Understanding Property Prices in Bali: A Guide from Excel Real Estate Bali

At Excel Real Estate Bali, we often find our clients are confused about property prices in Bali. To help clarify, we’ve put together this guide to explain how we determine property values and what factors influence pricing.

Determining Property Prices in Bali: The Basics

Whether you’re considering a leasehold or freehold property, there are a few key factors to consider when determining the right price. The first step involves evaluating the value of the land. The size and location of the land are critical in this calculation. Additionally, the length of time the land will be used is a crucial factor, especially for leasehold properties.

Next, we assess the structure built on the land, considering the quality of construction, the size of the building, and its overall value. By combining the value of the land and the structure, we can estimate a base sale price.

Market Comparison

After calculating the base price, the next step is to compare it with similar properties on the market. For example, there should be a standard price range for a one-bedroom villa in Canggu or a two-bedroom villa in Uluwatu. By understanding market trends and standards, we can better gauge where a property stands in terms of value.

Final Sale Price and Developer Considerations

The final sale price, or listing price, takes into account the developer’s profit, which is typically calculated as a percentage of construction costs rather than the land value. In some cases, particularly with properties intended for daily rental, prices may also be influenced by potential annual yield. In these instances, we might reverse-engineer the price based on the expected return on investment (ROI) over a certain number of years.

Avoiding Overpriced Purchases

If you’re purchasing a property in Bali, it’s crucial to perform your own calculations or consult a trusted Bali real estate agency like ours. Overpaying for a property can lead to financial loss, especially if you plan to sell in the future. We always advise our clients to carefully assess the ROI and ensure that their investment aligns with realistic market expectations.

Understanding ROI Expectations

ROI is a common concern for investors. Most of our clients expect to see a return on their investment within 5 to 6 years, which requires an average ROI of around 15%. If the expected ROI period extends beyond six to seven years, it might be less appealing, and you should focus more on the long-term potential of your investment.

Location, Location, Location

The location of your property is one of the most important factors in achieving high occupancy rates and ensuring a good ROI. Areas like Canggu Central, Canggu Beach, and the surrounding regions like Berawa and Pererenan are currently in high demand. These areas have limited supply, which makes them prime locations for investment.

High occupancy villas tend to be those with Instagram-worthy designs, so having the right style in the right location can significantly enhance your property’s appeal.

Considering Off-Plan Purchases

In high-demand areas like Bingin and Canggu, where the supply of existing villas is limited, buying off-plan is often the best option. However, keep in mind that as the market evolves, properties with one to two bedrooms might become more difficult to rent out, as renters increasingly seek newer, more modern villas in better locations.

Pricing Your Villa

When pricing your villa, consider the location and market demand. For example, in areas like Bingin and Uluwatu, one-bedroom villas typically range from USD 229K to USD 279K. If you’re aiming for a high-end villa, you may need to invest a bit more upfront, but this shouldn’t negatively impact your ROI.

It’s essential to work with a professional Bali real estate agent who can guide you through the pricing process. At Excel Real Estate Bali, we’re here to help you navigate these decisions, ensuring your property is priced competitively while meeting market demands.

Simple ROI Calculation

For those interested in a straightforward method to calculate your property’s selling price, you can take the potential annual rental income and multiply it by five or six years—the typical timeframe investors are looking to recoup their investment. For example, if your property generates $50,000 in annual revenue, multiplying this by five or six gives you a ballpark figure for the sales price.

Your Guide to Investing in Bali Property

Understanding property pricing in Bali is crucial for making informed investment decisions. By considering factors like land value, construction quality, and market demand, you can determine a fair price whether you’re buying or selling. Remember, properties in prime locations like Canggu or Uluwatu may come at a premium but can offer higher occupancy and returns.

With over 19 years of experience in Bali Real Estate, our team at Excel Real Estate Bali is here to guide you through every step of the process. Whether you’re investing for the first time or adding to your portfolio, trust us to help you find the right property at the right price.