In 2021, Bali retook 1st place in Tripadvisor’s Travelers' Choice Award after a small setback that sent it to 4th place in the previous year. This signifies that Bali hasn’t lost its charm despite the pandemic and the international community yearns to explore the island again. According to Forbes, Canggu in particular was listed 4th best place to live and invest overseas for 2019 and is still the most sought-after destination even today. The coastal town of Canggu is a haven for people with various aspirations because of its ability to accommodate diverse lifestyles, thus it should not be surprising why many of them choose to stay there for a long term.
Canggu’s short-term rental market has always been prosperous thanks to the frequent influx of vacationers and professionals alike. The COVID-19 pandemic is merely a small speed bump to Canggu’s potential, as it has developed steadily before the pandemic and will continue to do so. Once the border reopens, the entire region will be flooded by visitors looking to rent a villa and it would be amiss to not seize such a promising opportunity. After thorough research and evaluation on the market’s previous performance, we have highlighted 3 advantages why investing in Canggu’s short-term rental during the pandemic is a lucrative venture:
All statistics displayed below are based on 2017-2019 data obtained from Airbnb and Vbro that have been analyzed with AirDNA
1. Thriving market
The villa rental business in Canggu had undergone rapid growth, especially in demand. The town offers plenty of room for financially rewarding developments in the short-term rental industry as demand is considerably larger than the supply. The following diagrams illustrate the supply and demand growth of Canggu’s villa rental market prior to the pandemic.
Listing data from 2019 shows that the supply of villas with more than 5 bedrooms numbered less than 10%, but the demand growth for such properties was substantially larger in comparison to villas with fewer bedrooms. The supply margin of 1-bedroom and 2-bedroom villas was very narrow, yet demand for the former increased at a much greater rate than the latter. On another note, the demand for villas with 6 or more bedrooms grew twice the size of 2-bedroom villas’ demand. As for 2 to 5-bedroom villas, the demand increased accordingly with the number of supplied bedrooms. Average demand growth was at 84%, thus the number of investment opportunities will remain plentiful in the future.
2. Revenue growth
The regular supply of foreign travelers created growing revenue for most of Canggu’s short-term rentals over the years. From 2017 to 2019, many villa rentals in the area experienced remarkable revenue growth as depicted by the chart below.
Within 3 years, the average annual revenue in the upper quartile gained a substantial increase while villas in the median earned a comparatively smaller gain. This growth disparity was made possible largely due to the difference in management and marketing quality. Villas that are developed, marketed, and managed professionally tend to sell better and faster than their competitors because they are capable of meeting customer’s needs and providing better service overall, which in turn yield positive reviews and higher returns regardless of the number of bedrooms. Hence, hiring professional assistance is a no-brainer in order to maximize the profitability of your investment.
3. Lucrative returns
In 2019 alone, 1 and 2-bedroom villas generated steady earnings every month throughout the year. A notable revenue increase can be seen in villas with 3 and 4 bedrooms during the peak season, which yields 10% to 15% higher income in comparison to the medium and high season. Villas with 5 and more bedrooms produced significantly better returns, particularly during the peak season when they brought more than twice the revenue of 4-bedroom villas in the same season. It is worth noting that the substantial revenue of villas with 6 or more bedrooms combined with their high demand reveals a highly prospective opportunity to invest in Canggu’s market.
For more information on Bali’s property market and/or full investment consultation in Canggu or the nearby areas, please book an appointment with Bali Home Immo. If you are looking to rent a villa, feel free to browse our long-term rental catalog and see all the villas that are available for monthly or yearly rental. If you are looking to buy a villa, we also have a handpicked selection available for sale both leasehold and freehold in our catalog. Or if you want to develop your investment from the ground up, we also have a selection of land and off-plan villas ready to be built.