Robust demand for villas is a bright spot for a destination that has had its share of well-publicised setbacks, says Margie T Logarta. She examines this positive trend.
The first thing visitors leaving Bali’s Denpasar International Airport, will catch sight of is not its iconic beaches or graceful palm trees, but a plethora of colourful signboards promoting villa developments with exotic names such as Sibaris, Kali Uma, Karma, Umala. Bali’s tourism may continue to suffer the effects of the terrorist bombings of 2002 and 2005, but one area that has remained buoyant is the property market.
“Villa rentals and ownership haven’t reached Phuket’s advanced stage but there’s still a lot of activity going on,” says Andy Gray, an executive of Paradise Property, a young company that builds, sells and manages luxury homes. Fuelling this lifestyle boom, he observes, is a new demographic for the fabled island. While Bali’s traditional clientele, Australian travellers – mostly backpackers, surfers and middle of the road types –?have stayed away suspicious about security, Europeans as well as expatriates from Hongkong and Singapore are finding land prices attractive and the blend of culture and commerce irresistible.
Angus MacLachlan, president director of Exotiq Real Estate, who describes his company’s work as “being pure brokerage or a little like a department store where you go in and pick what you want”, says the choice of whether to find a base in Bali or Phuket ultimately depends on the individual’s priorities. Both have their plusses and minuses. He estimates Phuket’s prices to be 35 percent higher than Bali’s but “that’s because it’s a smaller island and there’s less supply”. The perception that the Thai resort hub is stable and harbours no terrorist elements has also helped to spur faster development there.
But Bali’s fabled exotic charms can be just as seductive, and it’s only a matter of time, local businessmen like MacLachlan believe, before real estate to lifts off in a spectacular way, if it isn’t happening already. From the traditional built-up areas of Kuta (where the first bombing incident took place) to the sizzling hot districts of Legian and Seminyak that are studded with chic F&B and nightlife options, progress is quickly moving up the west coast to less inhabited places such as Brawa, Canggu and Tanah Lot.
“Four to five years ago, nobody would have thought of building there, but the new road from the airport has made it more accessible and attractive. It has everything: stunning clifftops and white sandy beaches,” says Gray of Paradise Property.
Towards the south, there is the Bukit area in Uluwatu (site of the famous Uluwatu Temple), 200m above sea level, where great swathes of land, said to be owned by the Suharto family and other powerful individuals, are experiencing land-moving activity destined for villas and a couple of golf courses.
Jimbaran Bay, likewise in the south, is the site of LIV Bali, a planned gated community of one- to three-bedroom villas, 50m away from the beach. Pursuing a holistic approach to development, the organisation is working with the local community to enhance the neighbourhood. The plan is to move the existing seafood restaurants to newer quarters and then construct a promenade.
Rick Shreves, LIV managing director, says that with the internet, people have become more mobile, thus able to work anywhere. “Holiday homes no longer are just for holidays. People actually want to live in them because it’s now easier to get connected even when they’re not in their offices.”
Investment purposes, however, remains a leading reason for the surging demand for villas in Bali. “Out of 10 customers,” Shreves continues,“two will actually live here and the rest will have us rent it out and perhaps visit once in a while.”
Lately, developers have been starting to diversify and add more components to the purely villa enclave model.
In Nusa Dua, where a cluster of luxury resorts are located, St Regis recently launched its first St Regis Resort & Residences in Asia, consisting of 42 luxurious “hotel villas” (labelled so because they come with a range of bespoke services and amenities) in one- to four-bedroom permutations. With a world-class golf resort next door, aficionados can buy the specially designed “Golf Residence”, which comes with vehicle access. A sister facility will be an 81-room all-suite resort, similar in service ethic to the soon-to-open twin-tower St Regis Residences and St Regis Hotel in Singapore.
The Panorama Group, a leading inbound operator and mid-range hotel owner, recently held an extremely successful pre-sale campaign for its project, The Haven in trendy Seminyak.
Not only does this brainchild of entrepreneur Budi Tirtawisata consist of villas (just seven), there is a 60-unit apartment block and a mid-range hotel as well, fitting comfortably in a one-hectare parcel of land that straddles two streets. Says project manager Jeffrey Kam: “Our project has two entrances, which is rare.” He said the company decided to build a hotel because “there is no good three or four-star property in this prime neighbourhood”.
Seminyak, like the Kuta area, abounds with bars and restaurants, but of the high-end genre. Ku De Ta, Paparazzi, La Luciolla and the Double Six Club, to name a few. “Imagine stepping out of The Haven and into the nightlife,”says Kam. “The Haven is ideal for corporates who may not all be able to stay in the same accommodation but still want to be together.”
Along with the more professionally organised developments, one-man bands (think Peter Mayle of A Year in Provence) are quite common, a situation with conseqences. Says MacLachlan: “When people know you, a foreigner, want to buy land, suddenly everyone turns agent or has a relative who’s an agent. If you get a good one, great; if you don’t and get a land title that isn’t ‘clean’, then you’re done for.”
Gray said the overall cost of a DIY villa might work out slightly cheaper but given the different work standards, it isn’t worth the aggravation of monitoring the labourers’ every move. He recounted the experience of a friend, who chose to build on his own, only to discover on a site visit that his master bedroom, which was supposed to have a panoramic view, now faced the neighbour’s wall. The offending section had to be ripped apart and redone. An expensive lesson indeed, but such is life in Bali.
FACT FILE
TALK THE HAK
As in all transactions, foreigners should always seek independent and reliable legal advice before committing to a purchase. This is especially so in Indonesia, with its sometimes confusing ownership rights (hak). Here are some scenarios:
- HAK MILIK refers to the right to own land. Freehold land can only be owned by an Indonesian citizen, but the individual can give a foreign national the right to use the land through a mortgage, and the improvements on the land belong to the foreign investor.
- HAK PAKAI refers to the right to use the land. Quite similar to a leasehold title and means technically the right of utilisation of Hak Milik land. Although the maximum length of the lease is debatable, usual stated maximum lease terms vary between 20 years with an additional 20 years renewal; 20 years plus 30 years, plus another 30 years, plus another 20 years; and 25 years plus 25 years up to 60 years and then plus another 60 years.
- HAK GUNA BANGUNGAN covers the right to build or construct on the land.
- NOMINEE ARRANGEMENT is a series of contractual arrangements between a foreigner and an Indonesian national who the foreigner nominates to hold the Hak Milik title. There must be a notarised loan agreement and mortgage in favour of the foreigner, as well as an agreement granting the foreigner secured rights to occupy the property. The mortgage prohibits the nominee selling the property without the foreigner discharging the mortgage.
