Why properties in Bali might sell for less than their worth

For many property investors, Bali is a promised land, with its magical scenery, status as a tourist mecca, and incredible rental returns. But some properties in Bali sell well under their expected value. Why? In this post, we explain the most common reasons for Bali property undervaluation, and what smart buyers need to keep in mind before signing a contract.

Foreign Ownership Restrictions and Legal Limitations

One of the most common reasons properties in Bali might sell for less than their perceived value is due to Indonesia’s complex property laws. Foreigners cannot hold freehold land directly; instead, they typically invest via leasehold arrangements or by establishing local entities.

• Leasehold Properties: Typically, the lease term is 25–30 years and can be renewed, but the uncertain future often reduces the property's value.
• Ownership Risks: If the owner passes away or ownership documents are mismanaged, it might lead to legal battles that prevent buyers from taking interest.

Overdevelopment and Market Saturation in Tourist Hotspots

Areas like Seminyak, Canggu, and Ubud have seen rapid development. However, they are now overdeveloped, largely due to an influx of villas, hotels, and guesthouses.

• Strong Competition: High competition forces sellers to cut prices.
• Demand Trends: Investors are increasingly turning toward developing areas such as Tabanan or North Bali, which offer lower prices and higher growth potential.

Dependency on Tourism in Bali's Economy

The property market in Bali is closely linked to the island’s tourism industry. In times of global crisis, like the COVID-19 pandemic, tourism halted — and demand for property dropped, along with prices.

• Unstable Revenue Streams: Investors using property for short-term rentals may see variable income.
• Seasonal Demand: Housing prices and rental yields may fluctuate with the seasons.

Infrastructure Challenges and Zoning Regulations

While Bali continues to develop, certain areas still experience issues like poor roads, inadequate public services, and frequent power outages.

• Accessibility: Properties in rural or underdeveloped communities may appeal less to buyers and renters.
• Zoning Issues: Some zones are restricted to residential, agricultural, or commercial use only. Violating zoning laws can lead to legal problems and reduced property values.

Regulatory Uncertainty and Bureaucracy

Property and investment laws in Indonesia can change relatively often, affecting both local and foreign investors. Rapid regulatory shifts can influence ownership rights, tax obligations, and development permissions.

• Red Tape: Land titles and permits are often time-consuming and confusing to manage.
• Policy Risk: Government restrictions on foreign investment can tighten market liquidity.

Market Sentiment and Investor Perception

Stories of scams, legal conflicts, and corrupt intermediaries can damage investor confidence and drive prices down — even for well-managed, legitimate properties.

• Online Reputation Matters: Negative press and poor online reviews can reduce demand in some areas.
• Risk Aversion: Many foreign buyers choose “safer” Southeast Asian markets like Thailand or Vietnam, lowering demand in Bali.

Should You Invest in Bali Property in 2025

Despite its challenges, Bali remains an attractive destination for real estate investment — especially for buyers who do their research. Understanding why some Bali properties are undervalued may help you uncover hidden opportunities.

Key Takeaways

• Conduct legal checks
• Understand lease vs. freehold
• Target up-and-coming areas
• Stay updated on regulations

Through patient and well-informed investing, buyers can recognize valuable opportunities — even when the market appears “too good to be true.” And DDA Real Estate can help you with this. Buying real estate in Bali is easy with professionals. Our specialists will help you buy any real estate you need without any problems and will provide full legal support throughout the transaction.