Investors have tasted Bali – Kommersant FM
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Russians have begun to invest more actively in real estate in Bali. In 2023, citizens purchased more than 1 thousand objects on the island. This is one and a half times more than in 2022. About 700 deals were concluded then. Data from the consulting company Ricci are reported by Vedomosti. In monetary terms, the volume of investments for 2023 reached more than $230 million. The year-on-year increase exceeded 60%. Analysts believe that this is due to an increase in real estate prices.
The most profitable investments are in the construction of hotels, says Alexander Sokov, founder of the development company Lyvin Properties: “Demand has really grown. Before 2020, it was very sluggish; we were only engaged in the construction of private facilities for people who knew what Bali was and loved surfing. What happened in 2020? Everyone thought that the moment had come when they needed to buy real estate. There was no drawdown even during the pandemic.
Bali, compared to Phuket, is not very developed. There is neither infrastructure nor a large number of rooms for accommodation. Now demand in this market is “bombing”, the tourist flow is recovering, we have almost caught up with 2019, and we are preparing to surpass it next year. And what’s most surprising: the flow of tourists has changed during the pandemic. Previously, these were mass tourists primarily from China.
Now everything has changed, the latest statistics on hotels show that everything above “four stars” is in demand. Fantastic prices, huge occupancy rate. This is a great help for investors: the upper segment gives good profitability, because there is very little of it, and there is a niche that needs to be actively closed.
The consensus of the big three – Knight Frank, Colliers and JLL – is that the average yield is 7.8%. If we take projects that cover the field of residents, it’s about 6-8%. If we go to an area already associated with tourism, it is 12-14%. But there are unique cases, of course. But this already comes with some additional risk, for example, if you have a very short lease or something is wrong with the zoning.”
According to Kommersant FM’s interlocutors, despite the active expansion on the part of the Russians, there is still space for development on the island. This is due to the uneven occupancy of the areas.
There are no longer any vacant places left in the central areas, so it is more profitable to invest in areas that are just being developed. As market players note, in particular, supply in the hotel segment has still not covered demand. The situation is similar in the category of apartments and villas. The construction of these facilities will pay for itself in about 10 years, notes Intermark Global managing partner Irina Mosheva:
“Apartments are often purchased as investment type ones. Villas are also purchased for your own use. The investor can choose managed properties. In this case, the company rents it out and pays the investor income. Apartments can be bought starting from $120 thousand, a villa – from $170 thousand. This is in the center of the island.
If on the coastline or with an ocean view, then such objects are more expensive. Apartments – from $180-200 thousand, and villas – from $350 thousand. On such properties you can earn from $200 to $500 per night. When calculating short-term rentals, this exactly gives an income of 7% to 15% per annum. In this case, the payback period will be 7-10 years.”
The occupancy rate of facilities is almost not affected by the flow of tourists from other countries, market participants say. Even during the low season of inbound tourism, the Indonesian population itself actively travels and fills the number of rooms. The only specific risk when investing in real estate on the island is the quality of development. As Kommersant FM’s interlocutors explain, there is a shortage of professional and experienced companies in the Bali market. Therefore, investors who are buying real estate in the region for the first time should carefully select developers.
Everything is clear with us – Telegram channel “Kommersant FM”.
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