A potential starting point for investors interested in the Bali market is around $100,000 USD. This amount can provide a springboard for the acquisition of a variety of properties, such as a cozy villa in a tranquil setting (for example, Beachfront Boutique hotel Villa B with price $300 000 for 30 years) or a strategic luxury space (as Farsight Nusa Dua with price $650 000). These investment options can serve as viable channels for generating rental income, giving investors a foot in the door of Bali's vibrant property market.
However, it's important to note that the exact amount required to invest can vary significantly depending on factors such as the specific location, size and type of property, emphasizing the need for a tailored approach to suit the investor's individual financial capabilities and investment goals.
However, investing in Bali does come with its own set of pitfalls.
- Location & Prices
There are a lot of great looking properties on the market, but with a bad location specifically for renting out with low yields and low occupancy. Also the object price is rising faster than the rental price. It is difficult to determine this from the district alone. So you should always request an investment yield analysis and forecast from experts with real statistics.
- Construction Company Tricks
In the last month, 300 construction companies have been registered. And they're not always quality and genuine companies, that invest a huge amount in PR and marketing, but really are nothing and have not built a single object.
Not to be caught by such companies, always make a quality research on the documents of the company, the founder or built objects and check all information.
- Liquidity & Reality
The return on investment is only taken into account when the property is sold.
Imagine: the land has rapidly increased in value, but you still have a 20-year lease.
Indonesians do not consider long-term leases, they buy into property. So the only way you can sell it is to a foreigner, and they want a 30-year lease, not a 20-year lease. In that case, you're giving away a cheaper property. Just keep it in mind.
The advantages for foreign investors are still there: it's greatly cheaper to enter the property and the cost of returning the annual cash flow is the same when buying (tourists don't care) from renting and even higher.
- Land Lease
Investors get the long-term lease for 30 years with some kind of extension right on obscure market land and whether it will be extended is unknown.
Check and choose your land owners very carefully, study the terms and conditions of the lease, read the documents carefully and ask all questions that concern you before signing the deal. It is recommended to consult a lawyer.
- Market Trends
Nowadays, many developers are building apartments. For the developers it is favorable: a small plot of land, and five floors at once (it is strongly forbidden to build higher). Such objects are cheap and the apartments are expensive. Flats are cheaper to build, easier and quicker to sell. The mark-up per square meter is higher than for a villa. As a result for investors — such objects are less sold on the market, the profitability is lower, the competition with real hotels, townhouses or villas (because of the private areas) is big.
So consider property type when investing in Bali, and don't follow trends.