6 Things You Must Know Before Buying Property in Bali
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.
If you don’t want to be a landlord or prefer to sell rather than rent out, you can buy off-plan villas and then resell them upon completion. Buying off-plan means that you’re purchasing a property before or during its construction at a lower price, and then you can sell it again at a higher price after it’s finished. There are more risks in buying off-plan compared to buying a finished villa, but buying the project from a trustworthy agent and a reputable developer is key to this kind of investment.
What about investing for passive income? Then turnkey properties are the answer. These types of property are offered with a management program that handles the operation, maintenance, sales and marketing of the villa while the owners are allowed to stay in the property for a certain duration every year. That way, you will have a fully serviced vacation home that generates rental income without having to lift a finger.
How much does it cost to buy property in Bali?
As discussed in a previous article, the price of a newly built modern villa on a 3 are land in Berawa offered with a 25 year leasehold starts from $300.000 whereas land price in the area is around $1000-$1700 per are per year. Property prices in tourist areas such as Seminyak, Kuta and Canggu are very high, hence you should consider regions such as Padonan, Babakan, Pererenan, Cemagi, or Tumbak Bayuh for inexpensive options.
There is a wide variety of more affordable alternatives available if you don’t have the budget for a brand new villa. If you don't need large space, consider investing in apartments instead as you can find good ones priced between $60.000-$150.000 in Canggu and the surrounding areas. Alternatively you can choose to buy an older villa and then renovate it, which will be more time consuming but can save you a lot of money. Regardless of which option that you choose, it’s possible to invest with a budget of $150.000 or less.
Luxury and beachfront properties are expensive (starting from $500.000 and up) but the price is justified by their higher rental and occupancy rate. It’s really difficult to find beachfront villas for sale in Bali because they’re fairly easy to rent out and owners wouldn’t willingly sell such a profitable investment. Luxury villas for sale are easier to find, but you need to assess the property’s financials first to determine whether it’s a good investment or not. One way to achieve this is by requesting an ROI forecast from the developer or the real estate agency that lists the property.
Note that you will also have to take 5% transfer tax for freehold purchases and notary fee into account as well. Luxury houses (priced ~$1.38 million and above) and condos (priced ~$690.000 and above) are subject to 20% sales tax on luxury goods.
How do I buy property in Bali?
The process of acquiring property in Bali can be safe and straightforward if you work with partners that you can trust in securing your investment. Indonesia’s legal system is very different and you have to get good legal advice before committing to any decision. A professional real estate agency is the place to go as they can guide you through the transaction process, appoint a reliable legal advisor, provide useful investment advice, find properties that match your search criteria, and help you rent out or resell your property later on.
Avoid buying properties from questionable sources and using risky methods such as the nominee arrangement, the only safe approach of acquiring property is either with a leasehold or a foreign investment company (PT PMA). Foreign individuals have the right to rent a property in Indonesia, whereas establishing a PT PMA demands a lot of resources but provides greater freedom and better protection.
What should I do next?
Sit back, relax, and enjoy the island life. Consider renting out your villa occasionally or when you’re overseas for cash flow and your property won’t be unattended while you’re away. If you choose to sell the house in the future, asking for a valuation from real estate agencies will reveal the property’s market value and having the right price will increase the likelihood of selling quickly.
Should you hire a property manager or manage the rental yourself? Handling a rental property requires constant attention and not everyone has the time or energy for that. For a hassle free experience, hire a trustworthy management company that will ensure your property is well managed by providing full-time support including sales, marketing and operational support so you can focus on everything else and enjoy the rental returns.
For more information on investing in Bali property or real estate related matters, do not hesitate to contact us as we’re more than happy to help.
