Bali not only attracts tourists with its white-sand beaches and magnificent views, but also presents a tempting opportunity for investors seeking capital growth and a stable source of income. Learn about Bali investment strategies and how to maximize your real estate returns

Investing in real estate in Bali is a promising opportunity to create a stable source of income and capital growth.  To maximize the return on your Bali real estate investment, the first step is to choose the right location.  The variety of regions on the island offers different opportunities for investors, from beach resorts to mountain retreats. 

A property management strategy must also be developed. This includes deciding whether the property will be rented out to tourists, rented out on a long-term basis or used as your own home. Each of these options has its pros and cons, and the choice depends on the investor's goals and the characteristics of the particular property.

Read more about Bali property management strategies and return on investment in this article.

Popularity of Bali among investors 

The island of Bali, which is known as an exotic tourist paradise, is attracting the attention of investors from all over the world due to its booming real estate market. 

This trend is due to several factors, including a steady flow of tourists and the stability of the local economy.

For example, Indonesia's GDP grew by 5.05% in 2023, the highest since 2013. The country's inflation rate also remains low, not exceeding 4%, which is significantly lower than many other countries.

After a temporary downturn due to the pandemic, the flow of foreign tourists is quickly recovering: on average, 500,000 guests visit the island every month, regardless of the time of year, as the season is year-round. 

This ensures a high occupancy rate of real estate properties, reaching close to 90% in hotels and about 80% in townhouses and villas.

For investors, the local real estate market remains attractive, as housing prices here are significantly lower than in other countries.  

The most popular way to use real estate in Indonesia is to use it as a second home. This format allows the owner to spend a vacation by the sea, and the rest of the time to rent the property to tourists.

Real estate investment strategies in Bali

Potential real estate investors have several strategies to choose from, each promising different opportunities and returns.

1. Short-term. 

One of the short-term Bali real estate investment strategies is to purchase a property in the primary market and then sell it after construction is completed. This strategy provides returns in the range of 20-30% per annum.

It can be profitable for investors looking to earn rental income, as well as for those purchasing real estate for personal use.

Buying an object in new buildings and then selling it after construction is completed can bring a return of 20% within a year. The price of a property is mainly determined by its potential rental yield.

2. Medium-term.

The second strategy of investing in real estate in Bali is focused on medium-term prospects (up to 2 years) with returns from 15% per annum. 

The essence of this strategy is to purchase an object in the primary market with full payment without installments, rent it out with a yield of 15% per annum and create a ready-made rental business (GAB). 

The property can then be sold one year after commencement of the lease at a return of 30% or more on the capital invested.

This strategy provides investors with the opportunity to generate rental income for the first year of operating the facility and then sell it as a GAB at a high yield.

3. Long-term.

The third real estate investment strategy in Bali is aimed at long-term prospects (up to 7 years) with returns from 15% per annum.

It involves buying a property in the primary market and renting it out at 15% p.a. for 7 years, and then selling it afterwards, which can bring additional profit due to the increase in the market value of the property.

Renting out is the most common way to generate income from real estate in Bali, providing stable dividends and increasing the capitalization of the property.

Daily rentals can generate more income but require constant care and maintenance, while long-term rentals can provide a stable, albeit lower income with lower maintenance costs.

4. Investments with installment payments 

It is also possible to invest using installment payments, while providing returns of up to 40% per annum. 

The initial installment is 30% of the value of the object. The remaining amount is paid over the next six months at an interest rate of 3% per month, which is 18% of the total value of the property.

After six months, the property is sold at a 20% increase in value, which also takes into account the capital invested. 

This strategy looks at the return on investment. In this case, the return on invested capital reaches 42%.

5. Possibility of redeeming individual shares

In Bali there is also an opportunity to invest not only the whole object at once, but also to start with individual shares. You can buy a share for $10 thousand and gradually increase it to the full value of the apartment. 

Equity investment in real estate - one of the most profitable forms of investment, because it is available to a wider range of people.

The investor, buying a share of real estate, gets the right to manage this part and receive income from the investment. Each participant has a share proportional to the size of his investment.

This model is especially attractive for young investors with limited financial resources, as it allows you to start with small amounts and gradually increase the capital.

International developer ANTA Group offers exclusive equity investments in premium apartments in the most popular area of Bali - Changgu, in the complex ANTA Residence Canggu.

Return on investment in Bali

Each of the investment strategies includes consideration of capitalization, taking into account both the value of the land and the cost per square meter of the property.

When calculating the return on investment takes into account the growth in the value of the land plot, which is an average of 5-7% per year, as well as the growth in the value of the project under construction, which during the construction period (about 2 years) increases by 20-25%. 

Thus, during the construction period of the project we can expect an increase in value of about 40%, which is equivalent to 20% per annum.

A popular way of obtaining passive income among investors is renting real estate.  On average, the rental yield in Bali is 15% per annum, taking into account all operating costs. 

In addition, the value of rental properties increases for two main reasons: the natural increase in the value of real estate and land in Bali (approximately 12% per year) and the increase in the value of the property as a business due to the reporting of rental revenue showing the actual value of the property.

Which property should I choose to invest in?

Bali is particularly sought after in the southwest of the island, especially in the Changgu area. In recent years there has been a growing interest in buying hotel apartments. 

These are apartments or studios that offer the opportunity to live in your own apartment, while using the service of the hotel, as well as receive passive income from renting apartments if necessary.

Entry prices into this market range from $120,000 to $350,000, and the return on investment is estimated at 14-16% per annum.