When you walk around Bali’s once-bustling tourist areas, you’ll see scenes that resemble a post-apocalyptic wasteland. Shops turned to ruins in preparation for restoration and the next tourist wave are among the barren villas and hotels testifying to the economic horrors of the 18-month pandemic. Since the island closed to international tourists in April last year, popular destinations like Kuta, Legian, and Seminyak, which once housed some of the island’s top-tier restaurants and hotels, have morphed into frightening empty towns. On a positive note, both foreign and domestic bargain hunters, or vulture buyers, are now eyeing villas, hotels, restaurants, and overall Bali property as investment prospects during the low economic season.
This is how the pandemic changes the property market of Indonesian’s most popular resort island.
The Crash of Bali Property Market
The Nikkei Asia Review released an analysis of Bali’s collapsing private villa market, which was triggered by a major exodus of expats fleeing the island due to the COVID-19 Pandemic.
Due to the lack of foreign visitors in Bali, bargains have emerged, such as a 3-bedroom luxury home overlooking a river valley in central Bali with a private pool that would have sold out immediately in better times for US$100 per night.
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A Golden Opportunity for Investment
Struggling hotel owners on the Indonesian resort island of Bali have been forced to sell their properties due to the coronavirus outbreak, which has resulted in a lack of tourists and income. Given the current status of the market, some investors may be forced to accept a loss. They opt to put their hotels and villas in Bali for sale rather than bleeding for money. It’s a chance for long-term investors to get a piece of paradise on the cheap.
As the cost of land and property falls, great possibilities to purchase prime real estate in Bali arise. Remember what Winston Churchill once said, “Never waste a good crisis.”
Indonesian Locals are Quickly Snapping Up Houses for Sale in Bali
Amidst the pandemic, however, the domestic tourists are likely to continue to expand. Thanks to Indonesia’s growing ultra-wealthy population and thriving start-up industry. With a population of over 265 million people, Indonesia has a large domestic tourism sector with a growing middle class. Domestic tourism increased from 8.7 million in 2017 to nearly 9.8 million in 2018.
According to the Knight Frank Wealth Report 2020, the number of Indonesia’s ultra-rich individuals is predicted to climb by 57 percent over the next four years, the second-highest increase in Southeast Asia. Indonesia’s ultra-high-net-worth people (UHNWIs) are expected to rise at the fifth fastest rate in the world, with a net worth of more than US$30 million. Given Bali’s international attractiveness, this leads to a steady demand for real estate. The local Indonesians see it as a golden opportunity to snap up good properties at premium locations in Bali at a relatively low price.
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A New Relaxed Property Ownership for Foreign Investors
The sector and end users alike have praised Indonesia’s efforts to make it easier for foreigners to purchase property. Sofyan Djalil, the Minister of Agrarian and Spatial Planning, stated that new rules are in the works that will provide foreigners the same ownership rights as locals. While that has not yet occurred, the passage of the Omnibus Law on Job Creation in October, which aims to leverage foreign property investment as one of the cornerstones for reviving the country’s economy following the pandemic, has paved the way.
Foreigners can now purchase using an HBG—or “right to build”—title, owning a property in Bali with their name, which can be a huge game changer. This will entice foreigners to consider Indonesia as a primary or secondary residence. Particularly now, as more individuals work from home, they can do so in locations that provide a fantastic lifestyle, great weather, and huge homes – both inside and out.
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Bali’s History of Quick Recovery
With pent-up demand and a predicted strong rebound, Bali remains a top tourism destination. This island has a history of resiliency in the face of adversity, and it could recover within a year of the outbreak ending. It’s was proven when this island was hit by terrorist bombing back in 2002 and 2005, killing and injuring hundreds of foreign tourists. However, Bali quickly experiencing record tourist arrivals after the terrorists were jailed, showcasing the tropical destination’s resilience in the aftermath of terrorist attacks that wreaked havoc on its fragile economy. Bali’s allure, it turns out, is long-lasting.
When travel plans resume after COVID-19, Bali is expected to continue to entice a wide range of visitors, from beachgoers and surfers to xenophiles and aspiring social media influencers looking for “Instagrammable” locations. So, it’s never a waste to invest in properties in this island especially when the prices flunk to its lowest.
