By Elly, OPI
Bali can deliver excellent returns, but it’s not without risk. In this IPA blog I want to cover the “what could go wrong” side of the story—to help you invest smarter.
Zoning, land use & over-development concerns
The island of Bali is increasingly focused on sustainability and limiting over-development of hotel/villa land. (Recent news: a moratorium on new hotel/villa construction in certain zones due to overtourism and environmental concerns.)
This means: some zones may face tighter regulation; land-use risk is real. Choose sites that comply with local zoning and where land-use is clear.
2. Legal & title risk
As covered in other blogs, mistaken title, unclear lease terms, or ambiguous extension rights can seriously erode value.
From Reddit commentary:
> “Yes, there’s a very lucrative return … but the investment strategy is based on finding gullible excitable people to ‘invest’.”
So do your own diligence. Don’t rely solely on marketing brochures.
3. Tourism / Demand swings
Even though Bali is strong now, the property’s performance depends on travellers and guests. External shocks (pandemic, travel bans) can hit occupancy and yield.
Example: Some older research shows volatility in ROI during COVID when tourism collapsed.
4. Exit/liquidity risk
If you need to sell quickly, in a downturn, you may face fewer ready buyers, especially for off-plan or niche villas. Ensure the property has broader appeal.
Also consider currency risk (investment is often in USD or foreign currency vs. Indonesian rupiah) and repatriation of funds.
5. Management & operational cost escalation
Guest expectations rise: design, amenities, technology all matter. Maintaining high standards costs money. Poor management will erode net yield fast.
Checklist for your due diligence
Lease/usage documents: length, extension rights, registration.
Zoning and land-use status: hotel, villa-resort, residential?
Guest demand data: historic occupancy, rate achieved, seasonality.
Purchase cost vs realistic achievable rental income.
Management company credentials and cost structure.
Tax / corporate structure implications (PT PMA, foreign investor rules).
Exit strategy: resale path, target buyer profile, timeframe.
Contingency for vacancy, maintenance and regulatory change.
Final word:
Every investment has risk. In Bali you are buying into many dynamics: tourism, lifestyle, island regulation, foreign-title structure. By treating it like a business, doing your homework, engaging the right local advisors—and aligning your target return realistically—you can tilt the odds in your favour.
🌴 Investing in Paradise: Your Free Guide to Buying Property in Bali
Have you ever imagined owning your own little slice of Bali – perhaps a tranquil villa tucked between lush rice fields, a chic coastal home near Seminyak’s beach clubs, or a luxury retreat perched above the cliffs of Uluwatu?
It’s no wonder so many international buyers are drawn here. With its tropical climate, deep cultural heritage, warm hospitality and year-round appeal, Bali continues to rank among the world’s most desirable destinations for lifestyle and investment property.
Whether your goal is a peaceful getaway, a relocation to island life, or a property that generates solid rental income, Bali delivers an enticing blend of beauty and opportunity.
The best part? There are real, accessible pathways for overseas buyers — from leasehold villas to managed resort investments — and with the right guidance, you can navigate the legal and financial aspects smoothly.
That’s why we created the FREE Bali Property Buying Guide, independently researched and written to give you expert insights, essential local knowledge, and step-by-step advice for buying safely and smartly in Indonesia’s island paradise.
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