselves. However, ensure a clear, written lease contract to avoid future disputes.
As experienced contractors, we at Bloka Build can help you not only build, but also design governance that facilitates the monitoring and maintenance process.
Conclusion: Which is More Profitable?
There's no definitive answer as to whether building a boarding house or a shophouse is more profitable. It all depends on your investment goals, location, and management strategy.
If you're looking for stable cash flow with moderate risk, then a boarding house could be an option. However, if you want rapid asset value growth with high resale potential, a shophouse could be more profitable.
The most important thing is to work with a professional contractor who understands the characteristics of both building types. With careful planning and efficient design, you can maximize the returns on any property investment you choose.
Use Bloka Build Services for Profitable Investments
Whatever your choice—building a boarding house or a shophouse—make sure the process is carried out by an experienced and trusted team of experts.
Bloka Build offers a complete solution for construction and renovation, from architectural design and cost planning to project completion with maximum results.
Contact us now for a free consultation and get the best solution to make your dream property come true with Bloka Build, your trusted contractor partner for your future investment.
