Building vs. Buying a Villa in Canggu: A Cost Comparison
Cost between building and buying villa in Canggu
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The main reason why Canggu is such a wildly popular destination is that it has something for everyone: beach clubs, surf spots, international schools, coworking spaces, crypto exchanges, restaurants, yoga and fitness centers, rice fields, and most importantly—holiday villas. Because the demand for vacation rentals keeps getting higher and higher, it’s no surprise that the region’s villa rental industry is thriving and continues to attract eager investors even during the COVID-19 pandemic.
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As time has proven, Canggu’s vacation rental market is a lucrative venture truly worth investing in and these days it has the potential to yield 7-10% ROI. But how much do you need to invest in a Canggu villa? Is it cheaper to build a brand new villa or buy one? To answer that, let’s go through a rundown on the cost difference between buying and building a villa in Canggu first.
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Buy a Villa
In today’s market, the price of a newly built modern villa on a 3 are land in Berawa offered with a 25 year lease starts from $350.000. There are many similarly sized villas in the $100.000-150.000 price range, but they’re usually located a bit further from the beach and/or offered with a short leasehold duration that makes them not ideal for long-term investment. If you prefer tranquil rice fields to bustling beaches, consider investing in Pererenan as it offers a wide variety of villas under $300.000 and some of which come with a rice field or river view that you won’t find easily in Canggu.
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Buying a slightly older villa and then renovating it to modern standards is a common practice as we have seen numerous holiday villas with an open air living area and outdoor bathrooms converted into modern villas with a fully enclosed living room and bathrooms more appropriate for the current market demand. While they’re not easy to find, there’s a good selection of fix-and-flip opportunities in Canggu.
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If you want to own a brand new villa without the hefty price tag, then buying off-plan might be the right option. There’s a plethora of off-plan villas in the market today, many of which are offered with customization options too so you can add some personal touch. The price of off-plan villas are quite varied and competitive, but they’re generally cheaper compared to pre-existing villas with comparable size and specification.Â
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Build a Villa
The current market price of land in Berawa is around $1000-$1700 per are per year, which is roughly 2-3 times more than in Babakan or Padonan where land is offered for less than $600 per are per year. Regardless of where you pick, we strongly advise renting the land for at least 25 years to maximize returns.
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After you have the land, you’ll need to obtain an IMB (Izin Mendirikan Bangunan) which is a building permit, but your contractor or architect will prepare all the paperwork and add the fee to their Bill of Quantity (BOQ). Starting from 2021, the IMB system is replaced by PBG (Persetujuan Bangunan Gedung) which essentially serves the same function so don’t get confused over these two. Note that you will also need a Pondok Wisata license if you plan to rent out the villa for daily rental or Airbnb.
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Construction will cost around $500 up to $800 per square meter depending on the build quality, but it doesn’t include furniture so you’ll want to add 10.000$ - 20.000$ for a fully furnished 3 bedroom villa. Don’t forget to add 1% notary fee as well as 5% agency commission if you’re using their services in finding the land. In summary, a high quality 200 square meters villa on a 3 are land in Berawa will cost at least $220.000 to build from the ground up.Â
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Conclusion
In most cases, it’s cheaper to build than buy. The most difficult part of building, however, is finding good land because most (if not all) of the best land in Canggu are already sold while the few that are still available demand a very high price. Small plots (3 are or less) are exceedingly rare and their price per are can be much higher than a larger plot, so finding a land big enough to build just one villa is not only challenging but also pricey. Renovating a second hand villa can be faster and cheaper than building from zero, but finding the villa that suits your vision will certainly take some time as well.
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Whether you decide to buy or build, having a competitive edge is the key to maximize the return of investment. Bali’s villa market is already saturated and you will struggle in getting the best price without any highlighting qualities that make your villa stand out. Having gold standard features such as enclosed living, spacious yard, and unique architecture may not be enough because we are seeing villas with cutting edge features such as smart home technology, earthquake resistant micropile foundations, climate responsive sustainable design, and many more in the current market.
