Can you talk a little about Ray White as a business? Ray White Paradise is a franchise?
Ray White Paradise is a real estate brokerage; We market and sell properties such as villas, land, commercial buildings and projects at a national and international market. It is a franchise from Australia, but our franchise agreement is with Ray White Indonesia.
When did you open your business and how has it been performing since?
We have done business in Bali for over 10 years now and joined the Ray White network in May 2010. Since then, we have seen massive growth, partly due to market growth in Bali, in part through Ray White business module provides us.
How many staff members do you have and how the company is structured?
We have about 50 dealers we call non-employed partners, and about 25 people divided administration in our offices. Each office is focusing on each of their respective fields, with partners who then actively supplying advertisements, properties on the market, as well as purchasers and customers. Our main office in Seminyak focuses on marketing and overall brand image for us as a group. Once the sale is complete, there is a formula of how the commission is shared between the office and partners, based on the objectives achieved.
Tell us about the real estate market in Bali. Prices have increased exponentially in recent years. Do you see a burst in the bubble coming soon?
The market in terms of size is growing, and will do so in the foreseeable future, good and bad, with many challenges, such as Bali's economy is over 80% on tourism. The main change we have seen in the market in recent years the domestic market is growing massively. This has to do with the generally strong Indonesian economy. The second largest market is Australians because they are about 30% of foreign arrivals to Bali. The third market is Asians and expatriates living and working in the Asian region.
I do not see an explosion in the market in general, for many reasons. The Indonesian economy is very strong and as a dominant force in tourism in Bali, in fact 65%. A generally strong Asian economy. The market is still largely cash driven, even if we see a growth of purchases based on mortgages, but the ratio between the amount of such loans also on projects is still very low and much lower than the national average Indonesia. Further funds increasingly institutional enter the market Bali. Resorts and villas have seen a decline of 1% per year over the past two years. However, growth in room rates more than covers for it. With the growth this year of about 17% overall, Bali needs about 9,000 new rooms every year! There are some problems in the low-end market, particularly condotels; they sell rooms for $ 30 and can not support financially or manage to pay as promised ROI to unit purchasers. Many of these hotels are built in less favorable places - poor construction, poor design, not the best management - of course if they get into a "price war." Some areas such as Sunset Road and Seminyak parties can begin to peak in land prices that restrictions on the height of buildings in Bali, any business concept will struggle to make sense. Other than the market will continue to grow throughout Bali.
Are there laws in place in Bali to curb the development of the property?
Yes and no. From time to time, the Indonesian central and provincial government issued various regulations to control growth. To brake, you can not, simply because the economic interest is too large, as well as legally difficult to enforce. We must also realize that the growth of the Balinese economy is lower than the national average and has nothing else that tourism and property. The last two years we have seen a change in the mentality of the government, far from slowing in addition to the very strong zoning laws, the size of land required for resorts and business concepts and in general to the place where the market is taken. There are huge challenges, particularly infrastructure, water, electricity and other essential items. But I think Bali will find its way through this.
In many foreign countries, land or property may be purchased by tourists / expats. Do you think expats or customers overseas will never be able to legally property here in Indonesia? How your non Indonesian customers buying properties now?
Foreigners may also legally own property in Indonesia under a play structure. What they can not own is only freehold. The first thing is to assess what purpose the property is purchased as this will affect the structure. Second, it is important to understand that these regulations are very safe and there is no restriction on the resale of goods to anyone, even a return to Indonesian freehold title. In addition, Indonesia does not exercise restrictions for resale by tax regulations than many other countries. The question for foreigners looking to buy property in Indonesia is the perception of the legal system. It took off in a very bad way and "custom" in Bali that is not done in Jakarta and Surabaya or any other place and has more to do with legal advice less responsible.
We want the new government wants to change the rules, and in fact they have done this before by increasing the first term of Hak Pakai , and HGB titles. This is most likely to be what they aim to do. But it will also probably need some revisions of the Indonesian Constitution, as here these changes failed to pass. In general, as any country is moving towards a more open market, this regulation will be easier and increasingly in favor of expatriates.
What is the most expensive property than you ever sold? How did he go to?
We made a few transactions of more than $ 10 million in the Seminyak area with stations. This record, I think that will not take long as there is a growing interest in high-end investors and institutional funds looking towards Bali. We also now strakes increasingly stations as part of our deal flow.
Do you plan to expand outside areas of Bali?
We stated that we want to be a real estate company based resort and tourism. We plan to open a few more offices in the areas to come to Bali and Lombok and Flores. We are also considering an office in Jakarta to be able to better track with customers in the capital. We can also do some cross marketing of Australian and New Zealand properties in the Indonesian market.
Have you noticed any trends in the development of, and interest in sustainable housing, like bamboo houses, or houses with solar panels and systems rainwater already in place?
Yes, it is increasingly a trend that we see on a daily basis, with design concepts from products recycled bamboo and steel. Many businesses focus on what their heart of business now. Be as profitable, it is just a question that these products are becoming more important on the market. Water is the main problem and there are many systems on the market. Hopefully the government issues regulations and tax benefits to enhance the use of these systems, as suggested by the tourism minister recently.
What do you think the future has in store for the real estate sector in Bali?
I predict it will continue to grow stronger and spread over larger areas of Bali. It will continue to move more upscale, and towards more ecological developments. It is a path that we have all seen in other countries. There are serious challenges to infrastructure development, but I am optimistic that the government will soon be up to speed. The main challenge for Bali is to preserve its culture and people, because without it we are lost; it is the main attraction of Bali.
What about the property industry you love so much?
There are more than a love for Bali. To sell property in Bali feels good, as you know buyers will benefit from capital gains, return on investment and lifestyle if bought in the right structure and the right price; something that we guarantee will.
Thank you, Terje. To get in touch, email: terje@raywhiteparadise.com