Indonesia is often described as a majestic gargantuan tree with branches that extend out into the various parts of the Indian and Pacific Oceans. And this tree has many branches, as we know of Indonesia has as many as 18,110 islands. The major islands are characterized by densely forest volcanic mountains and shallow seas with colorful coral reefs and thriving marine life, making it a dream for snorkelers and divers. The amazing diversity found in Indonesia, with so many people, cultures, customs, traditions, art, animals and plants make the ever-intriguing land of wonders a treasure chest of adventures and experiences.
With 17,508 islands, 6,000 of them inhabited, Indonesia is the largest archipelago in the world. About 240 million people live in this fourth most populous country in the world — after China, India and the USA — and by far the largest country in Southeast Asia. Indonesia also has the largest Muslim population in the world. Indonesia's population is on course to overtake the US and become the third largest before 2044. In the decade that ended in 2010, population growth remained high at 1.49% each year but there is substantial Muslim opposition to boosting family planning.
Indonesia markets itself as Wonderful Indonesia and the country is developing rapidly and the World Bank poverty figures have decreased fourfold in the past decade.
Investing in Bali, Indonesia
When it comes to Indonesia’s economic growth, it’s safe to say its main pillars are tourism and travel. One of the most popular places to visit is Bali, which has made land in Indonesia more expensive. However, investors are not getting the short end of the stick in Bali. They have made a huge profit there over the years, and there are even more opportunities now.
According to the Ministry of Tourism, the tourism industry in Indonesia is still going strong. In 2015, the country was visited by 12.02 million people, marking an increase of 15%+ in comparison to 2013’s 8.5%. That was exactly how many visitors the government wanted to see, but it’s expected that the number of tourists will grow even more in the following years.
What does this tell us? Well, Bali wasn’t a wealthy island before this huge influx of visitors. Indonesia was actually poor, and there weren’t many opportunities there, neither for the population nor for foreign investment. However, changes in one major economic factor — tourism — have put it on the map and made it a desirable location. Now, Bali is one of those places that can strategically grow due to one factor that works in its favor. A similar example would be Hong Kong, which is now a major harbor hub because the government knew how to use its location.
Seminyak — where building a lifestyle is a real possibility
When talking about tourism in Bali, we cannot forget about Seminyak, a town that has seen great changes during the last couple of years. There, property prices have gone up to approximately 40%, and there are luxury villa resorts in places where rice fields were once the main attraction. It’s filled with luxurious shops and amenities most people dream about. Thus, almost every fashion boutique or hotel chain wants a piece of the action; there’s just too much they cannot miss out on.
However, that has made this area not just expensive but extremely popular. Because of that, there isn’t any land left. Yet, that shouldn’t discourage any investors out there. The competition is intense when it comes to hotels — there’s no doubt about that. However, running a profitable business isn’t as easy as before. Therefore, some hotel owners might not even consider the ground-price value and rising trends. They may sell their assets to investors who are not afraid of their competitors.
In just a couple of decades, Bali transformed itself from a poor island into an island of plenty. However, since there isn’t a great deal of land left in Seminyak, investors are focusing on Northern Bali. There, the country is constructing an airport that will boost the influx of tourists yet again and create a much higher demand in that previously somewhat inaccessible area.
How Bali can beat Monaco’s residential property prices
Airports can help increase the price of properties, as plenty of people depend on them being as close to their homes or offices as possible. We aren’t just talking about tourists, but corporations, freight forwarding companies, caterers and car rentals. They all need to be close to the airport, so they will be looking for a piece of land nearby. As a result, the whole area will become accessible. Once everyone starts building, it could become new Seminyak, especially since the current airport is frequently overcrowded.
Drawing the visitors from one airport to another would allow for more development in Northern Bali. In addition, more tourists are drawn to peaceful accessible locations.
However, when it comes to prices, they will keep going up, allowing investors to use Bali to make a profit. According to the Wealth Report, in 2013, the prices for prime residential properties grew by 22%. To compare, not even Dubai witnessed that much growth — its prices went up by 17%. The only two places that surpassed Bali’s success were Jakarta (38%) and Auckland (28%).
These prices have been steadily rising for the last decade. There’s also a good chance this trend will continue into the future. Some even say Bali might surpass Monaco’s prices, making it one of the most expensive places for buying residential property in the world.
Bali Beach Hotel in Sanur — how it all started
Back in 1963, President Sukarno built the Bali Beach Hotel. By doing so, he opened the doors to a huge number of tourists who would eventually change the way we see Bali. Before that, tourism was at its low, as there were only three other hotels on the island. After the Bali Beach Hotel was built in Sanur, construction began across Bali; more and more restaurants and hotels were being built.
Now, Sanur is home to various hotel and villa resorts, such as Bali Hyatt and Fairmont Sanur Beach Bali. That has allowed the economy to significantly grow, as the focus is on the services, manufacturing, and infrastructure.
When investing in New Nordic Group holiday resorts, investors buy a slice in two of the fastest growing industries in some of the most beautiful areas of the world, the real estate & the tourism industries.
However, despite its average 5% growth, which is one of the most significant ones in the Southeast Asia region, it’s yet to become as interesting to investors as some other regions and large countries. Foreign investment is more prominent in Singapore and Thailand, which makes Indonesia a gem that has yet to be explored. Once it gets on the radar of those who are willing to take advantage of its rise, it will start to grow faster than ever before.
Plenty of things factor into why Indonesia is a worthy investment. One of them is the fact that it’s home to more than 250 million people. Because of that, whoever invests in it, they’ll have the edge over the competition in the future. However, it’s not for the faint-hearted and those looking to make a profit quickly. Investing in Indonesia is a long-term process, but it’s also a safe one. Since it’s densely populated, there’s no doubt multinational companies will soon start doing business there. After all, who wants to miss out on such a large consumer market or have to invest more in logistics? In Indonesia, they can have it all!
Since government policies are working towards supporting employment and businesses, it’s likely that the property prices in Bali will go up by 12% in 2020. The increase will mainly happen because of fluctuating fuel prices. However, the rise corresponds to the estimates and the wanted price increases of 7–12%.
What will allow such a rise? Indonesia has already changed the fuel prices policy, as well as its subsidy policy and the UMP (provincial minimum wage). The wage was increased by 5.09% and is now Rp 1,621,172. In addition, in order to make sure the forecast of Indonesia’s prosperity is correct, the central bank surveyed members of REI (Indonesia Real Estate Association) and AREBI (Indonesian Real Estate and Broker Association). The results were positive and promising for all those looking to invest, especially since there’s a huge demand for type 36 to 70 house categories and properties worth less than Rp 1 billion.
Areas where one can find such properties are the Tabanan, Klungkung, Bangli, Negara and Karangasem District (the eastern part). However, some developers have also taken their businesses into the East Nusa Tenggara Province. Nevertheless, developers typically get properties worth more than Rp 1 billion as a long-term investment or for renting them out. Because of that, they are more careful now; they are not choosing just any properties. They are instead selective about advertising and selling.
Economy overview — what does Bali have to offer?
According to a monthly economic report by Bank of Indonesia, in the Q3 2017, Bali’s economy surged past the national average of 5.06%, marking a 6.22% growth. To compare, during the same period in the previous year, the growth was 6.01%.
Main growth factors — sectors driving the economy of Bali
Every year, more and more tourists are coming to Bali through its Ngurah Rai International Airport. In addition, the infrastructure initiatives are being implemented, allowing cruise ships to become a huge business. Thus, the tourism industry is the most valuable player here. Hotels and restaurants embraced the new labor coming from Australia and China. The other two contributing factors were the public and private sector consumption and the willingness of the country to spend more on infrastructure.
Still, at that time, regional and provincial governments spent less money, allowing the government to allocate funds for Bali. Nevertheless, the results were favorable — the inflation rate was at approximately 2.7%, and the income surged by 13%. Compared to the year before, these results indicated a decrease in inflation (was 4%), and an income boost (previously 9.5%).
Private sector and investments
According to the same report, among others, the general consumption in the private sector, as well as general bank credits, health and education, fuel prices and mortgages are all still growing. What’s more, domestic investments are still following a stable trend while foreign ones are becoming more and more prominent. It’s expected that this will become a standard for Bali. It may also increase the export of jewelry, furniture, fish, and wood too, specifically to markets in Australia, Singapore, and the US.
Nevertheless, tourism is still Bali’s forte. Those who are looking to experience holidays are more than willing to spend on luxury and stay a bit longer. Thus, the report also compares the average length of stay of tourists. On average, guests stay three nights in star-rated properties. But when it comes to non-star rated ones, the length of the holiday is almost twice as long.
So what does the future hold for Bali?
As far as tourism goes, Bali is looking to take advantage of its new position. The tourism industry has seen massive growth in numbers of visitors, and it accounts for 48% of the whole economy. In addition, the tax income it produces is about 68%, and it employs 42% of new labor. Thus, Bali is looking to enhance tourism in some other regions too and become a real holiday hub.
But how will they achieve this? The strategy Central and Provincial governments have created will focus on developing:
- A strategic plan, i.e., a roadmap that would drive the growth further
- Stakeholder alliances, which would be strategically made to boost the already positive results
- Agro-tourism, as well as village and communities, allowing tourists to experience Bali completely
Therefore, if all goes according to plan, there’s a lot to hope for. China, the EU (albeit partially), and the US have shown signs of improvement in their respective economies. Thus, Indonesia, and especially Bali, have a good chance to finally step into the spotlight we all know they deserve.
Whether you are looking for picture-perfect beaches, idyllic stretches of rice paddy, world-class shopping, active volcanos, the world’s best diving destinations, rejuvenating spas, yoga retreats or rich local culture, we guarantee that you will find it in Bali! The island is one of the few places in the world which offers something for every kind of tourist, and Bali will continue to be a key tourist destination for many years to come. From laid-back Sanur to the bustling Kuta and Seminyak areas to the art hub of Ubud or the picture-perfect North, Bali is a true holiday paradise.
New Nordics first project, Signature Bali, is opening as a hotel autumn of 2019.
Country head office
Our sales office in Bali is open, and our helpful staff can answer any questions you might have about the project. The office is right next door to the Bali Water World project!
New Nordic Group, Jalan Sudamala 10A, Belanjong, Sanur Kauh, Denpasar Selatan, Bali, Indonesia, 80227.
Phone: +62 (0) 361 4493754
Bali is known for its unique style and Sanur is no exception. Enjoy the trendy and relaxed lifestyle that is Sanur. Soak in the bright sun on the beach, fun water activities or explore Balinese culture by visiting some local warungs (café) or temples. Sanur is the perfect place for a relaxing, yet eventful holiday destination. The town itself is home to many well-known restaurants, a unique 5 kilometers long white sand beach, crystal clear water and soon a Water World!