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Property update

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That the Bali property market is booming is a reality, but not every type of real estate is flourishing to the same extent, so it’s worth taking a closer look at the key sectors to form a more detailed picture of today’s market. ... read more

Vacant land

…In strategic tourist areas

The sale of vacant land in Bali’s key strategic tourist areas continues to grow at an unprecedented rate. The Badung Regency, which encompasses Kuta, Legian, Seminyak, Jimbaran, Nusa Dua, Canggu, Uluwatu, has probably been the best performer in the world over the last five years (according to the Knight Frank International Wealth Report, where Indonesia is placed No.1 for Jakarta and Bali). Within the Regency, the most popular plots are, unsurprisingly, beachfront and cliff-top. As a result, very few of these prime sites remain and transacted land prices have risen 40% in the last 12 months.

The same pattern is evolving for inland plots in areas such as Batubelig, Berawa and Northern Seminyak, which remain a fantastic investment. However, we predict that prices have almost peaked now and are unlikely to go much higher. Approximately 80% of these investors are Indonesians wanting to purchase the land for commercial development. From a developer’s perspective, the numbers only work if the site is maximised (i.e. building to Bali’s designated maximum four-storey height). We also anticipate that Indonesian banks will be less and less likely to grant loans if pricing continues to rise, as the numbers will simply not compute. That said, we do not see prices falling, only a reduction in liquidity.

…In emerging coastal areas

As these prime sites become more scarce and less affordable, we are also seeing a growing interest in land sales further along the coast in both directions. Land around and beyond Tanah Lot (to the west) and Karangasem (to the east) is a great investment, frequently offering elevated terrain and ocean views that surpass those of the remaining plots in Bali‘s most popular areas.

…On outlying islands

Strong growth is also being seen on the island of Nusa Lembongan – a longtime favourite holiday destination for Bali’s foreign residents – as well as key locales in Lombok such as the Gilis, Sira Beach, and southern Kuta.

2014 saw foreign tourist arrivals in Lombok rise by more than 200%, with the number of visitors from Bali looking just as strong. In terms of land purchase, many small- to medium-size buyers have broken ground with two, three and five-bedroom villa projects in Lombok over the last year.

Following the opening of the new airport in 2011, there has been plenty of low-end development in the south of Lombok, while high-end activity tends more to the west of the island, in particular the Royal Kameula, which is Lombok’s largest development since the Sheraton was completed 20 years ago.

Land on Gili Meno has been the strongest performer, with two large boutique resorts being recently announced, prices jumping 60% year-on-year, and almost all beachfront land now sold.

The two largest developments on Meno are Bask in the north west (140 rooms and 80 villas) and Seri (75 rooms). The Bounty Group owns a large piece of land waiting to be developed, and Karma has just opened the first phase of its three-star Chandra Resort in the east of the island.

We understand that a second desalination plant is being developed on Gili Meno in anticipation of the rush for hotel development, which also includes, so we hear, Ku De Ta. Space is tight, and with so many boutique hoteliers targetting Gili Air and Meno, land prices are sure to rise further.

As in Bali, Indonesian developers have dominated all the large land acquisitions here, completing recent purchases of between USD 2,000,000 – 8,000,000. Interest has been triggered by the construction of an undersea fresh-water pipeline connecting Lombok to Gili Air. Not surprisingly, all beachfront land on Gili Air has now gone too, with keen interest also being shown in the Sira Beach area of Lombok.

All in all a great year for Lombok despite Jetstar suspending its direct flight from Perth in October due to squabbles with Qantas, however this is mitigated by Garuda Indonesia’s recent announcement to operate this leg.

The luxury villa market

As Bali and Lombok’s leading property consultancy, Elite Havens specialises in luxury villa sales and works hard to find buyers for its clients. There are, however, a huge number of villas on the market and the most successful sellers are those who bought their land several years ago, built their dream home on or close to the beach or cliff-top, and are now cashing in on today’s great prices.

Conversely, many developers building three- or four-bedroom villas on small plots of land (e.g. 3 are), expecting great rental returns or a quick sale, have been disappointed. One of the most sought-after attributes of today’s luxury villa is space, and without it we have seen an over-expectation of value and a drop in sales. Owners are now re-evaluating their expectations and marketing their properties at more realistic prices.

Foreigners must pay cash for property in Bali (no banks will lend to them). This means that the buyer pool is limited and heavily dependent on the local Indonesian market, which, so far has shown little interest in inland property.

Condotels

The Indonesian-driven condo/condotel investment vehicles have reached saturation in Bali. Accommodation prices are rock bottom and it is easy to find new hotels charging only USD 30-40 per night. With approximately 8,000 new rooms coming on stream in Bali, we don’t expect there to be any more lending in this sector.

Local housing

We’re seeing a very strong interest in local housing in Bali, led predominantly by Indonesian investors and developers, and in areas away from the key strategic centres. This growing interest is despite a rise in land, materials and construction costs which, until a few years ago were very cheap. As a result, local housing costs are now starting to escalate in line with the rest of the market.

Looking ahead

As the Bali property market matures over the next 10 years or so we expect that it will follow Australia and the rest of the world in the demand for residential designer holiday apartments (‘vertical’ villas), which are ideal for owners who may not be able to afford a large private villa, who want minimum maintenance, and have more flexibility over whether or not to rent their property.

We anticipate a continued increase in land value in strategic areas, although liquidity will remain a problem and villas are likely to take a longer time to sell unless they are signature properties. We don’t expect to see downward pricing as long as initial sale values are set at a realistic range.

From a legal and tax perspective, the government is keen to make all villas in Bali fully compliant. This will impact many villas that are still operating on a non-compliant basis.

In 2014 government tax departments started paying more attention

Common problems these days for villa staff is the inability to submit payroll tax, enroll for a pension plan and apply for the new government health insurance through their work, since many villas do not have a national tax number. In the past, tax regulations in Bali have been pretty lax, however, Indonesia is now catching up with the rest of the world, and in 2014 government tax departments started paying more attention.

Often a critical oversight made by non-Indonesian villa owners who wish to rent out their properties is a lack of property management after purchase. Since it is not possible for foreigners to own a property outright, there is often a disconnect between a foreigner’s legal ownership of a property and the available options to submit applicable taxes in Indonesia. Although a property might have been purchased through a nominee, it should not be assumed that a nominee will assist with taxes inherent to the commercial operation of a property.

Overall Bali is heading towards a more strict tax and legal status, where appropriate licenses are properly connected. Note that these regulations are applicable to Indonesians as well as foreigners.

Proper compliance provides safeguards for the future and a more robust environment resulting in better returns.

The changing face of the villa rental market

Bali has long been at the forefront of villa rentals in Asia and for decades people have been attracted to the relatively simple process of owning a second home in this island paradise. In the early days, when costs were cheap, rules were lax, supply was limited and Europeans were taking long lazy summer vacations, villas made significant returns to cover costs and squirrel away a tidy profit. That is changing.

In recent years Bali’s villa market has expanded to such an extent that once rural outposts like Canggu are now considered suburban neighbourhoods. New builds – from the large luxury properties in which the Elite Havens Group specialises, to complexes of cookie cutter style accommodation and an explosion of hotel and condotel offerings – have given tourists an abundance of choice, putting pressure on rates at all ends of the market, but in particular on low- and mid-range properties.

Traditionally the three- and four-bedroom market, because of oversupply, has faced most pressure, but this is now extending down to the single bedroom units, where competition comes from hotels and new markets such as Airbnb. Larger properties, being more scarce, are faring better although even these are not without growing competition.

The need for villa owners to think internationally, to work with a proven marketing expert with broad reach, to keep abreast of the many and fast-changing digital marketing channels and to stand out from the competitive crowd, is increasingly important. Elite Havens consolidation with Prestige Bali Villas gives us the scale to be able to invest in the latest technologies and thus yield the best occupancies of any portfolio on the island. For guests, ‘An Elite Haven’ assures comfort and quality, and for owners it represents efficient and effective marketing.

Villa staff – our chefs, butlers, managers and drivers – have long been the cornerstone of the Bali villa experience, making the market stand out from less serviced-developed countries, or more expensive Asian competition such as Thailand. Balinese charm comes at an ever-higher price, however, as demand for trained staff increases and governments rightfully seek to protect workers with minimum salaries, medical coverage and higher allowances. Add to this the growing pressure on villa owners to be legally and fiscally compliant, and operating a rental property is no longer a simple or inexpensive process.

The good news is that Bali visitor numbers – both international and national – are up significantly (14% in 2014). That said, with more guests travelling short-haul, stays are shorter and bookings are more last minute. New markets from India and China (who now make up the second largest number of visitor arrivals Bali) offer exciting prospects as they mature away from group travel.

With Bali and its surrounding islands continuing to delight with their remarkable soul and cultural experience and with infrastructure that is catching up (albeit painfully slowly), the future can only be rosy. It will not be long before visitor numbers catch up with villa rental supply and turn prices around. Those halcyon days of tidy profits may be harder to come by, but with a well-managed property positioned correctly and marketed internationally, it is still possible to own and enjoy a stunning luxury property in the sun without it burning a hole in your pocket.

Foodies heaven hits town

Kilo

New in the hood, and hot from its success in Singapore, is modern, minimalist Kilo, offering a selection of tapas style dishes with flavours from Argentina, Italy, Japan and Mexico. Try the wasabi tuna tartare or corn crusted crab cakes with basil vinaigrette and roasted red pepper relish; then finish off with marinated strawberries and basil ice cream. Kilo has a great atmosphere and provides intimate service: a nice new addition to the Bali culinary scene. Get there hungry as you might well be tempted try everything on the menu. [wpanchor id=”kubu”]... read more

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Jl. Drupadi No.22Xx, Seminyak
Tel: +62 361 474 1006.

Hujan Locale

Will Meyrick and the crew from Sarong and Mamasan have opened Hujan Locale in Ubud with a cool rural setting and plenty of Bali artefacts for your viewing pleasure. The menu features Will’s favourite dishes from his culinary adventures in London, Sydney, South America and Asia. “I want to serve the slow cooked food that I eat at home – a fusion of east meets west,” says Will. Indulge in tuna ceviche with roasted chili edamame, black beans, mint, parsley and white anchovies, and desserts like bread & butter pudding with smoked whiskey & maple syrup ice cream. Kick your meal off with a cocktail: the carrot swizzle with vodka, lemon, vanilla, chili, Thai basil, home-made carrot soda and carrot candy comes highly recommended.

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Jl. Sri Wedari 5, Ubud
Tel: +62 361 894 3092
www.hujanlocale.com

Villa Kubu: refreshed & refurbished

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In early December Villa Kubu launched a fresh new website and completed a major revamp. Six of the pool villas at this popular central Seminyak boutique villa hotel & spa have been fully refurbished, and the remaining eleven pool villas have had a thorough makeover. All 17 of Kubu’s one, two and three-bedroom villas now feature beautiful new furnishings and ceramics from the Warisan and Jenggala galleries, unique artwork from the Ubud Community Art Consortium, Indonesian wood furnishings and exquisite local and imported fabrics. And in the villas’ peaceful and private walled gardens, the pool bales have been re-fitted with lush upholstery for extra comfort and style. Adding a new level of luxury, Kubu’s two and three bedroom premium villas now boast air-conditioned media rooms. ...read more

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The popular onsite Spa Venus has likewise been refurbished with grand treatment and lounging rooms offering an exquisite spa environment in which guests can enjoy a wide range of treatments carried out by a well-trained team of professional therapists.

There’s a fresh look to the menu at The Oasis restaurant at Villa Kubu as well, with mouth-watering additions such as lamb kafka and avocado tempe salad as well as tantalising temptations on their fresh juice and cocktail menus – including a decadent white chocolate martini! Meals and drinks can be enjoyed in the air-conditioned restaurant, out on the deck or conveniently delivered to your villa.

Always looking for ways to add extra value and make a stay at Villa Kubu as fun and relaxing as possible, the new Kubu Concierge service assists guests with pre-arrival villa requirements and personalised itinerary planning, including tours, spa and restaurant reservations, grocery shopping, childcare, and so much more. Visit Villa Kubu’s new website now at
www.villakubu.com

New rental villas

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Villa Batujimbar

5, 6 & 8 bedroom villa
Sanur, Bali, Indonesia

Originally inspired by the 19th century palaces of Klungkung and Amlapura, the absolute beachfront 5, 6 & 8 bedroomed Villa Batujimbar in Sanur has entertained and wooed royalty and celebrities from the King of Malaysia to the Crown Prince of Thailand; Mick Jagger renewed his marriage vows to Jerry Hall here, and both Yoko Ono and Sting have spent their holidays in this stunning villa. Surrounded by outstanding Balinese paintings, stone carvings and murals, Villa Batujimbar is an historic inspiration spread over a hectare of landscaped gardens, ponds and outstanding buildings – all this literally right on the white sands of Sanur beach. www.villabatujimbar.com[wpanchor id=”ownvill”] ...read more

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The Iman Villa

5 bedroom villa
Pererenan, Bali, Indonesia

The Iman is a fabulous modern minimalist villa surrounded by scenic rice paddies in Bali’s peaceful and much sought-after district of Canggu. At the heart of the villa is a stylish sunken outdoor living area designed for the perfect holiday. www.theimanvilla.com

lulito

Villa Lulito

4 bedroom villa
Seminyak, Bali, Indonesia

Set in the heart of Seminyak’s sophisticated Oberoi area, luxurious four-bedroom Villa Lulito is only a few minutes’ walk from the beach, Ku De Ta, and many of Bali’s very best restaurants. This elegant property exudes luxury with its white-on-white colonial architecture and charming interiors, making it the perfect private holiday retreat for family and friends.

For Sale

The Beach House
Own the ultimate in beachfront living

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Rare to the market, this breathtaking absolute beachfront villa is located next to the stylish, five-star Alila Hotel Seminyak (due to be completed 2Q 2015) and is only 100 metres from iconic Seminyak beach venues La Lucciola and Potato Head. The Beach House is only one of two private luxury beachfront villas in Seminyak and Petitenget. ...read more

Boasting 1,580 square metres of lush tropical land with 752 square metres of pristine architecture, The Beach House offers every lavish amenity to satisfy the most distinguished of tastes.

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The villa features seven ensuite bedrooms including two upper-level ocean-view masters plus a children’s suite and playroom (with a slide that sweeps down to the dining room); two large ground level masters with terrace lounge areas, and an open-plan living and dining area with impressive two-storey floor-to-ceiling doors and retractable projector screen viewable indoors or outdoors.

Outside is a mature private garden with a large lawned area and a timber deck surrounding the 15-metre pool. From the villa’s charming thatched entrance it’s just a few steps to the beach and the many shops and restaurants of Seminyak and Petitenget.
www.thebeachhouse-seminyak.com