With over a decade of experience, Bukit Vista has witnessed Bali’s property market evolve, driven by a range of factors such as government regulations, tourism trends, and economic shifts. With its extensive experience and expertise, Bukit Vista has provided valuable insights to property owners, helping them adapt and thrive in an ever-changing market.
Jing Cho Yang – Bukit Vista CEO & Founder recently discussed with Cheryl Arcibal, a journalist from South China Morning Post covering the property market in Asia, to give his insights on Bali’s current property market. Having worked in the Bali property market for over 15 years and experiences ranging from Novotel, Exotic Real Estate, Amanresorts, and Airbnb. JIng has seen on-the-ground changes in Bali’s property market while collecting extensive data from Bukit Vista’s 100+ rental properties.
4 crucial questions from a property entrepreneur with 15 years of experience
Is Bali a good investment for locals and foreign buyers alike?
Bali is rebounding from 2 years of COVID-19, and we’ve been seeing two impressive trends from the rental perspective. The short answer is yes to both domestic & foreign investors. The largest innovation that equalized the market for both foreign and domestic investors was the leasehold property title combined with the proliferation of short-term vacation rental sites like Airbnb, and Traveloka and the adoption of Booking.com & Agoda to accommodate vacation rentals.
This has evolved the perspective of investment from capital gains to ROI & cash-flow return. We have a mixed clientele of both foreign and domestic property owners and everyone’s doing very well at the moment. For the first time that I’ve observed in Bali in over 10 years, the growth of supply seems to be behind the growth of demand. Locals will probably see more benefits long-term due to capital appreciation & also at the expiration of the leasehold agreements.
Above is a chart of Bukit Vista property partners’ rental revenue growth. With an average monthly revenue of around USD 3,741
investing in rental property in Bali is a good option to have stable cash flow and return on investment
What should foreigners know before buying/investing in Bali?
There are a few things that have objectively improved over time.
Legal. 10 years ago, the legal circumstances around foreign property investment were dodgy. Most investors were steered into ‘freehold’ rights involving complex agreements with nominees, powers of attorney, mortgages, and inheritance rights. Since the market has shifted to leasehold, the legal situation is much more transparent and by the spirit of the law. There are very few frictions in legal now.
Construction & property management quality and accountability have vastly improved. The short answer to that is the internet. Reviews, transparency, and ranking algorithms remove bad actors from the market quickly. So now investors can move up the Maslow pyramid, towards thinking less about their investment safety to their investment quality.
Is Bali a popular investment for Hong Kong and mainland Chinese buyers?
I’ve seen fewer East Asian investors embrace the leasehold model and in most conversations I’ve had, the leasehold agreement is the deal breaker. I think newspapers like SCMP can help evolve this understanding by framing the investment not so much as property but as a way to become ‘merchants of time’. You buy time at a cheap price, wholesale from a landlord – you sell time to travelers at a higher price for 25 years.
What are the features/hallmarks of a good development to invest in Bali?
The main factors an investor should consider are the competition they’ll be facing and how to carve out a unique, valuable niche. There are 10,000s of holiday rental properties – and it’s growing since the legal, build, and management process is getting more frictionless. The market is highly dynamic, with new & better entries coming all the time, so I would borrow a concept from the startup world.
The hallmarks of good development can be verified independently by a savvy investor through observable data :
- Is a design good? Go through IG and search for hashtags of #balivilla and find the most well-liked and engaging posts.
- Is the investment profitable? Take a look at Airbnb and see how many reviews have been left for similar properties & the average rental rate.
- Product Market Fit
- a.) Quality of design. Unique designs are rewarded more than commodity-type looks. This is a function of search engines like Airbnb & Booking.com rewarding more visually striking designs.
- b.) Desirability of location. Does the location offer experiential value? Desirable experiences are wide-ranging and could include tranquil villages, natural attractions, hip neighborhoods, and coastal regions with ocean views.
- c.) Modularity of the space. Travelers come year-round to Bali, which is great, but the group sizes & the trip purpose change considerably. The best-performing properties are flexible enough to allow for expansion to single bookings for large groups during family holidays, and privacy to multiple bookings for smaller groups for the rest of the year.
- d.) Agility of the space. Both short-term rentals & long-term rentals are growing. So your next rental might come from a short holiday or a tenant looking to lease for a year. Make sure the space provides adequate amenities for short & long-term plans. Workspaces, living spaces, and kitchens are becoming essential amenities.
If you want an unbiased data approach method to do property appraisal, revenue projection, and ROI estimation. Bukit Vista has analyzed properties and market conditions with 10+ years of experience. Contact us today to see how much money you can make from investing in Bali’s property market.