Buying in Paradise
A Beginner’s Guide
Everywhere you look in Bali there are lots of foreign tourists all enjoying the sun, the cheap prices and the relaxed tropical lifestyle. There is also a sizeable population of foreigners who actually live here, have bought property and call Bali home. The Bali and Lombok property markets have so far proven resistant to the world economic crisis. Prices have not fallen and the market is actually increasing as more and more foreign investors are looking to place their wealth in a non-mortgaged, high yield market. Making the decision to buy property in another part of the world can be fraught with risk, especially if you are planning to relocate to a country with an entirely different culture and set of laws and customs. By dealing with a reputable real estate broker you can avoid all the potential headaches and stress and will find the process to be professional, rewarding and above all, easy.
Exotiq Real Estate is Bali and Lombok’s largest property company and has been serving the needs of the community since 2002. Exotiq is at the forefront of the Bali property industry with over 1000 listed properties and a team of highly trained real estate professionals willing to work hard to get you the property you want. Exotiq Real Estate knows that buying a property can be an emotional issue and they will work closely with you through the entire process from initial meeting to putting the key in the door of your new home. Exotiq has an in-depth knowledge of all the Indonesian laws and regulations related to acquiring property and they pride themselves on our transparency and always advise clients to seek independent advice before embarking on any property purchase.
The first thing to decide is what kind of property to you want to buy and to what end.
- Do you intend to reside full time?
- To use it as a holiday home and seek a rental income when you are not here?
- A pure investment for rental income?
- To build a villa development?
Below is a list of the most common options available.
Existing Villas : One of the most popular options in Bali. Purchasing an existing villa has the advantage of allowing you to see just what you are buying. You can easily see the condition of the buildings and the practicalities of design and assess if it suits your personal needs. There may also be a management company in place and you will be able to see the rental history. If it has been successful your returns can start immediately.
Villa Estate : Many new villas are being built in estate complexes and offer the advantage of shared facilities which can be a big inducement to rental customers. Tennis courts, parking, restaurants and room service are a big draw card and operational costs are lower thanks to economies of scale offered by shared services. They are also often managed through an experienced management company with a proven track record and strong marketing, thus ensuring strong rental returns on your investment.
Buy and Build : This offers flexibility in design and location and it gives you exactly what you have envisaged. It can be a relatively easy process if you are dealing with professional consultants in all the different phases of this process including the broker, architect, and building company. You will need to think hard about what you are going to use the villa for and if you are going to be renting it you may want to add particular features and facilities that will attract renters to keep your occupancy high.
It can take up to 18 months to two years to sign off on a property and if you are not going to be on the island for the whole of that time it can get quite tricky so, you will need an excellent project manager to make decisions on your behalf. You will also need an architect, structural and electrical engineers, and above all a good contractor. You may also want to employ the services of a good interior designer and lighting specialist and landscapers to make the property truly special. All this can set the costs quite high but the trade off is the realization of a dream.
Off Plan : Buying from a 3D rendering or a show villa is another popular method of purchase. The advantages are that many developers offer introductory discount prices to early buyers, and you can usually spread the payments out over the construction period. But again you must make sure that you are working with a reputable developer with a proven record of completion and customer satisfaction in Bali and it is well worth doing background checks on the land ownership.
If buying off the plan, it is imperative that you have a well-drafted sale and purchase agreement to protect your interests and make sure that you have a solid exit strategy in case anything goes wrong.
Apartments : This is a relatively new concept for Bali but one that is becoming more widespread as developers strive to maximize land use in the built up area of southern Bali. Many serviced apartments are springing up in popular areas such as Kuta and Legian where land is at a premium for both availability and price.
Apartments are practical for those people who may just be jetting in for a few days at a time and want to live close to the restaurants and shopping areas without the hassle of garden maintenance and costly staffing responsibilities.
Leasehold or Freehold?
Most buyers would instinctively opt to choose a piece of land with a freehold title (‘hak milik’). Freehold means that ownership is not limited in time. By law, only Indonesian citizens are allowed to own freehold land. Indonesian or foreign companies and foreign citizens are allowed to possess other forms of land titles known as “right of use” (‘hak pakai’), “right to build” (‘hak guna bangunan’) or leasehold (‘hak sewa’) titles. The various right of use titles are issued by the government for certain periods of time (25 or 30 years) and are renewable at the end of the period against paying the required renewal taxes. A popular form for foreigners to exercise beneficial ownership on freehold titles is by way of so called nominee agreements, where the title is issued in the name of an Indonesian citizen who pledges back the control of the land to the beneficial foreign owner through a number of agreements, including a loan agreement.
More straightforward ways of owning property in Indonesia for foreigners are the above mentioned “right of use” or “leasehold” titles. In certain areas in south Bali, particularly in the most sought after hot spots like Seminyak, landowners have decided not to sell their freehold titles, but pass on a lease to buyers, irrespective of the buyers’ citizenship. So if you have set your heart on getting a piece of land in one of those areas, chances are that you will only be able to buy leasehold. It then becomes very important to make sure that your leasehold contract allows you to extend the term before it ends. There a several ways of achieving that. Make sure that your lease agreement specifies the length of the extension term and how to arrive at the price to prevent tricky negotiations with your landlord when extension becomes due. Note that at the end of a leasehold term, all immovable structures will become the property of the lessor. Whatever you decide to buy, it is highly recommended that you seek professional legal advice to structure your acquisition in the most favorable and secure way.
For more detailed information on land ownership for foreigners in Indonesia visit the URL below
www.exotiqrealestate.com/buying_property_in_indonesia.asp
