Despite all of the red tape and other things that prevent foreigners from owning land in Bali, there are still thousands of people every year finding a way around it. Some people are buying land as an investment and some are buying to build a house on. Is buying land in Bali really a good idea though? Some recent trends in land prices have many people reconsidering.
As responsible adults, we learn that owning is much more financially responsible than renting. In many cases this is true, but buying in Bali could make an exception to that. I was recently told that buying land in certain parts of Bali was about the same price of buying land in Southern California. It sounded a little bit unbelievable at first, but after doing the math I was very surprised at what I found.
For these calculations we will be using the land around Teuku Umar or Renon which is currently selling for 300 million rupiah per are (100 square meters) as an example.
We will be comparing it against an acre (approximately 4,000 square meters) in Southern California which carries an average price of 1 million USD depending on location.
To make things easier to work with and to be able to compare the prices more directly, we will be comparing 40 are in Bali (4,000 square meters) against 1 acre in Southern California (also 4,000 square meters).
1 are @ rp 300,000,000 x 40 = rp 12,000,000,000 now let’s convert that into USD at the current exchange rate of 8,700. So 12,000,000,000 divided by 8,700 becomes $1,379,310.34.
It is a plausible argument that no one would buy 40 are of land in Bali at the original price for such a large plot as discounts are usually given for larger plots. So why don’t we just take that $379,310.34 off and call it an even million dollars.
Pretty scary stuff. One might say that they would much rather be in Bali than Southern California, even if the land was the same price. I would agree, having made that exact switch myself. On the other hand, buying land in California is a much simpler and safer process, since you will be putting things in your own name and will have much more protection from the government if anything goes wrong.
Of course there is still land available in Bali for much cheaper than 300 million per are, but this is not a good sign of things to come, as this land was selling for under 150 million per are just a couple years ago. I’m afraid to even ask how much land costs around the Kuta/Legian/Seminyak area.
I hope this hasn’t turned anyone away or made them rethink life in paradise. Even if the land is still the same price, building your house on said land will be a fraction of the price of what it would be back home. In this regard, and if you can secure the land under a trusted person’s name with your interests protected by a trusted notary, then buying and building in Bali will still probably be better than renting for decades.
Bali is seeming to be less of an investment opportunity though as far as land sales go. The Balinese will tell you that the price of land has never gone down, only up, even after the bombs that devastated the islands economy. Even if it doesn’t go down again how much higher can it go? It has got to hit its limit somewhere, the only question is when. Those looking to invest should definitely seek out the still lesser developed areas of Bali, or for bigger profit margins, other areas of Indonesia (think East).
I always knew that paradise had its price, I just never believed the price could ever get that high until I saw the actual numbers worked out.
I could not agree more.
I have lived in Bali for the past seven years, I have seen the prices explode.
In 2006 I bought land in Canggu at 60 million an are after 2.5 years I sold it at 175 million an are. I am sure the price now Oct/11 could be easily 225 and people are even asking 300.. Although I think these prices are keeping some people waiting and looking for better deals.
I still own a plot in Canggu and I am a bit reluctant to sell because my Indonesian wife likes the area and once we sell there is no way I will invest to get a plot in that area again.
What I have done is started moving further up the West coast near an area called Soka because the land can be 30X cheaper, this will allow for a better return and still a great life..
I personally think what will really stop the investments and continued returns is the insane grid lock in the south… Smart money will move to the more remote areas..
I think a beautiful home on the outskirts during the week and if you want to feel the buzz of Seminyak go down on the weekend and rent a cheap place or stay with a friend.. or if your lucky and have a plot in the south 🙂
Thats my investment strategy for Bali
Thanks for the great reply Ross. For sure better off not selling your land in a place that you like, will be almost impossible to find something of the same quality in that area without having to shell out even more money. How much is land going for in Soka?
Sorry for the long delay, I just stubled on your site again.
For Soka land not to far from Balian Surf waves .. I have found land as low as 5 million an are and it can be like 20 – 25 if it is PRIME!!
If people offer you 40 they are making a huge mark up.
The only disadvantage is that crazy road to get there but it is either that or in my opinion buy into the south where the bubble is inflated.. Or just not buy.
I am married and want to make a life there and have somthing to pass on that is the only reason I bought
There is still great land available in the north east at a good price. Much calmer and due to better and better road connections easy to reach from the airport. Checkout Seraya Area.
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