Patience, ‘FreeHold’ & Gold Bali in the Time of Covid-19

The Wuhan coronavirus (Covid-19), now declared a pandemic, is affecting us all in so many ways that they are almost too numerous to count. Bali Nirmana Property stands with our brothers and sisters who are being impacted here in Bali (and across the globe) as the tourism numbers here have thinned a bit. Together we know that Bali is, in a way, more fortunate than several places around the world at the moment with respect to the physical impact on our population. Our friends and family here in Bali are not getting sick, but as tourism is THE driving force in the local economy, the lack of tourists has forced some deep and painful cuts for those on the front line. We also know that Bali comes back, and comes back with force. SARS, bird flu, GFC, Bali bombing tragedies have all wrought havoc around the world and here in our home in Bali, however the local communities have always demonstrated a strong and creative road back to recovery and we see this current crisis as no different. Bali WILL always bounce back.

What though, does all of this mean for the real estate market in Bali? Asia was hit with the virus earlier than Europe and it seems to be showing several signs of steps being taken to return to normalcy ahead of the drastic changes underway in the colder regions of Europe. Our hearts go out to those whose lives have been thrown into serious disruption. Nobody can really accurately predict when air travel and handshakes will be deemed OK again, so an element of patience is required for sure. So then, what it really means for the property market is still unclear.

Smart property investment has always been a play between patience and fortitude and the present time is no different. Opportunities will come up that need to be seriously considered and we stand ready – fully staffed – to work with our loyal clientele to do our part to ‘keep on keepin’ on’. We are foreseeing that the Hak Milik/’Freehold’ market in most of Bali’s touristic areas will be active in the coming months as both foreign and domestic investors will be keen to see how the prices fluctuate. As of this writing our market is outperforming the gold market – by a substantial margin. Property is a bit of a slower ‘play’ than commodities, and if your investment is for personal use and rental income combined, you’ve got to consider that even though you cannot monetize your 3 week holiday in Bali in your villa, you do know that those three weeks add value not only to the asset but to the lives of you and your family as well.

Luckily, in Indonesia, the number of confirmed cases is still low (117 reported cases as of March 15 2020). Indonesia’s hot and humid tropical climate surely has something to do with it. Virologists have said the virus spreads more easily in cold temperatures as sunlight and heat give a halt to the growth of the virus and limits longevity. A pathology professor at the University of Hong Kong, Dr, John Nicholls, stated there are 3 things that the coronavirus doesn’t like: sunlight, temperature and humidity. Bali is humid and hot all year round with an average of 27-degrees. The climate here on the island together with the measures Indonesia has taken and a lot of attention to proper hygiene, make Bali seem like a good place to be during the slowdown. Beach, tropical heat, open-air….. there are worse places to be and wait it out!

 

N.B. One of the great misconceptions in our industry stems from the use of the word “Freehold”. There simply is no translation for the word into Bahasa Indonesia. Hak Milik is the designation under Indonesian law that most closely resembles what those of us from abroad would call ‘Freehold’, however only Indonesian citizens can hold Hak Milik titles. Foreign investors can search the web and shop for properties marketed as Hak Milik. In the event that the foreigner finds a Hak Milik property he/she wants, negotiates the fair selling price and the property passes due diligence, a foreigner can buy a property that is marketed as Hak Milik/Freehold. You heard that correctly. A foreigner can shop for and buy a property that is being marketed as Hak Milik. The difference between the title that the local person holds upon successful purchase, and the title that you might hold as a foreigner, is only manifested in the paperwork. The features and benefits of true ownership can be held by the foreigner under the name of his/her newly formed company, so while the name of the title may be different from the one that Wayan has, the capital appreciation and the ability to pass the asset onto the beneficiaries is very much solidly and legally in place.