An article in the Gaudrian.co.uk examines the property frenzy underway in Bali, asking the uncomfortable question: who benefits?
Luxury property prices are on the increase across Indonesia, including the island of Bali, where wealthy foreigners and Indonesia’s from other islands vie for their own corner of paradise.
The article, available via the link provided below, examines the life-style pursuits of Bali’s glitterati class
who frequent Bali’s southwestern shoreline at Seminyak and Canggu in pursuit of massage treatments that outpace, in a single session, the monthly wage of the local therapist providing the pampering,
The article also touches on real estate firms offering beachfront villas from £1.5 million “close to the action” - along the world-renowned stretch of Seminyak bars and night spots.
According to a report by Knight Frank,
property prices on the luxury end of the market increased 38% in Jakarta in 2012 with Bali prices up 20%.
The article suggest that if property prices continue to escalate in Bali, prices may soon place Bali luxury real estate among the most expensive worldwide. By extension and not mentioned in the article, these prices will also be out of the reach of many Balinese seeking to carve out a life on their ancestral island.
Domestic buyers hail mainly from Jakarta and Surabaya where personal wealth continues to grow fuel much of Bali’s booming real estate market.
Freehold and Guarantee Rates of Return
Foreign buyers contemplating a plunge into the Bali real estate market need to tread with exceptional caution – especially when faced with aggressive real estate brokers offering “freehold”
land and “guaranteed return on investment.”
” land does not exist for non-Indonesians and anyone offering that status of land ownership in the English language is being nefarious, camouflaging their misdirection behind complicated legal constructs that use docile nominees - both of which increasingly can’t stand the light of day before am Indonesian civil or tax court.
Guaranteed rate of return (ROI)
promises, more often than not, are merely advance discounts against an inflated initial purchase price. Those in doubt on this point, should simply ask the seller offering "guaranteed ROI
to also guarantee in writing to repurchase the property at its original purchase price plus the guaranteed ROI, compounded annually.
A taxi driver, Budi Susila, quoted in the Guardian article
, outlines why Bali is now known in Indonesia a white man’s or “bule village:
"Housing in Bali is expensive now because many bule live in their own private villas, and they buy with dollars and pay dollar prices. That makes locals want to sell their land to bule, which makes more bule interested in moving here, which means that every year we lose more rice paddies and more greenery. The government gives permits very easily for new construction because they get money in their pocket."
The onslaught of rich Indonesian and foreigner has seen the once verdant rice fields of Kerobokan turned into a ghetto of time-share apartments, condotels and nightspots. Land prices for land far removed from the seashore now goes for Rp. 2.5 billion (US$250,000) per are or US$2,500 per square meter.
In grudging acknowledgement that Bali’s development has gone out out of control, the government toys with the idea of imposing a moratorium on new accommodation licenses.
Some relief to the excesses of unbirdled development in Bali is offered by new zoning laws (RTRWP 2009
), which stipulate 5-year prison terms for anyt regional officials caught granting non-conforming permits. This law is slowing the view that “all things can be arranged.” As a result, some foreign investors purchasing land too close to religious sites or shoreline are now finding it highly problematic obtain building permits for their vacant lots.
[In Bali, rich foreigners are sparking a property frenzy, but who benefits?
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