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Real estate in Bali

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Real Estate in Bali
Michael Russell

In the twilight of the evening local people are gathering, fully dressed in the Balinese traditional clothes. The women carry offerings with fruit on their head as if they have no weight. The typical bewildering Balinese music can be heard from afar and makes one feel a part of a different world, a magical world. Tonight a 3 month old baby is about to undertake his first important ceremony, one out of 13 in his life. Only after three months and after this ceremony has taken place is a baby is allowed to touch the ground, as its status as a god will be changed to that of a human being.

These types of ceremonies and many more are taking place constantly all over Bali in a family temple or a village temple. The Balinese culture, religion and sense of community are part of daily life for young and old. Each family compound has its own temple. In total Bali has more then 10,000 temples.

As a foreigner one is puzzled how it all fits into a modern economy as we know it. Work stops, companies close and shopping streets are closed down when the Balinese have to participate in a ceremony. This magic is addictive; the friendliness of the Balinese people makes one feel like coming home. "I want to live here" is the first thing that comes to mind visiting Bali for the first time!

That is when the urge to own property in Bali starts or when investors see opportunities for their business. A foreigner or foreign company can not own property directly in Bali. However, there are a few alternative and safe solutions. One of them is the Nominee system. You "borrow" the name of a local person to buy property. The notary deeds make sure you can act as if it is your own property. The local person can not enter, sell, rent or touch the property at all. Living in Bali also requires a permit to stay. The Government offers several options all depending on your needs. Basically you need to apply or extend a permit once every year. If you want to work or set up a company in Bali get good legal advice to advise you what course to take.

Bali has suffered some disasters in the past few years but due to the resolute spirit of its people, it has recovered. Although it was feared the disco calamity would devastate the tourist industry it did not and the tourists soon came back. The tsunamis did not reach Bali at all. In 2004 the numbers of foreigners coming to Bali showed an all time record high. 2005 is showing similar improvement and a new record high is expected. For a third year in a row Bali has been awarded world's best holiday destination. Bali's indigenous population of just over 3 million welcomes around 1.5 million foreign tourists (figures for 2004-5).

For investors, corporate as well as private, Bali offers many opportunities in all areas. The capital growth shows an average increase of 20 % on land only. Not only properties represent a safe investment, rental properties can be very attractive and profitable. For hotel and resort operators and investors generally, a bright future is forecast if opportunities are taken advantage of now. Many long time owners of hospitality property are not able to match the increasing demands for higher quality and better service. Therefore they opt to sell. Professional operators from all over the world are establishing their brands in Bali. They offer good training and solid positions to the local people. Staff who are happy in their position make guests feel more at home which can only have a positive effect on the business.

Bali is divided in more then 3500 Banjars. A Banjar is the name that describes a community district. The Banjar system is typical Balinese and has nothing to do with the government. Although the Banjar does not get a penny from the Government the Banjar as group has a very strong influence in local Government decisions. Every Balinese is obliged to join a Banjar. The "kalian" Banjar is the "head" of the Banjar. It is a quite elaborate social community system in which all members have duties and obligations towards the Banjar as a whole and towards the members individually. By its laws (named "adat Bali" (law of Bali) it teaches the younger ones how to respect each other and especially how to respect the older people. They learn how to work together to keep their district clean and well maintained.

When a person from the Banjar is getting married many men and women members will come to help to prepare the wedding. When the wedding takes place everyone in the Banjar district is expected to come. Also the youngsters must make an appearance. The basic wedding presents are also well known to everyone. Each visitor brings at least 2 kilos of rice and 2 kilos of sugar. More or a different gift is allowed but it's expected to have a higher value such as coffee or plain money. After the wedding the couple sells almost all back to the local shop (warung) and uses the money to buy something useful. As usual, knowledge of how the system works is vital to assist you in the best way to handle situations like these.

For example, buying a rice field land to build a villa is simple. Getting permission to build a villa from the government also is simple. But . then there is the local village leader in charge for the water irrigation system who can undo all permits by claiming the water flow will be interrupted once a building is blocking the system. Then you own a piece of land without real value and the only thing you can do is start a rice business! Another example, in Bali with its many Temples (family temples and community temples) there are different rules. For each temple there is an area set back with different specifications. You can buy a nice piece of land close to a temple but then it's not certain you'll get a building permit. Your building could be blocking the view of the gods towards the Temple. Balinese are rightly, very serious about these issues!

There are many ways to work around these obstacles or to get things settled before buying property. It is very important to seek local professional advice about these and all other business matters.

Michael Russell Your Independent guide to Real Estate

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