BUILD YOUR FUTURE IN BALI

HOW BALI PROPERTY FINANCED WORKS

Bali is becoming increasingly popular both as a tourist, lifestyle, and investment destination. but it also has challenges all of which we will address here.

One of these challenges is the inability to find finance similar to what is available in the West making acquiring assets such as property more difficult therefore for some the move more difficult.

Some people want a Villa/ Condo/Apartment/House for their occasional vacation, others want to take advantage of the high yields whilst others want investments to fund their new independent lifestyle or create cash flow they could redirect back home to defray the cost of other acquisitions.

Many prospective buyers were previously hindered by the lack of finance options for their initial purchase, a problem that we have now resolved.

9 THINGS YOU NEED TO KNOW BEFORE BUYING PROPERTY IN BALI

1
Decide the area to purchase in and why as the areas differ across Bali
2

Do you want new or established?

3

Do you wish to stay in Bali or invest as this will affect the type of Visa

4
Always use a Notary they charge 1% of the purchase price but protect your interests
5

What materials are being used in your build? The weather in Bali is high humidity and can affect the materials used

6

Freehold or Leasehold? Easy to understand but you need to understand

7
Bali previously lacked good Medical but changes this year with new Hospitals
8

Bali has traffic problems in areas like Canggu etc and can be up to 2 hours travel from the airport in busy times

9

Uluwatu is wonderful but water is supplied by either mains, truck or wells so you need to know which type of water is used.

WHY INVEST IN BALI ?

Bali, often referred to as the “Island of the Gods,” is a paradise known for its stunning landscapes, vibrant culture, and warm hospitality. Here are some compelling reasons why investing in a villa in Bali can be a rewarding venture.

NATURAL BEAUTY AND CLIMATE

Bali’s stunning beaches and warm, equatorial climate make it a year around tourist attraction.

CULTURAL RICHNESS 

The island’s unique Hindu-Balinese culture and welcoming locals create an enchanting atmosphere for visitors

STRONG INVESTMENT POTENTIAL

strong investment

With its growing real estate market, low land costs, and favorable investment laws, Bali promises high returns on property investments which can in some instances exceed 20-30% ROI.

THRIVING TOURISM

Direct international flights has made Bali world-renowned expecting a 50% increase by 2025. The high demand for vacation rentals and holiday homes creates excellent income potential for property investors

FOREIGN OWNERSHIP

Indonesia allows foreign investors to acquire property in Bali, making it accessible to international buyers. While there are some regulations to follow, it’s relatively straightforward to invest in Bali real estate. Owning of the land is a more involved process and requires legal assistance but is possible

ATTRACTIVE LIFESTYLE

Bali offers mainly unprocessed or genetically modified foods but do not eat from street vendors for any foods besides fruit and vegetables as Bali belly still exists. Motorbike the favoured form of transport and motorbike taxis are cheap plentiful and less stressful than driving oneself in Bali traffic.

BUY NOW PAY LATER

Traditional mortgage finance is not
available in Bali as cash is normally
required, you can borrow against
overseas assets or ask the seller to
provide you with finance

INFRASTRUCTURE DEVELOPMENT

Bali’s infrastructure has seen considerable changes. There are currently initiatives underway to improve connectivity, transport, utilities, 5G and three international hospitals are in various stages of construction. Bali of old is rapidly changing

REGULATORY FAVOURITES

Indonesia’s economy has been growing steadily, a political landscape geared to low tax, low compliance, low regulation in order to encourage overseas investment and this economic stability contributes to the favorable investment environment in Bali.

SIMPLE PROCEDURE TO PURCHASE

1

Contact Realtors and indicate what you are looking for and if you want freehold or leasehold

2

Ask questions like how long has the property been available, why hasn’t it sold, does it need work, is the Freehold renewable, how far from shops and beach, etc

3

If the property offered meets your requirements you can pay a holding deposit and receive time to review documents.

4

Drive the area of the location where your
property is taking note of shops and engage
with others to share their experience living
in the area in which you propose to buy.

5

Visit a Local Notary and have the Notary inspect all the documents9 They conduct due diligence and create a contract for both parties9 Due Diligence by Notary will verify several key aspects

  • Zoning: Confirm land zoning to ensure suitability for your intended use
  • Ownership Verification: Ensure the land is legally owned by the seller, checking for single or multiple owners
  • Permits: if buying an existing villa, confirm all permits are current and valid
  • Tax Status: Verify that annual land taxes are paid and not overdue
  • Encumbrances: Ensure no mortgages or legal claims exist on the land

Leave a deposit with the notary, who holds it in escrow until all checks are completed and the contract is signed

6

Contract Review and Signing: Review the draft agreement before signing at the notary office

FREE HOLD

  • Freehold is the strongest land ownership in Indonesia, granting complete rights over the land and structures.
  • Only Indonesian nationals can own freehold property
  • Foreigners typically use a local legal entity (like PT PMA) for property acquisition, a complex process requiring legal advice.
  • Traditional freehold through a PT PMA is essentially a long-term lease needing renewal
  • Nominee agreements (using a local to purchase land) are illegal and risky
  • Freehold properties often appreciate in value, making them a good investment
  • Security and stability are key advantages, offering peace of mind to owners
  • Direct ownership allows for unrestricted property development or alterations.

VS

LEASEHOLD

  • Common for foreigners, leasehold doesn't require a work permit or company ownership.
  • More affordable than freehold.
  • Lease terms are usually in millions of IDR per year per 100 square meters.
  • Lease extensions often depend on market rates or can be tied to gold prices.
  • Payment is typically upfront, but partial upfront payments are sometimes negotiable.
  • Additional costs include a 10% tax on the lease and Notary fees for contract execution.
  • Leasehold properties can be sold or transferred to next of kin, offering flexibility.
  • The lease period can range from short-term to up to 30 years, with renewal options.
  • Leasehold offers a lower risk investment.

BUILD

PROS
  • You have total control over the design of the villa and surrounding gardens
  • The Costs can be up to 30-40% cheaper
  • You can negotiate the lease on the land to suit you
  • You can see the way in which the villa was constructed and take steps to ensure that adequate materials and construction methods have been used
  • You will have a warranty on the construction
CONS
  • Your money can be tied up for 1-2 years before turning a profit as the build is ongoing
  • It can be incredibly stressful if you run into delays or cost blowouts
  • Ifs far more time consuming and a lot more effort finding land, suppliers and navigating the Indonesian legal system

OR

BUY

PROS
  • You can turn a profit from almost day 1
  • You can view properties 'in the flesh' and make a decision based on that
  • You can often see the real ROI that the villa is already earning (if ifs being used in short term rental)
  • Often the surrounding area is already developed making interruptions from nearby construction minimal
  • Easier and less effort setting up as permits and lease agreements will already be in place
CONS
  • More expensive
  • Defects in the building can be easily hidden with paint etc, it's often hard to tell what standard the villa has been build to
  • You are somewhat limited by the design
  • Often there are less years left on the lease agreement
  • Maintenance may be higher as things need attention sooner than a new building

BUILD AND BUY NOW PAY LATER

For the first time, there is a new way to buy property in Bali that includes financing

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