When Jerry Hall filed a divorce case for an alleged £30m against Mick Jagger in 1999, Bali gave the Rolling Stone the ultimate get-out clause: his lawyers claimed the couple’s six-hour Hindu wedding ceremony nine years before on a beach in Sanur, in the south of the island, was invalid under English law. The marriage was duly annulled. Hall accepted an undisclosed sum.
For most, the volcanic island in the Indonesian archipelago offers more conservative forms of escapism — namely surfing, tropical climes and the spirituality that has been celebrated in films such as Eat Pray Love. Yet even these Zen pursuits can come with multimillion-dollar price tags — and can be fraught with legal difficulties as only Indonesians can own freehold homes outright.
On the south-west of the island, Elite Havens, Knight Frank’s local associate, is marketing a four-bedroom, 622 square metre freehold villa for Rp35.75bn ($2.56m). It comes fully furnished and features a pool, a rooftop terrace and a four-poster day bed in the garden. It is in the resort town of Seminyak, historically the most expensive place to buy on the island — although the area’s fortunes have shifted in recent years.
House prices in Bali rocketed over the first decade of the century. From the early 2000s to 2012, “there was generally an increase of 20 per cent a year in land values”, says Zoe Rice of Elite Havens. Some 70 per cent of buyers in Bali are Indonesian while 30 per cent are from overseas, agents report. The rapid growth of the property market accompanied the expansion of Indonesia’s upper classes, a booming tourism industry and even, according to Rice, the global financial crisis of 2008. “If business wasn’t going to be good for the investment bankers, they decided to make a move down here”, she says.
But then prices hit saturation, says Rice, all the more so because mortgages are not available to foreigners. Transaction volumes across the island “are down substantially compared with three years ago”, she says. Prices in Seminyak have been flat since 2012, according to Elite Havens. One reason they haven’t dropped is that “the sellers don’t want to budge”, says Polo Peronnin, a property consultant at BaliHome Property. Some homes in Seminyak are sitting on the market for between six months and a year, he adds.
Tourists might have made Seminyak too crowded and expensive for residential buyers, but they are sustaining a buy-to-let market, says Peronnin. Though buyers need a special licence to let homes short term, gross rental yields can be as high as 10 per cent, says Karl Wilkins, marketing executive at Paradise Property Group.
Seminyak is preferred by many to Kuta — the original stop on the holiday home trail when buyers started moving in 30 years ago — which has not aged well. It is now “for low-budget tourists”, says Wilkins. “There’s a lot of concrete, a lot of Australians in ‘wife-beaters’ getting drunk on the streets,” says Peronnin.
Many international buyers have moved further up the west coast to Canggu. “We have so many requests for Canggu, it’s silly,” says Peronnin. Prices have risen 10 per cent annually for the past four years, says Wilkins. Peronnin estimates prices have jumped 15 per cent in the past 12 months and there are “villas popping up like mushrooms”. Recent developments include the COMO Uma Canggu, a hotel resort with 67 private residences that completed in February that has already sold out.
Bali operates strict zoning laws and regulations. “Thirteen years ago, there used to be quite a lot of corruption, money under the table to get permits and stuff, now Bali has cleaned up,” says Wilkins. Heights of buildings are restricted and at the end of 2015 the government re-clarified the legal framework for a Hak Pakai “right to use” certificate that allows resident foreigners to purchase a single freehold property for a period of 30 years (which can be extended).
While the Berawa and Umalas areas of Canggu are being developed for the expat market, Peronnin says that Batu Bolong is “more for the hipster holiday-goers” and Pererenan is for “wild, old-school Bali types”. Australian buyers account for half of those from overseas, says Rice, while most other international buyers are based in Asia.
The Bukit peninsula, in the southernmost part of Bali, is also undergoing some development, says Peronnin. Six Senses will open a resort in Uluwatu in August, with plans for a second phase of development featuring 60 villas. Sanur, site of the Jagger ceremony on the south-east coast, offers a more laid-back alternative to the west’s beach clubs, says Rice, while Ubud, an inland town, is more “popular for retirees, or people who prefer a more artistic scene”.
On Nusa Ceningan, an island off the mainland’s south-east coast, BaliHome Property is marketing a four-bedroom, freehold villa with an infinity pool overlooking a beach for Rp11.077bn.
Over on the south-west coast, bigger things are in the pipeline. Last summer, Nirwana Bali Golf Club closed. There are plans for it to become the Trump International Golf Club — the first Asian resort in the portfolio of the US Trump Hotels group.
Development in Bali has become a hot political issue in recent years, writes Lydia Shu. None more so than the proposed development at Benoa Bay, near the Ngurah Rai Airport. The $3bn project is set to feature a series of artificial islands with hotels, high-end villas and even an F1 racetrack.
But the development has met strong protestations locally. According to Conservation International, the new islands would damage the marine ecosystem and exacerbate south Bali’s flood problem. Locals have also raised concerns that the development could destroy more than 70 sites that are sacred to the island’s predominantly Hindu population.
Both candidates in next week’s gubernatorial elections oppose the project but whether or not either will be able to halt the development is another matter. The outgoing governor, Made Mangku Pastika, has said that the development is part of a national strategic area over which local authorities have no influence.
- Bali’s dry season is May-September, while the wet season is October-April. Temperatures are roughly 27C year-round
- Only Indonesian citizens have ownership rights. Foreigners can be granted lease rights and, if they have a resident visa, rights of use
- Overseas buyers looking to buy freehold sometimes use locals as nominees to hold the freehold title — this can be risky and some buyers have been caught out
What you can buy for . . .
$600,000 A four-bedroom villa in Ubud with rice paddy views
$2.4m A six-bedroom villa in Seminyak
$4.3m An eight-bedroom villa in Canggu
More homes at ftpropertylistings.com
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