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TOP 3 BENEFITS OF A LONG LEASE FOR BALI APARTMENT INVESTMENT
Owning a villa in Bali is not just a dream come true — it can also be a steady source of income if managed well, especially with the island welcoming international travelers once again. While some argue that Bali real estate isn’t a worthwhile investment due to foreigners not being able to own freehold property outright, they overlook the fact that Bali remains one of the best locations globally for purchasing a vacation home. Location is king, after all.
Many expats have proven that investing in leasehold properties in Bali is a smart investment, and in this article, we’ll explore why. Here are the top 3 benefits of investing in Bali apartments with a long lease.
Why Buy Leasehold Properties in Bali?
Leasehold properties in Bali offer many advantages, especially for foreign investors. For one, they are generally more affordable than freehold properties. Foreigners who wish to purchase freehold properties must establish a foreign company (PT PMA), which requires significant capital. On the other hand, leasehold properties allow foreigners to bypass this complicated process and still own a property with the flexibility to make alterations and sublease it.
Furthermore, leasehold properties in Bali are attractive because of the high demand for holiday rentals. Investors can expect strong return on investment (ROI) due to the island’s steady tourism. Popular areas like Canggu, Seminyak, Sanur, and Uluwatu see a constant influx of tourists, ensuring that leasehold villas can generate consistent rental income.
Is It Safe to Buy Leasehold Property in Bali?
Leasehold agreements are the safest way for foreigners to invest in Bali real estate. These contracts are notarized and serve as legal proof of the investor’s right to occupy the property for a specific period. Depending on the terms of the agreement, the lease can often be extended after the initial term.
While Indonesia’s property laws can be strict, leasehold properties provide a secure investment as long as you comply with regulations, such as zoning and building codes. Avoiding illegal practices, such as using nominees to purchase freehold properties, will ensure your investment remains protected.
The typical lease length for villas and land in Bali ranges from 20 to 30 years, not including extensions. It’s crucial to have lease extension clauses included in your agreement, as these ensure your right to extend the lease in the future. Always discuss this with the landowner before committing to the transaction.
What Are the Benefits of a Long Lease?
1. Higher ROI (Return on Investment)
From an investment perspective, a long lease offers the potential for higher ROI. Areas like Canggu, Pererenan, and Nusa Penida are experiencing growth in the short-term rental market, providing more opportunities for profit. With a longer lease term and a chance to extend, investors can earn passive income for years, without worrying about the short-term fluctuation in property demand.
2. Easy to Sell or Transfer
A long lease also increases the marketability of the property if you ever need to sell. The remaining lease term can add significant value to the property, and potential buyers will appreciate the longer duration and the possibility for extension. Buyers are more likely to invest in properties with long leases, as it provides a sense of stability.
3. Peace of Mind and Capital Appreciation
Lastly, one of the greatest benefits of a long lease is the peace of mind it offers. Investing in a slice of paradise with the option to stay for the duration of the lease allows you to enjoy your retirement or vacation without worrying about property management.
Furthermore, Bali’s real estate market has shown capital appreciation over time, especially in high-demand areas. If you choose a location with strong property value growth, your investment will likely increase in value during your lease period.
Conclusion: Why a Long Lease in Bali is a Smart Investment
A long lease in Bali offers investors a stable, low-maintenance investment that generates consistent returns. With popular areas like Canggu, Seminyak, and Uluwatu experiencing growing demand, leasehold properties present an attractive opportunity for those looking to capitalize on Bali’s tourism-driven rental market.
By opting for a long lease, you can enjoy the benefits of Bali’s property market without the burdens of ownership. Peace of mind, strong ROI, and property appreciation are just a few of the key benefits.
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