Bali is a popular resort island for many tourists, especially Australians and other westerners. It has some of the best performing property market values in Asia with luxury property prices having increased 15% year-to-year. Recently, the market has stagnated due to continuous uptrend but also because of problems with local infrastructure (lack of clean water) and oversupply of property due to lack of property zoning regulations. But there are still plenty of opportunities for investment in condos for sale in Bali. Let’s take a look how foreign property ownership works in Indonesia, which option is best for you, and where to buy.
Foreign Property Ownership
There are many options to owning property as a foreigner, some come with more risk than others. This guide will give you an overview of what those options are and help you decide what works best for your situation. Owning property in Bali is subject to the same national regulations as the rest of Indonesia with the exception that there is a restriction on the height of constructed buildings (15 meters).
Buying property with a freehold title (Hak Milik)
Most foreigners choose this option, despite it being the most risky. Under a freehold title (Hak Milik) you’ll receive full ownership, higher price appreciation, and more freedom. However, under Indonesian law foreigners can’t buy a freehold title but it’s possible with local contractual setups. You can use a local corporation or individual as the nominee or representative as the owner of the title. This means that your nominee retains the full rights of the property, not you.
Buying property with a leasehold title (Hak Sewa)
Choosing a leasehold title (Hak Sewa) means that you won’t have to put up money but it has more limitations with the usage of the property. The physical structure won’t increase in value as much and you will miss out on the price appreciation of the land itself.
Buying property with a Right-to-use title (Hak Pakai)
Right-to-use titles can be obtained from a person who wins the Hak Milik. The lease term is set for 25 years but can be extended up to 70 years. As an individual, you need to live in Indonesia or have it as your domicile. You’ll also need to apply for a permanent stay permit (KITAP) or a temporary/limited stay permit (KITAS). Thus, setting up a PMA (Penanaman Model Asing) company is preferred for non-citizens. This strong title comes with the benefit of being able to sell or transfer it to someone else who is eligible to hold property in Indonesia.
Buying property with a Right-to-build title (Hak Guna Bangunan)
The right-to-build title (Hak Guna Bangunan or HGB) is only available to citizens or companies incorporated under Indonesian law. This does include PMA companies that fall under the category of “foreign direct investment.” This property title is valid for 30 years, it can be extended for another 20 years, and another 30 years after that.
What is the best way to buy property in Bali?
The safest option when buying property is to set up a PMA company. This allows for the acquisition of Hak Pakai (HP): Right-to-use title and Hak Guna Bangunan (HGB): Right-to-build title. You can acquire a Hak Milik but you’ll need an Indonesian nominee for this option, which comes with added risk. It can take time to set up a PMA, it requires a business plan and operational activities in Indonesia but will give you the benefit of securing property and holding the full rights to it.
Where should I buy property in Bali?
Bali has plenty options for property depending on if you’re looking for the excitement of tourists attractions or the more relaxed atmosphere of seaside life. Here’s an overview of some of the best places to buy and what benefits they offer.
Buying property in Sanur
- Southeastern part of Bali
- 5 km long coastline
- More relaxed compared to other areas
- Lots of bars and restaurants
- More locals, less foreign tourists
- 3 bedroom freehold villa starts at USD 400,000
Buying property in Canggu
- Coastline twice as long as Sanur
- Southern part of Bali
- Popular place among property buyers and travelers
- Relaxed atmosphere with many cafes
- Popular among surfers
- 3 bedroom Villa starts at USD 750,000
Buying property in Ubud
- One of the oldest parts of Bali
- Located in the mountains with cool weather
- More relaxed atmosphere but has an abundant local culture with many arts
- 3 bedroom starts at USD 250,000-300,000
Buying property in Kuta
- Most popular area for travelers, especially Australians
- Located in the western part of Bali
- Near the Ngurah Rai international airport
- Plenty of bars, shopping, and restaurants
- 3 bedroom villa starts at USD 300,000
Buying property in Seminyak
- North of Kuta
- Previously undeveloped but now the most upscale region in Bali
- More relaxed atmosphere than Kuta
- 3 bedroom villa starts at USD 500,000
Real Estate Agents in Bali
Being so popular for foreign travelers there are plenty of real estate agents in Bali. Here’s a list of the most popular:
- Ray White Property Group
- Real estate commissions usually land at 5%.
Bali is one of the most visited resort islands in the world and continues to attract tons of travelers and tourists from around the world. It has seen a huge increase in property values on the past 10-15 years which has led to price stagnation. Foreigners can’t own freehold property here but some still choose to do so through local contractual setups, though the option is risky. If you choose to do this, remember that you won’t be protected under it.