With the start of new year Bali real estate market 2013 have noticed an increase in the domestic investment. Last year it was predicted that more domestic buyers will invest in the real estate market and it turns out to be true. In the time of global financial crisis, Asia has domesticated itself from an investment standpoint, and it is true especially in Bali.
The recent market survey report shows that over 80% of the transaction in the real estate market are Indonesians. Usually the foreign buyers dominated the domestic buyers in the past but the latest trend has a completely different dynamic. Till last year most of the real estate investors were from Australia, Hong Kong, Korea, Singapore, now Indonesians have overtaken their market. Now, when we talk about the buyers in Bali, there are two types of buyers in the real estate market: lifestyle buyers and investment buyers.
The lifestyle buyers are usually interested in the condo hotels. They buy the property because they either want to have a second home, or they are investing in a hotel brand. But eventually they want to go and use it. In the Indonesian market where the domestic buyers have become more active, most of them are lifestyle buyers, and most of them are coming from rising inspirational middle class in Surabaya and Jakarta.
Bali real estate is highly price sensitive market and now due to the recent global financial crisis, price of properties has come down. People were flocking to the condo hotels that are priced between $80,000 - $250,000 vs the old market where villas were going for $0.5M to $1M. That has been a dramatic shift. Now the buyers are more interested in the entry level properties instead of the luxury properties as they used to be interested till last year. One bedroom units have become the more popular property now. This does not mean that the growth of the villa market has stopped, but yes the sales figures have been down recently. There are various well marketing hotel branded villas that have sprung up in the recent years and some of those names are Banyan Tree, Bulgari, and Alila.
According to the current market trend, it’s taking around 4 months to sell a good villas in Bali, on the other hand the condo hotels sell within one month or even less. So you can see that there is a huge disparity between these two markets.If we talk about the risk and return on investment, Bali condo hotel market is still a risky investment, especially where the guaranteed return is concerned. Now with so many entry level hotels it is very doubtful if all the guaranteed return levels are really going to be sustainable. And as soon as people fail to get guaranteed return they will put the property back in the market, and you will get a resell market.
According to the experts, this is inevitable, and it will probably happen in the next 12 – 18 months. And the secondary resell market will be even more attractive to the buyers, because of zero development risk. There will be more dramatic shifts in the Bali real estate market during this year.