The Bali Real Estate Market Has Got Something For Everyone!
Bali Property Report
Well Outside Their Box
Unable to afford what they wanted in Singapore, they headed east for an investment they would never have considered just 5 years ago. Here are the options they considered.
Let’s call them John and Karyn. Diana. Up until 5 years ago, John and Karyn were under the impression that Seminyak was full of aging hippies and hairbun hipsters partying all night. They paid us a visit anyway, being the adventurous types that they are. They were amazed. They were NOT the only 50 somethings in town and they could sleep soundly after 10:00. Having settled in a bit, we turned to what they were really most concerned about and what they truly wanted out of this investment. Well, they wanted wanted a better return for the dollar than they were getting from their current property investment in Singapore, that was clear. 5% was just not getting the job done. They’d heard tales of returns of 10% and more coming from one and two bedroom properties in Bali and decided to pop down and have a look. Prior to leaving for Bali, they put their Singapore property on the market and it sold in 3 days.
Now they wanted to invest in something that they could comfortably use, and earn nice cash flow of 10% ++. With the budget they had in mind, our research showed them that a Hak Milik property within their range was either going to be in an undesirable location or require an additional investment of up to USD 100,000 to make it comfortable and commercially viable. That hundred grand was available, however the projections for ROI – after the upgrades – brought them right back to the same level of returns at which they’d begun. So how about a longer than average lease within a managed estate/hotel that did not impose annual personal usage restrictions? Here is what we found.
This option ticked several of the boxes on paper; Seminyak area, 2 bedrooms, kitchen, ocean views, 28 year lease, unlimited use, decent returns.
When it came time to talk about personalisation and hotel traffic, the conversation ended quickly. Not enough privacy in this equation and no option to replace furniture and artwork.
“The views were lovely and the staff were wonderful. We understand that the hotel needs to market each of their rooms to have a similar style and feel, we just couldn’t get comfortable enough with the personal interior design limitations.”
This selection also ticked several of the key boxes for John and Karyn; location, size, bedrooms, kitchen, design.
Even though this one had been offered at a very attractive price, at the end of the day John and Karyn – as much as they loved this little estate of 9 villas 300 meters from KudeTa – the limited usage of 42 nights per annum felt too restrictive. John’s business had him working from home more and more before the pandemic rolled in, and they both felt that the “clock would be running” on their personal time a little too intensely.
Location: Close to the center of Seminyak, bit far away from maddening noise of the night crowd.
Size: 2 bedrooms, kitchen, open plan living and dining, managed estate, unlimited personal use, documented proof of 10% return for adjacent neighbors under the same management.
This one was ticking ALL of the boxes. A serious chat with the developer, an even more serious chat with the management company and a lovely cup of tea with the neighbors, and John ad Karyn were convinced – this was to be THE ONE.
They could personalize the villa any way they wanted, come and go as they pleased and share it with friends and family with no limitations. Perfect.
After settlement, Karyn and the designers put the finishing touches in place and the villa was open for rental business mid-November 2019. The marketing machine already in place was able to quickly secure the bookings for Christmas and New Year’s Eve, Chinese New Year and even Easter. John and Karyn were well on their way to plenty of personal use and a double digit return.
We all know what happened next, don’t we? The bookings dried up as borders closed and the bevy of holiday rental villas in Bali quickly shifted their focus to the local and expat market of island hoppers/dwellers, digital nomads and the like. This demographic fell into the catbird seat as the pre-lockdown rents that they were paying were no longer realistic for the landlords to expect. Monthly and yearly rental contracts were drawn up to cover the operating expenses for the villa owners while keeping as much staff as is practical employed and looking after everyone’s interests and the tenants now enjoy a luxury villa for the price of the room that they were renting in early 2020.
Not too many expats are finding their way to Bali these days to invest in 2 bedroom investment properties. Developers and sellers are well aware of this and for the most part, they have adjusted their price expectations accordingly.
There are some tremendous opportunities in both Hak Milik and Leasehold properties at the moment; residential and investment driven. Folks from all corners of the globe are buying up a lot of the sweet stock both in person and remotely everyday.
What can YOU do? What do you WANT to do? Give us a call to discuss your dreams, intentions and wish lists and we’ll see if we can make them happen for you.
Contact Patrick for a chat today on Whatsapp +62 817 973 3031; [email protected]