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Is Bali’s property market heading for a crash? The truth behind the paradise bubble

buy property on bali

Bali has become a popular destination for both tourists and investors seeking to take advantage of its thriving real estate market. However, as the market experiences an unprecedented increase in property listings, concerns about sustainability and the possibility of a bubble are becoming more relevant.

Bali’s real estate market flooded with new listings

The real estate market in Bali has undergone significant changes in recent years, especially after the COVID-19 pandemic. There has been a surge in property offers across the island, ranging from Uluwatu to Canggu and Ubud. During this period, the market witnessed a substantial increase in the number of Javanese buyers, as well as buyers of other nationalities, seeking to take advantage of the crisis by purchasing land at lower prices. This trend has resulted in a saturation of the market, with a wide range of properties, including villas, lands, and hotels, being available for lease or purchase.

According to recent data, the number of short-term rental listings in Bali has increased by 22% from the previous year, reaching nearly 58,500 by the end of 2023. As a result of this surge in listings, the market has undergone a significant change, with traditional expectations of property investment returns being challenged.

High ROI promises vs. market realities in Bali

Real estate agents and developers have been promising investors up to 25% return on investment (ROI) amidst a booming market. However, these projections are being made at a time of increasing market uncertainties. The occupancy rate for 2023 has shown a decline compared to 2022, which can be attributed to a number of factors, such as changing travel preferences and Bali’s growing reputation for congestion.

Although the number of property listings has grown, the revenue generated from these investments is starting to decrease. Initially, property owners aimed for a quick return on investment by listing their properties at premium prices. However, the market is now experiencing a trend of declining revenue, which is consistent with the total revenue of 2022. This suggests that the high supply of properties has not been met with equivalent demand.

Strategic investment in Bali’s competitive landscape

Although the Bali property market can be challenging, it is not without its opportunities. The key to successful investment lies in adopting a strategic approach. This includes prioritizing freehold ownership, conducting thorough market research, understanding customer behavior, and implementing solid marketing strategies. Moreover, exploring new markets beyond Bali for sustainable tourism development could provide alternative investment avenues.

Investors who are interested in the Bali real estate market are advised to proceed with caution as the market continues to evolve. Current trends indicate that it’s important to differentiate and plan strategically to achieve sustainable returns. Although Bali is an attractive destination, it’s essential to understand the complexities of its real estate market before investing in this paradise island.

Your guide to buying property in Indonesia

Written by Matt Timmermans

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