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Bali attracts investors from all over the world. Some dream of an oceanfront villa to rent out. Others are looking for the perfect place to live. Some simply want to preserve their capital. According to Legion Real Estate, these investors are making a smart choice: real estate is currently considered one of the most promising asset classes.
The largest real estate agency in Bali has been finding the best options for its clients for many years. The Legion Real Estate team helps buy and sell not only coveted square meters but also established businesses. In short, they understand all the pitfalls of the local market. They shared with our readers the five most common mistakes and offered advice on how to avoid them.
The Bali real estate market is different from those in Europe, Turkey, or Dubai. It has its own rules and nuances that need to be understood in advance. Even one mistake can be very costly — both financially and otherwise. Therefore, Legion Real Estate advises approaching purchases with composure and prudence.
1. Unrealistic expectations
Developers' brochures and presentations may feature figures of 20-25% per annum, or even higher. Compared to the 3-5% in Europe, this is tempting, but it's not realistic. The actual return on investment in Bali real estate is around 10-15% per annum. To earn that much, you need to choose the right object — in a promising area with developed infrastructure.
The yield will be about 15% per annum — with proper management and stable occupancy.
What's the difference between what developers show? The fact is, few take into account the seasonality of tourist traffic and potential downtime, repair costs, interior renovations, utilities, and tax obligations.
Another factor that affects profitability — increasing competition. New properties are on the rise, and rental rates are falling. While demand remains high, oversupply is causing yields to decline in some locations.
Legion real estate agency recommends that investors not "overshoot" their expectations, but aim for approximately 10–15% per annum: «A conservative forecast will save your nerves. A good investment — this is when expectations match reality. Invest based on facts and figures, not emotions», — experts explain.
2. Misunderstanding of legal aspects
It's important to understand that, under Indonesian law, foreigners cannot directly own land. There are several legal mechanisms, each with its own specifics and risks:
Legion Real Estate warns against participating in shortcuts or dubious schemes to circumvent the law. Regulators may annul such transactions after an inspection, in which case a return on investment will be impossible.
Another common problem — failure to conduct due diligence before purchasing. Investors should ensure that the developer:
To minimize risks, Legion Real Estate experts recommend working only with professionals — lawyers who specialize in transactions involving foreign buyers.
«Legal literacy — this is not just a formality; it is the key to protecting your investment in Bali», — the agency claims. Indonesian laws are complex and constantly changing. To protect its clients from these difficulties, Legion Real Estate provides comprehensive legal support throughout the entire transaction.
3. Underestimating the climate and quality of construction
Bali has frequent rainfall, high salinity air, and extreme humidity (sometimes up to 95%). The island's tropical climate significantly reduces the lifespan of buildings. Materials that last for decades in Europe may require repairs in just 2–3 years in Bali.
«People accustomed to a different climate may not realize how serious this is. They see pretty pictures and attractive prices, but they don't consider the maintenance costs», — says Alexander Gulyaev, founder of Legion Real Estate.
Some of the most common problems faced by property owners include:
Mold and mildew
Corrosion of metal structures, including concrete reinforcement
Deformation of wooden structures (termite damage)
Damage to electrical wiring
Concrete deterioration (a common problem when using unwashed local sand)
Another important factor — Bali is prone to earthquakes. This means that homes must be built using specialized construction technologies to ensure structural stability. That's why Legion Real Estate partners only with reputable developers.
4. Choosing the wrong location
«ДEven if the view from the window is stunning, if there's no proper road, that's a problem», — says Alexander Gulyaev of Legion Real Estate. He advises investors to consider properties in tourist areas with well-developed infrastructure.
When choosing a location, consider:
Accessibility: Are the roads in good condition? Are there buses or other public transportation? How long does it take to travel to key locations?
Utilities: Are there frequent power outages? Is the internet reliable? Is the water supply stable?
Nearby amenities: Are there hospitals, shops, cafes, parks and entertainment venues?
Legion Real Estate emphasizes that real estate values and growth potential are directly dependent on the development of the area.
Some key investment areas in Bali include:
Premium areas (Seminyak, Canggu, Ubud, Nusa Dua) — Excellent infrastructure and stable tourist demand. Real estate prices are growing by 10–15% per year.
Developing areas (Uluwatu, Tabanan, North Coast) — high growth potential (up to 20% per year), but also higher risks due to uneven infrastructure development.
Remote areas — developers may emphasize scenic views and low prices, but these areas often lack infrastructure, which reduces the liquidity of the property.
«Even if you're buying a property in Bali for yourself rather than to rent out, you may need to sell it someday. When that time comes, location will be crucial», — say the experts at Legion Real Estate.
5. Lack of a property management strategy
Some investors focus solely on the purchase price and expected income, overlooking operating costs. However, owning property in Bali comes with ongoing expenses, including:
These expenses can amount to 5–8% of the property's value per year, which is higher than in many European countries. Without proper planning, investments may prove less profitable than expected.
Legion Real Estate Agency helps its clients resolve all these issues in advance. As a major agency, it is one of the first to receive exclusive offers from developers — often even before official sales begin. Experts help investors select the best options and, if necessary, undertake property management.
Legion Real Estate also provides legal support at every stage, acting as an advocate for the client's interests in all situations. Moreover, buyers can count on continued assistance even after the transaction is completed.
