ROI in Bali – is that worth it?
Bali’s vibrant real estate market has become a hotspot for investors seeking both profitability and lifestyle benefits. With its increasing popularity as a tourist destination and the rise in economic activities, Bali presents a promising opportunity for property investment. This article delves into the return on investment (ROI) and average rental yields in Bali, helping you understand what to expect when investing in this alluring Indonesian island.
Average Property Rental Yield in Bali
Rental yields in Bali can vary significantly based on location, property type, and amenities. Properties situated near popular tourist attractions or featuring unique amenities such as private pools or ocean views typically generate higher rental returns. For investors, understanding these factors is crucial to maximizing rental income and achieving a favorable ROI.
Gross Rental Yield in Bali
Gross rental yield provides a snapshot of potential income by comparing annual rental income to the property purchase price. For example, consider a property purchased for $250,000 with an annual rental income of $37,500.
To calculate the gross rental yield:
Gross Rental Yield = (Annual Rental Income / Property Purchase Price) × 100
Using the figures:
Gross Rental Yield = (37,500 / 250,000) × 100 = 15%
This calculation indicates a gross rental yield of 15%, reflecting a strong income potential for Bali properties.
Net Rental Yield in Bali
Net rental yield offers a more detailed view by factoring in additional expenses such as maintenance, management fees, and taxes. For a property with annual expenses of $9,375, the net rental yield is calculated as follows:
Net Rental Yield = ((Annual Rental Income – Annual Expenses) / Property Purchase Price) × 100
With the given figures:
Net Rental Yield = ((37,500 – 9,375) / 250,000) × 100 = 11.25%
These figures demonstrate that Bali offers impressive rental yield potential, with gross yields reaching 15% and net yields around 11.25%.
High-Yield Areas in Bali
In areas where the occupation rate exceeds 90%, rental income during peak season can soar up to 20%. The most lucrative areas currently include Uluwatu, Canggu, and Pererenan, known for their high returns. Kedungu, a hidden gem on the island, is also gaining attention and promises significant returns for early investors.
Bali’s real estate market presents a dynamic opportunity for investors looking for high returns and a desirable lifestyle. By understanding the rental yield dynamics and targeting the right areas, you can make a strategic investment and potentially enjoy lucrative returns in this tropical paradise.
