Business development / finance
You have the opportunity to manage an asset, such as a villa that serves as your rental business in Bali, that increases in value over time and generates rental income for you at a rate of approximately 2% per month, as a result of the exploding tourism on the island of Bali.
This presents a unique opportunity.
As a result of further relaxation of COVID-19 limitations and active planning for the G20 summit later this year in Bali, the number of foreign tourists arriving in Indonesia increased dramatically by 28000 % over the previous year to 510.2 thousand arrivals in August 2022.
Tourism has boomed in Indonesia in recent years and is one of the main sources of foreign currency earnings. In 2017, contribution of tourism to GDP amounted to IDR 536.8 trillion, 4.1% of Indonesia’s total GDP. In the same year, tourism provided 12.7 million jobs, representing 10.5% of total employment. Tourism receipts totalled IDR 200 billion and the sector out-performed the general growth of the Indonesian economy.
In 2018, international arrivals reached 15.8 million, an increase of 12.6% compared to the previous year. China was the country’s main international source market (16% of tourists), followed by Singapore (13.2%), Malaysia (10.6%) and Australia (9.7%). The average length of stay was 8.6 days.
If you wish to learn more about Indonesia's economic data read here
Bali, the world famous "Island of the Gods," stakes a serious claim to be paradise on earth with its diverse landscape of hills and mountains, rugged coastlines and sandy beaches, lush rice terraces, and volcanic hillsides all providing a picturesque backdrop to its colourful, deeply spiritual, and distinctive culture.
This is one of the world's most popular island destinations and one that routinely wins travel awards thanks to its world-class surfing and diving, a large number of cultural, historical, and archaeological attractions, and an extensive selection of accommodations.
After a slow post-pandemic start now Bali is back on track and the economy as the island resumed its growth.
Real estate in Bali is in demand for both short-term and long-term stays from a variety of demographic groups, including tourists, digital nomads, remote workforce, retirees, people looking to settle long term, luxury travelers, etc.
There is absolutely something for everyone's budget in Bali's rental market, which means that you should be prepared to see and compete with accommodations that cost as little as $30 per night as well as ones that cost more than $1,000 per night.
Yes, there is a lot of competition, but there's also a lot of demand.
⚠️ The investor who "makes it" here is the one who strategise the opportunity and is be smart enough to offer a competitive alternative within a set area and within a certain tenants demographic. All of this while balancing and optimising the costs of the opportunity.
It is quite possible for you to become the owner of a villa and rent it out while you are away or living somewhere else. Doing so is not only a very clever way to earn additional income, but also provides a wonderful boost to the value of your property.
How much you should invest is entirely up to you, but as a rule of thumb there's an entry price of approximately 100k USD, where the average investment size for a two bedroom villa is around 150-200k USD.
To really understand what are your necessities as an investor and for what demographic you should be targeting i suggest you to read this article about how to create a business plan for real estate investing. We do not want you to be caught off guard.
Bali has a very active and surprisingly liquid real estate market thanks, in part, but not limited to, the increasing demand for properties, a constant and growing flow of tourists and the expansion and creation of new suburban areas that often lead to the establishment of new and diverse communities and niches (ex. Canggu = digital nomads favourite , Ubud = spiritual people favourite , Seminyak = Party heads favourite, Sanur = retirees and so on..).
This stable growth in demand, (between its ups and downs), is pushing prices of properties higher year over year while on the supply side developments of new buildings are strongly lagging behind the demand at the moment.
This is a major contributing factor in the rise of nightly rates for accommodation prices, especially in 2022.
Is estimated that over the upcoming years nightly rates for accommodations will reach an "equilibrium" and the demand for new properties will catch up stabilising the growth of the island.
At the moment there are no signs or divergencies pointing to the supply side exceeding the demand or noticeable slowdowns, but yeah, keep your eyes open anyways.
Being able to generate passive income is arguably the largest advantage of owning rental property.This means that it is recurring income that requires relatively little effort to maintain. It can be an attractive option for people looking to make money on the side, or even as additional financial security during retirement and inflationary periods.
Because market conditions aren't always favorable, renting out your property gives you the flexibility to sell it whenever you are in a stronger position or when market conditions become more favorable. This is preferable to selling it at a loss, which would require you to take a financial hit.
There is a possibility that you already have some of your money invested in the stock market or in some other type of investment. The ownership of rental properties enables you to produce revenue while also diversifying your asset portfolio. Diversification is a wonderful additional barrier of defense against risk.
If you do not intend to use the property as your primary residence, renting it out first will buy you ample time to formulate an exit strategy and sell the home at the optimal moment. According to our past observations, real estate in Bali is capable of witnessing considerable price increases, sometimes even reaching into the double digits, which can significantly improve the overall return on investment.
Because it is anticipated that the real estate market in Bali will expand in the years to come, there are plenty of opportunities available to be taken advantage of starting from land deals ready for you to build your rental business up to walk-in ready villas that are essentially turnkey investment solutions.
You can enjoy property appreciation throughout the years in this market, and at the same time, you can use your property to create rental income, which will help you accomplish your return on investment goals more quickly.
This is one of the many wonderful things about this market.
There are a variety of methods in which you can participate in this market, including purchasing real estate with the intention of reselling it within a short period of time or renting out a vacation property in Bali, to mention just the two most prevalent choices. Everything mostly depends on the strategy you choose, the time horizon you go for your investments, the budget you have, and the amount of time you own.
You can learn more about rental business opportunities in the Bali real estate market by downloading our opportunity summary for free.