Investing in Bali's resort property

Although still someway behind Phuket in volume of sales and the number of developments, the Indonesian island is catching up fast, helped along by a newly proactive government, both at local and national level, which is keen to develop the island's appeal as a real estate investment destination for foreign buyers.

"Indonesia has a legal environment which makes it quite easy for foreigners to buy," says Dominique Gallmann, Director of Exotiq Real Estate. "They have a government which has consistently worked on improving the investment climate here and has improved the laws which enable foreigners to buy here. Just recently a new investment law was passed, by which foreigners can now hold government titles on property for 70 years with a possibility to extend."

"We've got a new Indonesian government that realises it has to catch up with the rest of Asia," says Matthew Georgeson, Sales Manager at Elite Havens. "The next step is for the Bank of Indonesia to accept that the extended tenures are a medium which banks can lend on. We're starting to get finance packages out of Jakarta now. The first step is for expatriates with a working visa and hopefully, if that goes well, they'll roll it out to the general public in due course."

Indonesia does not currently have a specific condominium law, which has restricted development on Bali to mostly villas. Although developments are becoming increasingly common, many buyers still opt to buy a plot of land and build an individual villa on it.

"The typical foreign investor is going to buy 20-25 are (are = 100 sqm) and build their own villa," Gallmann says. Land prices vary considerably depending on location but start at less than US$5,000 per are for plots in the interior, to 10 times that for seaview plots in the developed south of the island.

"In northern Bali you would get decent beachfront for US$2000 an are, so US$100,000 would buy you a beautiful beachfront property. In the south, there's nothing for that price. You're looking at US$500,000 upwards. A four-bedroom villa, 400-450sqm, would cost around US$500psm to build."

Courtesy: Property Report

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