The Luc Luxury Villas Berawa TUI Blue

When evaluating the Bali real estate market, a common concern is definitely about the potential returns that may seem too good to be true. So investors usually ask, is getting 12 to 15% ROI possible?

However, with careful planning, selecting the right property for your budget and goals, and investing with the right partner, investors can get above 10% ROI from properties in popular areas with steady rental income and professional property management.  

What are the considerations for projects that will deliver 12 to 15% ROI for investors?

Bali-based Geonet Property has stringent criteria for projects they invest in. Only if developers ensure they check all the boxes, is when the projects are then presented to investors.

✔ Area validation – Is it in a popular area with rental demand and rising property values?

✔ Project validation – Is it well-designed with amenities and attractive to travellers?

✔ Developer validation – Do they have a history of completed projects and high building standards?

✔ Strong ROI and cash flow – Will it be professionally managed for hassle-free investment and income?

✔ Investor benefits –Can the project be structured to include free stays, cashback during construction, and fractional ownership?

Calculating ROI

Geonet Property have provided a step-by-step checklist on how Bali property investments can stand to earn income and build long-term wealth.

1. Price of Investment

To understand how we arrive at our forecasted ROI, we start with the price of the unit or villa. This is not just the purchase price of the property; it includes all associated costs, such as taxes and insurance. At GPFG, when you see the prices on our website, the listed prices are comprehensive, ensuring transparency from the outset. 

Starting prices for units with some projects by Geonet Property partners

Leasehold vs. Freehold. Compared to the Singapore property market, Bali’s purchase prices are typically much lower. This is due to Bali properties typically being leasehold rather than freehold because of foreign ownership laws. You are purchasing the right to use the land, not the land itself. 

Fractional property and prices. There are options to buy a share of a property –  fractional property investment.. This provides flexibility to invest at a comfortable level while earning returns equivalent to a whole unit purchase. This option makes otherwise inaccessible properties attainable and allows for diversification with multiple properties.

For example, a 1BR 31 sq m studio at Beraban Luxury Lofts starts from SGD $136,874, while a 2-BR 127 sq m double storey Luxury Loft starts from SGD $501,873. These are luxury studio and loft apartments within a brand-new hotel with 5-star facilities in the heart of Seminyak. The forecasted ROI is 15-20% p.a. Fractional investments start from 25% (1 of 4 shares), and the rate of return is the same no matter the investment. 

2. Forecasted Rental Income

To determine potential income, start by estimating nightly rental rates, based on current market data from comparable hotels or villas in the same area. In popular tourist locations, properties rented out on a nightly basis (similar to hotels) generally yield higher returns than long-term rentals. The nightly room rate can vary based on the size, location, amenities, and seasonal demand of the unit or villa. 

The second part of estimating income is to consider occupancy rates. Although areas like Seminyak, Canggu, and Bingin often experience occupancy rates around 90%, it is betterto work with a conservative estimate of 75% to ensure financial projections are realistic and achievable. The data is consolidated from multiple industry reports on hotel occupancy and the Bali tourism statistics to provide accurate forecasting. 

Bali Real Estate Geonet

Income is estimated by multiplying the Average Nightly Rate x Occupancy. For the example above, the 1BR Loft in Berban Luxury Lofts, the estimated gross income is: 

$370 per night x (365 x 75% occupancy) = $101,287.50

For fractional investment, the income is proportional to the level of investment. A 25% investment would earn $25,322 per year. 

3. Additional & Ongoing Costs 

Investors should be aware of the costs associated with owning and managing Bali real estate. These include:

  • Management fees. Hiring a local property manager is essential for overseas investments. We work with experienced developers who offer property management within branded hotels, resorts, and residences, ensuring a hassle-free investment. Management fees are a portion of the gross rental revenue, covering day-to-day operations, maintenance, and other fees.
  • Sinking funds. Property owners set aside a portion of revenue each year for future renovations and repairs. These funds maintain property standards and appeal. Ensure you understand these fees in the contracts.
  • Insurance. Insurance is necessary and may be included in the management fees or be a separate cost. Verify if it’s included in the contract to understand the overall expenses.

All of these costs are listed in our contracts, so our investors are aware, and they are capped with agreements by the developers. This way, no costs are unexpected, and it prevents any future confusion or disappointments. This way, we are talking about true NET ROI. 

For our example, with Beraban Luxury Lofts, we have the following costs: Management fee, Maintenance fee, Online Travel Agency booking & Marketing fees, and the Sinking Fund. The management of the lofts comes with luxury amenities and services for guests, and investors don’t have to lift a finger. The profit share for the investor is 50% of the net income, and this amount is stated and capped in the contract. 

How does tax affect ROI when investing overseas? 

As a foreigner owning property in Bali, you’ll need to manage tax obligations in both Indonesia and your. In Australia, you must declare any income from your Bali property, which will be taxed as foreign income. Indonesia withholds 20% of rental earnings, but thanks to the Indonesia-Australia non-double taxation treaty, this tax is credited against your Australian tax obligations, preventing double taxation.

Download PDF: Double Taxation Avoidance Agreement between Indonesia and Australia

4. A Bali Real Estate ROI calculation example

Now that we have the price, yearly income, and costs, we can calculate the ROI. Let’s use the example of The Beraban Luxury Lofts, 1BR Loft Apartment.

Purchase Price for 1BR Loft Apartment- full ownership$314,500
Gross Yearly Income (from example above) = (Nightly Rate x 365 days x Occupancy)$101,287.50
Sinking Fund (4% of Gross Revenue). ($4,052)
Profit Share for investors (After management fees are deducted) – 50%$48,618
Return on Investment = Profit Share/Total Investment 15.55%

For this calculation, the ROI for the first year is about 15 %, and then, take into account for average nightly rates for hotels to increase 3-5%, driven by Bali’s growing tourism sector and rising demand. So ROI will improve year over year.

5. Maximising Your ROI on Bali Property Investment.

Consider strategies to enhance your investment returns:

  • Investment Diversification. Fractional ownership lets investors diversify portfolios by acquiring stakes in multiple properties or locations, spreading risk and enhancing exposure to various real estate markets, potentially increasing returns.
  • Immediate 8% Cash Back During Construction. Earn immediate returns with an 8% cash-back offer during the construction phase. This opportunity provides income before the property is operational, transitioning to regular income once the property opens.
  • 5-8 Year Payback. With high returns, lower prices, and minimal costs under the leasehold model, most properties achieve full payback within 5 to 8 years. After this period, investors enjoy pure profit, offering a solid pathway to financial security for retirement.

Bali Real Estate ROI is REAL, with the right partner and the right formula.

Investing in Bali is a personalised journey which starts by understanding your goals. From there, we build a strategy for you with the right property and the right ROI to increase retirement income and investment success. Soultrips is organising a visit to Bali this July for anyone keen to learn more about Bali real estate investment options.

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