Buying Property in Bali for Foreigners

Published on September 30, 2025 and written by Cyril Jarnias

Bali, Indonesia’s jewel, is attracting more and more foreign investors drawn to its paradise beaches, rich culture, and promising real estate potential. Whether you dream of an ocean-view villa or a profitable rental investment, understanding the subtleties of the Balinese real estate market is essential. Let’s dive into the intricacies of property acquisition in Bali for non-residents, breaking down the rules, taxation, and key steps of the process.

The Legal Framework: Navigating Property Waters in Bali

Indonesia, and Bali in particular, offers a unique legal framework for foreign investors. Contrary to some misconceptions, it is entirely possible for a non-resident to acquire property on the Island of the Gods. However, the property ownership system differs significantly from what one might know in the West.

Property rights for foreigners in Bali primarily materialize in the form of a long-term lease, commonly known as “leasehold”. This system allows foreign investors to lease land or property for a period typically ranging from 25 to 99 years. This option offers appreciable flexibility and the possibility to renew the lease upon its expiration.

For those seeking an option closer to full ownership, there is the “Right to Use” or “Hak Pakai”. This status, although more restrictive, allows a foreigner to own a property for a period of 30 years, renewable for an additional 20 years. It is important to note that this right applies only to residential properties and is subject to certain conditions, including a minimum investment and a residency requirement.

More ambitious investors can opt for the creation of a foreign-owned company (PT PMA) in Indonesia. This structure allows for the acquisition of real estate under the “Hak Guna Bangunan” (HGB) regime, offering more extensive rights, particularly for commercial projects.

International Taxation: Understanding the Financial Implications

Investing in Bali requires familiarizing yourself with a different tax system, which can have significant repercussions on your investment’s profitability. Real estate taxation in Bali involves several aspects to consider:

The property acquisition tax (BPHTB) amounts to 5% of the property’s value. This tax is generally the buyer’s responsibility and must be paid at the time of the transaction. It is crucial to include it in your overall acquisition budget.

The annual land and building tax, or PBB (Pajak Bumi dan Bangunan), is relatively modest in Bali. It is calculated based on the estimated value of the property and land, with a rate typically ranging between 0.1% and 0.3%. This tax is due every year by the owner or the leaseholder.

For rental income, Indonesia applies a 10% tax rate on rents received by non-residents. This rate is advantageous compared to many other countries, making rental investment particularly attractive in Bali.

It is important to note that Indonesia has signed tax treaties with many countries, including France, to avoid double taxation. These agreements can have a significant impact on your overall tax situation and deserve particular attention when structuring your investment.

The Administrative Process: Key Documents and Steps

Acquiring property in Bali requires meticulous preparation and the assembly of a solid file. Here are the essential documents and steps to follow to realize your project:

• Valid passport
• Residence visa or KITAS (temporary stay permit)
• Indonesian tax identification number (NPWP)
• Proof of sufficient funds for the purchase
• Bank reference letter

Steps of the Acquisition Process:

1. Due Diligence: This crucial step involves a thorough verification of the property’s legal status, ownership titles, and any restrictions. It is highly recommended to enlist a local specialized lawyer for this phase.

2. Negotiation and Preliminary Agreement: Once the property is chosen and due diligence is completed, you can begin negotiations. A preliminary agreement or letter of intent is usually signed at this stage.

3. Sale and Purchase Agreement: The drafting and signing of the sale and purchase agreement (or lease agreement for a leasehold) are crucial steps. This document must be drafted in Indonesian and English, and notarized to be legally valid.

4. Payment and Transfer: Payment is generally made via an escrow account to secure the transaction. Once payment is made, the property transfer can be finalized.

5. Registration: The final step involves registering the transaction with the local authorities, notably the National Land Agency (BPN) for long-term leases.

Investment Opportunities: Where and How to Invest in Bali?

Bali offers a diverse palette of real estate opportunities, suited to different investor profiles and objectives. Here is an overview of the most promising areas and popular investment types:

• Seminyak and Canggu: These coastal areas attract investors with their trendy vibe, renowned beaches, and strong tourist rental potential.
• Ubud: The cultural heart of Bali charms with its lush setting and appeal for a more zen and upscale tourism.
• Uluwatu: This booming region offers spectacular views and attracts a luxury clientele.
• Sanur: Ideal for long-term investments, this calmer area is appreciated by expatriates and retirees.

Popular Investment Types:

1. Luxury Villas: Villas with private pools remain a prime investment, offering high rental yields, especially in sought-after tourist areas.

2. Hotel Complexes: Investing in hotel rooms or resorts offers simplified management and potentially high returns.

3. Buildable Land: Purchasing land for future development can prove very profitable, especially in developing areas.

4. Commercial Properties: Commercial spaces, particularly in tourist areas, can offer interesting returns.

The Balinese real estate market has experienced sustained growth in recent years, with prices increasing on average by 5 to 10% per year in the most sought-after areas. In Seminyak, for example, prices for luxury villas can reach 3,000 to 5,000 euros per square meter, while more affordable opportunities exist in developing areas like Tabanan or Gianyar.

It is important to note that the Balinese market can be volatile and influenced by external factors like tourism. A long-term investment strategy and geographical diversification within the island can help mitigate risks.

Expert Tips: Maximizing Your Investment in Bali

To get the most out of your real estate investment in Bali, here are some tips from local market experts:

1. Engage Local Professionals: A lawyer specialized in Indonesian real estate law and a licensed real estate agent are indispensable for navigating the complexities of the Balinese market.

2. Prioritize Construction Quality: In a tropical climate, construction quality is crucial. Opt for properties built to high standards to minimize long-term maintenance costs.

3. Consider Rental Management: If you are investing for rental purposes, consider hiring a local management company to maximize your income and simplify remote management.

4. Stay Informed of Regulatory Changes: Laws concerning foreign ownership in Indonesia can evolve. Stay tuned for potential changes that could affect your investment.

5. Diversify Your Portfolio: Don’t put all your eggs in one basket. Consider different types of properties and locations to balance risks and returns.

6. Think Sustainable Development: Eco-friendly properties are gaining popularity in Bali. Investing in environmentally respectful properties can be wise in the long term.

7. Negotiate Smartly: The Balinese market often leaves room for negotiation. Don’t hesitate to discuss the price, but remain respectful of local customs.

Conclusion: Bali, a Paradise for Savvy Investors

Investing in real estate in Bali offers unique opportunities for foreign investors. With its enchanting landscapes, rich culture, and dynamic real estate market, the Island of the Gods attracts buyers from all over the world. Although the acquisition process may seem complex at first, a methodical and well-informed approach can lead to fruitful investments.

The key to success lies in a thorough understanding of the local legal framework, wise tax planning, and judicious selection of properties. By surrounding yourself with experienced professionals and staying attentive to market developments, you can turn your Balinese dream into a financially advantageous reality.

Whether you aim for an idyllic vacation home, a profitable rental investment, or a diversification of your international real estate portfolio, Bali offers a range of options to meet your objectives. With sustained growth in the real estate market and unwavering tourist appeal, the island promises exciting prospects for savvy investors.