Updated: July 17, 2024
Investing in Bali real estate is a popular decision due to its thriving tourism industry, high demand, and stable market. Bali’s diversity, breathtaking scenery, warm climate, rich culture, hospitality and being well-connected by air make it one of the world’s most popular islands.
Whether you choose to rent out your private Villa or enjoy the paradise yourself, investing in a Villa in Bali can be a great decision. But, taking the initial plunge to buy a villa in Bali can be a nerve-racking move.
At Villa Finder we are getting an average of 10 enquiries a month from customers around the world who want to invest and/or retire in a villa in Bali.
Are you one of those people planning for your dream home in Bali? Getting your own villa in Bali is exciting, but can be a risky affair if you aren’t extremely careful with your investment and the legal environment. Indonesia is a beautiful but bureaucratic country and many of the “agents” selling land or villas cannot always be trusted. Here is a check-list of DOs and DON’Ts when buying a Bali villa.
Location
DO:
As in any real estate investment, it is about location, location and location. Properties located in popular tourist spots generally experience greater demand and considerably higher returns on investment compared to areas just a bit further away.
If you are looking for safe returns, target Seminyak; Seminyak has always been a popular Bali destination and even though many other new locations are popular now, Seminyak remains stable and attractive and is often the first stop for travelers who come to Bali. About 50% of all our Bali enquiries are for Seminyak!
Other popular destinations are:
– Canggu; Bali’s hotspot for shopping, food, beach clubs and party
– Ubud; For culture, nature and food lovers.
– The Bukit area; A paradise for surfers
DON’T:
Don’t buy a villa or property too far away from the beach or the hotspots of the specific area. We have seen dozens of villas in the Bukit area, branding themselves as being in Uluwatu or Balangan or Bingin, but in fact are 5 kilometers from the ocean. This does not work if you want to get a decent occupancy at an attractive revenue. Same for the rural areas of Canggu and Kerobokan on the East side of Jalan Raya Canggu.
Most tourists coming to Bali will look for a villa near the beach, surf, and other tourist hotspots. A property that isn’t right on the beach can still yield high returns, but being within walking distance to the area’s hotspots should be considered a key standard. Also, make sure your villa is in a quiet neighbourhood, away from the main street and traffic noise.
Budget
DO:
Budget your villa well. If you build in Bali, the price of construction should be between US$ 500 to US$ 1,000 per square meter, depending on the quality you are aiming for. Construction does not include the price of finishes and furniture so add another 50% to the construction price to avoid any unexpected surprises!
If you plan to rent out your villa, budget for a villa manager, staff and a good photographer too. Do not compromise on service as Bali tourists are also coming for the hospitality, especially when they travel with the family.
DON’T:
Don’t overpay. Do your market research. Typically your villa should be repaid in 10 to 12 years of rentals, depending on your location and your ability to market the villa. Don’t believe agents or advertising boards that promise returns of 20%. A good return in Bali these days is 10%. In our guide, we have an ROI calculator, check it out.
Agents
DO:
Do work with an agent that has a registered company, an office and a recognised name in the market. A good agent will guide you through the whole process of due diligence (including securing access to your land, obtaining your building permit, and recommending a good notary for the transaction) and will show you “safe” land or villas with proper property titles. If you are closing a deal with an agent, make sure he or she has a contract with the owner of the land or villa you are targeting. If you wish us to introduce you to one of our well-trusted partners, you can drop us a message at owner@villa-finder.com.
DON’T:
Don’t trust the many agents out there that have “friends” selling a villa or piece of land. They are usually steering you in the wrong direction. Needless to say, they won’t be there if problems occur, before or after you have made your deposit payment, as they have no legal right to assist you in the transaction. A good agent, again, has a contract with the owner of the land or villa (or his/her official representative) and will help be there to assist you the entire time.
Legality
DO:
Do it the legal way to avoid issues with immigration, high fines or having to close or give up your property. You need to start with a Building Permit. This used to be called an IMB, but has now changed to PGB (building approval) and SLF (function certificate). The most important change in the transition to the PBG and SLF is the new flexibility in building functions. Previously, the IMB permit limited buildings to a single purpose. However, the updated regulations now permit the classification of multiple, related uses within a single building project.
The building permit process takes 3 to 6 months. Once you have the PGB and SLF, you can continue applying for a Pondok Wisata, which is the license to rent out your villa legally. One has little to do with the other; an IMB or PGB and SLF can never become a Pondok Wisata license or vice versa.
Do your due diligence. If you buy land, make sure the zoning of the neighbourhood is not agricultural or green as this will make it impossible to get an IMB. Check if there are any roads or construction projects to be built around the villa (Jalan Sunset will be extended through Canggu one day!). Again, a good agent or a good notaris will guide you through the legal process. Don’t hesitate to contact me if you need a recommendation for a respectful agent or a good notary.
DON’T:
– Don’t buy freehold if you are a foreigner. It is not allowed for a foreigner to own property in Bali. Any free-hold transaction is unlawful. You can only lease land or a villa in Bali. If you buy an existing villa, do not buy it if there are no official building permits (IMB or PGB and SLF).
– Don’t buy land in a green zone.
– Don’t use just any notary or agent. Be careful and respectful of laws just like you would be in Europe, Singapore or Australia.
I hope this helps! If you have any more questions, please do not hesitate to contact us. We will be happy to send you some more recommendations.
Once your villa is ready, check out our Bali Villa Marketing Services to distribute and promote your villa! We will contact you to discuss the most suitable marketing solution for your villa.
