Expert's insights about investing property in Bali

Investing in real estate is a rewarding experience and you can get the most out of it by doing it the right way. Property investment in Bali is still a profitable venture despite the pandemic when you take into account the high demand that is being held up by the border closure. On the contrary, the pandemic presents a golden opportunity to buy a property in Bali as you will be prepared to satisfy that demand once international travel is no longer restricted.

Whether you’re a first time buyer or expanding your portfolio, these tips can help maximising the return on your investment:

Buy leasehold

Buying freehold properties using the nominee arrangement offers no legal protection and is not a recommended practice. The lease duration for leasehold properties in Bali is typically between 25 to 35 years, which is sufficient for long term capital growth especially if you invest in a good location. 

While establishing a foreign investment company (locally known as PT PMA) is the safest method for foreign ownership of properties, buying freehold villa or land with a PT PMA is recommended for medium to large scale investments as there is a minimum amount of capital investment that must be met.  

Invest in emerging areas

Buy property in up-and-coming regions like Canggu while there’s still a lot of opportunities, especially in the Berawa neighborhood where all the buzz is happening right now and the property value is on the rise. Saturated areas such as Seminyak and Kuta offer little room for new developments while property prices are considerably higher. The rental demand growth in emerging areas is also stronger than in developed areas as seen in the last 3 years, which is highly advantageous if you plan to invest in short term rentals.

Don’t overlook less developed regions near emerging areas, but rather invest in those regions early on. Pererenan, for example, is not as developed as its neighbor Canggu just yet but it’s a promising location both for long term investments and short term rentals.

Get to know the rental market

This is particularly crucial if you wish to sublease your property either annually or daily, as the market condition of each region varies from time to time. Being well informed on the latest trends, including any changes in the average rent price and demand will allow you to recognize the current state and potential of the market, enables you to invest in the right place and property. Even if you’re looking for a home to settle in, it is very useful to understand the property’s rental potential as you may consider renting it out for cash flow while you’re on vacation overseas or returning to your home country.

Villa revenue is determined by several factors such as number of bedrooms, design, location. Revenue of different properties with similar specifications can easily vary, and you can achieve double the amount if you fit the right demand in the right area. Supply and demand for specific amounts of bedrooms also vary depending on the region’s market. For daily rentals, good management is essential as this will affect guest satisfaction and reviews. For long term rentals, proximity to international schools or coworking spaces will make your property more appealing to tenants with specific needs.

This is one of the primary reasons why it’s important to work with local licensed real estate agencies and property management companies, and we’ll talk about it more later on.    

Consider buying off-plan properties

Off-plan properties are usually priced lower than the market value, and you don’t have to worry about maintenance costs during low occupancy at times like this. Buying off-plan may be a cheaper option than a fix-and-flip as renovation costs can inflate easily if an existing property has hidden costs, which is something that you must beware of when browsing bargain properties. In addition, you might find off-plan properties offered with guaranteed ROI.

Investing in large-scale off-plan developments as early as possible is a wise move, as it allows you to secure the best units available before reaching their peak competitive pricing. Most of the developments increase their price along with the construction progress, and buying an off-plan villa before breaking ground will be cheaper than when it’s at 30% completion.

Hire a reliable property manager

Seek a property manager who has a good network of tradespeople that can help with the maintenance of your property, so you won’t have to look hard for housekeepers, gardeners, plumbers, etc. Hiring a manager is essential for rental properties even if you don’t live far from your investment because you can divide the workload accordingly or delegate it entirely for a hassle free operation, which is a lifesaver if you’re running multiple rentals at once. 

Guest satisfaction is instrumental in attracting customers, because online reviews greatly affect a prospective customer’s decision to book your property or not. With that said, working with a good management company is not only helpful in maintaining your property but also in producing high numbers and quality reviews. 

Consult with local real estate agents

Whether you want to buy through them or need some information, always seek the help of a licensed agent. Local agents are the best source because they can provide reliable and up to date information including the aforementioned insights into the property market, such as the rental outlook of a region and even the rental forecast of a particular property. Besides, the agent may already have listings that perfectly suit your budget and preferences, saving you from the tedious work of searching through Bali’s bustling streets.

Don’t bother working with unlicensed freelance agents as they do not have the legal authority to broker real estate transactions. Even worse, you might get caught in scams such as overpaying the property or the agent’s commission.

What You Can Invest in Bali with a Budget $150,000 to $650,000

Investing in Bali with a budget between $150,000 and $650,000? In this article, we will talk about one investment option that will best suit this budget range. Keep reading to know more.

Long Lease Apartments and Villas

With a budget in the range of $150,000 to $650,000, long lease apartments and villas are the best options. When we mention ‘long’ we mean a really long lease, which typically extends from 25 to 35 years. More often than not, the landlord also offers a long extension option, between 15-25 years.

Valuable insights you need to know about Bali property

Investing in Bali real estate is a long-time trending topic among foreigners, which is no surprise considering that the island’s tourism continues to grow bigger and the vacation rental market is prospering because of it. Bali has been a favorite holiday destination for decades and will likely stay that way for a very long time, with people from all around the world flocking to buy property for permanent residence or investment. The property market has performed extremely well in the last few years and investors are confident that it will be even better than before, hence why we’re still seeing new players entering the industry to this day.

With that said, we fully understand if you’re interested in buying a property in Bali and we will guide you through the entire process of securing your slice of paradise. These are just a few of the essential questions that you must ask before putting your hard earned savings into investment, and we’ll give you a concise answer for each.

Is it worth buying property in Bali?

Bali is an amazing place to buy property either for a second home or an investment, because the island is not only full of charm but also untapped potential. Bali has been dubbed the world’s best destination by TripAdvisor several times already, and Forbes even named Canggu as the 4th best place to live and invest in the world back in 2019. One advantage of investing in Bali aside from the great return potential and high vacation rental demand is that foreigners can invest without holding an Indonesian citizenship—it’s a lot simpler than it seems.

Villas are great for investment because the average forecasted ROI in Bali is between 8-12% depending on the location, with Seminyak offering the best return potential closely followed by its neighbor Canggu. Property prices in Pererenan and Cemagi have sharply increased in the last few years, so it’s best to invest there early while the price is still affordable.

Where should I buy property in Bali?

First, you have to identify your goal. Are you buying a property for investment, private residence, or both? If you plan to settle down, consider buying villas for sale in Umalas or Canggu. They are very popular with expats thanks to international schools, banks, gyms, medical centers, and supermarkets are readily available. Villas in Ubud or Sanur are a great option for retirement as the region offers a more mature ambience and similar accessibility. For a truly breathtaking view unlike anywhere else, buy property in the Uluwatu area, where you can enjoy an ocean view from the top of a hill.

If you are solely focused on investing for quick returns, then you can’t go wrong with buying property in Seminyak, Canggu, or Pererenan where villa rentals are highly profitable. For a balanced combination of living and investing, Berawa offers the best of both worlds as it is the most desirable neighborhood in Bali and the villa rental market is flourishing. Villas for sale in Berawa are widely sought after because of their proximity to beaches, beach clubs, restaurants and many other attractions, which in return allows them to command a higher rental price than its surrounding areas.

What type of property should I buy?

Is it good to invest in land, a brand new villa, or a second-hand house? If you’ve been living in Bali for quite some time and are familiar with the real estate market, consider investing in land and then build on it. Building a villa can be cheaper than buying one, but it’s really difficult and expensive to find small plots (3 are or less) if you’re just building one property. Whether you decide to build or buy a villa to do a short-term or yearly rental, the key to running a successful rental business is working with credible real estate agencies and management companies.