Bali has experienced a rapid rise in popularity over the past few years, especially when it comes to its real estate market. Its beautiful landscapes, tropical climate, rich culture and overall affordability have attracted the attention of not only tourists but also foreign investors. In this article, we will explain more about what this boom is all about and why Bali is becoming one of the most lucrative places to invest in real estate.
An unrivaled tropical oasis
Bali’s charm lies in its exotic appeal, which offers more than just a vacation destination. The island’s beautiful scenery, friendly local people and remarkable culture come together in a unique destination that combines the comforts of modern life with the tranquil atmosphere of a tropical oasis. Bali, with its beautiful beaches, ancient temples, lush rice terraces and wide range of entertainment, offers a lifestyle that is hard to pass up for even the most avid traveler. For many, the dream of living in this paradise has become a reality, leading to an increase in demand for real estate.
Affordability and high profitability
One of the leading driving factors fueling the real estate boom in Bali is the relative affordability of properties. Compared to other competing markets such as the US, Australia or Western Europe, the cost of apartments, guesthouses and villas in Bali is significantly lower. This affordable price combined with the high rental yield potential creates a solid platform for investors, especially those interested in the villa rental market where returns can be substantial. And in general, buying a home here is a good investment. Just compare: in Dubai the profitability of real estate is 6-7%, in Thailand – 7-8%, and in Bali you can earn 12-15% of its value per year.
There are 2 options for landlords to rent out their homes. The first option is to obtain a commercial license and occupy tenants themselves. But this option is not suitable for those who live off the island – you need to be on site all the time. The second option – to transfer all responsibility for the delivery of real estate management company, which will also solve all the issues that arise in the process of renting out the object. The work of this company costs, as a rule, 15-20% of the income received by the investor.
Infrastructure and development
Bali is constantly evolving with improvements to local infrastructure and development projects, which significantly increases property values. The Indonesian government has made a conscious effort to support Bali as a global tourist destination. Infrastructure investments include modernizing airports, expanding road networks and improving internet connectivity.
Stability and state support
Over the years, Indonesia has experienced continued economic stability and growth. Combined with the government’s efforts to regulate and simplify investment processes and procedures for foreigners, these factors have increased the confidence of foreign investors. Policy changes, such as the Hak Pakai (right of use) legislation, have made it easier for foreigners to own land. Hak Pakai is initially granted for 30 years with the possibility of extension up to 80 years in total.
While the coronavirus pandemic briefly hampered Bali’s thriving tourism industry, it has not greatly affected the long-term prospects for its real estate market. Prices remain stable and are expected to rise as the global economy recovers. The demand for vacation rentals is expected to increase further over time, generating good returns for those who invest in the sector.