Bali isn’t just a dream destination for travelers; it’s also a prime location for real estate investment. Its stunning beaches, vibrant culture, and robust tourism sector create a unique opportunity for investors looking to tap into the thriving property market. For those considering purchasing an investment property in Bali, the key is to identify areas that not only promise the best ROI but also align well with your budget and financial goals. Hence, understanding what sets Bali’s property market apart and targeting the most promising locations can help you secure a profitable investment. So, here’s a closer look at why Bali stands out and the top five areas worth considering for high returns.
What is ROI in real estate?
In simple terms, Return on Investment (ROI) in real estate terms measures the profitability of a property by comparing its generated income or value appreciation to the initial costs of its acquisition and development.
In Bali, investors usually see returns through rents, appreciation of property prices, or a combination of both. The island currently boasts a thriving tourism and steady influx of digital nomads, vacationers, and expats, which keeps a steady demand for properties thus making Bali a hot place for real estate investment.
Tourist-heavy property hotspots tend to bring quicker returns due to the high demand; those in emerging areas, however, might take a bit longer but are bound to realize exponential value growth as the place develops. On average, you can expect the ROI timelines in Bali to be between 3–7 years, depending on the type of property, location, market trends, and the pace of local infrastructure development. The advantages? Cash flow consistency, long-term value growth, and access to Bali’s booming real estate scene.
Is Buying Property in Bali a Profitable Investment?
Buying property in Bali is a promising venture. With more than 7 million foreign visitors annually and a growing remote-working community, Bali’s real estate market offers a resilient and profitable investment landscape. The island’s economy, heavily influenced by its thriving tourism, along with its global reputation as a premier travel and living destination, guarantees long-term growth opportunities for property investors. Government incentives and relatively affordable property prices compared to other global hotspots further add to its appeal.
Not just that, investment opportunities in Bali are diverse, catering to various preferences and financial goals:
- Luxury Villas for Tourists: High-end properties with amenities like private pools and ocean views attract premium-paying short-term vacationers seeking privacy, comfort, and exclusivity. Depending on where they’re located and the amenities offered, these villas can rake in anywhere from $500 to $2000 a night, especially in popular spots like Seminyak, Canggu, and Kuta. Just keep in mind that the initial investment and ongoing maintenance expenses can be pretty steep, but the high rental rates and strong occupancy levels during peak travel seasons can help balance things out.
- Long-Term Rentals: Quiet neighborhoods are ideal for digital nomads and expats, providing consistent rental income as these tenants often prioritize reliable internet, proximity to coworking spaces, and a tranquil environment. The perks include reliable monthly earnings and less maintenance hassle compared to short-term rentals.
- Flipping Properties: Renovating underdeveloped homes in prime locations can lead to impressive resale profits. With the right upgrades, older properties in sought-after locations like Seminyak, Berawa, and Jimbaran, can fetch much higher prices, up to 30% to 50% returns within a short timeframe, depending on the level of investment and the market demand. Just make sure you have a good grasp of renovation costs, local construction practices, and the emerging trends in the property market as well as the potential market shifts to better strategize ways to maximize your profits.
- Land Development: Undeveloped plots in emerging areas offer potential for resorts, eco-retreats, or rental properties. Especially in regions like Nyanyi, Cemagi, and Bingin, investors willing to start from scratch can discover great prospects. These areas are generally more affordable than established hotspots and have great growth potential as they develop. You can also snag a land for as little as $50,000, though prices can vary based on location and access to infrastructure. Just be aware that while initial returns might be slow, there’s a chance for significant capital appreciation once the property starts generating income.
Future-Proof Your Investment With High Liquidity
Our prime Bali locations drive property value growth by up to 35% upon completion, ensuring both strong appreciation and an easy sell if you choose to exit.
Property Hotspots vs Emerging Areas in Bali: Where Should You Invest?
When starting an investment, the first question you need to answer is: Where should I invest? Most of the time, you’ll find yourself deciding between popular tourist spots and emerging vacation areas as your investment location, each with its own perks and hurdles. It can be taxing thinking about it, but your decision should really come down on your budget, your investment goals, and who your target market is.
Property Hotspots for the best ROI
Places with established markets, strong infrastructure, and steady tourist traffic like Seminyak and Canggu are excellent choices for investors seeking stability and immediate returns. These areas are particularly ideal for those looking to capitalize on affluent tourists, digital nomads, and expatriates through rentals and commercial places. However, like any investment, these areas come with their own set of pros and cons.
In general, these hotspots offers:
- Consistent Rental Income: High demand ensures steady occupancy rates, particularly for short-term vacation rentals.
- Immediate ROI: Properties in these areas typically start generating returns quickly due to their established popularity.
- Convenient Infrastructure: Proximity to key amenities, restaurants, and entertainment increases the property’s value.
However, you must also factor in these things:
- Higher Property Prices: Demand for properties drives up costs, requiring a larger initial investment.
- Market Saturation: Increased competition may limit the rental yield growth potential.
- Limited Appreciation: Since these markets are already mature, property value appreciation may be slower compared to emerging areas.
Emerging areas are also worth considering
Emerging destinations that appeal to niche travelers and those after a more peaceful and authentic experience is also a wise choice, especially for budget-conscious investors. These areas are highly attractive for long-term investments, offering lower property prices alongside substantial growth potential. Just keep in mind that investing in these places requires a different investment approach than in the more established hotspots.
As mentioned, these factors may entice you to invest in emerging Bali destinations:
- Lower Entry Costs: More affordable property prices make these areas accessible to first-time investors.
- High Appreciation Potential: As these areas develop, property values can rise exponentially, offering substantial long-term gains and the best ROI.
- Niche Appeal: These locations attract eco-conscious tourists, divers, and cultural enthusiasts, opening opportunities for unique property offerings.
And considering these factors can help you make informed decisions:
- Delayed ROI: It may take longer to see returns as tourism and infrastructure in these areas are still developing.
- Limited Infrastructure: Fewer amenities and facilities can affect immediate rental appeal and property usability.
- Market Uncertainty: Growth depends on how quickly the area gains popularity, posing a higher risk for investors.
So, which should you choose?
Your choice should be guided by your budget, investment goals, and target market. For stable and immediate returns, high-demand areas offer a proven track record of success, but they can be pricier. Conversely, emerging areas provide a more affordable entry point and significant growth potential but demand patience and a long-term perspective. Finding the right balance between these factors will help you define the best investment strategy.
Defining Your Target Market
After evaluating the advantages and disadvantages of your chosen investment destination, the next step is to identify your target market. Whether you’re targeting digital nomads, expatriates, solo budget travelers, families, vacationers, or a combination, understanding their preferences is crucial for determining the ideal location and property type for investment. For instance, digital nomads usually look for places that are conveniently near coworking spaces, with reliable access to the internet, and other contemporary amenities. Families, on the other hand, tend to favor calmer locations that offer activities and attractions suitable for all ages.
Aside from that, it’s also important to consider markets that can deliver consistent returns regardless of the season. Tourists usually boost demand during busy seasons, but groups like expatriates or long-term tenants provide a steady income throughout the entire year. These groups value stability and comfort and are drawn to having access to amenities, making properties that cater them a solid choice for off-season earnings.
Aligning your property with the needs and wants of your target market helps you improve occupancy rates, boost rental income, and achieve sustained profitability. A proper understanding of the market enables you to fully maximize potential and select the appropriate investment approach for optimal long-term returns.
Planning Your Property Investment Budget in Bali
Setting a clear budget for your property investment is just as important as establishing your target market. Beyond the purchase price, several extra expenses must be considered, including legal fees, taxes, and maintenance costs. Here’s a detailed breakdown of the key expenses to guide your investment planning.
Legal Fees
Hiring a reputable lawyer to handle property agreements, conduct due diligence, and navigate Indonesian real estate regulations typically costs between $5,000 to $10,000. This step is crucial for protecting your investment and ensuring compliance with local laws.
For foreign buyers, note that Indonesia has laws that restrict direct freehold land ownership for non-citizens. However, there are legal ways to acquire property as a foreign investor:
Freehold (Hak Milik)
Non-Indonesian investors may indirectly own freehold properties through:
- Nominee Arrangements: This method involves having an Indonesian citizen hold the property title for you. However, it comes with significant risks, so it’s crucial to have a comprehensive legal contract in place between you and the nominated Indonesian citizen. Always make sure to work with a lawyer you trust to handle this process.
- Setting up a Local Company (PT PMA): A foreign-owned company can own freehold property in its name. However, the cost of setting up a PT PMA is relatively expensive, with a heavy upfront cost and on-going administrative burdens, so this is recommended for bigger and longer-term investments.
Leasehold (Hak Sewa)
Leasehold agreements are preferred by most foreign investors due to the fact that investors using these types of agreements need not have Indonesian residency status. Generally, these contracts have terms of 25 to 30 years, and are further renewable up to 80 years. Leasehold properties are relatively more affordable to acquire as well compared to freehold, and the legal pathway into investment is very simple for such properties.
Agent Commissions
While reducing agent commissions may seem cost-effective, partnering with an experienced property agent can provide valuable benefits, particularly for newcomers to the market. These professionals provide you with invaluable market insights, access to exclusive property listings, and guidance navigating the complex legal processes of acquiring a property. In a way, their expertise can help you locate the perfect property, negotiate favorable terms, and avoid costly mistakes, making their fee a wise investment to score the best deals. In Bali, property agents typically charge 2% to 5% of the property price as a commission for their services, which may be reduced depending on your agreement between your partners.
Maintenance Costs
Owning a property in Bali requires budgeting for landscaping, cleaning, repairs, and general upkeep. Annual maintenance costs can differ, but typically fall between $1,000 to $5,000 or about 10–20% of the total monthly income, depending on the size, type, and location of the property. High-end villas in tourist-heavy areas often incur higher maintenance expenses than apartment rentals in emerging areas such as Ubud and Uluwatu.
Tax Obligations
Understanding tax responsibilities is crucial for property investors in Bali. Whether you’re earning rental income or planning to sell your property, being aware of applicable taxes helps you stay compliant and plan your finances effectively.
- Rental Income Tax: Tax resident property investors must pay a tax of about 10% on rental earnings while rental income tax for non-tax residents are usually at 20% of the leasing value. Note: Tax residents are individuals who have spent over 183 days in Bali (Indonesia) within any given 12-month timeframe.
Capital Gains Tax: Should you choose to sell your property, you might incur a 2.5% capital gains tax applied to either the transaction value or the taxable sale value of the property, depending on which amount is greater. For non-residents, this may reach 5% of the total earnings, unless a tax treaty, like a Double Taxation Avoidance Agreement (DTAA) with their home nation and Indonesia, lowers the rate.
Buying property in Bali is a promising venture. With more than 7 million foreign visitors annually and a growing remote-working community, Bali’s real estate market offers a resilient and profitable investment landscape. The island’s economy, heavily influenced by its thriving tourism, along with its global reputation as a premier travel and living destination, guarantees long-term growth opportunities for property investors. Government incentives and relatively affordable property prices compared to other global hotspots further add to its appeal.
Not just that, investment opportunities in Bali are diverse, catering to various preferences and financial goals:
- Luxury Villas for Tourists: High-end properties with amenities like private pools and ocean views attract premium-paying short-term vacationers seeking privacy, comfort, and exclusivity. Depending on where they’re located and the amenities offered, these villas can rake in anywhere from $500 to $2000 a night, especially in popular spots like Seminyak, Canggu, and Kuta. Just keep in mind that the initial investment and ongoing maintenance expenses can be pretty steep, but the high rental rates and strong occupancy levels during peak travel seasons can help balance things out.
- Long-Term Rentals: Quiet neighborhoods are ideal for digital nomads and expats, providing consistent rental income as these tenants often prioritize reliable internet, proximity to coworking spaces, and a tranquil environment. The perks include reliable monthly earnings and less maintenance hassle compared to short-term rentals.
- Flipping Properties: Renovating underdeveloped homes in prime locations can lead to impressive resale profits. With the right upgrades, older properties in sought-after locations like Seminyak, Berawa, and Jimbaran, can fetch much higher prices, up to 30% to 50% returns within a short timeframe, depending on the level of investment and the market demand. Just make sure you have a good grasp of renovation costs, local construction practices, and the emerging trends in the property market as well as the potential market shifts to better strategize ways to maximize your profits.
Land Development: Undeveloped plots in emerging areas offer potential for resorts, eco-retreats, or rental properties. Especially in regions like Nyanyi, Cemagi, and Bingin, investors willing to start from scratch can discover great prospects. These areas are generally more affordable than established hotspots and have great growth potential as they develop. You can also snag a land for as little as $50,000, though prices can vary based on location and access to infrastructure. Just be aware that while initial returns might be slow, there’s a chance for significant capital appreciation once the property starts generating income.
No Taxes, No Hassle: COCO Handles Everything for Your Property
Let COCO Development Group take the stress out of property ownership. From accounting to tax optimization and payments, we handle every detail, so you enjoy hassle-free profits straight to your account.
Top 5 High-Demand Areas in Bali for the Best ROI
Selecting the right location is key to securing the best return on investment (ROI) in Bali’s dynamic real estate market. The Badung area, home to Bali’s most popular tourist destinations, leads the market with a remarkable 48.9% growth in popularity and offers rental yields nearing 5%, outperforming Jakarta. Similarly, Gianyar holds strong investment appeal, delivering rental yields with occupancy rates that can reach up to 80%, even during off-peak seasons.
Within these high-performing regions, certain property hotspots shine for their exceptional investment potential:
Seminyak
Seminyak remains one of Bali’s premier tourist hotspots, offering a luxurious experience with high-end restaurants, boutiques, art galleries, and a thriving nightlife scene. Seminyak’s exclusivity lies in its ability to balance modern sophistication with traditional Balinese charm, creating a unique appeal that keeps visitors returning. As such, it’s a favorite among affluent travelers, particularly beach lovers and nightlife seekers and is known for its consistent rental demand.
Properties here are ideal for those looking to invest in luxury villas, vacation rentals, or commercial spaces like boutique shops or cafes. While the initial property purchase cost may be higher, the potential for steady income and quick returns makes Seminyak a solid choice.
Canggu
Canggu has rapidly emerged as one of Bali’s top property investment hotspots, combining a laid-back vibe with a modern edge that appeals mostly to digital nomads, surfers, and young adventurers. With its trendy cafes, coworking spaces, and world-class surfing beaches like Echo Beach and Batu Bolong, Canggu has become a place materializing both relaxation and excitement.
For investors, Canggu provides a range of opportunities, from luxury rental villas and boutique hotels to coworking spaces and eco-friendly developments that cater to the increasing demand for sustainable living. This location is perfect for attracting long-term renters or vacationers seeking a vibrant yet relaxing environment. Although property prices in Canggu are rising, they still remain competitive when compared to more developed areas like Seminyak, offering significant growth potential.
Jimbaran
Jimbaran is a family-friendly destination that combines luxury with accessibility. Its pristine white sand beaches and calm waters provide a serene setting that appeals to families, young couples or honeymooners, and groups looking for a peaceful alternative to the bustling vibes of Seminyak or Canggu.
As an investment spot, investors can capitalize on Jimbaran through rentals on beachfront villas, family-oriented resorts, and commercial properties such as cafes and restaurants, which thrive due to the steady flow of visitors. Additionally, the area’s proximity to the airport and major attractions, such as Garuda Wisnu Kencana Cultural Park, enhances its appeal. Jimbaran’s balance of luxury living and relaxed charm offers investors the potential for high returns in both residential and commercial property sectors.
Uluwatu
Famous for its dramatic cliffs, surf culture, and luxury resorts, Uluwatu is perfect for high-end property investments. The area’s breathtaking views and serene atmosphere draw travelers seeking exclusivity. The area also attracts cultural enthusiasts as it houses few of Bali’s famous temples such as the Pura Luhur Uluwatu (Uluwatu Temple) and Pura Goa Lawah (Bat Cave Temple). Uluwatu serves as the ideal substitute to Canggu if you seek to enjoy both tranquility and adventure in a less crowded area.
Excellent investment property options in Uluwatu include beachfront villas and resort lots. Investors can also consider flipping properties to cater to the growing demand for premium accommodations in this area.
Ubud
Ubud’s reputation as Bali’s wellness hub makes it a top choice for those targeting expats and wellness tourists. Known for its lush greenery and spiritual retreats, Ubud offers a more relaxed and eco-conscious market.
Profitable investments in Ubud include eco-lodges, yoga retreats, and long-term rental properties that cater to a health-focused clientele. The area’s emphasis on sustainability and wellness ensures consistent demand for properties from expats, health practitioners, and digital nomads. With the growing wellness tourism sector and a focus on eco-friendly developments, Ubud presents an excellent opportunity for investors to generate the best ROI targeting both short-term visitors and long-term residents.
Emerging Areas Worth Mentioning
Mengwi
Mengwi, although less developed than Seminyak or Canggu, offers significant potential for investors looking for long-term growth. With its rich cultural heritage and serene surroundings, it appeals to both culture enthusiasts and spiritual seekers.
For investors, this emerging area is perfect for land developments or building eco-friendly villas, catering to the growing demand for sustainable living. Its strategic location—nestled between the bustling life of Canggu and the tranquil atmosphere of Ubud—makes it a prime choice for those aiming to balance accessibility and peace. Additionally, as a more affordable alternative to more well-known places, Mengwi presents a promising opportunity for those looking to capitalize on Bali’s continuous expansion and increasing property values.
Sanur
Sanur is increasingly popular among long-term expats and tourists, families, retirees, and health-conscious visitors who appreciate a more peaceful, traditional vibe away from more bustling areas like Seminyak and Canggu. Its laid-back atmosphere and beautiful beaches makes it the “more affordable” alternative to the family-friendly Jimbaran.
For investors, Sanur offers opportunities in long-term leases, boutique resorts, and wellness-oriented accommodations. Its growing infrastructure also ensures it remains a strong choice for investors looking to generate consistent rental income and the potential for significant property appreciation in the coming years.
Umalas
Umalas is a great option for investors seeking affordable entry into Bali’s real estate market without straying far from popular tourist districts like Canggu and Seminyak. The area offers a peaceful environment while maintaining proximity to vibrant attractions, making it highly appealing to expats and long-term renters.
Investment opportunities in Umalas include luxury villas and boutique accommodations that cater to high-income residents. As the area continues to develop, property values are expected to rise, ensuring strong long-term returns for investors.
Strategies and Tips for Maximizing ROI
Maximizing your return on investment requires a strategic approach. Here are some key strategies to ensure you get the most out of your property investment in Bali:
Tailored Investment Strategies: Matching Property Goals to Market Needs
To maximize ROI, you must align your property investment goals with the specific needs of your target market. If your goal is to generate passive income, investing in short-term vacation rentals in tourist-heavy areas like Seminyak and Canggu may be ideal due to their high occupancy rates. If long-term growth is your focus, purchasing in up-and-coming areas like Umalas or Mengwi where infrastructure development is increasing could offer higher capital appreciation in the future.
Budget Planning and Negotiation Tips:
Budget planning alongside negotiation is an essential skill for securing the best property deals.
- Create a Contingency Fund: Always set aside an additional 10% to 20% of your budget to cover unexpected expenses such as repairs, regulatory changes, or market fluctuations.
- Consider Financing Options: While most property transactions in Bali are cash-based, some developers offer payment plans or financing solutions for foreign investors, making entry to the market more accessible.
- Leverage Market Knowledge and Working with Experts: Knowing the current market trends and property values in the area will give you an edge in negotiations. Partnering with experienced lawyers and real estate agents familiar with Bali’s property market also is recommended to minimize risks.
- Be Ready to Walk Away: Most importantly, if a deal doesn’t meet your requirements or expectations, be prepared to explore other options.
Market Timing: Investing Early in Growth Areas to Get the Best ROI
Investing early in emerging areas offers significant upside potential. Areas like Cemagi, Sidemen, and Nyanyi are still in the early stages of development but are showing promising growth due to infrastructure improvements and increasing demand. Getting in on the ground floor allows investors to capitalize on appreciation as these areas develop further.
Diversification: Combining Primary and Emerging Markets for a Balanced Portfolio
By diversifying your investments across both established property hotspots (like Canggu or Seminyak) and emerging areas (such as Umalas or Mengwi), you can balance steady rental income with high capital appreciation potential. This strategy reduces risk and maximizes overall returns.
Achieve Financial Freedom With Expert-Guided Investment Strategies
Our tailored approach targets high-demand properties, delivering strong rental income and long-term growth.
FAQ
Foreigners can’t own land outright but can lease property for up to 80 years through the Hak Pakai or invest through legal entities. For this, consulting with a local legal expert is essential.
Luxury villas and rental properties in hotspots like Seminyak and Canggu often deliver the highest returns, thanks to steady tourist demand. However, depending on your budget and target market, you can opt for more affordable properties in emerging areas, which also present strong growth potential with lower initial investment costs.
Like any market, Bali real estate carries risks such as fluctuating demand, maintenance costs, and regulatory challenges. Partnering with local experts can help mitigate these risks.
Costs vary by location, with properties in hotspots ranging from $150,000 to $1 million, while emerging areas offer more affordable options starting at $50,000.
Hiring a professional property management company ensures smooth operations, from bookings to maintenance, especially for overseas investors.
Secure the Best ROI in these Top Property Hotspots in Bali!
Investing in Bali real estate can be highly rewarding, providing both immediate returns and significant long-term capital growth. Whether you choose high-demand property hotspots like Seminyak and Canggu or explore emerging areas like Umalas and Mengwi, your investment success depends on understanding your target market and aligning your strategy with their preferences. With the right approach, you can enjoy the benefits of owning profitable investments in Bali while contributing to the island’s thriving property market.
Rasmus Holst is a serial entrepreneur and Co-Founder of COCO Development Group, where he helps drive innovation and growth through strategic business development. He is also the Co-Founder of Estate of Bali and Regnskabshelten.dk, Denmark’s fastest-growing accounting firm, which grew to 35 employees and generated $2.5M in turnover in 2023. Rasmus is passionate about building businesses that create long-term value and impact.
