Dateline: Seminyak, Bali, Indonesia
Travel and tourism have been the key to Indonesia’s economic growth.
Indonesia is gaining in popularity with tourists and Bali is the number one place to visit. This has caused land prices to rise significantly.
Investors have made a lot of money in Bali in the past several years, but the future still has many opportunities for investors.
The travel and tourism segment of Bali’s economy grew by 8.4 percent in 2013, according to research by The World Travel & Tourism Council.
There is no reason to believe this trend won’t continue.
Bali’s situation is a good example of how an area can go through significant changes because of one major economic factor. Before mass tourism in Bali started to kick off, it was a very poor country with very little opportunity for its population.
All the major cities in the world have at least one factor that makes them capable of this kind of growth.
For example, one of today’s biggest cities, Hong Kong, owes much of its growth to a strategically good location right next to the sea and China as its ‘backyard’. This has enabled the city to become a major harbor hub.
Bali seems to have found its growth factor just recently. Watching it grow and go through changes makes it easier to understand how developed cities of today’s time went through the same growth period once.
Running out of land
What tourism has done for Bali is most visible in the town of Seminyak.
Property prices in this area have been increasing up to about 40 percent in just a couple of years.
Luxury villa resorts are located in areas where just 15 years ago rice fields were still dominating the landscape.
The streets have become crowded and there are fancy shops everywhere. It’s the place where every self-respecting hotel chain or luxury fashion boutique from around the world wants to be located.
Because the Seminyak area has become so popular, there is practically no land left to buy. There are of course still possibilities, for those looking at the right places.
Because of the fierce competition in the field of hotels, some hotel owners are having problems running a profitable business.
As a result, property owners might sell their assets without taking the rising trend of the ground price value into account. Situations like these can still lead to great chances for anyone willing to invest.
The southern part of Bali is the most developed area with Seminyak being the most expensive and most popular.
Next hot region: northern Bali
An airport under construction in the most northern part of Bali is expected to open the region to development. Government officials say that infrastructure improvements will bring higher demand as this undeveloped area becomes more accessible.
Airports are known to drive property prices up in a very serious way.
Many companies, like food caterers, freight forwarding companies or car rentals, will want to grab the opportunity to be in close proximity to the airport.
The whole area will start to blossom as a result of this area becoming very accessible. This can develop into a building frenzy and create a new Seminyak. It wouldn’t be so unlikely for this to happen because the area around the current airport is overcrowded and there are constant traffic jams.
Many tourists are looking for new places that offer peace and tranquility and have good accessibility at the same time.
The price for prime residential property in the whole of Bali grew 22 percent in 2013, the last year for which data is available, according to The Wealth Report 2014.
This is surpassed only by Jakarta with 38 percent and Auckland with 28 percent. Even Dubai, one of the fastest-growing cities in the world, has experienced a 17 percent growth of prime residential market prices and falls behind on Bali’s exploding prices.
Prices of real estate in Bali have been rising for the past 10 years and this is not expected to stop in the nearby future.
A stable political environment makes the future look very promising in this aspect.
Some even say that the prices of luxury property might soon surpass those of Monaco, which is currently the most expensive place in the world to buy residential property. Not bad for an island that developed itself totally out of tourism, in just a couple of decades.
You’ll need an Indonesian business partner
Having a reliable Indonesian business partner will be necessary for anyone wanting to do business in Bali.
The general consensus in Bali still is that all foreigners have lots of money and this will drive the prices up for just about everything you might buy.
Leaving negotiations up to a local Indonesian will drive prices down significantly.
People willing to invest in Bali will also need someone who is up to date with the local ground prices in Bali.
There are several real estate companies around in Bali that are run by foreigners. It would be wise to stay in close contact with them, as prices fluctuate strongly from region to region and from one period to another.
Some of those real estate companies offer free reports with valuable market information, which are very useful and give good insight into the market’s situation.