Given the current global situation, with so much uncertainty in the economy and the future, it would be wise to diversify your investment portfolio. And if you're looking for a promising direction to invest in, Bali is one of the best options. In this article, we will explore the main reasons why you should consider putting your money into Bali.
Bali is a popular tourist destination located in Indonesia, known for its natural beauty, rich culture, and dynamic tourism industry. The island has shown significant progress - with 1.97 million tourists in 2008 and 6.28 million in 2019 (a growth of 218%), making it a potentially profitable market for real estate investments. Currently, the situation looks positive after the opening of borders:
Living on Bali is relatively inexpensive. Everything necessary for comfortable living, including food, transportation, and housing, costs much less than in Western countries. According to Nomad List, the expenses for digital nomads for living per month on Bali range from $532 in the Canggu area to $2,419 in Uluwatu. With relatively inexpensive costs for basic needs, tourists and expats are willing to spend substantial amounts on rent to improve their quality of life.
One of the main advantages of Bali is that the island is visited all year round. With a temperature that constantly stays in the range of 26-30 °C, it is the perfect place to escape from the cold climate. Moreover, since the water temperature in the ocean never drops below 26°C, you can be sure that you can always swim and refresh yourself. As the saying goes, in Bali, only the beer is cold!
Let's compare it with the weather of another popular destination for vacation and investment - Dubai. In the city of the future, the tourist season lasts from October to April when the air temperature fluctuates from +24 to +30 °C. The beach season is shorter, from December to April, when the water temperature fluctuates around +24-25°C. In the other months, the temperature in Dubai reaches 50°C, which is an ideal time to test your culinary skills by frying an egg on the pavement! Just kidding, we don't recommend doing that.
On the island, there is a choice of budget and luxury villas, apartments, townhouses, hotels, and commercial real estate. Bali's real estate market has shown stable growth in recent years, driven by increasing demand from both local and foreign buyers.
To start investing in real estate in Bali, you do not need huge capital investments. The cost of purchasing property on the island starts from $100,000-$150,000. For this amount, you can already get finishing with quality materials such as natural stone, teak wood, and marble in the kitchen.
You have two scenarios:
1. Buy a villa or apartment and rent it out under the management of a company. With an average yield of 20%, you will recoup your investment in 5-7 years. Then you can sell the villa, and considering the annual growth in property prices, the villa's value will increase by an average of 10% per year.
2. Purchase property at the foundation stage and sell it with a markup of 25-35% after construction is completed. On average, construction takes 8-15 months, and then you have the opportunity to reinvest finances for the next project.
Bali is a part of Indonesia, which has a stable democracy with a multi-party system of governance. The latest presidential elections in Indonesia were held in 2019 and they were conducted peacefully without any notable incidents. This indicates that Indonesia and Bali are in a stable political state. In addition, Bali has a reputation as a peaceful and safe tourist destination that attracts millions of tourists every year. Local authorities make significant efforts to ensure the safety of tourists, which helps maintain stability and safety on the island.
Data presented on the tradingeconomics.com website shows that the inflation rate in Bali and Indonesia as a whole has been less than 5% in recent years. The global economic crisis has not had a significant impact on inflation, and the rate has remained below 6%.
Overall, Bali is an attractive place for real estate investment due to its low construction cost, high profitability, and low entry threshold for investors. It is also worth noting the unique culture of the island, which attracts tourists and nomads all year round. Low inflation, low political risk, and high population growth make Bali even more interesting for investors. Overall, investing in real estate in Bali can be a successful and profitable business, but it requires careful research and planning.