Only Indonesian citizens may own freeehold land. A foreigner may get a leasehold title to a building, however only lasts up to 25 years, and can be extended to 30 years before it is given back to the original owner of the property. Due to tourism becoming more and more apparent in Bali, the value of property in Bali continues to increase rapidly.

1.

Even though Bali suffered from terrorist activity in both 2002 and 2005, Bali still remains a potential property market for investors. This is indicated by the occupancy rate of both hotels and villas, which is currently at an average of 85 percent. The annual increase of property prices is said to be 10 percent according to several executives.

2.

Tourists from all over the world come to Bali, therefore making Bali a promising market for real estate. Many people visit Bali, and the numbers continue to increase annually. Bali has a limited supply of accommodation facilities, therefore there is a higher demand.

3.

Not only are the rates of office and industrial property increasing, the residential sector has also shown an increasing and substantial improvement throughout the recent years. However, in order for the investment climate to develop,the infrastructure needs to improve as it currently is still far from adequate.

1.

Referring to the graph on the right, there is a difference in property value depending on location.

2.

Residential property may still face many challenges.

One particular thing that could be faced in the upcoming years would be that investors choose to invest in residential property else where such as Singapore. Singapore has up to 99 years of free-hold period, where as Indonesia only has up to 30 (maximum), and is in the process of increasing to 50-70.

There are both high rentals and sale growth of condominiums and housing. in the first few months of 2008 the take-up rate for apartment rentals reached 2,000 units compared to only 73 units in the first few months of 2007.

4.

Transactions are also fairly expensive in Indonesia. Sometimes they can reach up to 15 percent of the property value.

5.

There is still a high chance that rental rates for apartments, condominiums and landed housing could grow as the mortgages offered by the banks become more appealing. Some banks are offering 9.75 percent fixed-rate mortgages for three years.

6.

An advantage of investing in property would be that you are able to live in it.

7.

In many countries property prices have increased sufficiently, and is happening currently in Bali. This is due to the strong economy and the low interest rates.

8.

If you have a regular and average income, have a large sum of money saved up, and can get a loan of up to 80 percent of the value of the property then investing in property would be a good idea.

As stated previously, the commercial property market has been successful. A reasonfor this is the high amounts of tourism and the demand for accommodation facilities.

2.

Investors that either buy hotels or villas and develop them successfully, can potentially sell the property for more than they bought it for, whilst earning an income via tourists. The more money the hotel makes, the more successful the investment. This would ultimately cause the selling price of the hotel or villa to be greater.

3.

In 2002 and 2005, not much business was coming in, and therefore was not a good time to invest in commercial property.

4.

After the Bali bombing, Bali recovered well and fast which enabled businesses to redevelop as soon as possible.

The development of retail property is a top priority for many investors.

The retail space in Bali was at 3.6 million square meters during late December. For 3 years before that, there had been a 17 percent annual growth rate.

As in any other country, the closer you buy property to the city centre, or the main area of activity, the property will be the most expensive. However, as an investment, buying property in these areas tend to be the most successful as it is where tourists want to be, close to the night life, beach and shopping.

4.

The statistics show Bali remained the county’s most popular destination for foreigners, with 446,886 visitors arriving in Ngurah Rai Airport, a 28.38 percent increase from the 363,686 received in the same period last year.

To buy retail property, the price can range from Rp. 250.000.000 - Rp. 650.000.000. However this generally depends on where you choose to buy the property.

For more information on the Bali property market, call our Singapore office at (+65) 67350120 or contact us at email@healyconsultants.com