How to save money when buying a property abroad in Bali
As one of the most popular real estate markets in Asia, Bali offers foreign buyers a variety of opportunities to invest in a property in a little slice of paradise.
Before making such a big purchase, however, it’s important to have an understanding of what types of properties are available to foreigners, what restrictions are in place that might get in the way, and how you can save money when buying a property overseas in Bali. That’s why we’ve compiled some helpful information below to assist you as you take the leap into real estate investment in that part of the world.
What properties are available for purchase in Bali?
Two of the highly sought-after types of investments made by foreigners in Bali are luxury properties and vacant land that can be used for constructing something new.
It’s also wise to keep in mind that, even though you can find properties for sale throughout Bali, some will be more desirable than others, based on your preferences and needs.
For example, you can find properties for sale in areas of the island that are quieter, calmer, and more remote. Those might be wonderful places to make a more affordable purchase today, with the knowledge that your property will grow in value over time.
On the other hand, you can also find more expensive options in areas that have already been developed to accommodate more tourists from around the world throughout the year.
Some of the most well-known areas for property investors in Bali include:
- Kuta (a villa might cost around $300,000 USD)
- Sanur (a villa may cost you around $400,000 USD)
- Seminyak (a villa might be priced around $500,000 USD)
- Ubud (a villa might start around $250,000 USD)
- Canggu (a villa might cost roughly $750,000 USD or more)
Note: Once you’ve found the perfect place, you can complete the purchase with a mortgage investment option, or you might choose to go with a long-term renting option instead.
Are there any restrictions for foreign property buyers in Bali?
As a foreign buyer of property in Bali, you will face some legal restrictions, as Indonesian laws have been set in place in order to help protect the nation’s economy, as well as maintain ownership within the country.
Here are a few things to keep in mind:
- You can choose between the Hak Milik (Right to Own), Hak Guna Bangunan (Right to Build), and Hak Pakai (Right to Use) when searching for real estate in Bali.
- You aren’t allowed to pursue Hak Milik and own property unless you receive assistance from a nominee. As an alternative, you can use a foreign investment company structure.
- The Hak Pakai option is more affordable than paying the freehold price on a property. It allows you to obtain a leasehold agreement, and this is also one of the more common methods used by foreign investors.
- As a foreign buyer, you can only invest in residential or commercial properties that aren’t part of housing that’s funded by the government.
What you should know about Hak Milik in Bali
Hak Milik provides you with a freehold title, which means you will have full ownership over the property, so this is what many buyers want. However, this can be a risky avenue because foreigners themselves aren’t allowed to directly buy and own freehold properties.
The best you can do is purchase and then indirectly control your freehold property with the help of an Indonesian individual, known as a nominee, or a corporation. They will own the title of the property, meaning you won’t be the true owner, so an untrustworthy nominee might end up taking the rights to your real estate. Hence, why it’s risky.
Why would anyone take this approach when investing in Bali real estate? Because of the high demand for these properties, the appreciation in value is noteworthy.
What can you do instead of Hak Milik?
To invest in Bali property, you could use a foreign-owned limited liability company in Indonesia, which is known as a PT PMA, to get a Hak Pakai or Hak Guna Bangunan.
These methods can provide you with the ability to not only enjoy the property for years to come, but also to lease it out to others or give it to family as part of an inheritance. If you choose to, you could even find an Indonesian buyer when you are ready to sell your Hak Pakai.
How to budget to buy property in Bali
Real estate prices throughout Bali will vary, depending on location and the type of property that you’re interested in.
- If you’re on a tighter budget, you might consider a place that’s located in the north, such as Tabanan. Or, you might even check out islands that you can get to from Bali, such as Gili Meno.
- If you have a large budget, you could find a lot of high-end properties that offer luxury and beauty in the heart of the action. For gorgeous villas right on the beach, though, you might find prices that are comparable to real estate prices in countries like the United States and Australia.
Use OFX to make payments on your property
To make payments when investing in real estate in Bali, you’ll need to convert your home currency to the Indonesian rupiah. And, when you’re ready to send money to Indonesia, using the right strategy can help you convert your currency and save the most money possible.
OFX is an online global money transfer service that you can use whenever you need to make payments on your property. Because you won’t be hit with the high margins and fees that a bank would charge, you’ll be able to save money while also resting easy, knowing that your transfers will be completed efficiently and securely.
Whether you’re planning on investing in real estate in Bali because you’re going to live and work there as an expat, or because you want to have a beautiful vacation home, you do have some options, but you also have some restrictions. Once you understand what you can and can’t do during the buying process, you’ll be prepared to find the ideal place that will allow you to make the most of everything that this one-of-a-kind island has to offer.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.