One of the fastest growing trends in investment real estate is the purchase of Bail investment villas.
Several days ago, the head of a huge Asian retail chain visited our office and commented that “he wished he had purchased a villa one year ago when they were selling for $129,000”.
The same villas would sell for $159,000, if they were available.
Why have these villas increased so dramatically during a year in which tourists decreased by 9.8%?
The reason is primarily related to the internet and modern sophisticated travelers.
There is a significant trend towards experienced travelers seeking to stay in luxury villas as opposed to traditional hotel rooms and suites.
Most of the large hotels including the Ritz Carlton Bail have recognized this trend and built private villas with small private swimming pools to accommodate this new demand.
They were 100 % occupied during the New Year holidays.
There has been a surge of new villa complexes all over Bali in just the past six months offering many different choices of styles and price ranges for new luxury villas.
Prices range from as low as U.S.D $69,000 upwards to $500,000.
The big question is which of these villas have the greatest investment potential.
The answer lies in the fundamental economic principle of supply and demand.
We can assume that the supply of luxury villas will continue to grow in the near future.
You do not need a master’s degree in business to realize that the villas that will have the highest demand in the future will be the villas that are the most attractive to two major demands.
One demand is medium to long term renters who are willing to pay top dollar for luxurious amenities for one month to twelve month or more. We will discuss this demand in later articles as they offer less potential return on investment than the biggest demand, which of course are tourists.
A luxury villa which may only rent for $2,000 per month to a long-term tenant can also rent for $6,000 a month or $200.00 a day to short-term daily and weekly rentals to tourists.
It is quite simple to identify which villas offer the greatest potential for tourists. Simply identify what features tourists look for when they rent luxury villas.
Location, Location, Location.
This famous saying is well known by sophisticated investors. It is the most important feature to look for in any real estate investment.
So what locations are tourists looking for when they rent a Bali luxury villa?
Since we manage the largest real estate website in Indonesia with nine websites with over 7000 pages we have a good idea of what tourists are seeking.
We have answered thousands of Email requests daily over the past several years.
The number one request is not for a specific area of Bail, but a specific location.
‘Beachfront”, “beach view”, and “close to the beach” are the three most popular requests, in that order.
“Why come to Bail unless you are only a few minutes away from the beach” most tourists reason.
“Why come to Bail unless you are only a few minutes away from the beach”
Therefore current and new luxury villa complexes may have fabulous construction and attractive amenities but if they are not close, the beach they will have difficult time marketing to a very demanding luxury villa clientele.
Villas that are close to the beach, or even better, on the beach will demand premium prices of 20% to 50% more than villas that are not an easy walk to the beach.
Therefore, the number one feature that you should look for when purchasing a new luxury investment villa is that it is located less than ten minutes from a beautiful clean, safe, beach.
