Increase in tourist flow and real estate prices
Bali captures investors' attention not only with its beauty and unique culture but also with the stable growth in housing prices. According to various sources, real estate prices on the island show a steady increase. Apartments can be purchased from $70,000, and villas start at $150,000.
Indonesia is one of the few countries whose real estate sector was hardly affected during the COVID-19 pandemic, successfully overcoming crises of past years (1998, 2008, 2018). Such market resilience makes investing in Bali real estate particularly attractive.
Since the beginning of 2023, Bali has welcomed over 3.4 million foreign guests, significantly exceeding the figures for the entire previous year (2 million visitors). Given the growing flow of tourists, an increase in real estate prices seems natural and expected.
Advantages of investing
Considering the growing interest of tourists and investors in Bali, the capitalization of real estate on the island shows a tendency to increase. Investments in properties in Bali can lead to significant appreciation of assets in the long term.
One of the key reasons why investing in Bali real estate is profitable is the high rental yield, which can reach 12-15% annually in US dollars. The average payback period for investments here is 6-7 years, which is significantly lower than in other popular investment destinations like Dubai, New York, or Paris.
Property maintenance specifics
Property maintenance on the island of Bali has its unique nuances related to local legislation. Private property owners are not allowed to engage directly in operational management and short-term rentals. Long-term leasing is a permissible alternative, but its yield is typically lower compared to short-term. To host tourists, owners need to register a business. A simpler solution is to cooperate with a management company that takes on the task of finding tenants and managing the property, ensuring a regular income for you.
Property maintenance services include:
- Resolving domestic issues such as leaks, air conditioner breakdowns, or other malfunctions;
- Conducting routine and major repairs;
- Managing service staff, including hiring and monitoring;
- Paying utility bills and other regular payments.
Such expenses usually range from $300 to $500 per month. Despite the necessity of paying for intermediary services, the net annual yield from owning property in Bali can reach 10-12%, which is notably higher than the global average of about 5%. Additionally, it significantly simplifies the property management process, especially if you are outside the country and cannot constantly monitor all processes personally.
Bali is more than just a retreat and inspiration corner; it is also a high-potential platform for real estate investments. The island's multifaceted nature with its rich culture, magnificent landscapes, and friendly population creates favorable conditions for various investment approaches - from purchasing villas and apartments for short-term rental to developing resort complexes with long-term capital growth prospects.
Considering the steady increase in tourist appeal and the improvement of the island's infrastructure, investments in real estate here can be quite profitable. Nevertheless, as with any investment venture, key factors remain a thorough market analysis, understanding local legislative nuances, and choosing the right strategy.