Bali's Property Market Outlook For 2023: What is happening?
A year ago, the Bali property market was virtually dead: indeed there were very few transactions happening at prices well below pre Covid -9 levels.
Twelve months later, notaries and real estate agents are busy again and property prices have gone up quite a bit. Traffic jams are back and Bali seems busier than ever before.
What’s happening with the Bali property market? And what is 2023 going to be like?
Indeed, you might be wondering if you should enter the market now to buy property in Bali or sell your current property if you are are a seller or wait a bit and which are the most promising locations to invest in with today’s landscape.
These are all topics people are wondering about these days when considering whether or not to get invested on this beautiful island.
Read on, and find out what 2023 is going to be like for property owners and for those who wish to become one.
What does Bali’s current real estate market look like?
In mid 2021, during the onslaught of Covid-19, there were two diverging forecasts for the Bali hospitality & property market recovery:
- The optimistic view: “Bali will reach pre-Covid levels two to three years after opening again for tourism”; and
- The pessimistic view: “it will take at least five years for numbers to come back to where they were in 2019”.
Both forecasts proved to be dead wrong!
The market went from zero to hero against all odds!
Bali tourism recovered almost at warp speed, at least in the South of the island.
To illustrate that: in April 2022 Seminyak, Bali’s poshest tourist playground looked very much like a ghost town.
Two months later after re-admitting foreign arrivals, tourists were walking the sidewalks again.
Shops and restaurants reopened. The lights went back on. And today the famous Oberoi street enjoys its good old traffic jams once again.
And what happened with the real estate market? It sprung back to life almost overnight!
Read on to find out why.
Is Bali offering good real estate investment opportunities?
There are many reasons why people invest in real estate all over the world.
Well bought properties offer investors predictable rental returns, tax breaks, asset diversification, and protection against inflation as well as leverage to build wealth.
All the above is certainly true for Bali, but there is an essential additional factor that drives real estate investment returns in Bali, and that is tourism.
The impact of tourism on luxury real estate is paramount. It is directly linked to rental returns and drives property values.
Here is an example: before Covid-19, a three bedroom villa in Canggu would rent annually for say USD 20.000.
With the recent influx of new residents leading to a dramatic increase in demand for housing, particularly from Russian expats, prices for such homes have actually increased up to 50%.
On the other hand, during Covid-19 rental prices dropped dramatically because there was very little demand. So much so, that some owners preferred to leave their homes empty rather than renting them at rates that wouldn’t cover costs.
Looking back over the last 25 years of real estate in Bali, one can safely say that investing in property has been a very good bet.
Yes, there have been bad years, where rental rates dropped and property values stagnated but over the long run, Bali has outperformed most real estate markets in the world.
If you are just as convinced as us that Bali is a great investment opportunity, feel free to get in contact with our team of professional Bali real estate agents to help you scout out a excellent investment opportunity.
Which areas should you buy property in?
There are two simple rules when it comes to selecting areas to invest in in Bali.
Rule number one: the longer you plan to be invested in Bali real estate the further away you should go from the hotspots of Canggu and Uluwatu.
The logic is simple: land prices diminish with increased distance from the dense southern tourist areas. In the long run, land prices in remote areas will increase faster than land prices in areas that are already comparatively high.
Rule number two: buy something that is rare.
You can never go wrong with beachfront property or a property with an amazing view located on a dramatic riverside or on a hill with unobstructed views.
Beachfront may be your safest bet as it is clearly a very limited good.
But make sure that you buy a piece of land that is large enough to allow you to build on it, respecting current setback rules of 100m from high tide!
What about buying in Canggu nowadays or in Uluwatu? Is it too late or is the market still going to increase in the coming years? And what are the alternatives?
Canggu has probably seen the most dramatic increase in land prices during the entire real estate history in Bali.
Shop rents have reached a level, where only very few businesses can still operate profitably.
Development density is high and traffic is at its limits.
The tipping point where land prices are going to go flat and then remain more or less stable is near.
How near? Nobody knows.
If you have a short term investment goal and find a good deal, go for it, especially if you can achieve a good rental return.
If you are interested in checking out Canggu as an investment opportunity feel free to browse our real estate listings for sale in Canggu.
If you want to stay invested longer, move further away along the west coast, to where the next ‘Canggu’ might be and you will realize much better asset appreciation.
Uluwatu is another hot spot that is becoming more and more popular with a younger surfing crowd.
Uluwatu is home to some of Bali’s best beaches and the cliff top views are simply breathtaking and populated with luxury resorts or private villas.
The peninsula still has a lot of empty land to offer and the land price curve is going to move upwards for many years to come - except for those cliff front properties, which already demand some of the highest land prices on the island.
But there is a vast hinterland with great views and proximity to the ocean that represents a good investment.
If you are interested in Uluwatu, feel free to check out our real estate listings for sale in Uluwatu.
Umalas is in high demand for residential developments.
But good land is getting scarce here and prices are already quite high. The advantage of Umalas is that it is close to Canggu and Seminyak, but without the annoying traffic.
We predict that Umalas will stay a good investment spot for quite a few years to come.
Seminyak is already well developed and mature. There is very little empty land available and property prices are stagnating here.
If you are among the lucky ones who bought here 10 years ago or longer, then you have seen property prices increase manifold.
If you are interested in Seminyak, feel free to check out our real estate listings for sale in Seminyak.
Sanur has kept its charm of a laid back low density tourist environment with good roads, little traffic and solid infrastructure.
It will remain attractive for those who seek a more quiet life, but land prices are not predicted to move much in the coming years.
If you are interested in Sanur, feel free to check out our real estate listings for sale in Sanur.
Ubud, the centre of art and festivals in Bali is home to some ancient temples, rainforests and amazing rice paddies.
It attracts a lot of interest from the self-styled yogis, vegans, healers, and artists. The surroundings of Ubud are vast and we predict that property prices will continue to move north for years to come.
But the village of Ubud itself suffers from endemic traffic jams along its main arteries, where most of the shopping and restaurants are located.
The challenge in Ubud and surroundings is to find one of those amazing riverside plots with proper access.
You can’t get wrong buying such a piece if you can still find it.
If you are interested in Ubud, feel free to check out our real estate listings for sale in Ubud.
Pemuteran is a hidden gem on the north-western shores of Bali, close to the national park offering a peaceful and swimmable coastline, with parts of it even consisting of yellow sandy beaches that you wouldn’t normally expect in North Bali.
Here you can still find affordable beachfront properties that will increase dramatically in value once the road infrastructure improves, which is happening right now!
The hills behind Pemuteran offer amazing ocean views and land prices here are still relatively cheap.
This is an excellent area to invest if you have a time horizon of at least 10 years and more.
The northeast coast from Tejakula to Ahmed is an upcoming area, where more and more boutique resorts are getting built, for those wanting to escape the busy Ubud area.
This part of Bali is establishing itself as an alternative destination for meditation and healing retreats or simply for a holiday away from the crowds.
Here prices for beachfront and hilltop land are still relatively cheap and will multiply in the next decade.
The drawback is that there is no shopping here for tourists and restaurants are only located in the local hotels.
How are housing prices evolving in Bali?
Owning a house in Bali is a dream most visitors have when they come to Bali.
The combination of a tourist destination with all its facilities, a welcoming culture and relatively cheap cost of living is attractive to many.
Building costs are low compared to Europe or the United States with an average of USD 600 to 700 per square metre under roof.
A budget of USD 300 – 400.000 gets you a very nice home with a swimming pool and a garden in a good location.
During the ten years preceding the outbreak of Covid-19, housing prices in Bali went up dramatically, mostly driven by increasing land prices.
Then things came to a halt in 2021 for known reasons as the market went quiet.
Then tourists came back and with them did the real estate market.
The Russian war in Ukraine created a massive influx of new residents, which further increased demand with effects described above.
That’s why we believe the housing price index will rise further in 2023 and beyond.
What does the future look like?
Reading the future of the Bali real estate market has proven a futile exercise in the past.
Nevertheless, here is what we predict will happen in the next few years, without any further pandemics scares, volcanic eruptions, wars, tsunamis and other unwelcome events – we had enough of those!
Bali will become a preferred destination for remote workers and digital nomads.
It will attract new residents that had enough of the drastic city lockdowns in Singapore, Hong Kong or Melbourne.
This, combined with increasing numbers of foreign arrivals will be the main drivers of the Bali property market in the next 15 years.
Development will remain focused on the South of the island in the first 10 years and will spread towards the west, following the coast line.
Eventually, new infrastructure projects like the toll road from Gilimanuk to the airport will get built and make distant locations like Medewi more attractive.
The northwest coast of Bali will also profit from the new toll road as travel distance from Denpasar to Pemuteran will come down from 3.5 hours to 2 hours or less making this area more attractive.
Eventually, the long promised international airport in North Bali and a toll road linking North and South Bali will be built and open up entirely new areas for a growing residential and holiday market.
Have property prices dropped in Bali?
No, they haven’t.
They may have stagnated during certain negative events like the Bali bombings or Covid-19.
But in general they kept rising above the national average housing price index due to tourism, as the main market driver.
Is it a good time to buy property in Bali?
Yes, it is a good time to buy property in Bali and it will continue to be in the future. Although there will be setbacks, the outlook for Bali’s property market is positive with new residents and remote workers moving to the island and tourism coming back even stronger than before the pandemic.
Is buying a villa in Bali worth it?
Yes, it is.
The fundamentals are positive and so is the outlook.
Revenue from home or villa rentals is attractive now and will remain so in the future.
Don’t be afraid to buy property in a slightly remoter area as development will soon catch up and you will find yourself located in the new “Canggu”.
The outlook for Bali’s property market for 2023 and beyond is a positive one.
Bali offers great investment opportunities if you are guided by qualified experts who know the island well and have lived here for years.
Tourism will remain the main driver of the market.
Bali is gaining ground as Southeast Asia’s preferred destination for remote workers and young families.
New infrastructure projects like the Gilimanuk to Denpasar toll road will give the Southwest coast a tremendous push in the coming few years.
It’s a good time to invest now as prices will continue to climb, so don’t hesitate to give us a call and find out what your budget will get you.