As one of the top destinations in Asia, considering buying a villa in Bali is a thought still held by many investors around the world. It’s because Bali is still a tourism center that remains the most visited place by tourists, even after the pandemic. As of September 2022, it was recorded that 1.19 million international tourists visited Bali.
The tourism industry is the main economic driver in Bali and the impact of the COVID-19 pandemic has certainly paralyzed the tourism sector in Bali. Even so, this is the right time for you to start property investment in Bali. Read further below to find out why.
Table of Contents
Why Invest in Bali Villa and Properties?
1. Increasing Tourism Trend
Tourism is undeniably vital to Bali’s economy and cultural preservation which attracts tourists to Bali all the time. This is why Bali has emerged from the pandemic more quickly than anywhere else in the world.
The most recent statistical data indicates a significant increase in the number of international tourists visiting Bali in 2023. The surge in these figures can be attributed to the festive and celebratory season. Achieving a higher number of passengers served compared to the previous month is an achievable goal. The graph below also indicates a rising trend in the number of tourists visiting Bali, especially during the summer season.
2. The lifestyle
Apart from being a popular destination, Bali is also famous for its relaxed lifestyle compared to other cities. This is why Bali has become a fast-growing hotspot for digital nomads in recent years.
Most of them say that the Balinese lifestyle is an example of the perfect balance between the relaxed island attitude and entrepreneurial vision. Internet and Wi-Fi connections are developing rapidly compared to other paradise islands.
Internet access and online work are easy to do anywhere. It is predicted that the Work From Anywhere phenomenon will continue to develop in the future following the changing dynamics of post-pandemic life.
Apart from internet access, the relatively low cost of living is also one of the reasons. Local and non-local food can be found easily everywhere. Apart from that, easy transportation access also makes life in Bali more enjoyable and makes it easier for them to live on this paradise island. Then, what’s not to like about Bali?
3. The Location
The island of Bali is the most famous island in Indonesia and is a gateway to some of the world’s most stunning areas of natural beauty. Bali Island is also accompanied by several other islands that are no less beautiful. There are the islands of Nusa Penida, Nusa Lembongan, and Nusa Ceningan which also have hidden gems hidden behind them.
The many tourist locations on other islands in Bali can be your opportunity to choose the right location for your property investment. The more strategic and close to tourist areas, the better for your property investment. So choose the right location for your property investment in the long term.
4. Affordable Price
Compared to other paradise islands, Bali property has relatively low prices. This is one of the considerations and attractive options for investors looking for property investment on a budget. Don’t worry, we will explain to you about how budget you need to prepare to get a Bali property. Just keep on reading!
Can Foreigners Buy Property in Indonesia?
The Indonesian Government Regulation
Is foreigners allowed to buying a villa in Bali and own the property? The answer is yes! Villas in Bali can be purchased by foreigners. According to Government Regulation Number 103 Article 2 paragraph 2, foreign nationals are permitted to purchase real estate in Indonesia if their presence provides benefits, conducts business, works, or invests in Indonesia.
Type of property and location
Foreign nationals can own two types of property in Indonesia. In accordance with Government Regulation of the Republic of Indonesia No.103 of 2015, foreign nationals are allowed to own two types of property, namely apartments and landed houses. Given the scarcity of apartments in Bali, landed houses are preferred for investment.
Choose the right location in addition to the type of property. A strategic location near tourist areas is the best option for investment. There are several popular property areas in Bali to consider, including Canggu, Pererenan, Seminyak, Umalas, Kerobokan, Seseh, Sanur, Ubud, and the Bukit Peninsula.
Bali Zoning Regulations
Zoning means dividing land into different parts, each with specific rules about how you can use the land and build things on it. In Bali, these rules are really important. They help keep the island beautiful, protect its culture, and control how cities grow. There are five types of zones in Bali:
- Agricultural Land (Green):
This is for farming and not good for building villas. There are strict rules here to save the farmland. - Residential Land (Yellow):
This is where you can build villas. But even here, there are different types – some areas allow fewer houses, some allow more. You need to research well to know which type fits your plan. - Commercial Land (Red):
This is for businesses, not villas. But it’s important to understand nearby commercial areas to know about the local economy and your potential customers. - Tourism Land (Pink):
Great for building villas, especially if you want tourists to stay. These areas are meant for places like hotels and villas, so they’re good for your villa project. - Commercial & Residential Land (Orange):
These areas have a mix of businesses and houses. They can be a good choice because you can cater to both locals and tourists, making it a good option for building villas.Learn more about Bali Zoning Regulations
Understanding Ownership Requirements : Leasehold vs. Freehold
When venturing into the Bali real estate market, grasping the distinction between leasehold and freehold ownership is crucial for making an informed decision that aligns with your long-term goals.
Leasehold Ownership
Leasehold is akin to a long-term lease arrangement, where you, as an investor, can secure the rights to a property for a period typically up to 30 years, with options to extend. This type of ownership is particularly popular among expatriates who wish to enjoy the beauty of Bali without the permanent commitment of owning land. It’s an accessible pathway to living your island dream and can be less daunting than outright ownership. However, it’s vital to understand the terms, as leaseholds can come with restrictions, and the property must revert to the owner once the lease term expires. For those not looking to plant permanent roots but still wish to soak up the Balinese lifestyle, leasehold offers a blend of commitment and flexibility.
Freehold Ownership
Freehold, on the other hand, is the gold standard of property rights. It grants you, the buyer, outright ownership of the land and the villa upon it. This option is often more appealing to those looking to make a lasting stake in Bali or to Indonesian citizens, as regulations stipulate that freehold ownership is reserved for the latter. However, foreign investors can navigate this through a PT PMA (foreign-owned company), which allows for a legal and more permanent form of investment. With freehold, you hold the reins to the property indefinitely, giving you full control over its use and the freedom to sell at will. This level of ownership provides a sense of permanence and security, knowing the land beneath your villa is unequivocally yours.
Bali Villa Buying Options
Ready-made Villas
Opting for a ready-made villa can be a straightforward entry into Bali’s real estate market. It’s an appealing option for those looking to skip the construction phase and move directly into their tropical abode. However, with convenience comes the need for diligence. Potential buyers must thoroughly verify the construction’s quality, ensuring that the villa has been built to stand the test of time and the elements. Equally important is the legal aspect—confirming clear and transferable ownership to avoid any future disputes. This route is perfect for investors who value time and ease over customization.
Off Plan Villas
For those who relish the idea of personalized touch and are willing to wait for the hammering to cease, off-plan villas present an enticing opportunity. This option involves purchasing a piece of land and a villa design before the first brick is laid, allowing for a high degree of customization. Buyers can tailor everything from the layout to the finishes, potentially saving costs compared to buying a completed property. However, this path is sprinkled with risk; it requires a robust contract and a reliable developer. The reward? A villa that’s a true reflection of your vision.
Land Purchase and Self-Building
The path less traveled, yet the one that offers the ultimate freedom, is buying a plot of land and orchestrating the construction of your villa from scratch. This is the canvas for those who dream in vivid detail, who want to oversee every aspect of the design and construction process. However, the complexity of such an endeavor shouldn’t be underestimated—it demands a considerable investment of time, energy, and expertise. There’s also a higher risk, with variables such as contractor reliability and fluctuating material costs. But for those who are up for the challenge, it promises an unmatched level of individuality and the satisfaction of seeing your vision emerge from the ground up.
How to Find The Right Property
Of course, patience is required when looking for the right property. But don’t worry, there are several things you can do to make it easier to find the right property. Here are some ideas to get you started in your search:
1. Online
You can start your search through Real estate agencies, classifieds websites, social media groups, and online platforms that list properties for sale in Bali. You can use keywords like “villa for sale Bali” or “land for sale Bali” to find listings that meet your requirements.
2. Local agents
There are many real estate agencies in Bali that can help you find a property. These agents typically have a wide range of listings and can provide you with guidance on the local property market.
There are several benefits and costs to consider when working with a real estate agent:
Benefits:
- Expertise: Real estate agents are trained professionals with extensive knowledge of the local property market. They can provide you with valuable insights and guidance when it comes to buying or selling a property.
- Network: Real estate agents have a wide network of contacts and resources that can help you find the right property or buyer for your needs.
- Efficiency: Working with an agent can save you time and effort, as they can handle much of the work involved in buying or selling a property, such as scheduling viewings, negotiating deals, and preparing paperwork.
- Legal protection: An agent can help you navigate the legal aspects of a real estate transaction, such as reviewing contracts and ensuring that all necessary documentation is in order.
Costs:
- Commission: Real estate agents typically charge a commission based on the sale price of the property. This commission can range from a few percent to over 10%, depending on the location and type of property.
- Fees: In addition to the commission, agents may charge other fees, such as for advertising or preparing marketing materials.
- Risk of conflicts of interest: While agents are required to act in the best interests of their clients, there is a risk that they may have conflicting interests if they represent both the buyer and seller in a transaction.
3. Networking
If you know people who have already owned property in Bali, they may be able to provide you with leads or recommendations for available properties. Our network of community experts allows us to network with real estate companies that you can contact.
Costs of Buying a Villa in Bali and Construction
When venturing into the Bali real estate market, grasping the distinction between leasehold and freehold ownership is crucial for making an informed decision that aligns with your long-term goals.
Construction Costs
The foundation of your budgeting plan starts with the construction costs, which are as varied as Bali’s diverse ecosystem. The materials you select play a significant role in this financial mosaic. Opting for locally-sourced, sustainable materials such as bamboo can be cost-effective, while importing luxury fixtures or rare materials can escalate costs considerably. The interior design complexity also sways the budget—simpler, more traditional designs can be cost-efficient, whereas modern, custom architectural feats may require a heftier investment.
The choice of builder, too, can impact the cost; established firms might charge a premium but bring reliability and quality, while independent local contractors might offer competitive rates with varying degrees of risk.
Land Costs
The plot of land upon which your villa will nestle is perhaps the most variable cost. Bali’s real estate landscape is a patchwork of prices that reflect the desirability of each locale. The pulsing heart of Seminyak, with its beach clubs and boutiques, commands a premium, as does the surfer’s paradise of Canggu. In contrast, more remote areas like the tranquil Sidemen Valley offer larger land parcels at more modest prices. The proximity to tourist hotspots, ocean views, and accessibility can all inflate land costs. Yet, these factors also contribute to potential rental yields, making them a key consideration for investors.
Discover your Property’s True Value through our property appraisal and projection service.
Check These Documents Before Buying A Villa in Bali
Once you’ve found your dream home, all you have to do is check the property ownership background documents.
This step is critical for ensuring legal ownership of the property you are about to purchase. It will also detail any disagreements, debt payments, current property status, and ownership.
The following are important documents that you must verify with the property owner:
- Kartu Tanda Penduduk (Indonesian Identity Card) of the owner/seller
- Kartu Keluarga (Family Card)
- Marriage Certificate or Death Certificate (depending on the circulstances of the couple)
- Original certificate of land ownership
- PBB tax payment, called SPPT PBB
- Owner/seller’s tax number (NPWP)
Legal and Technical Steps of Owning a Villa in Bali
Ensuring Legal Ownership through a Notary
Central to your villa ownership journey is the engagement of a notary. This professional acts as a legal guardian, ensuring that all documents and contracts are in order and that the property transfer is executed smoothly and according to Indonesian law. Their expertise is invaluable in safeguarding your investment, and they will guide you through the complexities of legal documentation to secure your rightful ownership.
Paying Tax on Land Transactions
Land transactions in Bali come with a fiscal responsibility—taxes. It’s crucial to be well-versed in the tax regulations of the region and adhere to them meticulously. The tax levied on property transactions may include transfer tax and income tax, and these rates can fluctuate based on various factors. Ensuring compliance with these tax obligations is not only a legal requirement but also an essential aspect of responsible ownership.
Hiring a Topographer and Conducting Soil Tests:
Before the first brick is laid, a topographer and soil test become paramount. A topographer will survey the land, mapping out the contours and boundaries, which is critical for accurate design and construction. Simultaneously, soil tests evaluate the land’s composition, providing insights into its suitability for construction. This step minimizes the risk of foundation issues and ensures the villa stands securely on its chosen plot.
Learn more about The Latest Property Legal Updates and Requirements
Finding a Designer and Architect to Create the Villa Plans:
Every villa in Bali has its unique charm, and it all begins with the vision crafted by a skilled designer and architect. These professionals transform your ideas into tangible plans, ensuring that your villa aligns with your aesthetic and functional preferences. Collaborating with them to create detailed blueprints is essential, as it serves as the foundation upon which your dream villa will be built.
Manage Your Villa After Buying It
Furthermore, managing your property is the most important step in your Bali property investment journey.
Managing a Bali property can involve a variety of tasks and responsibilities, depending on the specific needs of the property and the expectations of the owner or owners. Here are some general steps to take when managing a villa:
- Determine the property’s goals and objectives. Do you intend to use it as a vacation rental, a second home, or your primary residence? Understanding the property’s intended use will help guide your management decisions.
- Make a budget and a maintenance and upkeep plan. This should include regular cleaning, landscaping, and any repairs or renovations that are required.
- Consider hiring a property management company to handle the day-to-day tasks associated with managing the property. This can include tasks like coordinating with guests, handling bookings, and managing maintenance and repairs.
- Establish property policies and procedures, such as guest rules, check-in and check-out procedures, and any other relevant policies.
- Review and update your property management plan on a regular basis to ensure the property is well-maintained and running smoothly.
- Keep up to date on local laws and regulations that may have an impact on the property, such as zoning regulations, tax regulations, and health and safety codes.
- Maintain meticulous records of all financial transactions involving the property, including income, expenses, and taxes.
The Finish Line: Supervision, Quality, and ROI
With the right oversight, your villa can become a masterpiece of artistry and engineering, capable of attracting guests and securing an impressive Return on Investment (ROI). Bali’s allure as a tourist destination means that many investors see returns on their rental properties within a relatively short span, typically spanning 4 to 7 years. By maintaining high-quality standards during construction, you position your villa to command higher rental rates, ultimately accelerating your ROI.
At Bukit Vista, we understand the nuances of buying a property in Bali, and our commitment to your investment journey doesn’t stop here. We’re here to guide you through every step of this exciting process—from the dream stage to the moment your villa becomes a reality, trust us to help you plan an investment strategy and manage your property for a profitable returns and high ROI.
Our expertise in hospitality innovations and property management sets us apart. We don’t just help your investment flourish; we transform it into a thriving haven for guests and a stress-free asset for you. With our meticulous attention to detail, market insights, and a passionate team dedicated to delivering exceptional guest experiences, your villa will not only be a sound financial investment but also a retreat that enchants guests and rewards you with peace of mind.