Bali is well and truly back on the radar. The latest visitor arrival numbers from Bali’s Central Statistics Agency (BPS,) show that the cumulative number of international tourist visits in the first half of 2024 overtook 2019’s pre-pandemic levels. New routes and direct flights from the likes of Indonesia AirAsia, Emirates, and in the coming months, possibly Aeroflot, look set to boost these numbers even further.
But how do improved accessibility and the current tourism boom impact short-term holiday rentals and long-term property investments in Bali’s real estate market? And importantly what happens to the balance between growth and sustainability?
Bali’s Tourism Renaissance
After the global pandemic temporarily slowed Bali’s tourism sector, 2024 marks a year of resurgence. The latest figures from Statista reveal a remarkable recovery, driven largely by returning markets, particularly from Australia, which remains the top source of tourists. The influx of visitors is not only reviving the island’s economy but also fueling new opportunities in various sectors, especially real estate.
We’re not just talking about traditional vacationers here, because now we have to factor in digital nomads and expatriates, who are increasingly seeing Bali as an ideal location for both work and leisure. This is an important demographic shift that is creating a ripple effect across the property market, as demand for both short-term accommodations and long-term residences skyrockets.
Investment Surge: A Golden Opportunity
The growth in tourist numbers is directly contributing to a rise in foreign direct investment (FDI.) Bali’s Acting Governor, Sang Made Mahendra Jaya, recently announced that investment in Q2/2024 exceeded targets, reaching almost IDR 18 trillion, according to reporting from Detik Bali, with significant impacts on hospitality, real estate, and infrastructure. This wave of investment is reshaping Bali’s landscape, with new developments springing up to cater to the ever-growing influx of tourists and expatriates.
For investors, Bali represents a golden opportunity. It comes with risks of course, but the potential rewards are certainly triggering savvy investors. The island’s real estate market is currently one of the most dynamic in Southeast Asia, with properties appreciating as demand continues to outpace supply. Whether it’s luxury villas, boutique hotels, or commercial spaces, the opportunities, especially in the long term, are vast and varied.
Residential properties, particularly villas and apartments, are in high demand and the commercial property market is thriving, with investors eager to develop new hotels, resorts, restaurants, and shopping malls to cater to the swelling number of tourists. However, this rapid growth is not without its challenges. The influx of capital and development projects is driving up property prices, making it increasingly difficult for locals to afford housing.
Furthermore, the environmental impact of this growth is a concern, with some areas of Bali, particularly in the south and specifically around Canggu and Uluwatu, experiencing a growing strain on infrastructure and natural resources. The calls to spread the wealth to West Bali and North Bali, including less-explored areas like Karangasem, Klungkung, Tabanan, and Bangli need to be acted upon. Talk of a new airport in the north of the island and an LRT system from Ngurah Rai International Airport in the south may go some way to address these issues, but realistically they will take years to bear fruit.
Cracking Down on Illegal Workers and Unregistered Accommodations
Another issue that has arisen with the tourism boom is the presence of illegal workers and the use of non-registered accommodations. The Indonesian government has stepped up checks on foreigners to prevent illegal workers, which has become a growing concern in Bali’s hospitality and service industries. Professor Ida Bagus Raka Suardana from the National Education University (Undiknas) Denpasar, noted that not only do these tourists bring less spending money than before, but some are even competing for jobs in Bali.
According to Jakarta Globe, despite the record numbers of international visitor arrivals in Bali, there are rising concerns about the declining economic impact and choice of accommodations, as many opt for illegal villas and non-registered accommodations, often found on platforms like Airbnb. These unregulated options not only evade taxes but also contribute to the strain on local infrastructure without proper oversight or contribution to community development.
Balancing Growth and Sustainability
The rapid expansion of tourism and real estate in Bali also raises important questions about sustainability. Over-tourism has long been a concern on the island, with the sheer number of visitors putting pressure on local infrastructure, the environment, and cultural heritage. The delicate balance between growth and sustainability is critical to ensuring that Bali remains an attractive destination for years to come.
Antara News recently reported that Indonesia’s Minister of Tourism and Creative Economy, Sandiaga Uno, speaking at a recent THINC Indonesia Conference in Nusa Dua expressed the need for a balanced approach to tourism development, citing July 2024 protests in Barcelona as an example, during which residents expressed their frustration over the overwhelming number of tourists in the city, saying that to prevent a similar situation in Bali, there is a need to implement sustainable business practices and improve tourism quality.
For investors, this focus on sustainability presents both a challenge and an opportunity. Those who can incorporate sustainable practices into their projects will not only contribute to Bali’s long-term viability but also stand to benefit from the growing demand for eco-conscious properties and experiences.
Embracing a Sustainable Future
Bali’s tourism boom presents both opportunities and challenges. While the rise in visitor numbers boosts the property market, it also underscores the need for sustainable practices and balanced development across the island. Bali’s waste management infrastructure is a case in point as it has struggled to keep up with this rapid growth, leading to significant environmental issues.
The government and local organizations are working on initiatives to address this, such as promoting recycling and sustainable practices among businesses and residents. However, the sheer volume of waste generated by millions of visitors each year makes this an ongoing challenge that needs more robust solutions.
Investors looking at Bali should be mindful of these dynamics and consider the long-term impact of their investments. As Bali continues to evolve, the key to success will be in finding harmony between growth and sustainability to ensure that Bali’s natural beauty and cultural heritage are preserved for future generations.
If you’re looking to invest in a luxury villa, a boutique hotel, or a commercial property in Bali, the time is now. And by embracing sustainable development and being mindful of the island’s unique landscape, investors can contribute to a prosperous future for Bali while reaping the rewards of this thriving market.