More investors are now looking to Lombok for real estate and property investments. With its white sand beach, South Lombok is attracting investors with the help of the Indonesian government. In the last few years, Bali has hidden other investment destinations in Indonesia. However, the game is now changing, and Lombok has started to attract investors from all over the world, especially in the property sector. Lombok is now ready to attract investors, and this article reviews why you should invest in Lombok.
New infrastructure and pristine beach
Lombok was known for several years for the Gilis and Senggigi and the Rinjani. Most of the tourists gathered in the north of Lombok, where the infrastructures, hotels and major places to visit were located. In the last few years, other spots have become more and more famous, especially in the South of Lombok. The Lombok invest and development initiatives in the South has been helped by the government to promote other destinations around the country.
Indeed the airport near Mataram is now able to accommodate large aeroplanes with flights directly from Singapore or Kuala Lumpur. This decision from the government has been accompanied by the development of the international Moto GP circuit in South Lombok. The place was for several years known only to surfers or backpackers looking for a place to escape from the crowd. For those who visited Kuta Lombok 10 years ago, they will not recognise the place anymore. The beaches are still pristine and natural. However, the infrastructure and development of restaurants or hotels have been booming over the last few years. While it could take hours to go from Selong Belanak to Kuta Lombok, it now takes only half an hour.
Make navigating real estate in Indonesia easy
Save time and money by letting ILA’s team of experts guide your real estate journey in Indonesia. We can help with due diligence, land title transfers, notary services, contract drafting and reviewing, building permits, various licences and more.
Find more information about our broad range of real estate services, or reach out today for a free consultation.
Improvement in hospitality
While Bali has been famous for decades for its hospitality, Lombok and the Sasak were more known for being rougher and less welcoming. However, the community and younger generations now recognize that growth can come when everyone works together to create a welcoming atmosphere, positively impacting property investment in Lombok. In some ways, for visitors, Lombok is even now more welcoming than Bali itself. Lombok has worked a lot to change its image. Kuta Lombok now has a main street with bars and restaurants, which makes it pleasant to walk with families and friends at night. For fans of nightlife, Kuta Lombok also offers memorable events and parties.
Affordable investments and Great ROI
While Bali is now offering properties over a million dollars with no sea view, Lombok is offering a beautiful and natural landscape with a sea view or beachfront for thousands or hundreds of thousands of dollars. For investors looking to buy a property in Lombok, the price will be 80% more affordable than in Bali for a property with the same quality and sea view with a capital gain more interesting.
The return on investment in Lombok is indeed, at the moment, more about capital gain and the expectation of seeing a price increase. Investors in Lombok can easily expect a capital gain of 200% in the next few years, with an ROI on Airbnb of around 20%. While Bali has thousands of villas in construction and strong competition between villa owners, Lombok is at the beginning of a new path. Bali is seeing a drop of 40% in daily rental income due to the new villas dropping in price and investors bringing new products onto the market (the number of villas increasing more than the number of tourists).
Also read: How to Rent Out A Property in Bali and Lombok as Foreigner
Regulation
While Bali continues to rely on leasehold, property investment in Lombok offers a more secure approach. Despite what some vendors can promise, the leasehold starts to bring some difficulties. Indeed some investors have difficulties extending their lease in Bali even after 5 years. Balinese understands that the investors will be ready to pay a lot of money to extend the lease. Nobody can blame the Balinese, as every owner would do the same. Would you extend the lease of land if somebody has generously built a villa on your property? You would probably ask for a price of 30% over the market price. Unfortunately, do not expect the notary to help with the extension; the 1% fee is just to sign a document which was not require their signature.
Lombok has taken a different approach, with owners selling their land on freehold (SHM) and allowing foreigners to purchase the land or the villa through a PT PMA to acquire an HGB. The legal framework is clear, and the procedure seems to follow the regulations. Developers are still new and some projects however need to be checked. At ILA Global Consulting, we have seen some projects without the application of a building permit (PBG) or with unclear definitions of the zoning and the land title.
Moratorium in Bali
Bali is facing a situation that could provide good momentum for Lombok. Indeed, Bali has faced an uncontrolled development with some real estate agents and some developers selling properties without building permits (PBG) and promoting the possibility of renting villas on Airbnb without any licence by leasing villas under their own name. This time seems over with locals calling now for a moratorium in Bali.
This moratorium has the objective to stop some development on beach clubs, restaurants, and new villa complexes in areas such as Badung (Canggu, Kuta, Uluwatu), Sanur and Ubud. Those regulations are more than welcomed by ILA if it is applied. This new momentum could be beneficial for property investment in Lombok, attracting various types of investors and providing opportunities for those who missed their chance in Bali to invest in a promising new destination.
In other words Kuta Lombok has its momentum and it is the right time to catch it.
- Beautiful beaches
- Nice fine dining
- Less traffic than in Bali
- Possibility to build a villa on beach side or seaview for more than half of the price of Bali
- Lower price and better ROI than Bali as a developer
- Investors looking to find another destination after Bali
- Start of a new adventure
