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How property prices in Bali have changed and what awaits the market

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Over the last year, real estate in Bali has risen in price by 10-20%. However, it is still cheaper than similar resorts in Malaysia, Cambodia, the Philippines and Thailand.

Alex Shtefan, founder and owner of the development holding Alex Villas Group, tells us what to expect from the market in 2024.

Alex Shtefan (Image supplied)

TOURISM ON THE ISLAND is recovering at record speed after the pandemic. In 2023, about 5.3 million foreign guests arrived here, which is 140% more than the year before.

The Bali Government Tourism Office stated the Island of the Gods could attract 7 million tourists in 2024. This indicator is higher than the one that was recorded before the pandemic, when the island was visited by 6.5 million tourists annually. This means the number of tourists in Bali will increase by 40% in 2024 compared to 2023.

Tourist flow has revived the island

The flow of tourists has revived the island in every sense of the word. Restaurants have opened, streets and beaches are now filled with people, and travel agencies have started operating. An extremely positive trend could already be observed in 2022 and in 2023, the trend consolidated. According to Colliers, hotel occupancy levels grew throughout last year, ultimately increasing by 26% and eventually reaching 73.7%.

The real estate market has restarted its growth as well. In addition to the tourist flow, a powerful incentive for it was the influx of investment. Firstly, a wave of investors from Japan, South Korea, Australia and China came to the island, who were forced to postpone the purchase of a villa in 2020 due to the pandemic. Secondly, a variety of government programs and benefits related to property ownership and residence permits for foreigners had a beneficial effect on the investment climate. 

The introduction of the Second Home Visa in December 2022 has also borne fruit. This program allows foreigners who own real estate in Indonesia worth at least $250,000 to obtain a long-term visa. The “golden visa” program is another opportunity that entitles large investors and their family members to a five-year residence permit. Another positive signal was the state program aimed at refunding VAT to foreign citizens when purchasing real estate. 

Thus, the investment policy of the authorities of Indonesia in general – and Bali in particular – is bearing fruit. In 2023, the volume of foreign investment on the island increased by 85% compared to 2022, reaching $764 million. A significant share of investments came from the construction sector.

Real estate prices for tourists and relocatees are rising

The growth of tourist flows and high demand from investors have led to an increase in real estate prices — especially for villas and apartments. The rise in the price of land (for example, plots in the south of the island have increased in price by about 50% since 2019) and building materials (30%) also played a role. 

However, real estate prices in different locations on the island grew unevenly. For example, according to a Flash Report on Rumah123.com, Indonesia's largest real estate search platform, in Denpasar, the Balinese capital, housing prices increased by 20% over the year. It’s the largest annual increase in Indonesia. 

The cost of housing has also risen by 10-15% in locations such as Kuta, Canggu, Seminyak, Ubud and other popular tourist destinations. For example, in the cultural capital of Bali, Ubud, the cost of villas in 2023 started from $300,000. Medium-sized properties cost $500,000 by the end of the year.

In the beach areas of the island, for example, in Seminyak, the average villa is 200 square metres and costs about $650,000. Its competitor, Canggu, has a lower price — $240,000 for a one-bedroom villa (or apartments in a high-quality residential complex) and $380,000 for a good two-bedroom villa. 

The flow of tourists also stimulated the rental market. Prices for rental housing have increased by 10-15% on average over the year, depending on the location, type of housing and condition. The prices for renting villas and apartments in tourist locations increased most rapidly. Moreover, in Bali, the demand for comfortable and even luxury real estate was growing, while in other regions of Indonesia, small properties were in greatest demand on the market. 

The rise of the largest developer in Bali Alex Villas Group

In 2023, following the growing demand for real estate, we increased construction volumes by nine times. In addition, we have completed the development of a vertically integrated full-cycle holding company. Today, our company almost fully provides itself with essential building materials. 

We are currently building several complexes in Canggu. One of the largest is Complex 7 which occupies a territory of 30,000 square metres. It comprises exclusive villas and apartments with rooftop swimming pools. The area itself has a rich infrastructure including a 500-metre-long jogging track, a rooftop bar, a swimming pool, a cinema and a restaurant.

Construction completion is scheduled for 2025.

(Image supplied)

In 2024, we see continued growth in demand for tourist rental accommodation. Accordingly, the cost of rent will only get higher: according to our estimates, it will increase by 15-20% by the end of the year. There is no doubt that real estate prices in both the primary and secondary markets will also continue to rise.

We have almost run out of land for development in popular tourist locations. For us, we see new growth points in entering new areas of Bali and then going beyond Indonesia.

We want to build entire cities with all the essential infrastructure in Bali. Our next step will be expansion into new countries and to do this, we have already opened a representative office in the UAE. The next country will most likely be Thailand.

If everything goes according to plan, the holding’s turnover will grow to $1 billion in the next seven years.

(Image supplied)

Despite the rise in prices for Balinese property in recent years, it still remains cheaper than similar resorts in other Asian countries. Therefore, prices for local housing have room to rise.

This situation suggests that the Indonesian real estate market is still in its development stage and has great potential for growth. According to the forecast of the international consulting company Mordor Intelligence, its volume will reach $72.1 billion in 2024 and $105.73 billion by 2029, with an average annual growth rate of 7.95% during the forecast period (2024-2029).

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How property prices in Bali have changed and what awaits the market

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