Comparing Bali's Leasehold and Freehold Properties: Making Informed Investment Decisions

Bali offers a unique opportunity for investors to own a piece of paradise. While both freehold and leasehold properties are available, many investors ask whether leasehold properties present compelling advantages over their freehold counterparts.

Regulations and Accessibility

Land ownership under the title "freehold" or "Sertifikat Hak Milik (SHM)" is exclusive to Indonesian citizens. However, there are approaches available to foreigners, including establishing a local PT PMA Company with 100% foreign ownership.

Investors must consider whether the initial higher costs associated with setting up a company for owning freehold land are justified by the potential long-term security. Purchasing a leasehold property is relatively straightforward with lower upfront costs and an easier exit strategy.

Affordability in Prime Locations

One of the most significant advantages of investing in a Bali leasehold property is its affordability compared to freehold properties.

Return on Investment (ROI) and Diversification

With Bali's robust tourism industry and increasing popularity as a destination for digital nomads, leasehold properties can offer substantial rental income potential.

Lower Entry and Exit Costs

Acquiring a leasehold property in Bali involves lower initial costs compared to freehold properties. When it comes to selling or transferring ownership, leasehold properties offer more flexibility.