Bali is one of the most popular resorts in the country and is known for its diverse culture and beaches. “Bali is one of the most popular resorts in the country and is known for its diverse culture and beaches. People from all over the world choose to invest in buildings, or even stay here full-time.” Sarah Ross, financial adviser and co-founder of CocoLoan said.
People from all over the world choose to invest in buildings, or even stay here full-time. To say that Bali’s real estate market has prospered over the past decade is an understatement, something we will consider later in this article.
Thus, Indonesia is also known for having some of the most unpleasant rules for foreign property owners in Asia. Before investing in Bali real estate, you should get your feet wet, learn the rules of the land, and work with reputable players.
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The wealth market of Baal
Bali welcomes many foreign traders which has resulted in an increase in property prices. Prices have risen sharply over the last 10-15 years. To the surprise of many, the Bali real estate market was one of the largest in Asia. The following facts support this statement:
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Prices for luxury buildings increased 15% per year
The prices of vacant lands have risen to one of the fastest prices in the world
As a result, prices began to fall. After years of progress, the market began to cool down. Some obvious reasons why the market is stagnant are:
- Problems with local infrastructure, such as lack of clean water
- Expansion of buildings due to unregistered market and local issues
- Foreign bali property Ownership Regulations in Bali. Bali is unique in comparison to many other places in Indonesia, in terms of culture and population.
Foreigners visit Bali for a holiday or a long stay there. A common question is whether the rules for foreign owners are different compared to national laws. Unfortunately, the rules do not differ much, except for the maximum height of buildings that can be built, which is simply not practical. Generally, the building can not be higher than 3-4 levels (15 meters). But, one of the tallest buildings, the Grand Bali Beach Hotel, was built in the ’60s and stretched ten floors, as the builders managed to evade the new rules.
Buying a Site With a Free Title (Hak Milik)
Most outsiders want to buy a building with a free name, although this option is riskier. Not surprisingly, as a free name gives you full ownership rights, resulting in more freedom and often higher pricing value.
As explained in my separate guide to buying property in Indonesia, foreigners cannot have free real estate in Indonesia. This is in violation of Indonesian property owners’ laws, which are one of the most difficult in Asia. However, there are ways for outsiders to buy and control indirectly free space. Becoming a landowner through contract setups is a common practice. This requires you to use an Indonesian alliance or person (called a representative or ambassador) as the name holder.
In the worst case scenario, the one you choose may get the full rights to the property. The advantage of buying a free site, on the other hand, is that you often experience a higher price point as this is in high demand and remains attractive. The rental building loses its beauty as you approach the end of the rental days.
Buying a Leasehold Title (Hak Sewa)
Choosing a place to rent is safer and less costly. But, yet you will have some limitations if you use the resources. You will also lose the value of the world’s trust, something that free landowners can enjoy.
Buying a Right-Use building (Hak Pakai)
Hak Pakai is a name-To-Use name and can be derived from the individual owner of Hak Milik. The rental period is set at 25 years and can be renewed for a maximum period of 70 years. To get Hak Pakai as a person (not a company), you must live in Indonesia or have Indonesia as your home.
This brings the requirements for applying for a KITAP (permanent stay permit) or KITAS (temporary / limited stay permit). Therefore, setting up a PMA company is the preferred option, if you are not an Indonesian citizen or have Indonesia as your place of residence. Hak Pakai is a strong name that allows you to sell and transfer the name to someone else, who is eligible to be a name owner in Indonesia.
Buying a Right-To-Build Site Name (Hak Guna Bangunan)
Hak Guna Bangunan, commonly abbreviated as HGB, is only available to Indonesian citizens and local companies, bound under Indonesian law. These include PMA companies that fall under the foreign investment component, FDI. HGB’s are active for a period of 30 years but may be extended by an additional 20 years, and later for a further 30 years.
Hak Guna Bangunan and Hak Pakai: the main difference
A common question is what is the difference between Hak Guna Bangunan (HGB) and Hak Pakai (HP).
You can get the name Hak Pakai as a person, but Hak Guna Bangunan wants you to open a PMA company. You cannot use Hakai Pakai’s name as a doctor, which is possible with Hak Guna Bangunan’s name. It is recommended to do it with a reputable real estate agent and real estate attorney who can guide you through the process of purchasing and sharing current information.
Best to set up when buying Real Estate in Bali
It is the safest option when buying a building in bali investment plan to stop the PMA (Penanaman Model Using) company. You can then find any of the following names:
Hak Pakai (HP): Right-to-use name
Hak Guna Bangunan (HGB): Right-of-name building
I have removed the Hak Milik as you have to work with an Indonesian person nominated for this election. This is not recommended and it is not uncommon for outsiders to lose property owners if they let a local person hold the name. Although the PMA merger can take time and requires documentation such as business plan and operational events in Indonesia, it is the safest option. Getting a Name-Using-Name (Hak Pakai) is possible without a PMA but requires you to have Indonesia as your own.
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