Updated on 01/06/2018
Taking the initial plunge to buy a villa in Bali can be a nerve-racking move…
At Bali Villa Finder, we are getting an average of 5 enquiries a month from customers around the world who want to invest and/or retire in a Bali villa. Are you one of those people planning for your dream home in Bali? Getting your own villa in Bali is still affordable, 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 most 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…
Choose a location you love because if you love it, other foreigners (potential guests to your villa) will like it too! As in any real estate investment, it is about location, location and location. If you are looking for safe returns, target Seminyak; the investment will be twice as much as in Canggu, but the returns will come much faster. The North of Bali is more developed now. There are lots of projects so prices are going up.
Don’t buy a villa or property far away from the sea. We have seen dozens of villas on the Bukit Peninsula, branding themselves as being in Uluwatu or Palangan, but in fact are 5 kilometres from the ocean. This doesn’t work. 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 to beach and surf. Very few visitors will compromise on beach distance. Also, make sure your villa is in a quiet neighbourhood, away from the main street and traffic noise. A great example is Villa Yoga that is both quiet and at the heart of Seminyak.
Budget well your villa. If you build in Bali, the price of construction should be between 500 to 1,000 USD 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. For more details, check out our guide to invest in a Bali villa.
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.
Do meet agents that have a proper 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 the access to your land, obtaining your building permit, 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.
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.
Do it the legal way. In order to do this, you will need a Building Permit (IMB) to build the villa (about 3 to 6 months to process) and a PONDOK WISATA (guest house license) to rent out your villa. One has little do with the other; an IMB 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 buy freehold. It is not authorised 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 if there’s no IMB. 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.
Hope this helps! Any more questions – please do not hesitate to contact us – we will be happy to send you some more recommendations.
Once you have your villa ready, check out our Bali villa management services to distribute and promote it!