Advantages and disadvantages of investing in property in Bali

Amidst rapid development and a growing economy, Bali attracts investors from various countries. This implies that real estate investments could yield significant returns in the coming years. If this piques your interest, learn more about the prospects, substantial advantages and disadvantages of investing in Bali real estate

In recent years, Bali has become one of the world's tourist destinations according to numerous recommended portals, and interest on the island among tourists and expats is growing rapidly, and Bali has all the necessary conditions for life, recreation and business. Such effectiveness determines its place in international ratings of investment attractiveness.

Bali's economic development opportunities

Indonesia is developing rapidly, therefore it is among the most promising countries and occupies the seventh place in the rating by the rate of economic growth.

In 2021, four important projects are planned to be implemented in Bali, which will contribute to an increase in the number of tourists: the creation of the largest theme park in Southeast Asia by Paramount Pictures, the construction of a new international airport and a Formula 1 track in the northwest of Bali, as well as the construction of a new port for cruise ships. Experts predict that these measures will increase the value of land plots on the island. Therefore, investing in real estate and land in Bali is a pleasant direction for investors.

Why investing in real estate on the island of Bali is a profitable decision?

Region of interest to tourists

Bali attracts travelers from different countries due to its unparalleled nature, volcanoes, diverse animal world, huge rice fields, restaurants with delicious and varied cuisine, bars and breathtaking views of the sea and mountains. The infrastructure of the island - from the coolest entertainment facilities to medical centers is developed at a high level. The tourist season on the island lasts all year round.

Stable real estate market with high profits

• Bali has the highest incomes in the world, an average of 15% per year, and this is without taking into account the increase in the cost of housing. For comparison, the average return on real estate in the world is 5%
• The cost of rent in Bali increases by 15-20% on average every year
• Annual increase in real estate value increases by 15-20%
• Average real estate occupancy during the year is about 65-80%
• And it is possible to pay back the funds spent on real estate within 5–6 years

Reasonable amount of investment

A low investment threshold is another advantage of spending on Balinese real estate, because cottages with plots of land – from 212.5 thousand dollars, and apartments are available from 143.7 thousand dollars. For $350,000, you can buy a fully equipped villa in a tourist location. The cost of land and real estate in Bali is generally more affordable compared to other exotic islands of the world.

Programs for attracting the attention of foreign investors

The country's government actively promotes the attraction of foreign investments, simplifying the conditions, taxation system and legislation for foreign investors.

Cons for foreign investors in the Bali real estate market

• Foreigners can get a plot of land for long-term lease, but cannot become owners
• Only qualified and specialized companies can lease real estate
• There is no mortgage lending
• It is forbidden to build structures higher than four floors
• Important location during construction, for example, you cannot build near temples and areas of religious pilgrimage

What risks should investors from other countries consider in Bali?

It is not enough for successful investment to choose a country only with a high level of profitability, but you should carefully choose a region where the demand for rent will be higher than the supply.

Risks vary depending on the type of real estate

The most cost-effective and affordable solution for renting are apartments that are in demand among tourists and have everything they need. The income will be profitable if the investors manage to lease the object. However, there are few of them on the market, because obtaining a permit for the construction of such housing follows complex rules. A private villa needs constant cleaning and supervision of order. Otherwise, it can quickly lose its good appearance due to sudden changes in the climate, which will lead to the need for frequent repair costs. One of the affordable and profitable options is a villa in a complex with its own territory, round-the-clock security and management of the complex.

Not the best choice of location for the object

Profitability and occupancy are affected by your choice of property location. Seminyak-Kerobokan-Changu is considered one of the most successful districts.

Demand for offers

Achieving the expected profitability will be difficult if the real estate rental market in this area significantly exceeds the number of people who intend to rent housing.

Renting with a management company

Self-renting of real estate may be difficult for an investor, since he himself will be obliged to conclude contracts, look for tenants, control the payment process and guarantee complete security of housing. Most owners entrust the management of their property to professional management companies, which charge 15% to 30% of the total profit.

Due to the return of Chinese tourists to the island, according to forecasts, in part in 2023, the cost of renting real estate in Bali will increase by 30%. Over the next 5 years, the value is expected to increase by at least 150% for ready-made objects. The advantages of investing in real estate in Bali far outweigh the disadvantages and possible difficulties, so it is currently considered the optimal period for investing in real estate in this country.

If you are interested in an incredible life on the island of Bali, contact professionals for a successful and profitable investment!
 

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