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Bali’s Villa Boom

14.12.20

In Denpasar, Indonesia, construction of new villas in Bali is defying the steep economic downturn that the coronavirus pandemic has caused for the tourist hotspot.

With around 60% of the country’s gross domestic product derived from tourism, Bali's economy has been the hardest hit in Indonesia by the COVID-19 pandemic. The country's central bank reported negative growth of just under 11% for the province in September while the Ministry of Labour reports at least 80,000 tourism workers lost their jobs.

The effect on the island's all-important accommodation sector has been devastating. Only 3% of Bali's 130,000 hotel rooms are occupied while rental rates for the island's 4,000 villas have been slashed by as much as 85%. The property market has hit a wall. "You can't sell anything at the moment," a prominent real estate agent told Nikkei Asia on condition of anonymity.

However, the building of new villas -- mainly for people from Australia, Europe and the U.S. -- appears to defy this calculus. Construction activity is most pronounced in the surf mecca of Canggu, where a property boom saw land values increase 40 to 50 times in the last 10 years. Some of these projects were started or conceived before the pandemic. But many are new projects commissioned by foreign investors.

"We are receiving more inquiries from expats living in Indonesia than ever before -- people who out of the blue decided to invest. It has really surprised me," says Baptiste Dufau of Bali Sandstone Consulting.

Manuele Mossoni, director of architectural company 2M Design Lab, says his "business has increased 20% to 30% compared to last year." Terje Nilsen, director of Seven Stones Indonesia, a property consultant that caters to foreign investors, also reports an uptick in trade, stressing "This is our best business year in 15 years in Bali."

The island has consistently ranked among the most desirable post-pandemic travel destinations in the world by users of Booking.com, TripAdvisor and other travel platforms. Bali has also topped the list of most-searched post-pandemic destinations by Indonesian travellers, according to travel platform Agoda, followed by Yogyakarta and Bandung in West Java.

"After the lockdowns, a lot of people have figured out it's better living in Bali than in Melbourne or Hong Kong," says investment consultant Nilsen. "I think we are going to see a massive rise in the number of people coming here, and it will be different from the tourist market of the past [driven by people] who came here for a few days or weeks. They will be residents with long-term commitments."

Nilsen is also receiving a high number of inquiries for villas and office space from companies planning to relocate to Bali. "Previously the 'digital nomads' movement in Bali was dominated by professionals working in hospitality and IT, but now the proposition is attracting a much wider spectrum of businesses," he explains.

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