Bali investment

[fredo]

BALI, BALI, BALI
$92,000 - $175000
MELBOURNE
An excellent investment, or for owner/occupiers which you cannot find in Australia. 36 Luxury serviced apartments now selling off the plan. All apartments with 2 ensuites plus powder room. This is a luxury tropical resort with private pool, water falls, underground parking and large restaurant in complex. 24 hour in-house management. A short walk to beach, Legian Street and Kuta. An unbelievable investment opportunity. Single bedroom apartments from $US79,000 (less 15% discount off plan) rental potential $US65.00 per day. Two bedroom apartments from $US123,000 (less 15% discount off plan) rental potential $US110.00 per day. The ultimate 5 star Holiday Resort - FOR BROCHURE phone Andrew Kakoufas 0412 541 593 at Peter Parkes Real Estate, 906 Doncaster Road, Doncaster East Vic 3109 Australia.

Any thoughts on the ability to own property in Bali

regards Fredo

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[stanley]

Sounds great... but can i holiday there myself?

How much are the management fees and does this include insurance and body corporate?

 

[Aceyducey]

If they can't get gullible investors to buy metro apartments in Melbourne or Sydney anymore, why not Bali!

The ad for sale reads like a holiday brochure. They want people to buy emotionally, not rationally...the comment 'can I holiday there' shows this perfectly - STRIKE ONE

It's not residential investment it's holiday apartments with the risk of fluctuating occupancy & little control over management fees - STRIKE TWO

It's in a country with a level of political risk....not a really bad risk, but definitely an avoidable risk by considering other countries with less risk (NZ/UK/US/CAN/FR/GE/SP) - STRIKE THREE

Other points:

Securing independent data on occupancy & rental rates & quality/costs of management will be difficult.

Understanding the local environment - politically, socially, economically & legally will take time.

Selling the properties could be extremely difficult....where do you advertise them?

This type of investment is best for someone who has the petty change to buy them outright, where it's an insignificant portion of their portfolio so poor performance would not be a major risk to their wealth strategy.

Or for naive investors who like being taken for rides.

Cheers,

Aceyducey

 

[Peter_Tersteeg]

I wonder how much the locals pay for equivalent property? Somehow I doubt these would make a good investment even if they hadn't already struck out.

 

[Ajax]

This link (on a Bali surfing site) gives a brief intro to the land purchase system in Bali and has 2 properties (land only) listed for sale near Uluwatu.

"An Indonesian's name must appear on all copies of land entitlements. ( This is a requirement by the Indonesian Gov. It requires a land owner to have an Indonesian sponsor. The normal arrangement in Bali since day one is to have a standard agreement with the said friend/sponsor. The deal being; If and when the land owner sells his Bali land holding in the future he will then pay his friend/sponsor 5% of the sale price to return the favor. Sponsors can be arranged"


http://www.baliwaves.com/realestate/prop1.htm

 

[Aceyducey]

"An Indonesian's name must appear on all copies of land entitlements. ( This is a requirement by the Indonesian Gov...."

Yeah I thought this may have been the case.

It adds a serious risk to the proposition if you don't have Indonesian contacts that you trust implicitly.

I wonder if this is a hangover from the Suharto days...a nice way to fleece foreign investors.

Cheers,

Aceyducey

 

[Ajax]

Hi Aceyducey,

Please note that the advice regarding Indonesian sponsor is given by an Australian guy who lives in Bali (who is not a lawyer though seems to have good local knowledge).

When I spent about 4 months in Indonesia in 1996 I heard that the sponsorship requirement for Westerners buying had been relaxed.

I had been offered prime vacant land in Nemberala, Rote (which has good surfing nearby) for about 50k (an absolute fortune for a local). The villager who said he owned the land spoke limited English. The couple of Westerners who owned land there were married to Indonesians. I was tempted to visit an Indonesian lawyer (with a translator in tow) to obtain some legal advice on property ownership but it all seemed too hard. I only had a slight understanding of the land holding system-in West Timor and Rote it involved regencies, village rights and the Kepala Desa (village chief).

I was in Kuta, Lombok the following year and heard the story of a syndicate of Westerners who bought land on a nearby beach and built a hotel/resort. Seems the Indonesian Department of Tourism liked the hotel so much they compulsorarily acquired it. The newish hotel/resort was empty and the previous syndicate members had given up on their Indonesian property plans.

Bali being far more Westernised than Lombok or Rote may have a workable system of property ownership for foreigners (though I'm sure investing there wouldn't be without challenges).

Ajax

 

[Aceyducey]

Bali being far more Westernised than Lombok or Rote may have a workable system of property ownership for foreigners (though I'm sure investing there wouldn't be without challenges).

More westernised, but under the same legal system.

Cheers,

Aceyducey

 

[cad]

All sounds wonderful but you must do your DD, it is my understanding that you must be a resident or be very friendly with one to lease the land from the government, not own it.
However this may not stop you from owning the building on the land.

Cad

 

[waf1]

Correct

You are correct you cannot purchase land in your name, however if your were to consider investing there are a number of people on the ground who can help. Lots of Australians have invested there in the last few years.

The vacancy rate in Bali although recovering is not great at the moment, it would be hard to work out an average rate as their are so many hotels, apartments but on the higher end 5 star I would have it a guess at the moment vacancy rate of around 60 %.

The return on the apartments is also not right someone is taking a big chunk somewhere. For five star accomodation expect to pay over 100USD per night. For example the Hard Rock has very small one bedroom rooms and they average about $93 USD per night. Basically I would be careful particulary investing of the plan. I do however think if you do your research there are some good opportunities elsewhere on the Island.

I don't live there but close by and visit stay between 10 and 20 times per year.

Cheers

 

[CHISEL]

What goes around comes around

Hi Aceyducey,

Please note that the advice regarding Indonesian sponsor is given by an Australian guy who lives in Bali (who is not a lawyer though seems to have good local knowledge).

When I spent about 4 months in Indonesia in 1996 I heard that the sponsorship requirement for Westerners buying had been relaxed.

I had been offered prime vacant land in Nemberala, Rote (which has good surfing nearby) for about 50k (an absolute fortune for a local). The villager who said he owned the land spoke limited English. The couple of Westerners who owned land there were married to Indonesians. I was tempted to visit an Indonesian lawyer (with a translator in tow) to obtain some legal advice on property ownership but it all seemed too hard. I only had a slight understanding of the land holding system-in West Timor and Rote it involved regencies, village rights and the Kepala Desa (village chief).

I was in Kuta, Lombok the following year and heard the story of a syndicate of Westerners who bought land on a nearby beach and built a hotel/resort. Seems the Indonesian Department of Tourism liked the hotel so much they compulsorarily acquired it. The newish hotel/resort was empty and the previous syndicate members had given up on their Indonesian property plans.

Bali being far more Westernised than Lombok or Rote may have a workable system of property ownership for foreigners (though I'm sure investing there wouldn't be without challenges).



Ajax

The Indonesian paper "KOMPAS " online 2 weeks ago had banner ads selling Melbourne apartments to Indonesians. In both cases the locals might no better

Chisel

 

[Aceyducey]

The Indonesian paper "KOMPAS " online 2 weeks ago had banner ads selling Melbourne apartments to Indonesians. In both cases the locals might no better

Well, the locals aren't buying them

And they are legally allowed to buy in Australia. New dwellings anyway

Ahh - to be a Saudi!

Cheers,

Aceyducey