Bali’s Property Market: What to Expect in 2025

A Strong Foundation: Tourism and Investment

Bali’s property market is thriving, driven by the island’s robust tourism industry and increasing foreign investment. As a global tourist destination, Bali offers significant potential for property investment.

Property prices in Bali have steadily risen over the past five years, with an average annual increase of 7%. Additionally, Bali boasts the highest rental yields in Indonesia, making it an attractive investment opportunity.

While traditional tourist hotspots like Sanur, Seminyak, and Ubud remain popular, there’s a growing interest in newer areas like Seseh, Kedungu, Cemagi, Nyanyi, and Pererenan. Younger generations are drawn to these areas for their greener and more natural environment.

The development of infrastructure projects, such as the Bali Urban Subway, is expected to further boost property values. Improved connectivity and accessibility will enhance the appeal of various areas.

With strong fundamentals, Bali’s property market is poised for continued growth in 2025. Both domestic and international investors are drawn to the island’s unique blend of natural beauty, cultural richness, and growing infrastructure.

Why Invest in Bali? Exploring the Investment Potential

Bali’s breathtaking landscapes, characterized by its famous beaches, verdant rice terraces, and vibrant cultural heritage, make it a highly appealing destination for both short-term and long-term visitors.

As we look toward 2025, several key factors continue to enhance the attractiveness of investing in Balinese real estate:

1) Tourism Growth:

Bali consistently ranks among the world’s top tourist destinations, drawing millions of visitors annually. This steady influx generates a robust demand for accommodations, making property investments especially lucrative.

2) Expat and Digital Nomad Influx:

The rise of remote work has transformed Bali into a hotspot for digital nomads. This trend has significantly increased the demand for rental properties, particularly villas and long-term accommodations.

3) Growing Property Market:

Despite fluctuations in the global economy, Bali’s real estate market exhibits consistent growth. Investors can expect to enjoy both personal use and financial returns by renting properties to tourists or long-term tenants.

Types of Property Ownership in Bali

Navigating the legal landscape for foreign investment in Bali is essential. Understanding the different property ownership options is crucial:

1) Leasehold Ownership:

This common investment method allows foreigners to secure property through a leasehold contract, typically lasting between 20 to 30 years, with options for extension. Leasehold agreements are favored for their flexibility and lower initial costs compared to freehold properties.

2) Freehold Ownership:

Although Indonesian law restricts direct foreign ownership of freehold property, it is possible to acquire it indirectly through a PT PMA (foreign investment company). Freehold properties are ideal for long-term investments, providing stability and control over the property for up to 90 years through a structured legal framework.

Please read our article on a more detailed explanation of Freehold vs. Leasehold in Bali Property.

The Investment Process: A Step-by-Step Guide

Investing in Bali’s real estate requires careful planning and an understanding of local procedures. Here’s a concise breakdown of the essential steps:

1) Identify the Right Property:

Bali offers diverse real estate options, from beachfront villas to serene jungle retreats. Your choice should align with your investment goals—whether targeting short-term rentals via platforms like Airbnb or long-term leasing to expatriates and retirees.

2) Negotiate and Secure the Deal:

After conducting legal checks, enter negotiations. Once an agreement is reached, a refundable deposit is typically made to lock in the deal, followed by drafting a Memorandum of Understanding (MoU) that outlines purchase terms.

3) Due Diligence and Legal Verification:

Conduct thorough due diligence on your chosen property. This includes verifying its legal status, compliance with zoning regulations, and ownership details. Engaging a notary and collaborating with a reputable local real estate agency can help mitigate risks.

4) Finalizing Contracts and Payments:

After successful due diligence, prepare a formal contract and follow the agreed payment schedule. The entire acquisition process can take between 10 to 30 days, influenced by factors such as property type and legal complexities.

Will Property Prices Rise in Bali in 2025?

Yes, property prices in Bali are projected to increase in 2025 due to several factors that include rising tourism levels and foreign investment. While challenges such as regulatory changes and environmental concerns exist, strong demand driven by Bali’s appeal as a tourist destination and growing digital nomad community suggests significant price stability.

Indicators of Potential Price Increases

Several factors indicate that property prices may rise:

1. Tourism Growth: As one of the top destinations for international travelers, increasing tourism is expected to elevate demand for vacation properties and rental investments.
2. Foreign Investment Surge: An uptick in foreign investment driven by high return potential is likely to push property prices higher.
3. Demand from Digital Nomads: The growing popularity of Bali among remote workers will sustain demand for residential properties, especially those with good internet connectivity.
4. Infrastructure Improvements: Ongoing enhancements like new roads and airport expansions will improve accessibility and attractiveness, potentially raising property values in less developed areas.
5. Government Initiatives for Sustainable Development: Efforts by the Indonesian government to promote sustainable tourism will likely enhance Bali’s appeal to buyers and investors.
6. Limited Land Availability: The scarcity of land for new developments in popular areas will maintain upward pressure on prices as demand continues to exceed supply.
7. Cultural Allure: Bali’s unique cultural heritage continues to attract high-net-worth individuals seeking exclusive properties.
   Factors Suggesting Potential Price Decreases

Conversely, certain elements could lead to price declines:

1. Regulatory Changes: Stricter foreign ownership laws might deter some international buyers, cooling demand in specific market segments.
2. Environmental Concerns: Issues related to overdevelopment may diminish the desirability of certain areas, impacting property values.
3. Economic Uncertainties: Global economic fluctuations could affect buyer confidence and purchasing power, potentially slowing down the property market.

In summary, while there are challenges ahead, the overall outlook for investing in Bali’s real estate market remains promising due to its unique blend of natural beauty, cultural richness, and ongoing demand from various buyer segments.