chilli
anyone like to comment on this article ?[url="http://www.balidiscovery.com/messages/message.asp?Id=4827"]http://www.balidiscovery.com/messages/m ... sp?Id=4827[/url]
Sanurian
There's not a real lot to say about it, just yet....The Chairman of the Bali Chapter of the [i]Indonesian Chamber of Commerce[/i] has predicted that the real estate business in Bali will collapse before the end of 2008...[/quote]The Chairman is one [i]Gede Wiratha[/i], according to the article, who owns various tourism and entertainment ventures in Bali.Maybe he's freaking out a bit because he might lose some money in the near future. I don't know if [i]the real estate business in Bali will collapse before the end of 2008[/i] or not. Sounds to me like panic stations and perhaps jumping the gun.And if his "dire predictions" come true, that [i]might[/i] be a good thing for local Balinese who've "sold" or "leased" their land to foreign villa/apartment "owners" who are now panicking about their investments in light of the global financial crisis. Some Balinese might even get control of their land back sooner than expected, as rats flee the sinking ship. (If that's what it is.)I don't believe that Bali, or the rest of Indonesia for that matter, have some kind of special "immunity" in the wake of what's shaping up to be a major economic bummer for the whole world.Not personally being a businessman, in any shape or form, I have little sympathy for people who've invested here and now might find themselves up shit creek without a paddle. If things do go seriously bad for Bali's real-estate business, I feel for the local victims of the flow-on effects, like unemployment.Isn't it always the little guys and gals that have to face unwelcome [i]reality sandwiches[/i]?In the worst case scenario, everybody will be affected, one way or another. I'm feeling it already. How about you? :cry:
Jimbo
I don't believe that Bali, or the rest of Indonesia for that matter, have some kind of special "immunity" in the wake of what's shaping up to be a major economic bummer for the whole world.[/quote]I can only agree with your comments. It was especially a statement in the report that stated the banks do not have the money to lend. Not all developers on the island are rich expats paying cash.I also believe that all bubbles burst at sometime....the rest of the world has found that out and although I cannot speak for Bali alone the rest of Indonesia is feeling a knock on a affect from the world crisis. I for one will have to postpone my plan to buy early next year and I am sure there are others.
chilli
From my observation Sanurian it is affecting everyone (and if not, it will soon).with FIAT currencies losing value, shares, stocks up, down, all over the parking ground,banks are iffie, real estate value down, thats not so much the problem (more so for the people who are mortgaged and cannot sell their property to at least get out of debt). Pension funds, super funds, you name it, its all wabbling.
BaliLife
i believe this article was presented not entirely clearly - after reading it, what you tend to note is that he's talking about developments and projects not being able to complete because the financial institutions won't provide critical operating lines, which is meaning that some developers who rely on those lines may have nowhere to turn, and next thing you know, bang, the development's dead.. this is happening in surabaya also..the difference is that this is a supply side issue.. i.e. developers won't be able to provide some of the units they've already taken deposits for.. yikes if you gave a developer 30% down - in most developed markets you're protected by trusts / escrows, but not in indo - if you were brave enough to give a dp to an indo developer, you might not see that, or your finished property.. in a market where buyers of homes also rely on mortgages / financing, then yes absolutely, the credit freeze would put more buyers out of the market.. but in indo, mortgages are rare and generally very small - so this really constrains supply, not weakens demand.. BUT, that said, yes of course - liquidity in the world has shrunk.. the german guy who was gonna buy that summer villa in bali this year may be feeling too pinched to do it - no doubt there's an argument to be made on the weakening demand, but that's not what this article was about.. also, as i've pointed to earlier, land prices in bali are reasonable cheap compared to the real cost of construction.. typically, bali properties on the market are reflective of their replacement cost and seeing that land (which is the main real varying cost factor) is not a huge component of overall price, i think the speculative bubble in bali is not as much of a driving factor in prices there, or anywhere in indo..i'll give one example - in vancouver, in 2003 i about a townhouse off the plan for about 20% above construction + cost of land expense, from a developer.. it completed in 2005 and had increased 50% from it's original purchase price.. by 2007, when i sold it, it was sold at exactly double of what i paid for it.. where had that 'extra worth' of the property come from? cost of construction was up only 20% in that period, so replacement cot wasn't a factor.. the fluff was in the perceived value in the price of the land - that fluff can easily be blown away when people don't feel o rosy about the outlook.. but in bali, the market's far less liquid, but there's also far less fluff - unless you buy from one of these developers that basically marks up their cost of product by 100%.. then you're giving them the fluff before your lose it..just my thoughts..but i do believe a bali property is a long term asset, - it's not like you can flip them like people were used to doing in canada, australia and the US every 6 months..ct
