Is Bali (still) a good place to invest in?

Is Bali still a good place to invest in

Since we started Tropic Invest last year, we received a lot of questions regarding Indonesia, Bali, Lombok, how to invest safely there…

Twice a month, I will share what we have learned so far about the real estate industry in Indonesia and the Island of the Gods in particular. We hope that it will help others who wish to invest in this beautiful Island that we love so much. If you wish to learn more about a subject, let me know, I’ll write about it!

A brief overview of Indonesia

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Indonesia is a market of more than 260 million inhabitants with an increasingly important middle class in large urban centres. The growth rate has averaged around 5% in recent years, with inflation under control at less than 4%.

Last year, “President Jokowi Widodo initiated the omnibus bill to improve the ease of doing business in Indonesia and attract investments, thereby boosting job opportunities and economic growth in Southeast Asia’s largest economy.”

Indonesia in a nutshell:

  • #2 best country to invest in 2021 
  • Member of the G20
  • Economic growth of + 5% per year between 2014 and 2019
  • International arrivals increased by 16% per year over the same period

What about Bali?

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From 2014 to 2019, the number of visitors increased by 11% a year, reaching 17 million people in 2019.

In the real estate industry, the last three years of property rental figures (before covid) showed a double-digit increase (AirBnb data):

  • Daily Rates : + 10%
  • Occupancy : + 16%
  • Revenue : + 23%

To picture the effervescence of the real estate in Bali, the number of properties rented on AirBnb from 2017 to 2019 jumped significantly:

  • Seminyak: +35%
  • Bukit: +43%
  • Canggu: +47%
  • Ubud: +69%

It is interesting to note that even since last year, the prices of lands and houses in popular areas like Seminyak, Canggu or Berawa have not dropped significantly. Why?

  • For the last 10 years, real estate prices in Bali have increased every year, with returns on investment often higher than 10% per year. In brief, either properties are already paid out or sellers prefer to wait for tourists to come back.
  • In areas like Canggu or Berawa, properties are rented out by expats and digital nomads who escaped the covid lockdown in their countries. Demand is there.
  • Bali still attracts: developers are selling more and more off-plan properties to buyers who wish to grab a piece of the Island of the Gods.

What does the future of the real estate market in Bali look like?

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Bali is well known for its amazing diversity of landscapes and sightseeing, beautiful panoramas, colourful ceremonies, white and black sand beaches and one of the most exciting nightlife in the world. Declared the most popular destination in the world in 2021, tourists can’t wait to return to the Island of the Gods.

In my opinion, several trends will help Bali to recover quickly from the current crisis:

  • Digital nomads and remote workers: a recent study from staffing firm Robert Half, shows that “about 1 in 3 professionals (34%) currently working from home due to the coronavirus pandemic would look for a new job if required to return to the office full-time.” The future of work will be (partly) remote for many employees. Especially when research starts showing that the productivity of employees working remotely was the same as or higher than it was before the pandemic. And what is better than working from a magical Island, with great infrastructures, and with living expenses 3 to 4 times lower than in Europe or in cities like Singapore, Hong Kong, Sydney, Tokyo… No wonder Bali has been voted the best place for remote workers in Asia, and #4 in the world.
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  • Growth of the Indonesian middle class: Indonesia’s population of about 260 million people presents a huge potential domestic tourism market. As the economy grows, the middle-class purchasing power will increase as well as its wish to travel. In the last few years, the number of domestic guest nights has grown by an annual average rate of 10% in Bali.
  • Strength of the Asian market: Bali’s proximity to major Asia Pacific markets makes it the perfect holiday destination. Like Indonesia, the middle class in other Asian countries is growing at a rapid pace, and thus their wish to fly abroad and discover new places and cultures. As an example, the number of Chinese tourists increased from 129,000 in 2008 to 1,400,000 in 2018, an annual growth rate of 26.6%.

A topic you’d like us to talk about? Let me know!

Don’t hesitate to give us your opinions and experiences in the comments below.