JAKARTA • The world’s hottest island property market is about to get even hotter.
Prime residential prices on Bali surged 15 per cent last year, the most among comparable destinations tracked by broker Knight Frank LLP. The cost of villas on the Spanish island of Ibiza climbed 5 per cent and those in Italy’s autonomous region of Sardinia fell 8 per cent, the report said.
Bali’s gains are set to continue as Indonesia’s government this week begins to discuss revising rules to allow foreigners to directly own luxury apartments in the archipelago, with hopes of implementing changes within two to three months.
Mr Nathan Ryan, owner of property brokerage Bali Realty, expects interest from China and Singapore once the revisions are made.
“Asian buyers are no doubt a sleeping giant for Indonesia,” Mr Ryan said from Kerobokan, an area north of Kuta known for its surf and nightlife. “These buyers have plenty of money, but they are turned away by the leasehold property options, as they would prefer to be able to buy freehold.”
Currently, foreigners can get around the ban against owning real estate in Indonesia by using local citizens as proxies or by structuring the purchase as a long-term lease.
The government will coordinate with the immigration and tax offices to draft the revisions, Coordinating Minister for Economic Affairs Sofyan Djalil said last Thursday
Under the proposed amendments, foreigners will be allowed to buy only luxury apartments and not landed property.
Property prices in Jakarta rose 11 per cent in March from a year earlier, Knight Frank data shows. That is the biggest gain in Asia after Bengaluru in India, where real estate costs climbed 13.6 per cent.
“If you look at how close Jakarta is to Singapore and given that a lot of Singaporeans also work in Indonesia, there will be interest from Singaporeans,” said Ms Christine Li, director of research for Singapore at Cushman & Wakefield.