Bali’s luxury real estate profits from tourism and investment growth
Analysts say prices of villas on freehold land have jumped more than 10 times in the past several years. Global Property Guide estimates that they are priced around US$1,100 to US$2,300 per sq m
For generations, Bali’s sun-kissed tropical island paradise is the jewel in the crown of Indonesia’s booming tourism industry and an important foreign exchange earner of the country.
Tourism feeds the real estate industry in Bali. A report by Global Property Guide, released in February, estimates that 80 per cent of Bali’s economy depends on tourism, and that there are about 30,000 expatriates living in Bali. These, coupled with rising investments by Indonesians and foreigners resulted in “unprecedented property price increases in recent years”.
Principals at Seven Stones Indonesia, Terje Nilsen and Andy Gray, were in Bali when things went a little crazy. “Some strategic areas, especially those on the edges of where tourism development was in those days, areas like Seminyak for example, saw prices go through the roof. As much as 10 times in a very short space of time,” Nilsen says.
Global Property Guide notes that a four-bedroom villa built on freehold land in Berawa and priced between US$600,000 and US$700,000 six years ago is now worth US$1.7 million. In 2017, villas in Bali were priced at around US$1,100 to US$2,300 per square metre.
On the other hand, according to the 2017 market report by tourism consultancy Horwarth HTL, the supply of villas on the island grew 7 per cent year on year. Asking rate had a year-on-year growth average of 36 per cent even though there was a 69 per cent decrease in monthly absorption rate.