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Overview of Bali's real estate market

Indonesia is a dreamland for foreigners. Thanks to its tropical climate, its paradise beaches, its unique fauna and flora, and its thousands of islands to visit, the country attracts many expatriates. Estimates suggest there are about 350,000-400,000 expatriates throughout the country, but most are located around Jakarta. Bali, the island of the Gods, is another Indonesian haven that is very popular with expatriates. It must be said that the lifestyle in Bali is quite pleasant, even without taking into account the breathtaking beauty of the island.

In short, there are many reasons for an expatriate to buy a small piece of land, a house, or an apartment in Bali. However, the vast majority of them prefer to rent a residence rather than buy a property there. The reason behind this lies in the Indonesian legislation regarding land ownership. If it is possible today for a foreigner to enjoy a property in Bali or elsewhere in Indonesia, it remains, in most cases, a very complicated process.

For many years, local legislation prohibited foreigners from buying land or buildings in Indonesia. But by the end of the 90s, the situation somehow changed with the enactment of new laws that allowed expatriates to buy a house or an apartment. However, this is only limited to properties where the land on which the purchased building is located is not part of the sale contract.

Expatriates are legally authorized to lease land for a period not exceeding 80 years. However, these laws remain unclear and are subject to many interpretations. Moreover, the conditions attached to the granting of a lease to a foreigner are rather strict, not to mention that the administrative procedures are also long and complex.

Bear in mind that the law governing property in Indonesia is Law Number 5 of 1960. This law clearly states that only Indonesian citizens can acquire a Hak Milik, the local term for freehold land title. The severity of this prohibition is such that paragraph 5 of this law states that even Indonesian citizens who hold another citizenship are treated the same as foreigners and must renounce their other citizenship in order to become property owners in their own country.

What are the options and conditions for buying real estate in Bali?

Even if, as we explained before, buying property in Bali can be complicated for foreigners, you can still enjoy property on the island of the Gods without owning it.

First, be aware that Indonesia has two types of property rights, namely the "right to own" (Hak Milik), which we have already mentioned, and the "right to build" (Hak Guna Bangunan). Like the Hak Milik, the Hak Guna Bangunan is prohibited to foreigners.

Expatriates residing in Indonesia are allowed to rent land or a residence on a long-term basis, but are subject to certain conditions.

Therefore, while the Hak Milik remains inaccessible to those who do not have Indonesian citizenship, two other legal terms have been added to the existing legislation, the Hak Guna Bangunan and the Hak Pakai. Here are the meanings of these two terms:

• Hak Guna Bangunan allows you to build and enjoy your property for up to 80 years.
• Hak Pakai gives you the right to buy and use your property for 30 years, with an option to renew up to 50 years, to live in it, or to turn it into a rental property, either through leasing or subleasing. As the lease is long-term, you can use it as an office, transfer it to a family member, or sell it to an Indonesian citizen. However, this type of lease usually (not always) requires an initial investment, which includes all the rents, payable in advance.

Thus, expatriates can purchase land or a house under the Right of Use category for a period not exceeding 30 years. After the expiration of the initial period, it is possible to renew the right of use contract twice, the first time for the same period of 30 years and the second time for 20 years. If you opt for this solution, you will be renting a property in Bali for a maximum of 80 years.

There are also other options for those who wish to acquire land in Indonesia. For example, you can choose to appoint a local representative to act as your partner in your land transactions. This can be an interesting solution, as only Indonesian citizens can legally own property in Indonesia. However, such partnerships can quickly turn against the expatriate. There are many cases where the Indonesian partner incurred debts, leading to the seizure of the respective asset. There have also been reports of outright extortion.

Another way for an expatriate to become a property owner in Bali is to set up a company in Indonesia. As a foreigner, you will need to set up a company called PT PMA. This is, simply put, a limited liability company founded by foreign capital. The requirements for establishing a PT PMA in Bali are as follows:

• The company must have a minimum capital of IDR 10 billion, with paid-up capital of at least 25% of this amount.
• The company's shares must be owned by a minimum of two persons or legal entities.
• Founders must first sign a deed of establishment before a notary. The deed of establishment must contain all the required identity information about the founders, but also about the members of the board of directors and the shareholders, whether they are individuals or companies.

Such a procedure may seem cumbersome at first glance, but it is a safer solution than partnering with a local citizen. In this particular case, the property in question will be placed under the company's ownership.

The types of land available to foreigners through the acquisition by a PT PMA company are, however, limited to certain categories. It is therefore recommended that you find out what type of classification the local legislation places on the land you are interested in before you proceed.

Foreigners married in Indonesia to Indonesian citizens may also be eligible to own property in Indonesia. It is important for you to know that, in any case, there are strict conditions attached to the purchase of real estate by a foreigner in this country. For example, you will need to be a holder of a KITAS (a limited residence permit in Indonesia), and you can only purchase individual houses or apartments.

Moreover, the Indonesian government has established a minimum amount of local property value that can be purchased by expatriates. This minimum amount will vary depending on the region and different geographical areas.

Real estate prices in Bali

As for real estate costs in Bali, be financially savvy, as price variations can be extreme. There are all sorts of different properties available to purchase on the island, from small traditional houses in quiet villages to large and lavish beachside villas designed by international architects.

For a high-end beachfront villa in a tourist area, be prepared to pay almost the same price as in Western countries. A 2-bedroom villa on a 250 m 2 plot in Seminyak or Canggu will cost between 300,000 USD and 500,000 USD. In Jimbaran or Nusa Dua, it'll be around 350,000 USD, while in Denpasar, it can be cheaper at around 250,000 USD.

The property buying process in Bali

Indonesian property law is complex to say the very least, so the buying process in Bali tends to be fair but lengthier and more involved than what many foreigners may be accustomed to. Engaging a reputable notary (notaris) early on is strongly recommended, as they play a central role in the transaction and are legally required to oversee the transfer of property rights. You need someone you can really trust and rely on here.

Each property purchase will be different, but as a general rule, here's how the process may look for you. Once you've found yourself a property, the first step is no different from anywhere else – some thorough due diligence. This involves verifying the land certificate, confirming that the seller has the legal right to sell, and checking that the property is free of any debts, disputes or encumbrances. Property in Bali is often inherited and shared among many family members, so this step is really important and should never be skipped.

Once due diligence is complete and both parties agree on the terms, a preliminary sale and purchase agreement (Perjanjian Pengikatan Jual Beli, or PPJB) is signed, often with a deposit. The final deed of sale (Akta Jual Beli, or AKB) is then signed before a notary, who will oversee the transfer of the title into the buyer's name.

In terms of documents, buyers can expect to need the following:

• A valid passport and proof of legal residency in Indonesia (KITAS).
• A local tax identification number (NPWP), which foreigners can obtain through the Indonesian tax office.
• Proof of funds or financing.

On the seller's side, the key documents to request and verify include:

• The original land certificate (sertifikat tanah).
• The building permit (IMB or its more recent equivalent, PBG).
• Up-to-date land and building tax receipts (PBB).
• A certificate confirming the property is free of any legal disputes.

Remember that taxes and fees are associated with the transaction, both for the buyer and the seller. As a buyer, you should budget for a land and building acquisition tax (BPHTB), which is typically set at around 5% of the transaction value. Notary fees and administrative costs will also add to this figure, so you should factor them in from the start.

Who should you turn to when buying property in Bali?

To navigate the complex and ever-changing real estate laws, it is advisable to hire a reliable real estate agent. Some of the most reputable ones include:

These agents have extensive listings of properties for sale or rent in Bali and will assist you with the legal aspects. They will make sure that the property is legally fit to be sold or rented. This last point is extremely important, as, in Bali, real estate is often family property, being inherited and shared between different family members. You also need to make sure that the person who is negotiating the transaction has the legal right to do so to avoid any problems in the future.

Although a real estate agency is a paid option, you are assured of being protected during all stages of the transaction.

Meanwhile, if you're looking for a platform to search for property for sale in Bali, then both and are good options with plenty of Bali properties listed.