Micro-Apartments in Bali: An Affordable Solution

Published on September 30, 2025 and written by Cyril Jarnias

In Bali, one of the world’s most sought-after tourist destinations where real estate demand continues to grow, micro-apartments are emerging as an ingenious solution to budget constraints while meeting the aspirations of many expatriates and locals.

These compact living spaces, typically under 30 m², offer an affordable alternative for those looking to settle on the island without breaking the bank. Beyond reducing living costs, micro-apartments encourage a minimalist and sustainable lifestyle, thus playing a crucial role in adapting to contemporary environmental challenges.

Explore how this innovative trend meets the needs of a population eager to balance economy and quality of life, while aligning with ecological and practical values.

Microliving in Bali: An Expanding Niche

The growing popularity of microliving in Bali is explained by several converging factors that are rapidly transforming the local real estate market.

Key Demand Factors:

• Rise in international tourism, fueled by the expansion of Ngurah Rai Airport and improved connectivity.
• Massive influx of remote workers and digital nomads, encouraged by specific visas and significant improvements in digital infrastructure. Digital nomads now account for 20% of long-term rentals on the island.
• Attractiveness of a lower cost of living compared to other global destinations, appealing to temporary expatriates seeking a balance between modern comfort and accessibility.
• Rapid urbanization in areas like Canggu, Ubud, or Uluwatu where urban densification leads to rising prices per square meter.

Trends in Residential Preferences:

• Shift towards compact yet optimized spaces: high demand for one-bedroom apartments or villas offering maximum functionality with minimal wasted space.
• Growing popularity of favorable cost-to-size ratio:
  • More affordable rents for smaller spaces
  • Low utility bills (energy/water)
  • Contract flexibility (short/long-term rentals)
• Increased importance placed on environmental sustainability:
  • Projects integrating solar panels, rainwater harvesting systems, and eco-friendly local materials
  • Eco-certification (LEED/GBCI) valued by foreign investors

Comparison Table: Micro-Apartments vs. Traditional Housing

Criterion	Micro-Apartment	Traditional Housing
Area	20–45 m²	>80 m²
Average Rent	Low	Medium/High
Sustainability	High (green solutions)	Variable
Target Audience	Digital nomads / Youth	Families / Long-term
Rental Flexibility	Very High	Lower

Local Initiatives Addressing Economic & Environmental Challenges:

• Real estate developers are betting on modular, adaptable, and rapid construction to quickly meet demand while controlling costs.
• Systematic adoption of energy innovations to limit carbon footprint: enhanced insulation, low-consumption LED lighting.
• Thoughtful layouts to promote well-being: open spaces blending indoor/outdoor areas in a modern Balinese style with traditional accents.

Challenges Encountered:

• Land pressure in major tourist areas artificially driving up prices despite the small size of the housing.
• Ongoing need to adapt environmental standards in response to local climate issues (notably sustainable water management).

Thus, the joint efforts of the local real estate sector aim to offer accessible options without sacrificing quality or eco-responsibility, positioning Bali as a regional laboratory for microliving adapted to new global lifestyles.

Investing in Studios in Bali: Opportunities and Challenges

Bali is attracting more and more real estate investors, particularly due to sustained tourism growth and its increasing popularity as a second-home destination. This Indonesian island benefits from a constant influx of international visitors, with a government ambition to reach 7 million tourists in 2024, surpassing pre-pandemic levels. Simultaneously, Bali appeals to an international clientele with high purchasing power seeking properties for regular stays or semi-permanent relocation.

Studios and micro-apartments represent a preferred choice for investors thanks to the following advantages:

• Attractive rental yields: Annual rates generally range between 8% and 12%, especially in dynamic areas like Ubud or Seminyak.
• High occupancy rates: The average rate fluctuates between 65% and 80%, ensuring stable rental income.
• Continuous rent increases: Rental costs are rising rapidly (+15% to +20% per year), favoring return on investment through short-term rentals.
• Growth in the real estate market: Nationally, the Indonesian market is expected to grow from USD 61.22 billion (2023) to USD 81.24 billion (2028), representing an average annual rate exceeding 5%. Property value is therefore well-oriented.

Main Opportunities

Opportunity	Detail
Rental Yield	Up to 10–12%/year depending on location
Property Appreciation	Expected increase in price per m² with growing demand
Asset Diversification	Facilitated access through long-term lease (“leasehold”)
Dynamic Tourist Market	High occupancy year-round

Major Challenges

• Restrictive legislation for foreigners:
  • Inability to directly acquire certain types of properties;
  • Available legal solutions: long-term lease (“leasehold”), right of use (“hak pakai”), local company establishment (PT PMA).
• Additional costs:
  • Recurring fees related to management and maintenance;
  • Necessary upkeep to maintain appeal to high-end tourists.
• Seasonal tourism fluctuations:
  • Income dependent on tourist peaks;
  • Increased exposure to global economic uncertainties.

Case Study(ies)

Investors who acquired micro-apartments in the city center or near the coast have recorded a net yield between 9% and over 11% annually after deducting ongoing expenses. In Ubud, for example, despite a lower initial investment than in Seminyak, profitability remains very competitive thanks to local tourism dynamism and optimized management through specialized services.

In summary
The combination of Bali’s tourism vitality, rapid rent increases, and solid prospects for land appreciation is establishing Bali as a prime destination for studio real estate investment. However, it remains essential to carefully analyze each project in light of the specific Indonesian legal framework and anticipating the natural cycles of the local hospitality sector.

Small Space Yields: Why Choose Bali

Bali benefits from sustained tourist demand, attracting millions of visitors each year drawn by its picturesque landscapes, rich local culture, and diverse affordable accommodation options. This appeal fuels a dynamic real estate market where micro-apartments occupy an increasingly significant place.

Key Advantages of Micro-Apartments in Bali for Rental Yield:

• High rental demand linked to international tourism and the rise of remote work.
• Very high occupancy rates, favoring net profitability that can reach up to 10% after deducting taxes and fees.
• More accessible purchase prices than luxury properties, offering an affordable entry point for investors wanting to benefit from Bali’s dynamism.
• Smaller spaces are easier to rent quickly and offer increased flexibility in terms of management.

Factor	Impact on Yield
Tourist Demand	High annual occupancy
Purchase Price	More accessible
Profitability Rate	Up to 10% net
Management	Simplified

Lucrative opportunities also stem from demographic changes among potential tenants: families, young remote workers, or travelers all seek compact yet well-located accommodations. Compact formats are now preferred as they better adapt to modern needs while remaining economical to build and maintain.

Determining Factors to Optimize Yield:

• Location remains crucial: prioritizing areas near popular beaches or lively urban centers ensures maximum occupancy rates.
• Effective management (professional service, responsive maintenance) maximizes customer satisfaction and limits rental vacancies.
• Targeted marketing strategies (international platforms, specialized social networks) help reach a diverse international clientele.

The winning equation combines modern small format + strategic location + professional management = sustainable profitability on Indonesia’s most sought-after island.