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ROIs from Bali property investments
Generating high rate ROIs from a Bali property investment is an exciting prospect and fulfilling experience.
Using the property for your own holiday needs can be a dream come true and a highly desirable lifestyle choice for many.
Using the property as a rental investment when you are not using it for your personal needs can provide a generous passive income with ROIs ranging from 11% to 18% per year.
Choosing the right property in the right location can help you to payback your investment in a short period of time as you continue to enjoy the long-term benefits of owing a property in Bali.
Reliability of data sources
Our research seeks to provide the most up to date information on Bali’s real estate and rental market.
We use AirDNA to gather as much information as possible on the main rental markets in Bai.
AirDNA is the #1 rental analysis tool providing real estate investors with a deep understanding of target markets.
The tool delivers real-time data analysis taken from leading booking platforms like Vrbo and Airbnb.
Using the tool, investors and property managers are able to determine;
- Occupancy rates: real-time and historical performance
- Revenue projections: predict the earning potential of a rental property
- Price per day: real-time and historical rental price data to display whether a market is growing or in decline
Our research is focussed on 3-bed/3-bath villas across various submarkets in Bali.
We use the data to compare ROI performance so that investors are better positioned to make informed decisions.
If you would like to discuss how this research tool works, please reach out and we will be happy to show the system as a way of verifying our research findings.
$279,000 investment: What to expect
The information table below shows what you could expect to earn from a Bali property investment of $279,000.
The data is based on 3-bed/3-bath villas in the ‘Upscale’ category has been taken using the free tools from this leading rental management company in Bali.
It is important to note that in the most developed areas of Canggu, Seminyak, Uluwatu and Ubud, $279,000 starting capital doesn’t go too far.
At this price point in these locations, the property is likely to be old, have limited space and perhaps set in a less than convenient location.
On the flip side, a $279,000 investment in a 3-bed/3-bath villa in Amed would buy a high quality two-storey pool villa with large internal and external living spaces and stunning views of the Bali Sea.
Amed | Canggu | Seminyak | Uluwatu | Ubud | |
|---|---|---|---|---|---|
Purchase Price | US$279,000 | US$279,000 | US$279,000 | US$279,000 | US$279,000 |
Ave Daily Rate | US$215 | US$166 | US$181 | US$181 | US$199 |
Ave Occupancy | 92% | 80% | 76% | 73% | 70% |
Gross Revenue pa | US$72,197 | US$48,472 | US$50,209 | US$48,277 | US$50,844 |
Management Fees | US$10,829 | US$9,694 | US$10,041 | US$9,645 | US$10,168 |
Operational Costs | US$10,474 | US$8,724 | US$9,037 | US$8,680 | US$9,152 |
Net Revenue pa | US$50,893 | US$30,054 | US$31,131 | US$29,902 | US$31,524 |
ROI % per Year | 18.2% | 10.8% | 11.2% | 10.7% | 11.3% |
ROI Payback | 5.5 Years | 9.3 Years | 9.0 Years | 9.3 Years | 8.9 Years |
ROIs from a $279,000 investment
The chart below is a visual comparison taken from the table data above.
The data for 3-bed/3-bath villas shows that performance from villa rentals in Amed presents a more compelling proposition than in the more established areas of Bali.
As a developing market, the supply of quality 3-bed/3-bath villas in Amed is low. With a 92% occupancy rate (Source: AirDNA) , we can determine that the demand for quality 3-bed/3-bath villas is high.
Because the supply is low and demand is high, owners are able to charge a higher daily rate as competition is for places is low.
In comparison, whilst occupancy rates in Canggu are also high at 80%, because there is an abundant supply of quality 3-bed/3-bath villas, owners are forced to lower their daily rates in line with the competition.
The result of these supply, demand and pricing dynamics has a dramatic effect on the investors bottom line ROIs.
How many years to break even?
The main metic to determine the potential for a successful investment is the rate at which your principle investment is returned.
Simply put, if your property is generating a rental income, how many years will it take for that income to cover the upfront cost of the property?
The faster the payback, the more profitable the investment performance.
Based on a property purchase price of $279,000, the chart shows that 3-bed/3-bath villas in Amed have the potential to return the investment in just 5.5 years.
Due to the supply, demand and pricing dynamics explained above, the ROI performance for 3-bed/3-bath villas in Amed is much higher than in the more developed markets in Bali.
Looking at this from an investors perspective – Amed presents a much safer investment proposition. The high rate of income per year returns capital back to the owners at much faster pace.
Bali's rental market
The main concentration of Bali’s rental properties are located in Canggu, Seminyak, Uluwatu and Ubud.
These developed markets will accommodate the large majority of the 7 million tourists that visit the island during 2024. The supply of 3-bed/3-bath villas in these areas has grow in line with the demand.
So much so that year-round occupancy rates for 3-bed/3-bath villas are sustained at levels well above 70%.
However, the influx of tourists into these already developed areas leaves little room for the property market to grow.
Heavy traffic and congested beaches, combined with rising accommodation prices and holiday spending costs are forcing many visitors, long-term residents and business owners to look at less developed markets as they search for a more affordable and authentic Balinese experience.
Emerging property markets
Canggu, Seminyak, Uluwatu and Ubud were once emerging markets. Now, as fully developed locations, the compact road networks and infrastructure cannot sustain further development.
For this reason alone, emerging locations are already showing clear signs that tourists are keen to explore other areas of the island.
Amed is one such location currently attracting increasing levels of tourist spending. Road networks have ben improved, lifestyle infrastructure is being developed and the real estate market is entering the very early stages of a 14+ year growth cycle.
Just like those who had the foresight to invest in Canggu, Seminyak, Uluwatu and Ubud during the early years, those investing in Amed are set to make life changing ROIs from their Bali property investment.
Investing in Bali’s property market
As the trend for holiday villa rentals continues to increase and annual tourist numbers steadily rise, the outlook for holiday villas rentals remains strong.
However, as the more developed markets have grown at such a rapid pace, the high entry cost of buying a quality 3-bed/3-bath villa in Canggu, Seminyak or Uluwatu has priced the majority of new investors out of the market.
$400,000 investment: What to expect
Buying a brand new, high quality 3-bed/3-bath pool villa in Canggu, Seminyak or Uluwatu will cost upwards of $400,000.
At the $400,000 entry price, villas typically have compact living spaces, small plunge pools and little to no garden (approx total plot size of 200SQM).
The table below shows the estimated performance ROIs from property in Canggu purchased at $400k and $500k;
Canggu ($400k) | Canggu ($500k) | Amed | |||
|---|---|---|---|---|---|
Purchase Price | US$400,000 | US$500,000 | US$279,000 | ||
Ave Daily Rate | US$166 | US$217 | US$215 | ||
Ave Occupancy | 80% | 79% | 92% | ||
Gross Revenue pa | US$48,472 | US$62,571 | US$72,197 | ||
Management Fees | US$9,694 | US$12,514 | US$10,829 | ||
Operational Costs | US$8,724 | US$11,262 | US$10,474 | ||
Net Revenue pa | US$30,054 | US$38,794 | US$50,893 | ||
ROI % per Year | 7.5% | 7.8% | 18.2% | ||
ROI Payback | 13.3 Years | 12.9 Years | 5.5 Years |
The data shows that even at a high entry level purchase into a Bali property investment, ROIs are way less than 10% and the payback period is way above 10 years.
Compared with a brand new 3-bed/3-bath pool villa in Amed with Ocean views (costing $279,000), the returns in Canggu, Seminyak and Uluwatu are not as appealing when looking purely from an investor’s perspective.
Perspective on a Bali property investment
The buzz and hype of owning a rental property in the South of Bali is real. These areas are established tourist destinations that are often credited as the world’s top places to go.
Making informed investment decisions is all about removing emotion and analyzing the facts.
The research and numbers provided in this article clearly shows that 3-bed/3-bath villas in Amed are a more capital efficient way of benefiting from a Bali property investment.
Canggu, Seminyak and Uluwatu were once emerging markets. Early investors buying in a low levels have made life changing returns. They continue to benefit from high occupancy rates and impressive rental income.
New investors are not so fortune. Buying into a developed market is expensive and the upside is limited.
The cost to buy a rental villa is high, and whilst occupancy rates in the region of 80% are appealing, the rate of return is low. It takes more time (upwards of 10 years) for the rental income to cover the initial purchasing price.
New investors looking to generate a high rate passive income from a Bali property investment will find a much better proposition in emerging markets.
3-bed/3-bath quality pool villas with ocean views in Amed have a payback ratio of 5.5 years from an impressive rental income rate upwards of US$50,000 per year.
High Passive Income From Rental Villas
Starting from $279,0000
18% ROI
$50k Income
75%+ Occupancy
$225 Daily rate
Build Generational Wealth
Upside opportunity as land and property prices increase
