A Villa Like No Other – Sculpted Elegance with a Spiraling Masterpiece

At Bali Home Immo, we offer 3 types of properties, here is an explanation of the differences between them. 

Villas
The villas are detached houses with large green gardens and no vis-à-vis or proximity to even the closest neighbours. They have all the conveniences you will need, and very often offer an incredible view of the rice fields, the seaside, the swimming pool or the garden. 

Townhouses
Townhouses are mostly built in complexes, which is why they are often more affordable than villas. They are located in towns or villages, and do not require high maintenance costs for gardens or swimming pools, for example. They are built on 2 or 3 floors and have common walls with the rest of the complex. 

Apartments 
Apartments are properties that are often part of large buildings, and are usually built on only one floor. Not surprisingly, they are therefore more affordable than the first two types of real estate. They are perfect for students, or businessmen who are away on business and don't need a lot of space. Luxury apartments are becoming more scarce in Bali, so prices can vary greatly for this type of property. 

Bali is one of the most paradisiac islands in the world and attracts tourists all year long. The property market for villas is flourishing and attracts more and more foreign investors, either to live permanently in the Island of Gods or to rent accommodation to visitors. The Indonesian laws can make the purchase of land or property by foreigners rather complex and the ownership of the goods isn’t always granted indefinitely. That is why several types of contracts can be made with different terms and ownership rights and the complexity of the process can bring risks to the transaction.

Bali’s property market is booming. It attracts more and more investors looking for a good way to invest their money. There is still some room for construction on the Island of Gods and the smaller surrounding islands because the flourishing touristic activities allowed a large diversity of people in need of an accommodation, both on a short or long term. Bali’s strong tourism position means good turnover rates for sub-leased properties and high demand for properties for sale. The key is getting into the market before it’s too late.

The Indonesian property laws are really complex to understand and may be a brake for potential investors. It restricts the rights of foreign people to invest in property in Indonesia. A distinction must be drawn between the Rights to Use (Hak Pakai), the Rights to Build (Hak Guna Bangunan) and the Rights to Own (Hak Milik). The law aims to keep the ownership of property to the Indonesian people: it is not possible for a non-Indonesian investor to get the ownership of a property for good. But some turnarounds exist to bypass the laws and legally get the ownership of a property.

The first possibility is a leasehold investment which is similar to a long-term lease contract. The property remains under the name of the original owner but the investor can rent it for an initial period of around 25 years which can be extended to 70 years. The owner will keep the right to own (Hak Milik) but the investor will get the Hak Pakai title (right to Use) which allows him to sub-lease the place.

The second possibility, the freehold investment, is to find an Indonesian business partner, the property will be under the name of the sponsor. You will then have the ownership through the Hak Pakai Certificate without any time restriction. The most important thing in this kind of transaction is the binding documents between the investor and the sponsor. If the legal papers are not correct you could lose the use of the house for the benefit of your sponsor.

Ok. You have the money and you’ve been thinking about investing in Bali. What you need now is good advice on what kind of investment you should make. Since we're a real estate and construction company, it’s clear that you’re looking to invest in this area right? Because, otherwise, you won’t be here.

Here are some relevant questions to consider before you make an investment in Bali.

Freehold or leasehold?
This question never gets old. If this question is still bugging you, let me make it clear for you: no foreigner can own a freehold property in Bali using his/her name as the titleholder. Indonesian law simply doesn’t permit it, and for good reason. Otherwise, it could be colonial days all over again.

“If that is so, how come a friend of a friend managed to get a freehold certificate for his property?” The answer to that question is this: most likely, he has an Indonesian nominee who acts as the property title holder on his behalf. This nominee could be anyone as long as he or she is an Indonesian citizen. It could be his spouse, for example,  or someone he can trust (sponsor, your ex’s Indonesian husband etc). Hell, I even know people who use his gardener or driver as the titleholder. However, as you can guess already, this is a risky move. You’ve probably heard about the sob story of a guy who loses his property due to trusting the wrong person for such an arrangement. Take notes, because that story is probably true.

As risky as it may be, many still insist on doing it. Indeed, a watertight pre-agreement could avoid such disaster by closing loopholes that could create problems in the future. However, when it goes wrong, it goes wrong, and unless you come prepared, a turbulence ride awaits.

Secondly, that person may acquire his property using his company’s name. This is also possible as long your company fulfills all requirements to acquire property (as the company’s assets). We call this the PMA method. FYI, PMA is an acronym for Penanaman Modal Asing (Foreign Investment Company) and it refers to the company you own. The setback of this method is that it takes time and money to set up a company here.

To build or not to build?
If you’re a builder and you know your way about planning, budgeting, men management and all that stuff, go for it. Outsource everything else. Familiarize yourself with assortments of building materials available in Bali. Learn the regulations, visit building expos, ask around, find a first mate, someone you trust that could build for you. If you decide to build, the workforce is another thing you have to plan out thoroughly, especially in terms of labor supply, management and communication (that can be tricky sometimes, due to language barrier).

Without proper knowledge, even if you’re a builder back home, things can be out of hand really fast, from delays to bad finishing.

That’s one.
Number two, if you decide to invest in a resale villa or other type of property instead, make sure that everything is legit and it has a building permit (IMB). Conduct due diligence properly. It may be necessary to consult with a notary public or company that specializes in this kind of service before you make any decision.

Where to Invest?
Like in your home country, some areas in Bali cost more than the others, but at the same time also promise greater ROI: a simple demand and supply thing. On the other hand, a place can lack what is necessary to give high yields, but the cost is twice or three times cheaper and the view is amazing, so it’s worth it. It’s important to calculate everything before making an offer. Whatever place you choose, make sure it fits your needs. A place in Seminyak or Petitenget may be perfect to be developed into a daily or short term rentals, but consider the noise coming from nearby bars and clubs. Investing that large amount of money only to be sorry after is not good at all, is it? Look for the plus factor of the area. Is it the view? Is there any development that will add value (or the contrary) to the area in the near future? Gather as much information in this phase. Compare notes with friends or acquaintances that are familiar with the area if necessary.

In this case, the North Kuta area (especially Berawa, Echo Beach, and Pererenan) is still one of the top most-sought-after areas for residential and commercial purposes. The area still continues to develop, with some challenges in the communication sector, especially in fiber optics grids coverage and unstable mobile signal reception. Other than that, residential and commercial incentives (schools, food and beverage, sunny beaches) along with the availability of basic infrastructures will continue to draw investors in years to come.

What about the cost?
Ok. You’ve found the answers to the questions above. Now it’s time to sum everything up and convert it all into numbers. What numbers are we talking about here?

Keep in mind that as far as the price is concerned, there are no clear guidelines. The price for land and villas changes on a regular basis in Bali. Pure speculation, property resale or simple greed drive such fluctuation. The government doesn’t regulate property prices. They leave it at the mercy of the seller. Whatever that may be, always remember, that everything is negotiable here in Bali. Negotiate the price as if your life depends on it!

Here I summarize quick and dirty tips to consider before making an offer:

• Stick to your budget.
• Unless you’re Richard Branson or Warren Buffet, don’t fall into stereotypical “bule” acting like he owns all the money to buy this world. Be humble and friendly with your middleman (known as makelar) or property agent and of course, the seller. Those two simple things will make your life 100x easier in the negotiating process.
• Negotiate, negotiate, negotiate!

There. I think this post has covered all the basics you need to know about investing in Bali. What do you think? You can share your experience or question in the comment below. For more detailed information, feel free to email us or drop a visit to our office.