Why is Bali's Real Estate Market Attracting Investors from Around the World?

Investing in Bali can offer stable returns. On this exotic island, where tourism thrives, rental yields significantly exceed global averages, reaching around 15% depending on property purchase prices, compared to the global norm of around 5%.

We’ll now dive deeper into the numbers and explore:
What makes Bali a leader in profitability?

In 2024, the Bali real estate market is rapidly growing, driven by a strong revival of tourism and increasing demand for luxury properties. In 2023, the island welcomed 5.37 million foreign tourists, recovering to 88% of pre-pandemic levels, and in 2024, it is expected to attract up to 6 million foreign tourists.

As a result, interest in high-end villas and sustainable developments has grown, particularly in popular regions like Seminyak, Canggu, and Ubud, where property prices are continuously rising.

The positive economic outlook is further supported by Bali’s GDP growth of 3.60% in 2023.

Real estate prices in Bali show a consistent upward trend. For example, the Consumer Price Index (CPI) in Denpasar increased from 102.5 in the first quarter of 2023 to 107.64 in the third quarter of 2024. This trend indicates a steady, gradual rise in the cost of goods and services in Denpasar, reflecting ongoing inflationary pressure and increased demand in Bali’s real estate market.

As economic activity revives and tourism continues to recover, Bali’s real estate market demonstrates sustained growth, signaling a promising future for investments in both commercial and residential properties on the island.

Yes, you heard it right! Bali’s legislation has recently been updated, allowing foreign nationals to own apartments under GR 18/2021 (Hak Milik Atas Satuan Rumah Susun, HMSRS), which grants property ownership rights for condominium units.

However, there’s more! Foreigners can acquire MSRS rights only for apartments located in special economic zones, free trade areas, industrial zones, or other designated economic areas (tourist, suburban, or urban zones). Additionally, foreigners can own houses built on HP land rights and apartments on HP or HGB land rights. We’ll explain these abbreviations further.

Foreign-owned properties are subject to certain restrictions, such as:

• Minimum price requirements;
• Land area and number of apartments;
• Residential zoning;
• Land area limitations.

Minimum prices for land plots and apartments for foreigners vary depending on the province.

Russia and Indonesia have signed a double taxation avoidance agreement, which means that income from real estate in Indonesia is taxed only in Indonesia.

Real Estate Purchase Tax (BPHTB): When obtaining ownership or usage rights for buildings (through purchase), the taxes are as follows: the seller pays 2.5% of the property’s value, and the buyer pays 5% based on the taxable value.

Important: Hak Sewa (standard leasehold) is exempt from the real estate purchase tax.

Land and Property Tax (PBB): This tax is calculated based on the value of the land and any buildings on it. The tax rate is 0.5% and is collected annually.

Income Tax: If an investor rents out property in Indonesia, the landlord or property manager withholds 10% of the income. A progressive income tax does not apply to rental income earned by individuals or legal entities from leasing land and/or premises.

VAT: VAT is only charged on the rental of commercial real estate. Residential property rentals are not subject to VAT. The VAT rate is 11%. Important: The VAT rate is 11% in 2024, but starting next year, the Indonesian government promises to raise it to 12%.

Stamp Duty: Stamp duty is required for the certification of rental agreements. The duty is 10,000 rupiahs or $ 0.63 per document.

Luxury Goods Sales Tax (PPnBM): PPnBM is a tax levied on goods considered luxury items, such as:

• Automobiles: expensive cars, motorcycles, yachts, and airplanes;
• Real estate: luxury houses, villas, and apartments;
• Jewelry: gold, diamonds, and other precious gems;
• High-end electronics;
• Luxury clothing;
• Household items: expensive furniture and appliances.

Real estate valued at $ 1,883,238 (30 billion rupiah) is considered a luxury item and is subject to PPnBM upon resale. The tax rate is 20% of the declared value.