The Bali residential property market has been negatively impacted by the global financial crisis. As many developments are funded by US and European banks, the Bali residential property market has been exposed to the credit problems of the US and European markets. Following is an overview of the Bali residential property market, enabling investors to make an informed decision on whether it meets their strategic investment objectives:

Tourism plays a key role in the Bali residential property market. According to the Bali Tourism Board, a total of 2.2 million tourists visited the country in 2009 (this value is up 13% from last year). The majority of tourists were from Australia, Japan and China, accounting for approximately 20%, 14.3% and 8.9% respectively.

Foreign ownership of Bali residential property is possible whether the purpose be for residential real estate, commercial real estate, or as a property investment. Three options to legally secure a property in Indonesia are i) a Leasehold Investment where rights are negotiated with the landowner for a period of up to 25 years ii) an Indonesian Nominee Power of Attorney Agreement, involves having an Indonesian nominee is the registered owner iii) a PMA Foreign Investment Company Structure, which is where a foreign company can own land without having an Indonesian partner for a period of 30 years.

Investors purchasing Bali residential property are subject to tax on rental income as well as other levies. To ensure all tax obligations are fulfilled, Healy Consultants provides professional advice to international investors on the taxation requirements associated with the Bali residential property market, including notary tax, vendor and purchaser tax and mortgage certificate tax.

After Bali suffered from terrorist attacks in 2002 and 2005, tourism growth is a positive sign for the Bali residential property market as demand for rental properties is likely to increase. This is supported by the Colliers International market report on Bali which shows an upward trend in occupancy rates for hotels across Bali. The current economic downturn will be another challenge, which the Bali provincial administration plans to fight by speeding up the spending of its 2009 budget and combating the impact of the financial crisis.

Despite the troubles Bali has been through, such as the terrorists attacks and the financial crisis, residential property prices have not declined. Properties in prime locations along beach fronts continues to command premium prices.

Indonesia bolsters a large expatriate population, and in recent years has increased bilateral ties with many countries. Indonesia will also be playing host to the 61st ‘International Real Estate Forum’ in 2010.

While the current economic environment has eroded buyer sentiment, Bali's residential property market's attractiveness should be helped by longer and more attractive tenures to foreigners. The availability of finance from international banks is another area that could boost the Bali real estate market.

For clients who have invested in the Bali residential property market and are moving to Bali, Healy Consultants provides immigration services including organizing visas, arranging relocation services, orientation information of Bali and its culture.

For further information on the Bali residential property market, call our Singapore office at (+65) 67350120 or contact us at email@healyconsultants.com

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