There have been many recent requests in Bali property transactions have slowed down after 15 years of unprecedented growth. Is it true? And if it is, then why is it so? What happened? Let's take a look at some of the issues.
Number One: Property prices
There has been tremendous growth in land prices and property in all parts of Bali, but we now see for the first time that some areas are experiencing a slowdown. This is not rocket science to the savvy investor, especially if one considers that commercial companies should have the financial sense of their investment. And he does not do in areas like Seminyak and Sunset where the earth has reached the dizzying heights of Rp.3 billion are. This high price tag combined with things like building height restrictions grows interest in other, less expensive parts of the island, as Canggu further west, Ubud, north, and all along the east coast because of more attractive return on investment (ROI).
Second: Is there an overproduction
Generally, yes ?. But this is something that any market will experience at this stage of its development. There are two to three years Gold Coast of Australia has taken a tumble because of oversupply and prices dropped by a whopping 50 percent. Now, however, everyone talks about the potential price boom next year because all the developers selected and demand has not decreased. In fact, the opposite happened because of an ever-increasing appetite of foreign markets. This will also happen in Bali, and in the interval
smart domestic bulk buyers are running around picking up everything they can.
Third Infrastructure, Energy and Water
This is a sensitive subject. In general, the infrastructure seems to be improving and the new government resolve the problems with the speed and lots of money. For some people it is a matter of too little, too late, but these are the kinds of people who will try to find holes in any initiative because they are wired that way. This does not mean their negative opinions are right. The truth of the matter is that infrastructure projects are a priority in the country, especially in Bali, and we can expect to see more projects in the near future.
The central government is trying to focus all provinces to alternative energy in particular in the areas of solar, hydro and geothermal, resulting in many projects queue for the immediate future. Solar energy seems to be the flavor of the month and the provincial government of Bali is trying to get legislation approved to have solar panels on all buildings belonging to the government.
Water is a big challenge for Bali and the next record should be on the implementation of the hotels and housing projects to recirculate and reuse water. If this is not addressed soon, it will peak and eventually have a negative impact on the island. The political will, or lack thereof, has been the main stumbling block on this issue, but now it changes and positive steps are taken.
Number four: Overbuilding
In Bali there are many areas already massively oversized. The main factor influencing this is related to the issue of zoning, or more precisely where there is no zoning applied. This began to change in 2009-2013 and today it is much more clear where and what those areas are. This is supported by stricter policies focused on the issuance of licenses and permits and what can or can not be done in specific areas, including regulations on the size / amount of land needed to build mini-hotels " . Interestingly, more and more developers now understand the need for green developments and see "empty" spaces as valuable assets.
Five Number: Ownership Structures for Expats
This year, there has been much discussion around this topic, and in particular to something called a the structure of the candidates . This has been - and will always -. Illegal under Indonesian law and is actually defined as such in the Indonesian constitution
The adjustments on other structures such as Hak Pakai and Hak Guna Bangunan are well underway as the property for expatriates, no matter what the self-proclaimed experts other industries can say. These other structures can sell freely to values similar to freehold, and it is interesting to define either of these two ownership structures is to actually cheaper than using the candidate structure and the so-called lawyers who played a key role in the creation of the myth. Many people, however, are reluctant to change the candidate illegal structure. This could possibly be because they are worried about being exposed or a fine, or worse, but we strongly recommend that if you are one of these people to make the change in legal structure sooner rather more later it will not be easier to change as time passes.
Number Six: Policy
national elections this year and the usual tug of war between the powers have a long time. Indonesia was also affected by a broad global slowdown in general and a currency war between the US and China. However, since its recent redesign, Indonesia really had the speed, revocation of 2700 regulations that hindered investment. He has also published six economic stimulus plans among other initiatives to encourage investment. We see this as a very positive step in the right direction as Indonesia tries to standardize and continue to fight against corruption through better enforcement it has never done in the past.
The new Minister of Tourism was allocated a budget which is ten times the size of previous years. This is used in a number of platforms in a number of strategic areas, including China and the Middle East, and the results are already positive impact.
What has changed, however, is the market. It is now much better informed and is slightly more conservative than it used to be. Prices and ROIs are more conservative, regulations are easier to understand and red tape is disappearing - that attracts a larger market. So the answer to the question "What is the problem with real estate in Bali? Is nothing!
There is nothing wrong with real estate in Bali. The key is that Indonesia is one of the richest countries in the world in terms of natural resources, one of the largest productive populations on Earth being led by a democratic and proactive government. He received the second highest amount of foreign investment in the world after China and its exposure to debt from the national budget is on the same level as Norway.
There is no better place to invest in right now, and domestic investors jump to the possibilities of absorbing the cheapest assets. Their mindset is simple: develop tourism and fill hotels and resorts. All underlying indicators are strong and positive. They do not want to lose; the question is, do you?