Are you thinking about buying property in Bali?
With the economy stabilizing and interest rates decreasing, it might be a great time to invest.
But before you dive in, it’s important to consider global trends and how they affect Bali’s property market.
This article will explore these trends and guide you toward making a confident investment decision.
Global Real Estate Market: What’s Happening?
The global real estate market is going through significant changes due to economic challenges, high interest rates, and political uncertainties.
However, despite these issues, there are still promising opportunities for smart investments.
Economic Stability
The world economy is finally stabilizing after a turbulent period caused by the COVID-19 pandemic and rising inflation.
Central banks have worked hard to control inflation, and it’s beginning to slow down.
As we move into 2024, this more predictable economic environment sets the stage for more confident investment decisions.
Source: Global real estate capital flows (PWC)
Political and Economic Policies: A Global Influence
Political events and policies in key regions like the US, Europe, and Asia significantly impact real estate markets.
Changes in how these regions handle monetary policies, particularly interest rates, are expected to increase investment activity later in 2024 and beyond.
Interest Rates and Inflation: A Double-Edged Sword
Currently, borrowing money to buy properties is more expensive due to high interest rates.
This has made many investors cautious, slowing down global property transactions.
The good news is that inflation is starting to go down. The World Economic Forum states that:
“Among a selection of 22 developed countries, the average annual inflation rate has dropped to 3.7%, compared to 12.7% at the end of 2022.”
As inflation continues to fall, interest rates are expected to stabilize—making borrowing cheaper and potentially spurring a new wave of real estate investments.
Bali’s Resilient Rebound: Then vs Now
The COVID-19 pandemic significantly impacted Bali’s property market but has shown remarkable resilience and recovery.
During the Pandemic
At the onset of COVID-19, Bali saw a dramatic drop in property transactions and prices, especially in key areas like Denpasar.
Travel restrictions and lockdowns brought tourism to a halt, leading to a sharp decline in the property market.
Source: Global Property Guide
Now: Recovery and Current Trends
As travel restrictions began to ease and vaccination rates increased, the market started to recover.
By the second quarter of 2022, there was a noticeable rebound in property prices and transactions.
Foreign tourist arrivals surged, reaching approximately 1.34 million by March 2024, which helped stabilize the market and boost property values.
By the end of 2023, commercial property prices in Denpasar, Bali, hit 111.62 index points.
With COVID-19 over, Bali’s tourism, including Denpasar, is bouncing back to how it was before.
Source: Statista
Bali’s Property Market: Navigating the Opportunities
While high interest rates have made borrowing more expensive, Bali’s property market remains attractive, especially in tourist areas with strong rental yields.
Property Prices and Rental Yields
Bali remains a hotspot for investors, particularly in prime locations like Seminyak and Canggu.
However, investors can find more affordable options in less touristy areas like Seseh, which still offer good returns.
The rental market is strong, thanks to the island’s thriving tourism industry, making it an appealing option for those seeking consistent rental income.
Source: Investment Legal Advisory
What This Means for You as an Investor
Stable Economy
A more stable global economy with lower inflation and interest rates means less risk when investing in property.
This stability can give you confidence that your investment will be safe and profitable.
As the picture shows below, Indonesia’s GDP is predicted to be stable compared to other Asia Pacific Countries.
Source: Stable Indonesia’s GDP projections (PWC)
Investment Opportunities
As borrowing costs decrease and economic conditions improve, more opportunities for real estate investment will emerge.
This could mean finding great deals on properties as the market adjusts, especially in a high-demand location like Bali.
Better Planning
Knowing that political and economic policies are starting to favor investment allows you to plan your purchases better.
You can look for the right time to invest when conditions are most favorable.
Is Now a Good Time to Invest in Bali?
Given the current trends, now could be an excellent time to invest in Bali’s property market.
The global economy is stabilizing, inflation is decreasing, and interest rates are expected to follow.
These factors create a favorable environment for investment.
Bali’s property market, particularly in tourist-rich areas, shows strong rental yields and promising growth.
For investors, this means potential high returns and a chance to capitalize on a recovering market.
However, it’s important to balance being cautious and taking advantage of new opportunities.
This means knowing high borrowing costs and changing regulations while looking for good investment chances.
Understanding broader economic and market trends allows you to make smart choices that align with your investment goals.
If you do, you can navigate the changing market with confidence.
