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Guide to Buy Property in Bali

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Introduction

Many foreigners do dream to own their dream property in Bali. Some of them fulfilled their dream of living in tropical luxury villa, some did investments for business – holiday rentals, as Bali is a world known and desired holiday destination with many attractions!

canggubeachThe majority of investors do ask for professional help to guide them through the purchase process since Bali is a unique market and buying property in Indonesia is not as easy or transparent as it is in their own countries.

BALI CHIC VILLA is offering wide range of services from sales and rentals, to villas development, property management and marketing, we have experts in every field to guide you skillfully from the beginning to the end of your travel and real estate journey. We are passionate about delivering unique consumer experiences, and by offering a complete suite of real estate services.

At BALI CHIC VILLA we do carefully analyze our clients’ needs, expectations and budgets to the properties. Buying property in Bali is not always a straightforward process. The regulatory and legacy are sufficiently complex that one requires timely, knowledgeable advice to guide a buyer throughout the process. The recommended Notaries have in-depth knowledge of established laws and regulations related to real estate with latest updates and such advises to our clients are essential to make decisions. But there are also other factors that must be considered. These may include government regulations, community customs and traditions, local climatic conditions, current subtleties in both sales and rental markets, and others.

Why to buy in Bali…

The reason you want to buy in Bali will influence the choice! When you are clear about the reason of purchase, it will be much easier to decide what properties you should be considering.

Questions you might ask yourself…
What’s my motivation? Is it lifestyle or investment? If it’s a little of both, which is more important? Understand why you are buying and you will make better choices. Should you consider build your dream villa according to your desires and needs there will be another important choices to make in term of: location, and the property’s size, number of bedrooms, configuration and facilities.

ricefields

The right choice: Leasehold or Freehold property

As a foreigner the choice between leasehold and freehold property will depend on your needs. Until the last few years, leasing land was the preferred option, mainly because freehold structures were largely unknown. However, a new freehold structure: “Hak Pakai atas Tanah Hak Milik” could place the leasehold under the view angle to no longer as attractive in to consideration. Freehold means that the purchaser can sell, bequeath to 3rd party or otherwise dispose of the property and take any capital gains on it.

villadayaLeasehold property, after a certain period of time and whatever improvements the leaseholder may have been made, revert to the owner. In very simple terms, as time passes, your investment in leasehold property depreciates in value, because as the term of the lease gets shorter, the lease is less attractive to a new buyer, should you want to sell the remainder of your lease. The terms and conditions of any extension to a lease are usually built into the original agreement. In some cases, the cost of the extension is tied to the price of gold or actual market price at the time of extension. A freehold property gains the benefit of any increase in value, either through improvements you have made to it, or through the rise in land prices. Advantage of the leasehold is that it is a more affordable option, especially in high demanded areas, where freehold is difficult to obtain. Guaranteeing renewals and limiting rent increases is the key to a cost-effective leasehold structure. Whatever is a choice to purchase, any agreement should be carried out by the independent notary with good reputation with legal advice.


Location Location Location - Understand the importance of location

seminyakaerialThis expression applies everywhere in the world with same logic, same in Bali. Locations in Bali have a fairly rigid pricing structure because it is a strictly cash-based market. Price is driven by desirability: stunning views, beach front, close to shopping, dining and nightlife.
Over the last 30 years, the suburbs of choice for residential purchase, whether owner-occupier or for rental purposes, have changed as development has increased. The desired locations get rapidly commercialized, and the expansion of built villa took in north and north-west direction from Kuta and Legian, expatriate buyers started moving to Umalas to build their houses and now they’ve moved even further a field, to Canggu.

These days, from a rental perspective, villas close to popular areas such as Seminyak tend to offer the most consistently high rental occupancy. These districts are still relatively quiet and unspoiled, but close to the beach and sophisticated shopping, restaurants and nightlife. However, properties with exceptional views – cliff-top, beachfront, river valley, rice fields – or other natural attractions are also good value. The distance to the airport remains an important consideration.


ngurahraiThe improvement of the infrastructure and roads has resulted that locations like Ketewel and even Candi Dasa in the east, and Pererenan and Cemagi on the west coast now becoming value areas from a rental perspective.

The discussion at the highest levels of the government for more then 5years now about putting in a new airport into the north that would change the current investment factors in that area didn’t have fixed results, on other hand the government is finishing the last touches of the main extension and renovations of the Ngurah Rai Airport what promising the potential to work with much higher numbers of tourists traffic.






People buy houses in Bali for a number of reasons. Some are looking for a place to live full time, others seek a holiday home, which will generate rental income, when they are not in residence themselves. Still others just want to buy as an investment. The choice of location will be driven by your reasons for buying. If you want to live in the house most of the time, then you’ll want a location which suits your own tastes and preferences. If you love peace and solitude, then a rural environment far from the action may be right for you. If you have a young family, the location near to the school of your choice, healthcare and other facilities may be your priority. If you are planning to rent when you are not living there, you would be wise to give some consideration to an area close with attractions. Some people may share your desire to be far from the maddening crowds, but the majority of holidaymakers generally want to be close to beaches, shopping, restaurants and nightlife. If your purchase is strictly an investment, then its recommended to choose an area which delivers the highest rental numbers.

Should you wish to maximize rental potential, it’s our experience that the Greater Seminyak Area (Seminyak, Petitenget, and Batu Belig) and a little further North towards Canggu (Berawa, Echo Beach) are the islands most popular rental locations. Seminyak of course has its up-market boutiques, nice beaches, sophisticated restaurants and nightspots such as the W Hotel, KuDeTa, Potato Head and the Mozaic Beach Club.

Kudetabali

However with infrastructure quickly developing around the Canggu Club and into the Echo Beach areas, villas are more moderately priced compared to Seminyak, and the potential for an equal or better ROI is realistic. Other notable districts continuing to rise in popularity and attracting considerable investment include the Bukit with its majestic cliffs, Bali’s east and northern coasts which are now easily accessible via the Sunrise Bypass, and Nusa Lembongan island which is just a half hour boat ride from Sanur.

Investment options in overview:

Buy land purely for investment purpose

bukit13Trading with undeveloped land in Bali is attractive for many reasons. Land values, in a historically cash market have never suffered from the bubbles witnessed in other countries. Also annual land taxes are generally very low compared to other countries, and taxes on transactions are also very reasonable.
Purchasing raw land requires a keen understanding of the importance of location, development trends, and local conditions. Beachfront and cliff-top land is always winner, also high-demand districts such as Canggu Berawa. The coastal side of the main roads running from the south along both the east and west coasts is always more valuable than other locations in central Bali. However finding desirable freehold property close to the tourist areas of the south is becoming increasingly difficult. Buying land has its own peculiarities which require the assistance and guidance of an experienced and transparent advisor. Green Belt or “prohibited development land” which can be sold but not built on; individual communities have certain customary rules about building near temples; family-held land might have multiple titles; some family members might want to sell while others do block the deal.

Purchase land to build your own villa

landMany Investors are buying land and build their own villa. The main advantage of building is the flexibility in both: location and design. By finding your ideal piece of land – cliff-top or beachfront, on the edge of a dramatic view, tourism center such as Seminyak or overlooking rice fields – your dream home will have the setting you desire. Buying land in Bali can be a straightforward process if you deal with a reputable real estate agent and all agreements and prices are ready on the table. The purchase can also turn out to be a complicated negotiation process with the local owner, who did not even think yet to sell the plot of the land you found and desire. The most important thing is to follow process advice by professional agent and using notary, who is independent, to get the deal. The Notary will check title, building regulations and other matters to ensure the property details are in order. Building yourself gives you a lot of individual design freedom, allowing you to create the environment you want to live in and enjoy. It is strongly recommended to get complete advices about the bureaucracy in relation to obtaining building permits, once zoning is clear.

To have a successful villa rental business it is all about the right concept: right location, attractive property, great service and facilities and the right rental price. BALI CHIC VILLA experts offer you a complete personal consulting, how to manage the puzzle of running successfully holiday villa rentals.

While building to be clear about the primary motivation is very important. If it is pure investment, then the size and location will be driven by its rental potential. If your plot of land is substantial, you may build few smaller houses on the property, ideally interconnected. Each should be completely self-contained and offer separate garden, swimming pool, entrance and staff working area. This will give you greater rental and owner use flexibility.

mokenAnother alternative is to build a “destination” villa. This is a villa with a high-level of facilities and comfort – and with a top end food and beverage services – that guests don’t feel the need to leave the property. Large villas are also ideal as function venues – such as weddings, birthdays and corporate events – which can be an important driver for occupancy and hence rental returns. 
 
Designing and constructing a villa, even with the best specialists in their fields is a laborious process. It might take up to 2 years from initial surveys through to handover. Unless you plan regular visits to the island due the duration of the construction and work hand in hand efficient for small decisions with the contractors. If you are absent, work may grind to a halt, or worse, expensive mistakes may be made. To avoid problems, you will need a competent project manager with extensive experience to deal on the project site in Bali. To build and construct the villa it is necessary to work with specialists – surveyor, landscape architect, interior decorator, architect, structural engineer, electrical engineer, and a contractor. BALI CHIC VILLA has an extensive network with own experienced team and can assist you to get the right partners for your project in Bali on board.

Purchase Off-Plan

offplanThere are many properties from the architect’s plans in 3D designs on the market, artist’s impressions with on option of viewing a “show unit villa”. There are a number of advantages to buying off-the-plan. These include being able to take advantage of lower prices which developers quote in the early stages of a development, and that your payments can be spread over the period of construction. Other benefit can be an individual touch in term of chosen materials and furniture. You need to be concerned that the developer is reputable and experienced, and has a history of successful completion of similar projects in Bali. Reputable developers will own the land themselves and your deposit and subsequent payments will be secured against the land. Your payments will be tied to certain stages of construction, so you must ensure that an independent, third party project manager confirms that each stage of construction has actually been completed satisfactorily before you make progress payments.

Buy an apartment

umaresidBali does not have many apartments yet, but as developers are forced to use vertical solutions to rising land prices in highly demanded locations it might change soon. An apartment appeals to those who want to live close to the most happening areas but is not ready to pay the price for the villa in those locations, as well as to people for whom a private garden with pool is not required.
In Bali we can see many Condotel suites or hotel units and they are seldom desirable from a western perspective. On the other hand, there are apartment developments, which are very clearly targeted at the international purchaser from a residential and investment point-of-view, and are as well-appointed as you will find elsewhere in the world. We believe the apartment market in Bali will continue to grow and provide more options in the future to invest.

Purchase of an existing villa

leovillaPeople who purchase in Bali for lifestyle reasons along with investment often prefer the independence and privacy of a stand-alone property. These villas are not restricted in owner usage and there are plenty of reputable management companies on the island who can oversee the property and rentals while the owners are away. While buying an existing villa you see the end result of what you are buying. You can evaluate it in term of suitability to your needs, aesthetic and design qualities, furnishing and its potential for rental returns. The track of the rental numbers is mostly accessible only, if the buyer already placed a deposit at the notary, as those information is confidential. However the professional villa marketing agencies will be able to evaluate approx the potential rental price by analyzing the competitors and average occupancies in the location of the villa, from there you will enjoy almost immediate rental demand and return on your investment. A villa that already has a rental history and enjoys a positive reputation among well-known agents, is much simpler to evaluate. New villas might take several years of management and marketing efforts before they start to achieve their true return potential.

Construction materials and techniques have improved so much over the last several years, but also the price of the materials and to build increased, that many villas built few years ago simply do not compare with those built more recently.

There are always a number of villas that are discretely offered for sale by personal introduction only, as the exposure of the sale might affect the cooperation with rental agents. Those properties you can’t find online on property websites.

Buy an existing villa within an estate villa complex

c151Some villas are part of a villa complex. As one unit of many villas, which share certain facilities and services in common, what allows to reduce costs by sharing them. These might include room service, restaurants, car parking, security, housekeeping, maintenance, and recreational amenities such as tennis courts, spas, and beach clubs. Established estates are popular with many purchasers because their operational management companies are experienced and both service and financial histories are established. An experienced, efficient management and marketing company can add significantly to the investors return on investment through a proven structures and professional sales channels. The purchase of some villa unit might have also some limitations for the owners in term of the periods of personal stays, percentage of incomes, personal interior and design and provided services. As an owner of the single unit in a complex it is not easy to change the management company, as the cost structure changes immediately and the profit goes down.  

Process to buy - due diligence

dreamvillaOnce you have found the right property for youself, whether it’s land, an “off the plan” villa, a place in a managed estate, or an existing free-standing home, you need to perform  rigorous due diligence.
With any property purchase in Indonesia, you must use a Notary who is essentially a government agent working for both parties to process the information relating to the sale.
It is important to do due diligence on all the legal aspects of your purchase – from the most basic considerations such as whether the vendor actually has the right to sell the property, through to all tax implications, licensing requirements, government fees and other governmental factors.



Basic due diligence is as follows:


  •   certificate of title(s)
  •   land and building tax receipts
  •   identity card of land title holder and spouse
  •   family card of title holder
  •   tax file number of title holder
  •   any encumbrances by foreign parties
  •   building permit
  •   construction tax payment receipt
  •   deed of separation of marriage (if Indonesian married to a foreigner)
  •   any other agreements related to the property (if any) such as nominee agreement, mortgage paper, will or other statements /agreements

However there is more to due diligence research than just the legal details. In the case of an existing house or villa, you should also satisfy yourself that you are aware of the physical condition of the buildings, the relationship with the Banjar (the local community council), access to fresh water, electrical systems, drainage and waste disposal systems, noise or other impediments to peaceful living, security issues, and existing management contracts.

For land, you will also want to know about road access, drainage, soil stability, potential site works problems, building restrictions, and commercial or governmental developments planned for the area that might impinge on the property.

We also suggest you have the following inspections completed before buying:

  • architectural
  • structural
  • mechanical, electrical and plumbing
  • pests
  • landscape
  • geological of cliff properties or wet land areas, as well as an erosion/sea wall inspection for waterfront properties

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We hope, our compact information will be useful for you to get the first impression about the choices, process and important aspects of buying properties in Bali, Indonesia. To learn more about the locations around Bali, you may visit our Map, showing and explaining to you trends, atmosphere and attractions of selected locations.

For any questions do not hesitate to contact us personally, we will be happy to assist for more details.

BALI CHIC VILLA TEAM
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Jl. Mertanadi No.22B Kerobokan - Bali, Indonesia. Phone: +62 361 730796