Bali vs Phuket: Which is the Best for Your Next Property Investment?

Invest in Bali October 14, 2024 5 Min Read

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Two prominent destinations stand out regarding property investment in Southeast Asia: Bali, Indonesia, and Phuket, Thailand. Each location offers a unique blend of cultural richness, investment opportunities, and lifestyle benefits that appeal to foreign investors. Understanding the nuances of each market is crucial for making informed decisions. This comparison will explore various aspects of investing in Bali and Phuket, highlighting their strengths and weaknesses and ultimately suggesting why Bali may be a more favorable option for investors.

Property Ownership and Legal Framework

One of the most significant considerations for foreign investors is property ownership and the legal frameworks governing it.

Due to Indonesian law, foreign investors cannot directly own land in Bali. However, they have several options for acquiring property. The most common route is through leasehold agreements, which typically last for 30 years and can often be extended. Additionally, foreigners can establish a PT PMA (Penanaman Modal Asing), a foreign-owned company, which allows them to hold freehold ownership of property(InvestinAsia). This flexibility in ownership structures is particularly appealing for long-term investments in Bali’s burgeoning real estate market.

Phuket, on the other hand, offers a different set of challenges. Foreigners can purchase property, but they are restricted from owning land outright. Instead, they must establish a Thai company or enter into long-term leases, typically lasting up to 30 years, with an option to renew(Bali.RealEstate). While the legal processes in Phuket are manageable, the requirement for establishing a company can be a barrier for some investors, complicating the investment landscape.

Tax Obligations

Understanding tax obligations is critical for foreign investors as they can significantly impact profitability.

In Bali, the tax system is relatively straightforward. Essential taxes include the Land and Building Tax (PBB), which is relatively low, as well as the Property Transfer Tax and Value Added Tax (PPN), currently set at 11% for properties sold by professional developers (InvestinAsia). The low tax rates make Bali an attractive option for investors looking to maximize their returns.

In Phuket, the tax obligations are more complex. The Property Transfer Tax is set at 2%, and if the property is sold within five years of acquisition, a Specific Business Tax (SBT) of 3.3% applies(Bali.RealEstate). These additional taxes can erode profits and complicate financial forecasting for investors. The comparative simplicity of Bali's tax landscape could be a decisive factor for foreign buyers.

Market Growth Potential

Bali and Phuket have experienced growth in their real estate markets, but the trajectory and potential differ significantly.

Bali has seen a remarkable resurgence in its property market following the lifting of COVID-19 travel restrictions, drawing considerable foreign interest in vacation rentals and residential properties (InvestinAsia). The island’s tourism-driven economy contributes to ongoing demand, enhancing property values and rental yields. Bali's strategic focus on attracting international visitors—through wellness tourism, cultural experiences, and eco-friendly initiatives—positions it for continued growth in the coming years.

While still a popular tourist destination, Phuket has shown signs of market saturation, leading to slower growth rates than Bali(Bali.RealEstate)(Lazudi). The island’s reliance on mass tourism may pose challenges as competition increases, and investors could find it harder to achieve high returns in a crowded market.

Which one is better?

Bali and Phuket offer appealing property investment opportunities, each with unique advantages. Bali provides a flexible legal framework for foreign investors, allowing long-term leasehold agreements and the option to establish a PT PMA for freehold ownership; this flexibility can enhance investors' security.

While Phuket has charm and established infrastructure, Bali’s tax structure is generally more favorable, with lower property taxes than Phuket. Bali’s real estate market is also experiencing notable growth, driven by a resurgence in tourism after COVID-19. The island’s vibrant culture, stunning landscapes, and focus on wellness tourism make it a compelling destination for living and investing, catering to diverse preferences and lifestyles.

In summary, both locations have their merits, but Bali's unique blend of legal options, tax advantages, and lifestyle appeal make it a noteworthy consideration for property investors in Southeast Asia.

Where to Invest in Bali?

The real estate market in Bali offers a wide selection of properties, from luxury villas to minimalist studios or apartments. As one of the leading property agencies in Bali, we recommend you invest in Canggu, Seminyak, and Uluwatu. These locations are home to 5-star hotels and world-class beach clubs.

Canggu's pristine beaches are perfect for surfing, and its vibrant lifestyle makes it a hotspot for property investment in Bali. There are many selections of unique restaurants, high-end boutiques, world-class beach clubs, and international schools.

Furthermore, Uluwatu offers breathtaking views of the Indian Ocean's stunning coastline and is home to the majestic Garuda Wisnu Kencana statue. Additionally, Uluwatu is an excellent place to surf, as its beaches provide perfect waves for beginner and expert surfers.

Seminyak is a place for those who seek an upscale lifestyle. Its location offers beautiful beaches, a restless nightlife, and a wide range of delicate dining areas.

In addition, Seseh, Cemagi, and Pererenan are experiencing rapid growth in property development, making them ample locations for investment. Bali is renowned for its stunning natural landscapes, vibrant expat communities, and rich cultural heritage.

When considering real estate investment, Bali stands out with its expanding villa market and booming tourism sector. These make it an attractive option for those looking to achieve robust rental returns.

While Bali and Phuket present significant opportunities for property appreciation, Bali's unique blend of culture and natural beauty solidifies its position as a top choice for Southeast Asian investors.

So, have you secured your dream property in Bali? Take a look at our property collection and book a consultation with us.

Relevant Articles you may like

How Bedroom Quantity Influences Rental Earnings: A Guide for Villa Investments in Bali

Bali Villa October 28, 2024 3 Min Read

Bali’s rental property market constantly evolves, offering exciting opportunities for tourists and investors drawn to the island's natural beauty and lifestyle. A common question for investors is, “How many bedrooms should a villa have to maximize occupancy and return?” With strong profit potential, Bali’s rental market appeals to those looking to invest in property.

This article aims to give valuable insight into how the number of bedrooms affects rental prices and why investing in an extra-bedroom villa in Bali can be profitable.

Exploring the Charms of Villas in Bali

Renting a villa in Bali offers a unique experience. Villas range from cozy one-bedroom spaces to spacious six-bedroom villas. Many villas have luxury amenities, private pools, and stunning views, making them a top choice for tourists and long-term residents. Bali’s rental market is vibrant and competitive, with each villa offering distinct features to suit various tastes and needs.

Profit maximization in rental properties requires understanding the balance between bedrooms and the bottom line. While more bedrooms mean more profit, other costs, such as maintenance and property tax, must also be considered.

Comparison of Occupancy Based on Bedrooms

The daily rates of villas vary depending on the number of bedrooms. Villas are usually categorized into one-bedroom, two-bedroom, three-bedroom, and those with more than three bedrooms. Each type offers different amenities and prices to suit various needs.

1. One-Bedroom Villas

These cozy villas are great for couples or solo travelers. They usually include essential amenities like a private pool and kitchen, and their daily rates are generally more affordable.

2. Two-Bedroom Villas

Ideal for small families or friends, these villas offer more space and comfort. They often have larger living areas and outdoor spaces, resulting in slightly higher daily rates.

3. Three-Bedroom Villas

These villas provide ample living space and additional amenities, such as multiple bathrooms and bigger kitchens, perfect for larger families or groups. Daily rates vary based on location and services offered.

4. Villas with More Than Three Bedrooms

Designed for big gatherings, these villas can accommodate multiple families or groups and usually feature luxury amenities like private pools and gardens. Due to their size and premium offerings, their daily rates are higher.

We have calculated the daily rent rates for each villa category to better understand how these factors influence pricing.

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source: AirDNA

The graph reveals that one-bedroom villas have the highest booking counts, indicating strong demand, particularly from couples and solo travelers, while two-bedroom villas show consistent bookings, reflecting stable interest from small families and groups.

Moderate bookings for three-bedroom villas suggest a demand for larger family accommodations or groups of friends traveling together. In contrast, four-bedroom villas have lower booking counts, indicating less interest than smaller options and suggesting a niche market.

Five-bedroom villas cater to larger gatherings but exhibit modest booking numbers, and the category of six or more bedrooms experiences slight fluctuations, indicating their appeal for larger groups or events.

Revenue growth based on bedroom count is a critical metric in the rental property market. It measures the increase in income as the number of bedrooms in a property increases. Understanding this concept is crucial for investors as it can guide decisions on property size and potential revenue.

How to Boost Your Villa’s Occupancy Rate

In the competitive property market in Bali, a stylish and modern design is pivotal to attracting more potential renters or buyers. A well-designed villa improves aesthetic appeal and provides a comfortable, functional living space tailored to modern tenants' needs.

Key points include an open-space living room that blends seamlessly with the kitchen and dining room and thoughtful designs such as enclosed bedrooms for occupant convenience. Furthermore, focusing on interior design, such as adding premium appliances and bedding, can make a lasting impression on its renters or buyers. Investing in top-notch design leads to higher occupancy rates, increased rental income, and greater satisfaction for renters and owners.

For potential investors and villa owners in Bali, understanding these dynamics can lead to more informed decisions and better returns in the thriving rental market. Whether you want to rent or invest, recognizing the value of extra bedrooms can be the key to success in Bali's competitive real estate landscape.

Dreaming of moving to Bali and investing in prime properties? Look no further! At Bali Home Immo, we boast an extensive database of over 7,000 properties tailored to your needs.

Contact us today to arrange a consultation with our expert sales agents and take the first step toward your successful investment journey in Bali.

6 Things You Must Know Before Buying Property in Bali

Bali Property Advice March 09, 2022

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.

4 Reasons to Invest in Property Insurance for Your Bali Villa

Bali Property Insurance October 14, 2024 5 Min Read

Image by dontree_m on Canva

Owning a villa in Bali is a dream for many people. It offers a beautiful escape and the potential for lucrative rental income. However, this paradise also comes with a set of unique challenges. Beyond the breathtaking beaches and lush landscapes lies a reality where natural disasters, theft, and other risks can threaten your investment.

In this blog, we’ll dive into why property insurance is vital to protect your villa and ensure peace of mind for owners. With insights from Bali Property Insurance, a trusted partner in property insurance for Bali villas, we aim to equip you with the knowledge you need to protect your valuable investment. A trusted partner in property coverage, we strive to equip you with the knowledge you need to protect your valuable investment.

The Reality of Natural Disasters in Bali

The risks of earthquakes and flooding often overshadow Bali's natural beauty. Due to the region's geological characteristics, earthquakes can occur without warning, leading to substantial damage to properties. According to BMKG, Bali experiences an average of 99 earthquakes annually (based on 2023 data), some of which can cause significant damage to structures.

Flooding, especially during the rainy season, can further worsen this risk, threatening the villa and its contents. Having reliable Bali villa property insurance can provide essential protection against the financial impact of these natural disasters. It ensures that your investment remains intact and you can recover quickly from unexpected events.

1. Fire Protection

Many villas in Bali feature unique architectural designs, often incorporating traditional materials such as bamboo and wood. While these natural materials contribute to these properties' aesthetic appeal and charm, they also come with inherent risks.

Bamboo and wooden structures are beautiful and sustainable but more vulnerable to fire hazards. The natural oils in bamboo and the cellulose in wood can make these materials flammable, especially during the dry season or in the event of a nearby fire. Additionally, the tropical climate can contribute to conditions that promote fire spread.

Fire insurance for Bali villas plays a vital role in protecting against fire damage. Fire insurance for Bali villas plays an essential role in protecting against fire damage. Property insurance plays a crucial role in protecting against fire damage. A thorough insurance policy can cover repairing or rebuilding your villa in the unfortunate event of a fire. This coverage helps you recover financially and ensures your investment can be restored to its former glory, allowing you to continue enjoying or renting out your villa.

2. Protection Against Theft

Many villas in Bali feature large windows and open layouts that embrace the natural surroundings, offering stunning views and a sense of openness. While these design elements create a welcoming atmosphere, they can also present security vulnerabilities vulnerabilities regarding security. The allure of a beautiful villa can attract opportunistic thieves, especially during peak tourist seasons.

Ensuring that your villa is protected against theft is essential. This can include installing security systems, utilizing smart home technology, and securing all entry points. Moreover, having theft protection for Bali villas as part of your insurance policy can provide peace of mind, knowing you have financial protection in case of any unfortunate incidents. Moreover, having property insurance can provide peace of mind, knowing you have financial protection in case of unfortunate incidents.

3. Ensuring Continuous Rental Income

For many villa owners, maintaining a steady flow of rental income is significantly important. Unexpected events can disrupt this income stream, making it essential to have sufficient protection in place. A comprehensive insurance policy, such as The Zurich Insurance Platinum Package, offers business continuity coverage, ensuring that you won't lose income even if your villa requires repairs or becomes uninhabitable even if your villa requires repairs or becomes uninhabitable, you won’t lose suffer a loss of income.

With Zurich’s support, you can receive daily compensation of 500,000 IDR for up to 90 days, providing financial stability during unforeseen disruptions. This protection allows you to navigate challenging times confidently, helping you safeguard your investment and plan for the future without fear of navigating challenging times with confidence, helping you preserve your investment and plan for the future without fear of financial instability.

4. Attracting Renters with Insurance

Property insurance protects you and not only protects you but also enhances your villa's appeal to potential renters. In today's rental market, guests are increasingly aware of the importance of safety and security. Properties with extensive villa insurance coverage in Bali are more attractive to renters, as they provide reassurance that their safety and comfort are prioritized.Properties with comprehensive insurance coverage are more attractive to renters, as they provide reassurance that their safety and comfort are prioritized.

This added assurance can set your villa apart in a competitive rental market, making it more likely that you'll secure bookings and generate rental income.

Simplifying Your Insurance Journey

Getting property insurance for Bali villas is straightforward but requires some preparation. Getting property insurance is straightforward, but it requires some preparation. Here’s what you’ll typically need to provide:

- A photo or Airbnb link of your villa

- The exact address or Google Maps link

- Estimated building value (in IDR)

- Estimated contents value (in IDR)

- Desired liability coverage (IDR 500 million to 2.5 billion)

Protect Your Investment Before It’s Too Late

Investing in Bali villa property insurance is not just a safety net—it's a vital component of responsible villa ownership in Bali. By understanding the risks and securing the right coverage, you can protect your investment and enjoy the beauty of Bali with peace of mind. Collaborating with experts like Bali Property Insurance and Bali Home Immo can help you navigate the complexities of property ownership, ensuring that your villa remains a source of joy and income for years to come.

Established in 2009, Bali Home Immo is the first real estate agency in Canggu with more than 7000 Bali properties listed in its database. Bali Home Immo (PT. Bali Properti Kontruksi) is a licensed property agency (SIUP-P4 certified) located in Bali, Indonesia and have been successfully operating as a trustworthy and reputable real estate agency with more than 13 years of experience. Long-standing partnerships and a committed, dedicated team are the driving force behind the work that takes place every day at Bali Home Immo.

As a member of the Real Estate Broker Association of Indonesia (AREBI), Bali Home Immo Property offers luxury real estate across the region to a local and international client base. Catering to a wide range of property requests, the team will ensure they can find a property, land or residential listing, to match each client’s personal requirements.

We have curated a wide selection of properties ranging from the land for sale, villas for sale and rent, as well as commercial space rental in Bali's most in-demand areas including Canggu, Seminyak, Pererenan, Umalas, and Uluwatu. Not only Bali, but our connection also reaches other popular destinations in Indonesia including Gili Islands, Lombok, Labuan Bajo, and more.

We also provide professional marketing services that will showcase the best of your Bali properties to more than +160k social media followers and maximise the potential to find buyers looking at villas for sale in Bali. With a thorough knowledge of the Bali property market inside-out, we deliver the most professional and data-driven valuation of your property at the most competitive price for your Bali properties.

Our expertise in the local market and extensive network affiliated with 93 local and international partners including Goplaceit.com, Rumah123, Kangaloo, Luxury Estate, and many more will also help you bring global exposure to your real estate investment and find your dream Bali property. Looking to buy villas for sale in Bali? Check out our online catalogue of Bali real estate and follow us on social media for updates.