Bali turning into a residential destination

25 January, 2013 | Source: The Jakarta Post

The surging tourism market is driving Bali’s real-estate sector, which has moved into top gear with large, listed Indonesian firms and wealthy individuals creating a land-buying frenzy on the southern part of the island, recent market research showed.


Bali’s active tourism market, coupled with improvements to the airport, highways and the construction of an underpass, would support its real-estate market, said a report by property consultant C9 Hotelworks and Horwath HTL.

One key benefactor highlighted in the report was the upward spike in hotel-branded villas and condo-hotel (condotel) offerings.

Indonesian buyers have played a vital role in property sales over the past few years. While most of the international buyers are from Europe, Australia and the US, it is anticipated that a demographic shift will see this gradually evolve over time.

Domestic buyers from Jakarta and Surabaya dominated the hotel-branded residential sector with potential return on investment and annual usage as key magnets.

“Bali has been inundated by domestic demand. Both investment and end users, primarily from Jakarta and Surabaya, have been buying off the units,” C9 Hotelworks managing director Bill Barnett said, as quoted on the company’s website.

Skyrocketing land prices in Kuta and Seminyak, with limited supply of large plots of land, has driven the development landscape to peripheral areas as Pererenan, Kerobokan and Umalas, where land prices are still relatively lower.

Ngurah Wijaya, chairman of the Indonesian Tourism Industry Association in Bali, said that the trend for real estate properties functioning as tourist accommodation would badly affect the island’s tourism, as the local administration would not receive hotel and restaurant tax revenue.

“Tourist-related businesses in Bali have shifted from hospitality to property. The taxes on these properties will go to the central government, and the local administration will only get revenue from granting the permit for the property’s establishment,” he said.

 

The Indonesian government plans to issue savings sukuk (Islamic bonds), series ST007, to expand the base of retail investors in the domestic financial market and finance green projects in the state budget (APBN).
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