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Bali property market insights with Indonesia’s leading developer Magnum Estate

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MAGNUM ESTATE is a rapidly growing real estate development company in Indonesia, invited as a participant in the Davos World Economic Forum 2024. Magnum Estate was established in 2019 and had become one of the leading development companies in Indonesia by the start of 2024.

Magnum Estate is a leading Indonesian developer with a rich history spanning over a decade. Their expertise lies in building premium commercial and residential properties in Bali, offering comprehensive turnkey solutions.

The mission of the company is to create projects where aesthetics seamlessly meets comfort. Magnum Estate specializes in constructing distinctive and meticulously designed residential complexes situated in the most coveted locations across the island.

Andres Senkovs Co Partner at Magnum Estate

Investment Gem of Bali Island

Journalists covering investments are increasingly labeling Bali as a haven for vacationers and a hotspot for investors. As is typical, not all real estate investments in the most promising areas yield equal success. Let’s explore which Bali real estate options can provide a stable source of income.

Since 2022, Bali’s real estate market has become increasingly attractive to investors from different global capitals, evolving into one of the most sought-after destinations. In essence, the premium real estate market on the island is still taking shape, consisting of several resort zones with varying levels of appeal.

It’s time to reap the benefits from the most Instagram-worthy place

About a decade ago, a sustainable tourism trend began taking root in Bali. Fast forward to today, and we can see the island has become the epitome of “Instagrammable” and one of the trendiest vacation spots globally. Unlike other places, Bali’s tourist season lasts all year round. With its diverse range of attractions, every blogger and tourist can’t help but flood their social media with dozens of vibrant photos. The breathtaking nature, unique culture, ambiance, establishments, distinct beaches, and majestic volcanoes have lured in a massive influx of tourists, attracting investors and developers alike.

In 2023, Bali surpassed the authorities’ predictions for foreign tourist numbers, welcoming over 5.2 million visitors in a single year. The annual growth in tourist traffic skyrocketed by an unprecedented 140%, exceeding the forecast by 30%. The top countries contributing tourists to Bali were Australia, India, China, the United Kingdom, and the United States. Tjok Bagus Pemayun, head of the Bali Tourism Service, is confident in sustained growth. According to him, in 2024, Bali is expected to host a whopping 7 million foreign tourists.

The investment scene has been picking up speed post-pandemic. Right now, there’s a considerable demand, which makes sense given the year-round season and an average occupancy rate of 75-80% throughout the year! What’s more, Indonesia’s political neutrality plays a role in ensuring there are no political risks for potential investment losses.

Investors are pressed for time due to a shortage of available land for development

In Bali, despite the island’s considerable size, there’s surprisingly little land available for resort real estate. The tourist zone covers just about 5% of the entire island, while the area designated for hotels and apartments is already about 93% developed. The high daily rental costs contribute to Bali’s impressive average annual yield of around 12%, which is several times higher than in other countries. According to expert predictions, in the next 1-2 years, the property market in Bali is expected to be developed to over 97% in tourist-heavy areas, resulting in a likely shortage of investment-worthy projects. Even now, Bali’s limited land availability is causing property prices to consistently rise—typically around 15-20% each year, as per data from the consulting agency Bali Business Consulting.

Andres Senkovs Co Partner at Magnum Estate

Optimal investment strategy for Bali

The cost of staying in hotels and apartments varies quite a bit based on how close they are to the sea – ranging from $30-$50 in the kilometer zone from the ocean to $150-$3,000 right on the beachfront. This gives a pretty significant advantage in terms of making a profit. Another big plus is the appeal of newer constructions, pulling in wealthier travelers away from older, and often less well-maintained hotels. Around these fresh accommodations, you’ll find all the entertainment you need conveniently forming and continually growing.

Among Bali’s resort areas, Seminyak takes the spotlight as the most attractive, thanks to its diverse range of cafes, restaurants, well-known beaches, and clubs, many of which make it into almost all international ratings. You’ll also find the famous Eat Street in this area. An interesting thing about Seminyak is that establishments are within easy walking distance, designed to make it easy for tourists, so renting a bike isn’t a constant necessity.

For investors, the key thing is that Seminyak offers the highest quality relaxation in Bali, with consistently high occupancy rates year-round and properties that are exceptionally well taken care of by management companies.

Furthermore, some investors lean towards larger spaces of 100-160 square meters, always in demand at a premium, while others go for the opposite and prefer to profit from smaller apartments under 50 square meters, typically rented out for short-term stays.

Experts recommend the optimal investment strategy as acquiring real estate on the waterfront in a newly constructed or recently completed hotel or apartment complex with an investment horizon of 8-10 years, followed by resale. This approach is highly sought after due to the appeal of fresh constructions, minimizing potential repair issues, and ensuring a steady income stream from rentals. Properties in this category can be found in the $250,000 to $500,000 range, offering a yield of approximately 12-13% per annum. It’s worth noting that investors recognize the starting point for the most lucrative “elite” apartments is around $350,000.

Potential downsides of investing in Bali’s real estate, both generally and specifically in Seminyak, include the limited supply and a scarcity of available areas for development. This often implies a potential closing of the window for lucrative opportunities within the next 1-3 years.

Transforming into a haven for stable returns, Bali, especially its most sought-after area, Seminyak, is becoming an attractive prospect for investors in search of a consistent income source.

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