Popular also as a meeting/convention and wedding destination, foreign arrivals have grown by a CAGR of 10.4% since 2005*. Denpasar International Airport was expanded in 2013 along with several other significant infrastructure improvements, and visa entry regulations to Indonesia were eased for 45 countries in 2015.

Most visitors stay in South Bali with the Kuta and Legian areas popular with a younger crowd and Seminyak marketed as more trendy and upmarket. Those seeking arts and culture head inland to Ubud, a cluster of luxury resorts can be found in Nusa Dua and other popular destinations are scattered mainly around the very southern portion of the island. Most big name hotel operators by now have at least a single property presence on the island.

Many developers have also created branded villa and condotel products whereby hotel and villa units are sold off-plan to raise development financing. Investors would usually be offered a guaranteed yield for a fixed period (7% per annum over three years would be typical) and a set number of days free stay each year. Thereafter, revenue would be pooled and distributed to investors. While some high profile projects with quality developers and reputable hotel operators performed well in the early years of this development cycle, less desirable offerings have sometimes been unable to deliver an adequate return after the guarantee period.

Given Bali’s continued popularity, land prices have risen drastically in recent years and can vary wildly depending on the land owner’s expectations. With a four-storey height limit on development, scaling-up is a challenge and finding cost effective opportunities is not always easy. JLL’s office in Bali has advisory and brokerage capabilities and finding suitable options for developers is one of our primary functions there.

According to tourist arrival figures, China has officially overtaken Australia as the number one source country for foreign visitors as of end-February 2016. We expect hotel and real estate developers to increasingly focus on capturing this market, and some operators already have dedicated China marketing teams. Boosting visitor arrivals is understandably a priority for the local government, but on a recent visit I was struck by Jakarta-esque traffic congestion in some areas. To ensure Bali is developed sustainably, it is vital that the addition of new rooms is proportionally equivalent to growth in tourist arrivals, and projects are appropriately dispersed geographically throughout the island, not focused solely on the highly developed area of South Bali.

* Source: Central Statistics Agency