A Unique Real Estate Opportunity in Bali
The Kedungu Fund
Hello again dear readers. Today we will go on a small journey, searching for land in Bali! (For transparency’s sake I’m involved with The Kedungu Fund as a small investor.)
Map location: Kedungu.
But first, a small recap of real estate development in southern Bali. It is said that when Charlie Chaplin, the great filmmaker, comedian, and worldwide icon for over 75 years visited Bali in 1932, he claimed the island already had too many tourists.
From my point of view, over the last six years (and especially the last two), there has been an influx of digital nomads, remote workers, and a small wave of expats that has made an impact (and in some cases too strong an impact) on this most treasured island.
However, it doesn’t take more than 15 minutes to leave the touristy areas of southern Bali and explore one of the top ten travel destinations in the world.
Land in the hot parts of southern Bali is unlike the rest of the island. You can still get freehold land for 15 million rupiah ($990 USD) per are (100 meters X 100 meters) in the least developed parts of the island. But you’d be very isolated. If you are a foreigner you will want access to modern grocery stores and Western restaurants. I do however encourage you to partake in the local cuisine as well, although I doubt you will want it 3X per day, 7X a week.
That means you need to be near the touristy areas, but not necessarily in the middle of them. The opportunity presented here is in an up and coming section of Bali. It may take 3-5 years to have all of the conveniences at your fingertips, but if there’s one thing I’ve learned in Bali is that once an area gets hot there’s a tsunami of development.
Case in point was my move to Pererenan in 2018. There were 2 restaurants along the main road and a Spanish place (Pescado) about to open close to me. Even taking into consideration Covid, Pererenan now has at least 50 restaurants and cafes. (This list is about a year out of date but has 36).
There was one clothing shop in 2018, and this list (also a year old) has 13 shops (now there’s probably 20+).
I haven’t yet mentioned new villas, row houses, joglos, residential communities, resorts or other types of real estate. There’s probably 800 - 1,000+ new rooms / villas / lofts etc built in Pererenan during the last 5 years.
The reason I mentioned the restaurants and shops first is that without quality anchor tenants the area cannot become hot.
To delve into the numbers a bit:
Residential land: around 2019 along Batu Bolong, in the heart of Canggu, you could lease 1 are of land (100 meters X 100 meters) for 15,000,000 rupiah ($990 USD) for 1 year.
So if you wanted to build a villa on 3 are for example, and keep it for 30 years, you’d pay 1,350,000,000 rupiah or $89,000 USD. The same 1 are is now 37 million rupiah or $223,100 for 3 ares for 30 years. If you had just leased the dirt (or old rice field) and did nothing, you’d have a profit of $134,000 in 4 years (not counting real estate commission and taxes).
For commercial land it’s been even crazier.
But remember, this calculus only works for hot areas.
Here’s a recent at Kedungu:
As you can see, the town is a bit sleepy, but already anchor tenants are establishing themselves. The surfing culture (or subculture) has been here for years and they’d love to keep it as sleepy as possible. But the writing is on the wall, as they say. This area has been targeted as one of the hot new parts of Bali.
As far as the Balinese are concerned, they don’t lease or sell land unless they want to (or have to, in unfortunate circumstances). But most Balinese lease land, which is easy for foreigners to purchase in the own names. And then 30 years later the Balinese children (now grown up) can lease the land again at market prices.
The Kedungu Fund, managed by Kosong Satu Capital, a subsidiary of Kosong Satu Group, has a over decade of experience in real estate investments in popular Indonesian destinations. With a proven track record of identifying and investing in lucrative properties across Indonesia, our team brings a wealth of experience and expertise to the table. We are committed to providing our investors with secure and reliable opportunities for profitable growth in the dynamic Indonesian real estate market.
Later,
Neill