Bali has been one of the world's most sought-after travel destinations for years, with thousands of visitors exploring the island daily. Beyond its tourist appeal, Bali also offers excellent opportunities for real estate investors, both short-term and long-term. Whether you're interested in rentals or buying and selling properties, the Bali market provides unique advantages, making it an attractive destination for foreign investors. Below, you'll find answers to the most frequently asked questions.
Investing in off-plan property offers a range of benefits that can be appealing to both experienced and new investors. Off-plan property refers to properties that are still under development, and the sale takes place before construction is completed. Here are some key benefits of this investment strategy:
1. Lower Purchase CostsOne of the biggest advantages of investing in off-plan property is the potential to benefit from lower purchase costs. Since you invest before the project is completed, prices are often significantly cheaper than those of comparable, already finished properties. This can help you achieve a better return on investment (ROI).
2. Potential for Value AppreciationOff-plan property has the potential to increase in value as the project progresses and the completion date approaches. Once the property is finished, its market value may be substantially higher than the purchase price, allowing you to benefit from significant appreciation.
3. CustomizationWhen investing in off-plan property, you often have the opportunity to make personal preferences and modifications to the design and finishing of the property. This gives you the chance to create a property that fully meets your desires and needs, which is often not possible with existing homes.
4. Flexible Payment PlansMany developers offer flexible payment plans for off-plan property. This means you can often pay in installments during the construction period, making it more financially feasible to invest. This structure helps investors manage their cash flow better.
5. Access to Prime LocationsInvesting in off-plan property also gives you access to emerging areas before they are fully developed. This allows you to acquire property in a location with growth potential, expanding your investment opportunities as the area develops and the demand for real estate increases.
ConclusionInvesting in off-plan property can be a smart move for those seeking cost-effective investment opportunities with the potential for significant appreciation. With lower purchase costs, customization options, flexible payment plans, and access to emerging areas, this investment strategy offers unique advantages. Be sure to conduct thorough research and work with reliable developers to successfully invest in off-plan property.
Do you dream of owning a house in Bali? Buying a house or other real estate in Bali, or elsewhere in Indonesia, is possible, but there are specific rules you must follow. Foreigners cannot own land in full ownership (freehold) in Indonesia, but there are alternatives such as leasehold and freehold through an Indonesian company (PMA or PT) that make this possible.
Types of Ownership in Indonesia:Leasehold
With leasehold, you lease the land for a predetermined period, usually 25 years. This is the most common form of ownership for foreign investors. After the lease period, the contract can often be extended.
Freehold through a PMA or PT
Freehold means full ownership of the land, but this is only possible if you set up an Indonesian company, such as a PMA (Penanaman Modal Asing) or a PT (Perseroan Terbatas). With these structures, foreign investors can indirectly own land.
If you’re ready to invest in a house in Bali, follow these steps to ensure a smooth process:
While buying a house in Bali as a foreigner involves some specific steps and regulations, the process can be successfully navigated with the right guidance. Whether you choose leasehold or freehold via a PMA, by following these steps, you can safely invest in the thriving real estate market in Bali.
When buying real estate in Bali, it is crucial to work with reliable professionals such as a local real estate agent, lawyer, and notary. These experts ensure that your transaction runs smoothly and that you meet all legal requirements. But how do you find the right professionals in Bali who can represent your interests effectively? Below, we provide tips and information about the costs you can expect for their services.
Finding a Reliable Real Estate Agent, Lawyer, and NotaryFinding a Local Real Estate Agent
A local real estate agent is your first point of contact when searching for property in Bali. They have a deep understanding of the local market and can help you find the right properties. To find a reliable agent, you can:
Real Estate Agent Fees: Real estate agents in Bali typically charge a commission of 5% of the sale price. This may vary depending on the agent and the specific services they offer.
Finding a Lawyer or Legal Advisor
Hiring a local lawyer is important to ensure that all paperwork is handled correctly and that you comply with Indonesian laws. Lawyers can also assist with setting up a company, such as a PMA (Penanaman Modal Asing), if you want to own real estate through a freehold structure. To find a reliable lawyer:
Lawyer Fees: The costs for a local lawyer in Bali are typically around €2000 per purchase. This often includes setting up a company and applying for a KITAS (work and residency permit).
Finding a Notary for Real Estate Transactions
In Indonesia, a notary is essential to complete the property transfer and ensure the transaction is legally recorded. A notary verifies the documents and ensures that the property is properly registered with the Land Registry. To find a reliable notary:
Notary Fees: Notary fees in Bali range from 0.5% to 1% of the total transaction value.
ConclusionFinding a reliable real estate agent, lawyer, and notary in Bali is a crucial step in the property purchase process. By working with local professionals who have experience with foreign investors, you can avoid many legal and administrative complications. Be sure to compare the costs and services of different parties so that you can make the best choice for your specific situation.
As a foreigner looking to invest in commercial real estate in Bali or elsewhere in Indonesia, it is important to choose the right business structure. Indonesian law does not allow foreigners to own land outright, but there are several business structures that allow you to own and manage commercial real estate. Choosing the right structure is essential to protect your investment and avoid legal complications. Below we discuss the three most common business structures you can use for commercial real estate in Bali.
Business Structures for Commercial Real Estate in Indonesia PT (Perseroan Terbatas)A PT is a limited liability company that must be fully owned by Indonesians. With a PT, you can own and manage commercial real estate, but you cannot own land outright (freehold) as a foreigner. A PT can be useful for foreign investors who have a local partner with Indonesian nationality.
A PMA is a foreign investment company and the most common structure for foreigners who want to own commercial real estate in Indonesia. With a PMA, you can own commercial real estate, including land in freehold through the company. This structure allows you to engage in a wide range of commercial activities and is specifically designed to attract foreign investors.
A joint venture with a local partner is another option for foreigners. This is a collaboration between a foreign investor and an Indonesian partner, where the local partner retains ownership of the land. The joint venture provides the opportunity to benefit from the real estate without being the owner of the land.
Choosing the right business structure for commercial real estate in Bali depends on your investment goals and your willingness to collaborate with local partners. A PMA is generally the best option for foreign investors who want to fully own and manage commercial real estate. For those who prefer to collaborate with local partners, a PT or joint venture may provide a solution, but these options come with limitations and risks. Make sure to consult a legal advisor to make the best choice for your specific situation.
It is possible to purchase property remotely in Bali and other parts of Indonesia. This modern approach makes it easier for foreign investors to acquire their dream property, even if they cannot be physically present. Here are some key aspects and methods for buying property remotely:
Conclusion
Buying property remotely in Bali and Indonesia is not only possible but also increasingly common thanks to technological advancements and professional support. By utilizing virtual tours and appointing a power of attorney, you can make an informed purchase, no matter where you are located. Make sure to work with reliable real estate agents and legal professionals to ensure a safe and successful purchase.
Bali is an island full of attractive real estate locations that can offer excellent returns on investment, especially in the tourism sector. If you're considering investing in real estate on Bali, here’s a brief overview of some of the most profitable areas and what each region has to offer:
Bali offers various locations with excellent returns on investment, with Uluwatu and Canggu being the most attractive areas for real estate investments. These regions have strong rental demand and provide opportunities to benefit from the growing tourism sector. By carefully investing in these popular locations, you can achieve high returns on your investment and enjoy the unique charm of Bali.
It is possible to purchase and rent out a villa in Bali as an individual. In this case, you pay a tax of 20% on the net rental income in Indonesia. However, keep in mind potential additional tax obligations in your home country.
An attractive alternative for some investors is setting up a PMA (Penanaman Modal Asing), an Indonesian corporate structure. This offers tax benefits and can result in lower tax rates, making it financially more appealing to invest in rental properties in Bali.
You can buy a villa as an individual, but with a PMA, you gain tax advantages that can reduce investment costs.
The end of a leasehold period in Bali can bring uncertainty about the future of the land and the investment made on it. For investors, it is essential to understand what happens to the land and how to optimize potential extension options.
When the lease expires, you can usually renegotiate to extend the contract, often at a higher, current market price. Securing a long initial lease period is therefore advisable to maintain stability. If an extension is not possible, you can typically only take movable items, while the structures on the land become the property of the original owner.
For long-term stability, a long lease period is essential and prevents unexpected costs when extending the lease.
If you are considering leasing property in Bali, it is essential to understand the typical duration of these lease agreements and the options for extensions. Lease agreements in Bali usually range from 25 to 30 years, depending on the agreement and the specific terms agreed upon by the parties.
In summary, lease agreements for land in Bali typically last 25 to 30 years, with options for extensions. It is crucial to establish clear terms for extensions when drafting the contract to enjoy a long-term investment without concerns. By securing a clear and transparent agreement, you can confidently invest in Bali's thriving property market.
Leasehold is the most accessible form of ownership for foreigners in Indonesia, including Bali. With leasehold, you lease the land for a predetermined period, often 25 years, with the option to extend the lease period.
Advantages of LeaseholdMany foreign investors wonder if it is possible to own property on the beautiful island of Bali. The answer is yes, but there are specific conditions for foreigners who want to buy real estate in Indonesia.
There are two common forms of ownership available to foreign investors: leasehold and freehold through an Indonesian company.
When planning a construction project in Bali or elsewhere in Indonesia, it is crucial to be aware of the required permits. Obtaining the correct permits is an essential part of the construction process and ensures that your project complies with local laws and regulations. Here are the key permits you will need:
For successful construction projects in Bali, it is crucial to obtain the correct permits, starting with the PBG permit before construction begins and the SLF permit for the building's functionality. Ensure you understand the requirements of the local authorities and submit all necessary documents and plans in a timely manner. By following this process, you can carry out your construction project safely and legally.
Land zoning is a crucial aspect of real estate development in Bali, determining what can and cannot be built on a specific location. It is a system that ensures the land development aligns with local policies and intended usage goals. In Bali, there are various land zones, each with its own rules and restrictions. Below are the most common land zones on the island:
Land zoning plays a critical role in real estate development in Bali, and understanding the different zones—Pink, Yellow, Red, and Green—is essential for any investor. By being well-informed about the rules and restrictions of each zone, you can make informed decisions and ensure that your real estate projects comply with local regulations and meet the community’s needs.
Freehold means full ownership of the land, but according to Indonesian law, foreigners cannot own freehold property directly. However, this is possible by establishing a company in Indonesia, such as a PMA (Penanaman Modal Asing) or PT (Perseroan Terbatas). This company can then act as the owner of the land and buy and manage real estate. While freehold provides more control, the costs are higher, and setting up a company involves additional administrative burdens.
Foreigners can own property in Bali, but it is important to understand which form of ownership best suits your situation: leasehold for a more accessible and affordable option, or freehold via a PMA or PT for full control and ownership. By following the right steps, you can safely invest in the thriving real estate market in Bali.
If you are considering investing in property in Bali, it is important to understand the difference between leasehold and freehold. These two forms of ownership offer different advantages and limitations, especially for foreign investors. Below, we explain both options so you can make the right choice based on your investment goals.
Leasehold is the most accessible option for foreigners. With this, you lease the land for a set period, usually 25 years, with the option to extend the lease. You have the right to use and rent the property, but you do not fully own the land.
With freehold, you own the land outright, but this is only possible for foreigners through an Indonesian company, such as a PMA (Penanaman Modal Asing) or PT (Perseroan Terbatas). Through these company structures, you can indirectly own property, but setting up and maintaining such a business comes with more administrative burdens and costs.
The main difference between leasehold and freehold is the level of ownership and control you have. Leasehold is an affordable and accessible option for foreigners looking to invest for a longer term without the need to set up a company. Freehold, via a PMA or PT, offers full control over the land and is ideal for long-term investments but comes with more costs and obligations. Depending on your investment goals and financial situation, one of these options may be a better fit for you.
Bali not only attracts tourists from around the world but also offers significant opportunities for foreign investors. Investing in real estate or other sectors on the island can be very tax-efficient. Indonesia has various tax advantages that help foreign investors maximize their returns and reduce costs. By investing wisely, you can benefit from favorable tax schemes that enhance the investment climate in Bali.
A popular way to invest in Bali is through a holding structure. This allows you to borrow money at a low interest rate or even without interest. The profits generated from your investment can then be used to repay the loan. This reduces financial pressure in the short term and makes it easier to grow capital in real estate.
Indonesia encourages entrepreneurs with a favorable tax rate. In the first three years, you only pay 0.5% tax on turnover. This is a significant advantage compared to the standard 12% corporate income tax, and it helps new businesses grow faster by lowering tax pressure in the early stages.
Indonesia has one of the lowest inheritance tax rates in the world. While inheritance tax in Belgium can range from 20% to 50%, inheritance tax in Indonesia is only 5%. This makes it particularly attractive for investors looking to pass on their wealth to the next generation without losing a significant portion to tax.
Investing in Bali offers more than just the chance to participate in a thriving real estate market; the tax benefits can make your investment even more profitable. From the ability to invest through a holding structure to the low inheritance tax, there are plenty of reasons to consider Bali as a smart investment destination. By taking advantage of these tax benefits, you can optimize your returns and enjoy a favorable tax environment.
Indonesian banks generally do not offer mortgages to foreigners. However, it is possible to take out a second mortgage on real estate in your home country. The released funds can then be used as you wish, for example, for purchasing real estate in Bali.
Indonesian banks can provide loans if you already own property in Indonesia and can demonstrate that this is part of healthy businesses. Keep in mind that interest rates are significantly higher than what we are used to in the West.
Foreigners can finance indirectly through a second mortgage or loans on existing Indonesian real estate, but keep in mind the high interest rates.
Real estate in Bali offers great opportunities, especially when you carefully analyze the return on investment (ROI). The ROI helps to gain insight into the expected income based on location and occupancy rate, which are crucial factors for real estate on the island.
Platforms like AirDNA display rental data by region, allowing you to calculate the estimated income for, for example, beachfront locations. The ROI calculation includes the total rental income minus operating costs, multiplied by the location-specific occupancy rate.
Calculate the ROI with platforms like AirDNA for specific regions; beachfront locations often offer the highest returns.
Villa management is an important aspect for those investing in rental properties in Bali, as it handles the maintenance and daily operations of the villa. Most managers charge between 20% and 30% of the revenue for their services, depending on the scale and level of service.
In our project, we offer an "Extra" package at 20%, excluding utilities and maintenance, and a "Carefree" package at 25%, which includes everything for a fixed fee. This allows investors to choose between flexibility or full peace of mind.
Villa management fees range from 20-30% of the revenue, depending on the chosen service level.
Investing in real estate in Bali can be very profitable, especially if you focus on some key factors that significantly influence rental prices and occupancy rates:
Properties near beaches and tourist hotspots like Canggu and Seminyak typically have:
Consider adding extra facilities such as:
Location and additional amenities are key factors in the success and return on your investment.
When setting up a business in Indonesia, such as a real estate company, a minimum investment of IDR 10 billion is recommended. This guideline prevents the creation of "fake companies" that are only established for visa purposes.
While there is no strict time limit for reaching this target amount, it is a requirement for real estate companies wishing to manage or develop property. This structure can also provide access to a KITAS (residency) permit.
For real estate companies, a minimum investment of IDR 10 billion is recommended, which also grants access to a residency permit.
When investing in real estate in Bali, it's important to have a clear understanding of the various costs and taxes you will encounter. Having a clear picture of these financial obligations helps you create a realistic budget and avoid surprises. Below is an overview of the main costs and taxes you can expect:
Maintaining real estate in Bali requires regular upkeep to ensure the value and appeal of the investment. Minor maintenance, such as painting and repairs, should be done annually, with costs around €1,000 per villa per year. Major maintenance is recommended every 5 to 10 years, with estimated costs ranging from €2,000 to €3,000 per year. Regular maintenance prevents high repair costs and ensures the villa remains attractive to tenants.
Regular minor and major maintenance is essential to preserve rental value and reduce long-term costs.
Investing in real estate in Bali offers attractive opportunities, but it’s crucial to consider the various costs and taxes involved in both the purchase and management. By being well-informed about these financial obligations, you can develop a solid investment strategy and optimize your return. Make sure you have a detailed financial plan that takes all these costs into account, so you can successfully invest in Bali’s flourishing real estate market.
Investing in commercial real estate in Bali offers interesting business opportunities, but it's important to be aware of the taxes involved. As an owner of commercial real estate in Indonesia, including Bali, you will face various types of taxes. These range from value-added tax (VAT) to income tax, and depending on your business structure, they can offer favorable advantages. Below is an overview of the main taxes applicable to commercial real estate.
For commercial real estate, you pay VAT on the income you generate. In Indonesia, VAT (also known as PPN – Pajak Pertambahan Nilai) is 10% of the revenue, and this amount must be paid monthly to the tax authorities. This is an important tax for anyone renting out or generating income through real estate.
Entrepreneurs who own commercial real estate also pay income tax. The standard income tax rate is 12% of the net profit. However, for start-up businesses, a special provision applies: in the first three years, you only pay 0.5% tax on the revenue instead of the regular income tax. This tax advantage is attractive to new investors just starting out in Bali.
Property tax, locally known as Pajak Bumi dan Bangunan (PBB), is calculated based on the value of the real estate. This tax is 0.5% of the value of commercial real estate and must be paid annually. It is a fixed expense for all property owners in Indonesia.
When you take profit from your business and pay it out as dividends, you pay dividend tax in Indonesia. The standard dividend tax rate is between 10% and 13%, depending on the size of the profit and the reinvestment policy. An attractive tax advantage is that you pay 0% dividend tax if you reinvest the profit within three years in Indonesia. This can be a strong incentive to keep investing your income in local projects and expand your real estate portfolio.
When investing in commercial real estate in Bali, it's essential to consider the various taxes that apply. By making smart use of tax benefits such as the reduced income tax rate for start-ups and the 0% dividend tax rate for reinvestment, you can minimize your tax burden. This ensures that you retain more profit and can optimize the returns on your investments in Bali's thriving real estate market.
When you know what the risks are and take them into account, a real estate investment in Bali can be a fantastic way to generate returns.
Purchase ConsultantsThere are purchase consultants who assist with buying real estate in Bali. These parties charge a fee on the purchase, often 1.5%. However, this is not their only revenue model. When they refer clients to real estate agents or developers, they receive another 2.5% or even 5%. This is not communicated openly, and it may be that they primarily push projects that provide them with the highest commission. Even Dutch purchase consultants in Bali are guilty of this. Always think for yourself and use your own knowledge when making decisions.
In the Netherlands, this is seen as a conflict of interest and is against the Wft law. In Indonesia, there are no laws regarding this.
Real Estate AgentsReal estate agents in Bali are very helpful. Just keep in mind that they receive money from the purchase, often 5% of the purchase price. There is nothing inherently wrong with this. However, a real estate agent's main goal is to sell. Educate yourself on what is important when buying real estate in Bali, so that you can make the decision yourself. Don't rely solely on the sales pitch from the agent. Use your own judgment.
Zoning PlanThe zoning plan is the most important thing to check when purchasing real estate. If a villa or apartment is built on agricultural land, it may even be the case that the building must be torn down if the zoning plan cannot be changed. Projects are offered that are located on agricultural land. Even “large” developers are guilty of this. So, be alert and always do due diligence with your own notary or lawyer when making a purchase.
FraudUnfortunately, there are cases of fraud. I would like to emphasize that this information is provided so you are aware of the risks and how you can protect yourself from them. A real estate investment in Bali is a fantastic way to generate returns.
Real Estate Agents Asking for a Deposit: There have been cases where real estate agents ask for a deposit without any contract in return. It is often said that this is to ensure the buyer is serious. Never do this! A deposit in itself is not a problem, but make sure to sign a reservation agreement and ensure that you have a copy of the identity card of the person you are transferring the money to. Make sure this person is the owner. Never transfer money directly to the agent. Agents can disappear and return to their own island. The police in Bali cannot help with fraud involving Indonesians from other islands, even if you have their identity card.
Property prices in Bali are still relatively low compared to other popular tourist destinations, meaning you can purchase luxury properties at an affordable price. With the constant demand from both tourists and expats, there is a high likelihood that you can sell your investment for a much higher price over time, offering an attractive return on investment.
Bali offers low labor costs, making it financially attractive to rent out properties or start other commercial activities. For property managers, this means you can maintain excellent service and a high level of hospitality with minimal operational expenses, which is an added advantage for landlords.
Unlike many other Asian destinations, Bali offers Western amenities and facilities that meet the expectations of tourists and expats. From luxury villas with private pools to trendy restaurants serving “normal” food by Western standards, Bali provides a high level of comfort and conveniences that attract expats and tourists alike. This uniqueness in the region further drives the demand for luxury accommodations.
Bali is home to between 200,000 and 300,000 expats, presenting a significant opportunity for real estate investors. The expat community consists of a mix of digital nomads, entrepreneurs, and individuals who choose to live in Bali for its relaxed lifestyle and affordable living costs. Additionally, friends and family of these expats frequently visit the island, contributing to a steady flow of visitors. Many investors in Bali benefit from this constant influx of expat visitors, making the rental market particularly lucrative.
Bali has a unique Hindu culture that sets it apart from the rest of Indonesia. The local population is known for their friendliness and hospitality, which adds to the island's charm. Additionally, religious traditions and rituals play a significant role in daily life on Bali. The combination of its serene culture and the warm attitude of the locals makes it an irresistible destination for both holidaymakers and permanent residents.