Here are some important questions that are frequently asked and the answers to the questions.
Bali remains one of the world's premier travel destinations, welcoming over 15,000 visitors daily. With an increasing number of individuals relocating to Bali for a higher quality of life, the real estate market is flourishing, displaying significant growth over the years. If you're seeking a long-term investment opportunity, now is an ideal time to consider investing in rental properties in Bali.
In Bali, the common purchasing options are Leasehold and Freehold. Leasehold properties involve leasing the land from an Indonesian owner for a specific period, typically 25 to 30 years. Freehold properties grant complete ownership rights, including the land itself.
However, it's important to note that direct ownership of freehold land is restricted for foreign investors in Indonesia. Foreign ownership of freehold land requires the use of a foreign investment company known as PT PMA, as Indonesian law prohibits foreigners from owning freehold land directly to safeguard the interests of locals.
Land zoning refers to the designated permitted land use and development possibilities in a specific area. In Bali, when purchasing land or a villa, understanding land zoning is crucial as it dictates what type of development is allowed. For instance, the 'Pink Zone' encompasses commercial and tourism areas where the construction and operation of hotels, villas, resorts, restaurants, venues, and shops are permitted. Being aware of land zoning helps buyers make informed decisions about the potential use and development of their property.
Purchasing a property remotely is entirely feasible: We offer virtual tours of properties, answer all inquiries, and facilitate purchases from abroad. With a power of attorney, our agency can legally sign land and property ownership documents on your behalf, streamlining the process for your convenience.
Uluwatu stands as the most sought-after location in Bali presently. Investing in a villa in this area can yield a minimum occupancy rate of 80% annually, translating to a promising ROI ranging between 13-18%.
To capitalize on this potential, it's crucial to enlist the services of a professional management company. Yolla Hospitality offers comprehensive solutions, including marketing strategies and end-to-end property management, ensuring optimal performance and returns.
Calculating costs and ROI is straightforward. Let's take a 2-bedroom villa priced at $300,000 as an example, with estimated average operational costs (including management commission) of $2,200 per month.
Assuming an 80% occupancy rate, the annual net income to the owner would be $40,000. This results in an ROI of 13%, with a payback period of 7.5 years.
1. Lower Initial Costs: Off-plan properties often come with lower initial purchase prices compared to completed properties, allowing for potential cost savings.
2. Potential for Capital Appreciation: As the property is typically purchased at today's prices but completed in the future, investors may benefit from potential capital appreciation as property values increase over time.
3. Customization Opportunities: Buyers often have the chance to customize certain aspects of the property, such as finishes and layouts, to suit their preferences.
4. Flexible Payment Plans: Developers may offer flexible payment plans, such as staggered payments over the construction period, making it easier for buyers to manage their finances.
5. Early Access to Prime Locations: Off-plan properties are often located in upcoming or prime locations, providing buyers with early access to areas poised for growth and development.
6. Potential for Higher Returns: Upon completion, off-plan properties may command higher resale or rental values, potentially leading to higher returns on investment compared to properties purchased after completion.
Payment plans vary depending on the owner and property type. For off-plan villas, the payment plan is often more flexible, allowing for installment payments that can sometimes be negotiated. However, for most property transactions in Bali, upfront payment of the entire purchase amount is typically required.
When undertaking construction projects in Bali, two crucial permits must be obtained:
- PBG License (Persetujuan Bangunan Gedung): This is the initial building permit acquired before commencing construction. It signifies official approval for the proposed building project.
- SLF Building Permit (Surat Izin Lembaga Konstruksi): This permit is secured during the construction phase and serves to monitor and verify compliance with approved plans and specifications. It ensures that construction proceeds according to legal and quality standards.
Both the PBG License and SLF Building Permit are indispensable documents, guaranteeing the legality and quality of construction endeavors in Bali.
One notable fee to consider is the 1% notary tax, which the buyer is responsible for paying. The Notary will issue a separate invoice to the buyer, distinct from the purchase price of the villa.