Investing in Bali Property: Key Things to Consider

Bali isn’t just a breathtaking vacation spot; it’s also a booming market for savvy investors. 

But investing in property here isn’t as simple as buying a piece of land and watching your profits grow.

You might need a deeper understanding of the local market, laws, and investment strategies. 

So, if making a smart investment in Bali real estate is your goal, this article is tailor-made for you.

In this guide, I’ll explain the exciting benefits of investing in Bali and share key strategies and tips for making wise investment choices.

Let’s dive in!

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Why Invest in Bali?

Bali is a highly attractive destination for foreign investors due to several key reasons:

1. High Visitor Numbers: 

Source: Domestic and International Visitors to Bali 

Every year, millions of people worldwide visit the beautiful island of Bali. 

Not to mention, there’s no high or low season in Bali. It attracts tourists all year round, with more than 500,000 visitors visiting the island every month.

These visitors enjoy the stunning beaches, lush green forests, and rich culture. With so many tourists visiting, there is a huge demand for hotels, villas, and apartments. 

This creates a great opportunity for investors to purchase properties and rent them out to visitors. The more tourists that come to Bali, the more money investors can make by providing accommodation.

2. Improving Infrastructure: 

The Indonesian government and local officials in Bali are working hard to make the island even better for tourists and investors. They are building new roads to make it easier to get around. 

They also construct modern hospitals with advanced medical care, like Bali International Hospital (BIH) in Sanur.

Source: bih

Additionally, transportation systems like airports and public transit are being upgraded. 

These improvements make Bali more convenient and appealing for visitors and those looking to invest in property there.

3. Profitability: 

Investing in real estate in Bali can be very profitable. The prices that property owners can charge for rent keep going up by 15-17% every year! 

Source: Statista

If you buy a villa or apartment, you can make a lot more money renting it out year after year. 

On average, investors can earn back all the money they initially spent on their Bali property within 5-6 years. After that, any rental income is pure profit. 

The typical return on investment for Bali real estate ranges from 15-21% per year, which is extremely high compared to other places, which only have 5%.

4. Reasonable Prices: 

Source: Taman Mumbul Nusa Dua Plagoo 2 Bedrooms

Even though Bali is a famous tropical destination, real estate prices are still quite affordable compared to other islands. 

For example, you can purchase an apartment in a desirable location in Bali starting at just USD 83,000. You can see more property listings here on Bali Villa Realty.

These lower prices allow more investors to get involved in the Bali property market without a high entry point.

5. Government Support: 

The Indonesian government wants to attract more foreign investment to Bali. To this end, it is improving infrastructure like roads and creating new laws to make investing easier and safer for foreigners. 

Some examples are the new “second home visa,” which allows foreigners to stay long-term if they own property, and the “Golden Visa,” which grants residency privileges to real estate investors. 

These policies show that the government is committed to supporting foreign investment in Bali.

Understanding the Legal Aspects

Before investing in Bali, it’s crucial to understand the legal landscape:

1. Tax: 

As a foreign investor in Bali, you must follow Indonesia’s tax laws, which can be complicated. One tax you’ll likely have to pay is an annual land and building tax on any property you own in Bali. 

You’ll also need to pay income tax on any money you earn from renting your Bali property to tenants or vacationers. Understanding these tax obligations is important so you can plan accordingly and budget for them.

2. Property Ownership: 

Two main ways foreigners can own property in Bali are leasehold and freehold

With a leasehold, you essentially rent the property for a long time, typically 25-30 years, and can extend the lease when it expires. 

Freehold means you fully own the property outright. 

However, freeholds have more requirements, such as foreigners building a foreign-owned company in Indonesia with a minimum investment of $700,000. 

That’s why, with the easy entry cost, leaseholds are the most popular of foreign investors. 

3. Property Zones: 

The island of Bali has different zones and areas designated for various purposes. Some zones only allow residential properties like villas and houses. 

Other zones are specifically for commercial properties like hotels, shops, and office buildings. 

There are even zones set aside for agriculture and farming use only. 

Depending on what property type you want to buy or build, you must ensure it follows the zoning regulations for that area.

4. Working with Local Real Estate Agents: 

The property laws and real estate market in Bali can be quite confusing for foreigners. 

That’s why working with a local real estate agent who understands all the legal details, like Bali Villa Realty, is very helpful.

We know all the important rules, regulations, and processes involved in safely purchasing property as a foreigner. We can guide you through all the paperwork and procedures to ensure your investment goes smoothly.

Investment Options in Bali

After understanding the legal aspects, Bali also offers a range of investment opportunities to suit different preferences and budgets:

1. Villas: 

One popular option for investing in Bali is purchasing a private villa. 

These luxurious properties often feature beautiful tropical designs with open-air living spaces, private swimming pools, and lush gardens filled with palm trees and exotic plants. 

Owning a Bali villa gives you a personal oasis to escape whenever you want a relaxing vacation. 

What’s more, when you’re not using the villa, you can rent it to tourists as an income property. Many visitors will pay premium prices to experience the ultimate tropical getaway by staying in their private villa rental.

2. Land: 

Instead of buying an existing property, some investors purchase vacant land in Bali to build their dream home or development from the ground up. 

With a land purchase, you can construct exactly what you envision—a custom luxury villa, an apartment complex with rental units, or commercial properties like shops and restaurants. 

Hiring local architects and contractors allows you to design it in a luxurious but with the traditional Balinese style.

3. Apartments: 

If you don’t need as much space or maintenance as a villa, investing in an apartment or condominium unit can be an excellent option, especially in Bali’s popular beach towns and tourist areas. 

Apartment living is very low-maintenance compared to a villa since you don’t have to worry about landscaping, pool upkeep, etc. 

Yet apartments can still offer a taste of Balinese luxury with amenities like resort-style pools and lush gardens. You can rent out your unit when you are not using it.

4. Commercial Properties: 

There is also demand for commercial properties for investors interested in Bali business opportunities beyond residential real estate. 

Options include purchasing retail spaces to open shops catering to tourists, buying restaurants or entertainment venues, or acquiring office buildings to lease to other businesses in Bali. 

These commercial investments allow you to be part of Bali’s booming tourism and hospitality industries.

How to Start Your Investment Property in Bali

Now that we’ve discussed why Bali is such an appealing destination for foreign real estate investors and the important legal aspects, let’s discuss the practical steps for getting started with your investment property in Bali.

The first step is to…

1. Find the Right Location: 

The area you choose to invest in Bali is very important. Currently, some of the most desirable locations for investors are in the Canggu region. Neighborhoods like Berawa, Pererenan, and Umalas in Canggu are highly popular but still developing, which creates great opportunities. 

These areas offer beautiful beaches, trendy cafes and shops, and a laidback surf town vibe that appeals to many tourists and expats. As Canggu continues growing, properties there have a lot of potential to increase in value over time.

2. Negotiate and Check Legalities: 

Once you’ve identified a property you want to purchase, it’s crucial to review all the legal documents and details about ownership thoroughly.

Don’t just skim through—read carefully to ensure no issues with the property’s titles, permits, or ownership rights. 

An illegitimate or problematic property could cost you a lot of money down the road.

3. Work with a Real Estate Agent and Notary: 

Don’t try to go through the process alone as a foreigner. Partner with an experienced, reputable real estate agent in Bali who knows the market very well. 

A good agent can expertly guide you through negotiating, handling legal contracts and paperwork, managing property if needed, and even overseeing construction if you’re building from the ground up. 

You’ll also want to work with a notary – a legal professional who can review documents and help ensure your transaction is 100% legitimate.

4. Find the Perfect Developer Team: 

If you plan to buy land and build your dream villa, you must assemble the right team of developers, including architects, builders, and contractors. 

Take your time vetting candidates, and don’t just go with whoever is cheapest. 

With 12+ years of experience, Ilot Property Bali has built hundreds of villas. Our experienced and reliable team understands your vision and can execute it with skilled craftsmanship, proper construction techniques, and durable materials. 

Contact us here or get a free consultation to build your custom luxurious villa in Bali.

Post-Purchase Considerations

Once you’ve purchased your Bali villa, there’s still more to consider if you plan to use it as a rental property instead of just a vacation home. 

Renting out a villa requires professional management – you’ll likely want to hire a reputable property management company. 

They can advertise your rental, communicate with guests, manage changeovers between bookings, arrange cleanings, and coordinate any needed maintenance and repairs. 

This allows you to earn income from your villa without the headaches of managing it all yourself remotely.

Conclusion: The Keys to Success in Bali Real Estate Investment

There are many great reasons to invest in Bali real estate and to make the most of your investment. The key is choosing the right property and understanding local laws.

Bali offers beautiful locations and reasonable prices, but you must go beyond buying a property.

If you invest money in Bali real estate, your property selection must be strategic, and you must learn from local experts.

By working with experienced real estate agents and understanding market trends, you can master the art of investing in Bali and significantly impact your financial future.

If you have any questions about investing in property in Bali, our team is here to help.

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