Bali has long ceased to be a destination associated solely with vacations and heavenly beaches. The island has become an excellent source of passive income. Investors from all over the world are showing great interest in the island, and for good reason. Indonesia’s economy has been growing steadily by an average of 5% for the past ten years, improving the country’s business climate and increasing its investment appeal.
Investing in real estate on this paradise island offers a number of advantages. We’ll discuss the key considerations in this article.
Why Buy Property in Bali?
Before considering investment options, we recommend defining your goals for purchasing real estate. This will determine your selection criteria, purchase terms, and other important considerations. For example, one question you should definitely ask yourself is whether you plan to sell the property, say, in five years.
So, what might your goals be?
- Buying a property for living
- Receiving rental income
- Combined: purchasing residential property + rental business
The criteria for choosing real estate will depend on the goals you set for yourself.
How to Choose Real Estate in Bali
When choosing options for living or investing, you also need to evaluate the location’s prospects, the factors that determine the price, and the available asset management options. Let’s discuss the key criteria.
Where do people buy property in Bali? It all depends on their preferences and goals.
Let’s look at each area separately.
1. Canggu
This is a prime tourist destination and one of the most attractive areas for investment. It’s a densely developed area where everything is close by: the ocean and a well-developed infrastructure with restaurants, bars, shops, schools, and medical centers.
Accommodation options: villas or hotels.
There’s a shortage of good hotels in Canggu, and there are virtually no plots of land left in this area for large-scale development. Over 97% of the area is already developed. The remaining land is used for single-family villas.
Despite the high demand for hotels in Canggu, there are virtually no suitable options, despite the numerous options available. Villas are also a challenge. Many villas were built in this area at one time using cheap building materials and poor design. This led to the properties quickly becoming worn out and losing their appeal. Therefore, acceptable villa options are booked up for months in advance.
Investing in Canggu is one of the most promising investment options, as space is very limited—there’s simply no available land. Developed infrastructure makes this area particularly attractive compared to others. High-quality real estate here will appreciate in value over time, as new large complexes won’t appear, and demand will continue to grow. This is a definite advantage over other areas. Nowadays, Canggu continues to be built up with small complexes without amenities, or villas.
2. Bukit
This is a more luxurious and open-plan format, which is plenty of open space. Natural beauty, beach relaxation, and the best establishments on the island are all you need. If you’re looking for a beautiful ocean where you can enjoy swimming, not just admiring it, and you don’t like crowds and traffic jams, then this is the perfect place for you. It’s the best area for comfortable living, especially for families with children. High-quality properties in this area are priced at the upper end of the market.
Accommodation options: Hotels & villas.
Bukit boasts numerous five-star hotels, but there are virtually no affordable, quality villa rentals. These typically offer either standalone, tired villas or luxury 5-6 bedroom villas, averaging $10,000 per month. However, one- or two-bedroom villas, the most sought-after type of property, are virtually nonexistent. As with all areas of Bali, Bukit is severely underserved.
Investment:
Bukit is a highly promising area, where you should look for properties with clear competitive advantages. For example, a direct ocean view that won’t be obscured by other developments in five years, a convenient location near beaches, and various amenities. Since Bukit is a large area, we recommend paying close attention to the location of the property, as this will determine the long-term success of the project.
3. Ubud
A neighborhood for those seeking spiritual enlightenment, practices, and a corresponding environment. It has a unique atmosphere. It’s located inland, far from the ocean. It’s slightly cooler than the island average. This neighborhood boasts a large Russian-speaking community, many retreat centers, and spiritual spaces.
Accommodation options: hotels and villas, or villas within hotel complexes.
Investment:
Ubud is a relatively profitable location for investors. However, its appeal is diminished by the unlimited availability of land in the area. This accounts for the low prices; hundreds of hotels and thousands of villas will be built here in the future. Investing for resale is unprofitable, as real estate prices are virtually flat, and Ubud faces intense competition from hotels: there are approximately 2,000 of them in a little over 42 square kilometers.
4. Sanur
Situated on the oceanfront, this developed area is ideal for both relaxation and living. The ocean is calm and quiet, and the beautiful beaches offer a gentle slope into the water. The Sanur area, which began to be developed in the 1960s, boasts excellent infrastructure. It offers everything needed for a comfortable life, from kindergartens and schools to supermarkets and restaurants. It’s a family-friendly neighborhood offering a quiet, relaxing holiday. For example, there’s a nine-hole golf course and the international Sanur Independent School.
Accommodation options: Hotels, villas.
Investment: This is a very attractive investment location.
However, the best spots on the coast are occupied by luxury hotels with expansive grounds, as well as private villas. Oceanfront property is nearly impossible to acquire; it’s in short supply and costs millions of dollars. However, it’s in high demand among tourists for rentals. Villas near the ocean in this area are the best investment for investors, while properties further inland are less popular.
5. Northern Bali:
We’d like to highlight the northern regions of the island separately, as there are also properties there that might appeal to potential investors, primarily due to their price. Of the areas discussed above, the northern part of Bali is about a 2.5-hour drive away. It’s also important to remember that this part of the island isn’t known for tourism. Occupancy rates are low here, making reselling a property virtually impossible.
Prices (Segment, Budget)
1. Canggu
Apartments: In the budget segment, one-bedroom apartments can start at $150,000. These properties are located in complexes without any infrastructure, stylish interiors, or services. Higher-end apartments with infrastructure and in a convenient location will cost at least $250,000.
Villas: Budget villas located away from the ocean start at an average of $200,000. However, when purchasing such a property, it’s worth considering why the villa is so cheap: perhaps the developer cut corners during construction? Villas from a reputable developer, with a modern design and close to amenities, will cost from $350,000.
Land: Land prices are the highest in all of Bali. Currently, the average land price in this area per 100 square meters with an annual lease is $1,700. This means that if you purchase land for a 500 square meter villa, the 30-year lease will be $270,000. For comparison, the cost of a similar plot of land near the ocean will be approximately $400,000–500,000.
2. Sanur
Apartments: Property and land prices in this area vary depending on location. For example, budget apartments away from the beach start at $150,000, mid-range one-bedroom apartments near the ocean start at $220,000, and premium apartments start at $300,000.
Villas: The situation is similar with these properties: the closer to the ocean, the more expensive. For example, premium villas 5 minutes from the ocean start at $400,000, while budget villas further away will cost at least $230,000.
Land: Land prices here are similar to those in other areas. The difference will depend on the distance from the ocean. For example, a 10-acre plot away from the ocean will cost $85,000, while a plot of the same size closer to the ocean may cost $160,000.
3. Bukit
Apartments: There are very few complexes in this area where you can buy real estate, and this segment is very competitive with hotels, which are quite difficult to compete with. In Bukit, one-bedroom apartments in good complexes will cost you $190,000–$300,000.
Villas: Three-bedroom apartments without a view and located further from the ocean will cost you at least $350,000. Similar villas with an ocean view start at $500,000. Good options with an ocean view will cost at least $700,000–$800,000. Villas in close proximity to the ocean will cost at least $1,500,000–$2,000,000.
Land: Land prices in Bukit vary greatly, depending on the area, amenities, proximity to the ocean, and popular establishments. We’re not taking into account illiquid land, but in a good location, a 100-square-meter plot with a yearly lease will cost $700–800. So, a 500-square-meter plot with a 30-year lease will cost a buyer $120,000. A similar plot in close proximity to the ocean will cost $300,000.
4. Ubud
Apartments: This type of housing is just beginning to develop in Ubud. Prices for one-bedroom apartments start at $150,000. This type of real estate in Ubud is not yet particularly popular.
Villas: In this area, a budget 3-bedroom villa will cost you at least $300,000. A well-built villa will cost at least $500,000.
Land: Land in this area is inexpensive. The average rent is $250 per 100 square meters per year. A 500-square-meter plot leased for 30 years will cost you around $37,000.
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