Bali attracts foreigners with its growing economy and large tourist flow. This means that investing in real estate on the paradise island can provide greater returns in the coming years. Learn more about the prospects, main advantages and disadvantages of investing in real estate in Bali

Many reputable portals call Bali one of the most desirable tourist destinations in the world. The island's popularity among travelers and expats is growing every year. Bali has all the necessary conditions for living, recreation, and business. These factors allow this paradise to be included in international ratings of investment attractiveness. According to statistics, the main buyers of real estate on this Indonesian island are citizens of Australia, the United States, China and the United Kingdom.

Is it profitable to invest in the economy of Bali? Find out in more detail below. 

You can learn more about investment strategies in Bali and ways to maximize your real estate returns by following the link.

Prospects for the development of Bali

Indonesia belongs to the category of the most promising developing countries. It is the seventh fastest growing country in the world.

In 2021, the construction of four major projects was announced in Bali that will increase the flow of tourists to the island: a new international airport, the largest theme park in Southeast Asia by Paramount picture, a Formula 1 track in Northwest Bali, and a new cruise ship port. Experts predict that these factors will contribute to the growth of land values on the island. Therefore, the most interesting area of investment in Bali is land and real estate. 

Benefits of buying real estate in Bali

Bali has long been established as one of the most fashionable tourist destinations in the world. According to booking.com, the island is recognized as the most desirable tourist destination, and the flow of tourists increases by 15% every year. Such popularity contributes to the growth of demand for rental property and provides a high income for its owners.

Bali has a relatively low entry threshold for developers, which attracts developers from all over the world. As a result, new unique projects appear on the island, improving the quality of construction and infrastructure.

Indonesia is one of the most promising developing countries and ranks seventh in the world in terms of economic development. Inflation is declining, which strengthens the national currency. These factors make real estate investment in Bali even more attractive.

Currently, 90% of the land in the tourist areas of Bali is already built up, so the real estate market is becoming scarce. This means that in the future, the number of new properties will decrease and their prices will increase. Currently, real estate prices in Bali are relatively low compared to other resort destinations in Southeast Asia.

Bali attracts expats from all over the world who come here for enlightenment, nature and surfing. Many of them stay on the island for a long time or forever, opening cafes, restaurants, beach clubs, coworking spaces, yoga studios, and beauty salons. This contributes to the development of infrastructure aimed at European consumers and the creation of new business and personal contacts.

Investors who rent out real estate in Bali earn an average of 12-15% per annum, which is significantly higher than the average rental income in the world, which is only 5%. Also, a speculative strategy works well on the island: investors who buy real estate at the excavation stage can earn up to 60-70% after construction is completed.

Features of investing in real estate in Bali

Investing in real estate in Bali can be an attractive option for many. With a budget of 100 thousand euros, you can already consider buying apartments in modern residential complexes located relatively close to the ocean. For 150 thousand euros, you can buy a good townhouse, and prices for villas start at 200 thousand euros. These figures relate to properties in the early stages of construction and are subject to change as real estate prices in Bali are constantly rising.

Despite the numerous advantages, there are some problems that can be encountered in the Bali real estate market. First, not all locations on the island are equally comfortable for living. For example, you may come across beaches polluted with garbage or narrow streets clogged with cars and scooters, which creates significant inconvenience for daily travel.

Secondly, the real estate market in Bali can be called "wild" due to the lack of clear government regulations. The rules and regulations are only being formed here, and many decisions are made at the local level. This can create additional risks for investors, especially for those who are used to a more systematic approach in Europe.

The third challenge is related to the specifics of real estate ownership in Bali. In most cases, investors do not acquire full ownership of a property but rather obtain a lease for 25 years. After this period, the lease agreement can be extended, but there is a risk that the extension will not take place. There are also properties with freehold or longer leases, but such offers are rare and much more expensive.

For many investors, this feature is not a deterrent, as rental income can significantly exceed the investment over 25 years. The average rental income in Bali is 12-15% per annum, which is significantly higher than the global average of 5%.

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Why is it profitable to invest in real estate in Bali?

Bali is a unique place with high attractiveness for real estate investors. The island is famous for its year-round tourist season, thanks to which property owners can earn a steady income. The island has about 320 days of sunshine a year, which ensures a constant flow of tourists and high rental prices for villas and apartments. In addition, the cost of rent is growing by an average of 15-20% every year.

A tourist attractive region

Bali is an interesting destination for tourists from many countries, because it has everything: beautiful nature, volcanoes, fascinating wildlife, vast rice fields, restaurants, bars and breathtaking views of the sea and mountains. It also has a well-developed infrastructure: from top entertainment venues to medical centers. The tourist season in Bali lasts 365 days a year.

Stable real estate market with good returns

Real estate in Bali has one of the highest yields in the world. On average, 15% per annum, excluding the growth of housing costs. For comparison, the average yield on real estate in the world is 5%. 

- The annual growth in real estate value is 15-20%;

- The cost of rent on the island is growing by 15-20% per year on average;

- The average occupancy rate of real estate during the year is 65-80%;

- Purchased real estate can be recouped in 5-6 years.

Reasonable investment amount

The advantages of investing in real estate in Bali include a fairly low investment threshold: apartments from $143.7 thousand, cottages with land from $212.5 thousand. A fully finished villa in a tourist location can be bought for $350 thousand. 

The cost of land and real estate in Bali is generally more affordable than on other paradise islands in the world. 

Government programs to attract foreign investors 

The government promotes foreign investment by simplifying the conditions, taxation system and legislation for foreign investors.