Due to the high ROI and rental yields for property in Bali, many foreign investors choose to buy a villa or land on the popular Indonesian island. Investing in Bali lands and villas can be lucrative, besides providing comfort. Bali’s increase in economic activities, with a growing number of tourists flocking to the island, makes Bali lands ripe for investment. This article provides more information about the ROI and average property rental yield in Bali and what you can expect when you decide to invest.
Average property rental yield in Bali
Several factors impact property rental yield in Bali, causing significant regional variations. Key determinants include property location, type, and amenities. Properties near popular tourist hotspots or with unique features like private pools or ocean views typically yield higher rental returns. Understanding these factors is essential for investors aiming to maximize their rental income.
Gross rental yield in Bali
Gross rental yield offers a quick overview of income generation by dividing annual rental income by the property purchase price. For example:
Consider a property in Bali purchased for $250,000 and rented out for $37,500 annually.
Gross rental yield = (annual rental income / property purchase price) × 100
Using the provided figures:
Gross rental yield = (37,500 / 250,000) × 100 = 15%
In this example, we used the current average annual income of a property in Bali to calculate the gross rental yield, which comes out to be 15%.
Net rental yield in Bali
Net rental yield provides a more comprehensive view by considering additional expenses such as maintenance, management fees, and taxes. This metric is essential for understanding the actual profitability of a property investment.
For instance, if the annual expenses (maintenance, property management fees, and taxes) for the above property amount to $9,375, the net rental yield is calculated as follows:
Net rental yield = (annual rental income − annual expenses / property purchase price) × 100
With the given figures:
Net rental yield = (37,500 − 9,375 / 250,000) × 100 = (28,125 / 250,000) × 100 = 11.25%
These calculations show that Bali offers strong rental yield potential, with gross yields of 15% and net yields of 11.25%, indicating high profitability for property investors.
Do you want to calculate the rental yield for your villa in Bali? You can do so using our rental yield calculator for Bali property.
Property prices in Bali
The cost of a property is a key factor in real estate investment. The size, location, type, and building materials of the property are the main factors that determine the total cost. You can use our calculator to estimate the average cost of building your dream villa in Bali. For your convenience, we have provided estimated prices that can serve as a reference for the construction cost of various properties.
| Villa type | Average price per m2 |
|---|---|
| Single villa | IDR 7.6 million ($464) |
| Multi-story villa | IDR 10.9 million ($665) to IDR 12.4 million ($756) |
| Villa with luxury materials (e.g., wood and marble) | IDR 22.9 million ($1,397) |
| Villa with swimming pool | Villa type cost + IDR 2 million ($122) per m2 of the pool |
Return on Investment (ROI) on villas in Bali
Due to the reopening of tourism after the pandemic, the average property ROI in Bali falls between 12-20% per annum.
Calculate the ROI for Bali real estate
Calculating the ROI, you can determine the (possible) profit or gain on any investment. The ROI (Return on Investment) is a profitability rate that is represented in percentage and can be calculated with the formula:
For example, we have a villa that was bought for IDR 1.9 billion ($115,900) and five years later sold for IDR 3.2 billion ($195,200). The net profit is IDR 1.3 billion ($79,300), and so the ROI for this property is 68.4%.
How to invest in Bali property?
Foreigners who wish to buy or rent out property in Bali can do so through a PT PMA, which is a foreign-owned company. However, it’s important to note that foreigners cannot buy and own freehold land or property in Indonesia through the most potent land title, which is known as Hak Milik (HM). Only Indonesian nationals and legal entities have the right to do so.
With a PT PMA, foreigners can purchase freehold or leasehold real estate. Once the land is acquired, they can build a villa with the Hak Guna Bangunan (HGB) title. Before renting out the villa, it is essential to obtain specific certificates that allow villa rentals, such as Pondok Wisata.
Invest in Bali property with Own Property Abroad
Looking to invest in property in Bali? Leave your name and email below, and our expert team will assist you with every step of the process. From understanding the legalities and navigating local regulations to finding the perfect property that matches your investment goals, we provide comprehensive support. Our personalized guidance will help you maximize your ROI and rental yield, ensuring a successful and profitable investment. You can also email us directly at hello@ownpropertyabroad.com. Start your property investment journey in Bali today!
Frequently Asked Questions (FAQs)
Is it worth buying property in Bali?
Buying property in Bali can be worth it, as Bali offers great investment possibilities for those seeking to invest in foreign real estate. Bali is seen as the world’s best holiday destination, with rising tourists visiting the island annually. Buying property in Bali is worth it if the investment is done correctly.
Where should I buy property in Bali?
Where you should buy property in Bali depends on the goal of the property. If you want to use the property for personal use and prefer a quiet area, purchase property in the north or east of Bali, such as Lovina, Amed, or Uluwatu. If you rent the property to tourists, you can buy property in popular tourist destinations such as Canggu, Seminyak, Ubud, or Sanur.
How much does it cost to buy property in Bali?
The costs of buying property in Bali depend on the property’s location, type, size, style, and building materials. The average price of a single villa is around IDR 7.6 million ($464) per square meter.
2 Responses
hi, I would like to ask, how to apply for the proper title for a property when earning ROI with it. I want a property to buy and still don’t know how to get the right title
Hi Dian,
When you want to earn money with property rentals in Bali, the land titles you need depend on how you buy the property. You might have to obtain land titles such as Hak Sewa with freehold. When you buy it through a leasehold agreement, you don’t need to apply for a land title, but you must be aware of the different rental income taxes you must pay. You read more about these taxes in this article:
https://ownpropertyabroad.com/indonesia/rental-taxes-for-property/
I hope this helps. Good luck!
^ Matt