Buying a Villa in Bali: The Complete Investment Guide

img Adiel Bukitvista | May 27, 2024

As one of the top destinations in Asia, considering buying a villa in Bali is a thought still held by many investors worldwide. It’s because Bali is still a tourism center that remains the most visited place by tourists, even after the pandemic. This enduring appeal makes it an attractive option for those looking to buy a villa in Bali. 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 Villas and Properties?

1. Increasing Tourism Trend

Tourism is undeniably vital to Bali’s economy and cultural preservation, continuously attracting tourists to Bali. This is why Bali has emerged from the pandemic more quickly than any other place in the world.

The most recent statistical data indicates a significant increase in international tourists visiting Bali in 2024. 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 tourists visiting Bali, especially during summer.

Learn more about Bali Tourism Trend

buying a villa in bali
Source: BPS, 2024

2. The lifestyle

Besides 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 say the Balinese lifestyle perfectly balances a 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. In addition, easy transportation access makes life in Bali more enjoyable and living on this paradise island easier. Then, what’s not to like about Bali?

Bali has become a fast-growing hotspot for digital nomads in recent years. Photo by Grand Ath Thariq Kusmara Gustav

3. The Location

The island of Bali is the most famous 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 waiting to be discovered

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 how much budget you need to prepare to get a Bali property. Just keep on reading!

Can Foreigners Buy Property in Indonesia?

The Indonesian Government Regulation

Are foreigners allowed to buy a villa in Bali and own the property? The answer is yes! Foreigners can purchase villas in Bali. 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. By Government Regulation of the Republic of Indonesia No.103 of 2015, foreign nationals are allowed to own two types of property: 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, 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 the land can be used and what can be built on it. In Bali, these rules are important. They help maintain the island’s beauty, protect its culture, and control urban development. 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 must conduct the 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 locals and tourists, making it a good option for building villas.

Learn more about Bali Zoning Regulations 

Heritage Bali - Legal consultation for property law in Indonesia (Bukit Vista Partners)
Our legal and advisory service partners can help guide you on the tax regulations and ensure your documents are in pace for a legal property ownership

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 especially favored 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 may have restrictions, and the property must revert to the owner once the lease term expires. Leasehold offers a blend of commitment and flexibility for those not looking to plant permanent roots but still wish to soak up the Balinese lifestyle.

Freehold Ownership

On the other hand, freehold 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 yours.

Learn more about Freehold vs. Leasehold in Bali

Bukit Vista collaborates with ILA Global Consulting, a Community Expert partner, to address the legal complexities of property ownership. This partnership provides comprehensive guidance on legal ownership and the property buying process in Bali. Additionally, Bukit Vista has produced a collaboration video with ILA Global Consulting, which can be accessed through this YouTube video:

Play Video about buying property in bali

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 a personalized touch and are willing to wait for construction to be completed, 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 and 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.

villa jado 2 hero
There are different options to buy a villa in Bali

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

Many real estate agencies in Bali can help you find a property. These agents typically have a wide range of listings and can guide 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 property’s sale price. 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.
Bukit Vista pertner, Bali Treasure Property
Bali Treasure Properties - Bukit Vista real estate agent partners can help you buy your dream villa

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 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 key considerations for investors.

Learn more about buying land in Bali

Property Valuation & Appraisal Services

Getting a property valuation is a crucial step in buying property. Imagine you’re on your way to owning a property. To make sure you’re on the right track, using a property appraisal service can be very helpful. It’s like having a reliable guide to help you through the process, making it simpler and clearer.

Key Features of a Property Appraisal Services

When you get a property appraisal, you receive a detailed view of the market. This helps you align your investment with both the current market and future trends. You’ll feel confident navigating the complex world of real estate. Property appraisals are done by experienced professionals who understand the industry well. They provide a thorough analysis of the market, looking at current conditions, demand trends, and economic indicators.

It’s like having a trusted expert to guide you through the ever-changing real estate market, providing clear insights and helping you make well-informed choices. You’ll receive a tailored appraisal report that highlights the unique factors affecting your property’s value. The process is transparent, keeping you informed at every step. It also follows legal and regulatory standards, ensuring a trustworthy document for negotiations and decision-making. Additionally, you’ll receive support during negotiations to manage property transactions effectively.

How Our Property Appraisal Services Benefit Potential Investors

Using a professional property appraisal service comes with several advantages. Firstly, our detailed appraisals reveal any risks or issues with a property, helping you make smart decisions and reduce financial risks. Secondly, our in-depth market analysis provides you with valuable insights into the local real estate scene. This enables you to spot opportunities and make strategic investment choices.

Bukit Vista team doing revenue projection for managed properties
We specialize in property appraisal and projections for Bali properties

Discover your Property’s True Value through our property appraisal and projection service

Review These Documents Before You Buy a Villa in Bali​

Once you’ve found your dream home, you need to 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:

  1. Kartu Tanda Penduduk (Indonesian Identity Card) of the owner/seller
  2. Kartu Keluarga (Family Card)
  3. Marriage Certificate or Death Certificate (depending on the circumstances of the couple) 
  4. Original certificate of land ownership
  5. PBB tax payment, called SPPT PBB
  6. Owner/seller’s tax number (NPWP)
buying a villa in bali
Checking property ownership background documents is a critical step before you make a deal. Photo by Andrea Piacquadio

Legal and Technical Steps to 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 Taxes 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 a legal requirement and 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 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.

nsg construction
Our architect and contractors service partner can help design and build your construction projects request.

Managing Your Villa After Purchase

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:

  1. 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.
  2. Make a budget and a maintenance and upkeep plan. This should include regular cleaning, landscaping, and any repairs or renovations that are required.
  3. 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.
  4. Establish property policies and procedures, such as guest rules, check-in and check-out procedures, and any other relevant policies.
  5. Review and update your property management plan regularly to ensure the property is well-maintained and running smoothly.
  6. 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.
  7. Maintain meticulous records of all financial transactions involving the property, including income, expenses, and taxes.
Bukit Vista discussing with property owner to manage better property
Contact us for an investment strategy consultation to know the potential costs and returns of investing a villa in Bali

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 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 be a sound financial investment and a retreat that enchants guests and rewards you with peace of mind.

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