Bali Property Buying Guide

How exactly big is the villa renting market?

US$162.5m – that is the value. It is approximately 35% of the entire Asia Pacific market.  (sources: villa-finder.com)

4,383 – the count of villas in Bali available for full-time and short-term rental.

In 2019 6,3 million foreigners visited Bali.

Are you planning to take a grab a piece of this growing cake? You need to know these two things: the approximate return of investment and what is exactly in demand.

Trending Property Locations

Seminyak – amongst Ubud, Sanur and Canggu is the hotspot area for all tourists which hosts about 45% of them. Similar places that are frequently visited are Legian, Kuta and Lombok. One important key factor that attracts tourists: is the distance to any beach. The street with the highest demand for villa rentals is Oberoi street.

Rent Prices

3 bedrooms – this is the villa type that tourists are frequently looking for. Next in line are villas with 2 bedrooms.  The approximate price for a 3 bedroom villa is $350 and $580 for a 4 bedroom luxury villa in Canggu. You can get half a price if you look in less popular areas like Lovina, Legion, Sanur, Gyaniar.

What are the customers that buy property in Bali?

Mostly – Singaporeans, Hong-Kongers and Europeans make a big part of all the tourists staying in Bali. The largest number of tourists visiting Bali are from Australia (1.230 million Australians stayed in Bali in 2019). They make the bulk of the villa market. All customers prefer to be in close proximity to shops, restaurants and mainly the beach. European vacationers do show a tendency to stay in traditional style villas, away from cities, deep in nature. Keep in mind that traditional style and dated old villas are not the same.

In the modern day necessities such as WiFi, a lush tropical garden, a swimming pool and a villa chef are very important to provide to your customers.

How much does it costs to buy property in Bali?

Bali property prices can vary a lot, from very low to extremely high. I you are looking to buy a property on the beach be prepared to pay as you would in any western country. Bargains is getting harder to find everyday and to find a run down villa to buy and renovate is almost impossible these days.

If you are looking to buy a 3 bedroom villa on a 300m² lot of land in Canggu or Seminyak for example, it can set you back about 500k$ for a freehold lot. Leasehold would be between 300k$ and 400K$. If you get further from the touristic hotspots like Jimbaran or Nusa Dua the prices drop dramatically and you can get same villa for about 300k$, o even further like Tabanan for 200k$. Note that there is a huge difference between leasehold and freehold.

View Our Villas for Sale in Bali

What are the cost of land?

To help you build up your villa business plan, here are some price points. Keep in mind that the numbers provided bellow and not complete as you will have to pay agent’s commission and the your notary’s fees and tax of 1% from the investment.

The price to lease the land is at least $40,000 (as we explained: foreigners cannot legally own land in Indonesia). The land is usually leased for 25 years. In a tourist area the average price of 1 are per year is $300 in Kerobokan and $1000 in Seminyak. The math is simple: you own 400 sqm (4 ares) you have a piece of land in say Canggu (sought after area) which is about $600/1year so the price for 25 years would be 25*600*4 = $60,000. It takes a lot of patience to find a good piece of land as most of them overpriced.

To build a square meter of an unfinished and undecorated luxurious villa usually costs $300-$800, so add another 50% and you will get the more accurate final price.

A full-time staff worker’s monthly salary is about $150. If you want to ensure a necessary hospitable experience for your customers be sure to hire staff.

The average monthly utility (electricity & water) cost for a standard two bedroom villa is about $150.

The Villa marketing platform market rate is 20%.

View Selection of Unique Land For Sale in Bali

What is the return on investment (ROI)?

Depending on the location of the villa and how well you market it, the yearly ROI ranges from 10% to 30%. Areas like Seminyak and Canggu could offer approximately 20% whereas Ubud would offer 15%. It all depends how cheap you can build your villa. We see 30% ROI also in some cases achievable if the project is very unique and stands out. It all depends on then location, developers and putting time and effort into your project.

What is the existing supply? Where is the future of the Bali villa market?

“With every new investor land prices go up. The market has become saturated in Canggu. A plot inland would cost 3 to 5 times less than a plot by the shore and we are not talking about commercial plots. In Canggu the plots by the main road are almost gone and the only ones that are left a quite expensive.” Said Mr Frieder Jacobsen, from Bali Treasure Properties.

It has been a price war in Bali, with over 35,000 listings on Airbnb. In order to thrive, owners of modern villas need to find a way to distinguish themselves from the crowd. “In order to get bookings and start generating income you must give your villa a theme like a yoga theme, or a family oriented theme to stay in the market.” Said Mr. Edouard Garret, Director of Distribution at Villa-Finder.com. “You can still make a lot of money in this niche if you possess the energy, patience and a good strategy”.

Legalities & process

With the amount of articles and discussions online one can misunderstand the situation of the legal process. This is what you need to be aware of before you buy property in Bali:

• Leasehold and Freehold: By law foreigners are only able to rent out a piece of land in Indonesia for e.g. 25 years. After the time is over all improvements that were made and the land itself returns to the owner.
• Avoid finding a “nominee” who would assist in buying the land of your choice. Because if anything bad were to happen the land wouldn’t be legally yours so you could lose the land and the villa along with it.
• Building permit (IMB): If you are planning to build a villa on a plot you rented out you must get a government issued certificate from Dinas Tata Ruang Kota dan Permukiman (Department of Town Planning and Settlements). If you are taking over an existing lease find out if it has the Building Permit issued. When you choose a trustworthy contractor and agree on the plans and the BOQ (Bill of Quantity that shows fees) get a copy of the contract with the registration IMB number on it. It takes about 4-10 months to get the IMB certificate.

Loans and Finance to buy property in Bali

It is unheard of foreigners acquiring loans to buy property in Bali from Indonesian banks as properties are usually not registered in their own names.

For those how a really determined, the option to get a loan is by setting up a PMA company or through nominee. Also to get a loan you need the project to be 70% completed and put under the bank name.

The perhaps more viable option is to try to get a loan via an international bank. There are local companies that can assist in this matter.

Step by Step

So now you have a sense what is going on in the market, have the money and are familiar with Bali laws. How to start?

• You have to find a trusted agent or a real estate company to assist you and to make sure you are safe. Safety should be always your number one concern when buying property in Bali.
• Once you find a suitable property you should once again make sure the deal is safe and all the documentations correct. You should check if the land is suitable for development and is not in a for example green zone, which will not get you a building permit (IMB).
• Then you should put down deposit of 10% to a notary escrow account.
• Then sign letter of intent with the seller via notary agreeing to the final payment.
• If you are using nominee, you should sign the Power of Attorney agreement.
• Pay the rest payment.
• Collect the agreement and the land papers and pay the notary fee of about 2%-3%.

Summary

No matter what market condition there will always be demand for property in Bali. Bali is not going anywhere soon and anyone who visited Bali’s knows how unique and spiritual this place is. It is better to get into the market and buy property in Bali later than never.