Indonesia is currently facing rapid urban development due to its government’s policies. Gentrification, which is present in the country accompanying the rapid urbanization, may bring about development and increase of life quality in a region. However, previous studies using data from urban and rural areas from other countries have shown the negative effects of gentrification, particularly on crime. Most of those studies have explored the effect of gentrification on crime through sociological mechanisms, even so the economic theories argued that the effect may be in a reverse direction. Therefore, reverse causality is a potential estimation problem to address. The present study aims to examine the effect of gentrification on crime while dealing with reverse causality problem and spatial interdependence of crime variables. Using Indonesian districts and cities level data from the 2019 National Household Survey, the study employs generalized spatial two-stages least square (GS2SLS) estimation. The results found that the inflow of gentrifiers positively affects property crime rate, which is observed more strongly on peripheral districts compared to cities, and negatively affects violent crime rate on cities. This difference in results is attributed to the nature of the type of crimes analysed in this study. © Springer-Verlag GmbH Germany, part of Springer Nature 2026.