Overseas Property Investment – Do you know real estate in Bali has one of the highest yields in the world?

Many savvy investors are diversifying their investment portfolios by investing in overseas properties. Real estate often acts as a hedge against inflation, offering stability, growth, and wealth preservation. Some investors prefer world-class cities like London and Tokyo for strong rental yields. However, due to the higher acquisition cost and property management expenses, the net investment return is often suboptimal.

Bali's real estate, on the other hand, offers arguably one of the highest yields in the world – averaging over 20% ROI – with relatively lower capital required.

In this article, let’s take a closer look at the Bali real estate market and compare it with other cities worldwide. We aim to understand why Bali should be at the top of your list for overseas property investment.

The Short-Term Rental Investment Market

Many investors are only looking at the long-lease for their overseas property investment, which is also the right strategy for most of the developed commercial cities like New York in the USA and Tokyo in Japan. However, many emerging markets particularly those whose economy is driven by tourism and the new nomad working trend, this lifestyle property investment can be more profitable with the short-term rental play, Airbnb for example, and this brings investors a new concept of property investment. 

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Let’s take a look at the table above. In well-known tourist cities like Las Vegas, earnings from an average monthly stay are much higher than long leases, representing over a 500% difference in rental income. In Japan – Chiba, adjacent to Tokyo and renowned for being home to Japan's two Disney parks, the area is also full of natural beauty both inland and by the sea. Rental income from Airbnb is over 700% higher than long leases.

Bali, a top tourism destination, was named the 2nd most popular world city in 2023 by TripAdvisor. It has the advantage of charging similar Airbnb rates as world-class cities like Tokyo, Los Angeles, and Las Vegas in the US, but with much lower capital required. This uniqueness allows Bali to offer significant returns on investment, rarely found anywhere else in the world.

From a short-term rental property investment perspective, Bali is arguably one of the best destinations to invest in property for rental purposes, earning a passive income due to its excellent yield and ROI.

Rental Yield and Price to Rent Ratio

In this section, let’s closely examine return on investment and opportunity cost. Short-term rentals in destination areas are typically listed at higher prices with nightly rates. As discussed earlier, short-term rental properties can yield a much higher monthly rent compared to long-term rentals. However, some investors prefer long-term income properties as rental income remains consistent throughout the entire year when a tenant is on a 12-month lease and pays rent on time. Investors have their preferences, but here, let’s compare the Bali real estate market with other popular property investment markets in terms of acquisition cost and investment return.

From the table above, it’s evident that the capital required to purchase a square foot of property in Bali is 20 times less than in Hong Kong, 10 times less than in Tokyo, 9 times less than in London, and 2.5 times less than in Dubai. However, when it comes to generating income per square foot, although Bali is lower than Hong Kong, it surpasses Tokyo, London, and Dubai, delivering over 30% of Gross Rental Yield, the highest among all the compared countries!

Bali’s rental revenue is also growing (occupancy x rate = revenue). The number of nights booked has risen from 42,621 in Q2 2020 to 58,396 in Q2 2023 (as shown below in the table). Rental properties, in general, have an average occupancy rate of 70-80%. In some areas, rental growth is significant due to the movement of tourists, new infrastructure, proximity to beaches, beach clubs, restaurants, and amenities. For example, the Bukit Peninsula saw more than a 161% growth in rental revenue annually.

Unparalleled Experience:

Apart from all the data and analysis on how great the Bali real estate can offer investors optimal returns, most importantly, it is also a lifestyle investment where Bali offers an amazing place to spend quality time with your loved ones and friends, making it a perfect investment for unforgettable memories.

Invest in Bali now, invest in your future!

To understand more about the Bali real estate market, you can watch our recorded webinar where our Co-founders and Directors provided their insights on the Bali market, discussing topics from why Bali is a great investment choice to how to invest in Bali and explore various investment opportunities. Click to view.