Hi this is my first post, so here goes. We are thinking of moving to Bali, but were shocked by the cost of property and land in the south . Our original idea was to buy 2 or 3 properties, with a view to renting 2 and living on the income, but it looks like the only place we could afford to do this is around Lovina. My husband is Chinese Indonesian, so land ownership isn't a problem, but he thinks Lovina would be too quiet to attract enough rental. I think that this is a developing area with good potential, after all not everyone wants to holiday surrounded by other tourists, and the south seems so crowded that pretty soon developers will have to move to other parts of the island. Any vews on this would be very appreciated. Also, does anyone know the average price of land (beachfront) in this area?
possible move to Bali
- Thread starter mariathe
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Allthough you should target a "different" kind of client when you want to rent out villas in the North, with the right marketing it is very well possible to get a good occupancy rate.
The price of beachland in the Lovina area depends on how far it is from the central area of Lovina. In lovina itself there is allmost no land available and prices have gone up steeply the last few years. Further west or east of Lovina prices are from around 30-10 million per are and lower if not on the beach. Ofcourse these prices are for undeveloped land, with no electricity, water etc.
The price of beachland in the Lovina area depends on how far it is from the central area of Lovina. In lovina itself there is allmost no land available and prices have gone up steeply the last few years. Further west or east of Lovina prices are from around 30-10 million per are and lower if not on the beach. Ofcourse these prices are for undeveloped land, with no electricity, water etc.
this is my first post- and i wanted to say that i have found this forum uniquely informative, sincere and frank. if all goes well, i hope to join your ranks as a bali expat in the next couple of years...but until then im happy to share what (little) i know from my 20-30 visits to Bali. (and i own a house in jimbaran)..
mariathe... first i would caution you that the demographics of the bali tourist have changed a lot. although net arrivals are as strong as ever, european, N american, and even japanese visitors (these groups may be considered higher spending, longer staying visitors) have been replaced by those of the ASEAN area, esp new demographic groups like Taiwan, Korea, etc. the latter groups are prone to a different style of travel that might include group tours, etc. i know that many of the more estabished hotel and villa operators relied on wholesaling rooms to such new visitors during the 2002-2003 lull but peripheral spending of the new bali visitor is far short of the old.
even a premium operator, like the villas (jalan kunti, seminyak) was rumored to be wholesaling normally $350/night villas at around 100$. even this month (jan 2005), the Four Seasons Jimbaran helps cover costs by doing similar in the post Xmas/NY lull. i was told they wholesaled to Taiwan operators and were running about 50% occupancy before CNY.
i SUSPECT 4* and 5* operators are generally seeing occupancy figures during these slow period in the region of 30% despite heavily slashed rates. that means that losmens, and traveller budget places (which lack the marketing) are probably doing same or LESS. i am told the breakeven for many hotels huilt within the last 7 years is around 35-40% and older ones maybe 25-30%
so....two things....LOCATION AND MARKETING.
for my money, empty houses sort of find ways of depreciating/breaking/wearing out quicker. instead of 2-3 houses in the far reaches, maybe you should consider one rental property in a more heavy traffic area (s'yak, canngu, sanur, jimbaran, ubud) and living yourself in a more distant place (lower overhead).
by doing so, you would be less reliant on the walk-by tenant, and would have a more stable income stream. i would also suggest that multiple houses means multiple headaches as its hardly easy being a landlord in (at times archaic) Indonesia.
older bali houses, well, are older, darker, more rustic- so know that their appeal will be limited to certain types of travellers/budgets. newer places are certainly, as you note, expensive, and limited to tourists with dosh!
in my research, people/agents/developers tout investment return rates of 10/15+ %. i would suggest caution. sure, it can happen, but i think that when you factor in fees like lawyers fees, maintenance, marketing budget, management fees, etc, you are really looking at 3-8%. and note also that a single house for rental has little economies of scale. as for building, well there is plenty to read on threads on this forum- do your budget and timeline, and multipy both by 2 (at least). lastly- know that it is not easy for a forienger to get a loan in Indo. and that the nextbest alternative for your hard earned cash is in a bank- whih in Rp's gets 10-12% interest and in USD can get 2-7% interest (ive heard that some local banks are giving 7+% USD 1 yr CD's- but watch out for default risk!)
that said, imho, i think that Bali continues to be attractive- very much so as a enchanting destination, as well as a long term investment (sorry- hate to sound so business-sy). i have read with interest the opinions on this forum on ownership options- that will take quite a bit of reflection on your part as well. personally i think the nomination workaround has found sufficient critical mass that the risk is not so great- ultimately, this workaround is against the spirit of the law- but would bali risk a massive real estate fall out? i doubt it barring extreme change in business climate (eg. regime change)...but i do also agree that 'bali is for the balinese'...and a long term lease, besides being politically correct, is also legally very much upholdable. my current house i have used the workaround. i am looking at another property- this one is leasehold.
there are many new 'glossy' developments that offer a fixed/g'teed return for up to three years...that might be a lower risk way of buying time. the good thing about that scenario is that you can get the developer to fix many of the things that inevitably are wrong/defective/need adjustment in ANY new house. (and beleive me, there will be ALOT). after all, you are not really ever living in the house!
also if you look around there are even apartments on leasehold that offer a steady cash stream on a fairly safe rental record. these apartments might be had for a lot less than a tourist or luxury villa.
Note- i bough a place two years ago off the plan. it was 8 mos late. overall i am pleased but now, even months after handover, there are numerous minor/major defects that need correction (and are slowly being corrected). as with much property (US, BKK, Sri lanka, Oz, NZ, London, pkt) worldwide, it has enjoyed capital appreciation.
mariathe... first i would caution you that the demographics of the bali tourist have changed a lot. although net arrivals are as strong as ever, european, N american, and even japanese visitors (these groups may be considered higher spending, longer staying visitors) have been replaced by those of the ASEAN area, esp new demographic groups like Taiwan, Korea, etc. the latter groups are prone to a different style of travel that might include group tours, etc. i know that many of the more estabished hotel and villa operators relied on wholesaling rooms to such new visitors during the 2002-2003 lull but peripheral spending of the new bali visitor is far short of the old.
even a premium operator, like the villas (jalan kunti, seminyak) was rumored to be wholesaling normally $350/night villas at around 100$. even this month (jan 2005), the Four Seasons Jimbaran helps cover costs by doing similar in the post Xmas/NY lull. i was told they wholesaled to Taiwan operators and were running about 50% occupancy before CNY.
i SUSPECT 4* and 5* operators are generally seeing occupancy figures during these slow period in the region of 30% despite heavily slashed rates. that means that losmens, and traveller budget places (which lack the marketing) are probably doing same or LESS. i am told the breakeven for many hotels huilt within the last 7 years is around 35-40% and older ones maybe 25-30%
so....two things....LOCATION AND MARKETING.
for my money, empty houses sort of find ways of depreciating/breaking/wearing out quicker. instead of 2-3 houses in the far reaches, maybe you should consider one rental property in a more heavy traffic area (s'yak, canngu, sanur, jimbaran, ubud) and living yourself in a more distant place (lower overhead).
by doing so, you would be less reliant on the walk-by tenant, and would have a more stable income stream. i would also suggest that multiple houses means multiple headaches as its hardly easy being a landlord in (at times archaic) Indonesia.
older bali houses, well, are older, darker, more rustic- so know that their appeal will be limited to certain types of travellers/budgets. newer places are certainly, as you note, expensive, and limited to tourists with dosh!
in my research, people/agents/developers tout investment return rates of 10/15+ %. i would suggest caution. sure, it can happen, but i think that when you factor in fees like lawyers fees, maintenance, marketing budget, management fees, etc, you are really looking at 3-8%. and note also that a single house for rental has little economies of scale. as for building, well there is plenty to read on threads on this forum- do your budget and timeline, and multipy both by 2 (at least). lastly- know that it is not easy for a forienger to get a loan in Indo. and that the nextbest alternative for your hard earned cash is in a bank- whih in Rp's gets 10-12% interest and in USD can get 2-7% interest (ive heard that some local banks are giving 7+% USD 1 yr CD's- but watch out for default risk!)
that said, imho, i think that Bali continues to be attractive- very much so as a enchanting destination, as well as a long term investment (sorry- hate to sound so business-sy). i have read with interest the opinions on this forum on ownership options- that will take quite a bit of reflection on your part as well. personally i think the nomination workaround has found sufficient critical mass that the risk is not so great- ultimately, this workaround is against the spirit of the law- but would bali risk a massive real estate fall out? i doubt it barring extreme change in business climate (eg. regime change)...but i do also agree that 'bali is for the balinese'...and a long term lease, besides being politically correct, is also legally very much upholdable. my current house i have used the workaround. i am looking at another property- this one is leasehold.
there are many new 'glossy' developments that offer a fixed/g'teed return for up to three years...that might be a lower risk way of buying time. the good thing about that scenario is that you can get the developer to fix many of the things that inevitably are wrong/defective/need adjustment in ANY new house. (and beleive me, there will be ALOT). after all, you are not really ever living in the house!
also if you look around there are even apartments on leasehold that offer a steady cash stream on a fairly safe rental record. these apartments might be had for a lot less than a tourist or luxury villa.
Note- i bough a place two years ago off the plan. it was 8 mos late. overall i am pleased but now, even months after handover, there are numerous minor/major defects that need correction (and are slowly being corrected). as with much property (US, BKK, Sri lanka, Oz, NZ, London, pkt) worldwide, it has enjoyed capital appreciation.
although net arrivals are as strong as ever, european, N american, and even japanese visitors (these groups may be considered higher spending, longer staying visitors) have been replaced by those of the ASEAN area, esp new demographic groups like Taiwan, Korea, etc.
Hmmm, last I checked, Japan was, and still is, a major player in ASEAN. Moreover, for tourists in Bali for the last three years, Japanese tourists have topped the list.
The latest, meaning last month arrivals in Denpasar put, as usual, Japan, Australia and Taiwan as the three leading countries of origin.
older bali houses, well, are older, darker, more rustic-
Really?
The house on the cover of the best selling book, BALI STYLE is owned by my good friend, and located close to my own house on the Ayung River. It's 28 years old, and to this day, bright as a star, and worth about 50 times what my friend paid to have it built.
Do you really know what you are talking about...or just setting up a mark?
Well, we have no intention of buying leasehold, and as my husband is Indonesian, we have no problem with ownership. If I had the choice, I would go for the traditional Balinese look with open living everytime, my idea of heaven. From what I have seen on the net, many of the new villas are souless, concrete boxes you could find anywhere. But I imagine that all that character would come with a hefty price tag, and we are not millionaires (unfortunately). The choice we have to make is where to buy for the best and most reliable return with the means we have available. I haven't done much homework on this yet (but intend to do alot more), but from what I have read, the south can barely sustain the burden of the tourist industry at the present time, let alone in the future if visitor numbers continue to rise. There is no denying that we would get a lot more for our money in the north, which is appealing, but buying there to rent might be a gamble. We considered buying to rent in the south, and living elsewhere, but would prefer to stay close to our investment. And by the way, I never take anything at face value.
roy, i knew i would get a frank reply from you! fair enough
well, like i said, my knowledge is limited. while japan and OZ still top the list, most hoteliers feel that their numbers are lower...and taiwan, while 3rd now, was probably not even on the radar >3 years ago. i have heard, though not witnessed personally that china, korea, and russia are moving up the demographics of arrivals.
Asean= ass'n of South East Asian Nations (or so i thought), so while Japan may be a often consulted, its actually not a member. my fault for not being more clear. there is a pretty good email update, i think its called "bali update" (haha) that does a decent job culling information about tourist and hotel/restauruant information. do a web search...i dont think its associated with this site (nor anything to do with me- other than i read it)
;-) im not setting up a mark- i got no motives other than sharing info/opinions. im definitely not an agent/web operator etc.
and marithe....i really do not agree the south 'can barely sustain the burdens of the tourist industry' at the time. yes, i know at times there are places running 100% but i dont think that is the case througout the whole accomodation spectrum.
lastly, and just being devils advocate, consider what happens in case of divorce when you do ownership solely in your husbands name. im not trying to be negative, just realisitic, and this issue may be worth talking to a lawyer about.
im going to stick by my investent 'return' figures- but let me clarify, those are based on cashflow (i.e. how much rent you collect v how much you paid). much of the attraction to real estate in bali is capital appreciation (the value of the land going up). i tend to be financially conservative and i dont include potential land appreciation when talking about how to value a property- i try to sperate the two meaning that i think a rentable property, ideally, should be able to pay for itself (cover its mortgage and expenses). the land appreciation is a bonus.
im really not setting you up for anythingg mariathe....like i said, ive done off the plan, and im looking at another leasehold now.... if i had the time and expertise, i might consider building....but that would be a even bigger pandoras box of complications (though one that may well be worth it). it is indeed true that exceptional older houses like roy points out onthe ayung do exist.... in my limited looking as well as in the opinions of people that i garner information from, i made that unfortunate statement sterotyping older houses as "older, darker," etc. take a look for your self. ;-)
newer places, can be quite alright- they do run a heft tag of 150-500+k and most are certainly densely packed- but i think few are totally void of design 'soul'. 'boxes' simple wont sell in Bali- or maybe they might in Kuta... however, compared to the dreamy and ideal traditional bali house (for example, the ayung river house), sure, they (new houses) pale but that outstanding classic option will also cost you dearly.
factors that i favored but i think often overlooked were security (no, im not worred about theft, but nor do i want to temp it) and freedom from minor social idiosycracies- dont get me wrong, i like the way bali community is set up (aprt from the corruption)...i simply didnt want to have my first place/home land me right in the middle of things. i wanted time to learn the proper way. supporting the banjar and community- ok. getting scammed - not ok.
good luck and i hope you share your adventure.
well, like i said, my knowledge is limited. while japan and OZ still top the list, most hoteliers feel that their numbers are lower...and taiwan, while 3rd now, was probably not even on the radar >3 years ago. i have heard, though not witnessed personally that china, korea, and russia are moving up the demographics of arrivals.
Asean= ass'n of South East Asian Nations (or so i thought), so while Japan may be a often consulted, its actually not a member. my fault for not being more clear. there is a pretty good email update, i think its called "bali update" (haha) that does a decent job culling information about tourist and hotel/restauruant information. do a web search...i dont think its associated with this site (nor anything to do with me- other than i read it)
;-) im not setting up a mark- i got no motives other than sharing info/opinions. im definitely not an agent/web operator etc.
and marithe....i really do not agree the south 'can barely sustain the burdens of the tourist industry' at the time. yes, i know at times there are places running 100% but i dont think that is the case througout the whole accomodation spectrum.
lastly, and just being devils advocate, consider what happens in case of divorce when you do ownership solely in your husbands name. im not trying to be negative, just realisitic, and this issue may be worth talking to a lawyer about.
im going to stick by my investent 'return' figures- but let me clarify, those are based on cashflow (i.e. how much rent you collect v how much you paid). much of the attraction to real estate in bali is capital appreciation (the value of the land going up). i tend to be financially conservative and i dont include potential land appreciation when talking about how to value a property- i try to sperate the two meaning that i think a rentable property, ideally, should be able to pay for itself (cover its mortgage and expenses). the land appreciation is a bonus.
im really not setting you up for anythingg mariathe....like i said, ive done off the plan, and im looking at another leasehold now.... if i had the time and expertise, i might consider building....but that would be a even bigger pandoras box of complications (though one that may well be worth it). it is indeed true that exceptional older houses like roy points out onthe ayung do exist.... in my limited looking as well as in the opinions of people that i garner information from, i made that unfortunate statement sterotyping older houses as "older, darker," etc. take a look for your self. ;-)
newer places, can be quite alright- they do run a heft tag of 150-500+k and most are certainly densely packed- but i think few are totally void of design 'soul'. 'boxes' simple wont sell in Bali- or maybe they might in Kuta... however, compared to the dreamy and ideal traditional bali house (for example, the ayung river house), sure, they (new houses) pale but that outstanding classic option will also cost you dearly.
factors that i favored but i think often overlooked were security (no, im not worred about theft, but nor do i want to temp it) and freedom from minor social idiosycracies- dont get me wrong, i like the way bali community is set up (aprt from the corruption)...i simply didnt want to have my first place/home land me right in the middle of things. i wanted time to learn the proper way. supporting the banjar and community- ok. getting scammed - not ok.
good luck and i hope you share your adventure.
When I said the south is having problems coping with the number of tourists, I meant its infrastructure, not room occupancy. My fault for not being clear enough.
And thanks, Grastaman, for your concern over my marriage, but we have been married nearly 30 years, so I think divorce is failry unlikely!! (unless Mel Gibson decides I'm the one for him!!!). He (my husband, not Mel) has lived with me in the UK for all that time, and now wants to move back to Jakarta, but for various reasons I'm not keen to do that. Bali seems like a good compromise.
They say the proof of the pudding is in the eating, so we plan to spend a couple of months in Bali before we make any concrete decisions, probably later this year. In the meantime I will continue to trawl the web for Bali info, and also keep on reading this forum. I will be pleased to share with you the ups and downs, I'm sure there will be plenty.
And thanks, Grastaman, for your concern over my marriage, but we have been married nearly 30 years, so I think divorce is failry unlikely!! (unless Mel Gibson decides I'm the one for him!!!). He (my husband, not Mel) has lived with me in the UK for all that time, and now wants to move back to Jakarta, but for various reasons I'm not keen to do that. Bali seems like a good compromise.
They say the proof of the pudding is in the eating, so we plan to spend a couple of months in Bali before we make any concrete decisions, probably later this year. In the meantime I will continue to trawl the web for Bali info, and also keep on reading this forum. I will be pleased to share with you the ups and downs, I'm sure there will be plenty.