Bali Nirmana Property’s Point of View
Buying Bali Property During a Pandemic: More Thoughts on the Corona Virus and the Bali Property Market
The Covid 19 pandemic that has spread across the world has caused borders to shut down and countries to lock down and it seems that the world is being asked to take a collective 2 week pause. Our local property market will of course, like all markets across the globe, be impacted in ways that we had not anticipated. What we do know is that free tourist-on-arrival visas are banned as of 20th March and more and all flight schedules have been reduced. Arrivals are still permitted, however visas need to be obtained at embassies and consulates in your home country.
At the same time, while the island is getting quieter, life still continues as always. Supermarkets are still fully-stocked, you can still grab a meal at most restaurants (keeping 1,5 metres distance from other guests) or order your favourite dish and have it delivered by Go-Jek. The whole-scale lock down hasn’t reached the island yet and we do not know if it will. The number of confirmed corona cases in Indonesia is still very low compared to other countries, but preventative steps are being taken as banks and government offices have now joined the ranks of businesses limiting consumer access or closing down for the balance of the fortnight. Some virologists say the coronavirus dies with temperatures of 27 degrees and above. This might explain why Bali and Indonesia have small numbers of infected cases, while Europe is waiting for summer to come and slow down the spread of the virus. Bali is always hot and humid, which are 2 things the virus hates.
Nobody knows exactly “how long this piece of string” is, so prognostications about when Bali and the rest of the world will settle back into business as usual are pointless. No matter what will happen in the coming weeks and months, as we are so heavily dependent on the tourism market, Bali is already severely impacted by Covid-19 in dozens of ways. How the pandemic will affect a property market that has recently been showing positive signs that it was primed to boom and flourish, is still unknown.
Overall, the property market has performed quite stable during economic slow-downs but then again, a worldwide pandemic is something we haven’t experienced before. We can be sure property transactions will drop significantly in the coming weeks or months, however the impact on the value of properties is unclear. The currency markets have been very volatile over the past 2 weeks and while the AUD has fallen off by as much 15% against the USD, a rebound/correction is nearly assured and there are opportunities to be had.
Major share market losses and recession don’t necessarily cause a decline in the value of properties. The high illiquidity of housing makes it more time-consuming for property to transact. Quick sell-offs of property are less likely during economic uncertainty. Again though, we’ve never been through a pandemic before. The aftermaths of volcanoes and earthquakes are generally seen as having a relatively short recovery cycle (outside of the most immediately impacted areas of course) while the GFC and SARS had a more protracted cycle. Each of those two phenomenon created a spike in the Bali real estate market as many investors took advantage of the conditions to capitalize. It is simply too early to know with any certainty how this pause will impact sellers though.
Traditional real estate practices like face to face client meetings, walking inspections and meetings with the notaries are being suspended temporarily. April 2 has been tagged as a reassessment day here in Bali. More time will be spent video-conferencing and video calling between agents and buyers/sellers. During this time of ‘soft semi-self-quarantine’ all of our Bali Nirmana Property team working from our respective homes; we’re already adjusting to the new normal pretty well.
Which brings us to Nyepi – our Day of Silence in Bali – which falls on Wednesday March 25 this year. For those of you who do not know about Nyepi yet, the short version is this: following an evening of hundreds of raucous parades of ogoh-ogoh and fireworks aplenty all across the island – all meant to drive away the undesirable spirits that have gathered in Bali – a Day of Silence is celebrated in Bali every year. All businesses are closed – including the airport – and people are required to remain in their homes and refrain from turning on any lights whatsoever, cooking, using electronics and devices, and they are encouraged to spend the day in reflection amidst the company of their families. The lack of lights in Bali is meant to confound the spirits as Bali ‘hides’ and the undesirable spirits are forced to settle elsewhere as they cannot find Bali as they circle the night sky. It is the Balinese time to slow down and self-quarantine. So now the world takes a page out of Bali’s book as families will surely be spending more and more time with one another as we ride out the two weeks in whichever way we choose. There are scores and scores of sources of advice, wisdom and opinion on how to maximize his experience. Eat more healthy food, do more exercise, connect with your loved ones. We recommend all of the above!
The largest industry shocks, however, are expected in tourism, education, hospitality, retail and arts and creation – not so much properties. For the time being, we need to remember that Bali always recovers and bounces back. When you are ready, we will be ready!