Lombok is rapidly emerging as the new investment gem for those looking to invest in property, driven by Bali’s market saturation and dropping Return on Investment (ROI).
Due to increasing competition and the sheer volume of construction, investors are now chasing opportunities along the beautiful southern coast of Lombok, including Kuta and Selong Belanak.
In this article, we provide a strategic overview of why South Lombok is attracting a new wave of investors and residents, from remote workers to families. Furthermore, we also guide you on how to secure your investment in this emerging market.
We detail the improving infrastructure, Lombok’s significantly lower entry market ticket, and its higher potential ROI (9% to 15% future estimate) compared to Bali’s declining returns (5% to 9%).
A key advantage is Lombok’s primary offering of freehold property (HGB or SHMSRS) over Bali’s predominantly leasehold market, providing greater potential for capital gain.
We also provide essential guidelines on securing your investment by emphasizing the need for thorough due diligence and defining the best tax structure (PT PMA vs. individual) to maximize your global ROI.
This is where ILA Global Consulting excels. For years, we’ve helped hundreds of international clients, including those investing in property in Bali and Lombok, precisely navigate Indonesia’s legal, taxation, and investment complexities.
Our team’s blend of deep local knowledge and international best practices ensures compliant, strategic solutions, making us a trusted advisor for anyone building a sustainable presence in Indonesia.
Why is Lombok Turning into a New Investment Attraction?
While Lombok was attracting surfers for years, looking for remote surf spots, Kuta Lombok is now seeing Remote workers and families relocating to the south of the Island. Infrastructure has improved, and since the Lombok Moto GP, the island has gained worldwide recognition.
Lombok is no longer the backpacker destination it once was; it has evolved into a place where people spend time and are looking to invest, work, live, and relocate with their families. International schools have emerged, and families now come to Kuta Lombok not only to spend vacation but to live there.
The internet, roads, international restaurants, and international airport connections (Singapore, Kuala Lumpur) all seem to be in place, preparing the boom of South Kuta. Other giant projects, such as Marina Bay Lombok, are also contributing to the area’s new surge in development.
Key Terms for Lombok’s Market Evolution
| Term | Definition |
|---|---|
| Kuta Lombok | The central hub of South Lombok, situated within the Mandalika Special Economic Zone (SEZ), has undergone rapid transformation from a remote surfing area into a key investment and lifestyle destination. |
| International Airport Connections | Refers to the Lombok International Airport’s (BIL) direct flights to major hubs like Singapore and Kuala Lumpur, which provide crucial access for international investors and residents. |
| Marina Bay Lombok | A giant, high-profile project contributing to the area’s development surge, typically including luxury resorts, residential areas, and waterfront facilities. |
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With numerous diverse investment opportunities in Indonesia, it is essential to ensure you have the correct setup to conduct business here.
Get help from our team of experts to register your company, navigate the real estate market, and secure your visa and stay permit.
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How Do Lombok’s Lower Prices Lead to Higher Future ROI?
Lombok offers an entry market ticket that is lower than that of other Islands, such as Bali. Kuta Lombok and the various beaches around Lombok offer a price range that is significantly lower than Bali.
The land prices and construction costs in Bali are now reaching levels that are affecting developers and investors. The current selling price is obviously affecting the Return On Investment (ROI), while developers and real estate agents are minimizing the effects based on the ROI from the last few years.
However, the current trend in Bali will obviously affect the ROI for the next few years. While it was still possible to achieve an ROI of 20 or 25% three years ago, the current ROI ranges from 7 to 13%.
People who have purchased a great location a few years ago are certainly not affected, but new buyers should probably look for other opportunities. For example, Lombok is offering a range of villas at prices below:
- Entry-level 1 to 2 bedroom villas: $90,000 to $200,000
- 2 to 3 bedroom villas: $200,000 to $350,000
- High-end luxury villas: $350,000+
Key Terms for Lombok’s Investment in Property
| Term | Definition |
|---|---|
| Entry Market Ticket | The initial, significantly lower financial cost required to acquire property (land and/or villa) in Lombok, compared to the mature and saturated market prices in Bali. |
| Return On Investment (ROI) | A performance metric calculating the profitability of an investment. The text highlights a lower current ROI in Bali (7%–13%) and a higher future potential ROI in Lombok (9%–15%). |
How is the Process of Property Ownership in Lombok?
Historically, the Bali market primarily sold leasehold properties. Developers were buying leasehold properties and subleasing them to their clients. Despite the leasehold property not being an ownership, this type of contract often gives rise to disputes between the lessor and lessee.
Kuta Lombok and Selong Belanak primarily offer freehold property, such as the Atrium project in Kuta. Those projects transfer absolute ownership to their client through a Strata Title (SHMSRS) and HGB.
Some developers, due to budgetary constraints, still offer leaseholds (Hak Sewa), but the trend of full ownership is attracting an increasing number of investors. In other words, Lombok provides both types of property acquisition, depending on the investor’s budget and constraints.
The ownership through the HGB or SHMSRS offers the investor a possibility to bet on a capital gain. At the same time, the Hak Sewa usually obligates the lessee to purchase more years in the future to be able to resell the land.
Lombok Property Ownership Comparison
| Feature | Freehold (HGB or SHMSRS) | Leasehold (Hak Sewa) |
|---|---|---|
| Ownership | Yes | No |
| Transferrable | Yes | Yes (for the remaining years) |
| Capital Gain | Highly potential | Very uncertain |
Why Does Lombok Provide a Greater ROI than Bali?
As mentioned earlier, the expected return on investment in Bali is decreasing for the new entrant. While the return on Lombok is increasing, the return in Bali is dropping for people purchasing new properties that are not well-located.
Lombok still offers a great location with a beautiful view and is close to the beach. Some properties in Bali, sold as being located close to Canggu or the beach, such as Padonan, are in reality 20 or 25 minutes from the beach. In contrast, properties in Lombok are typically within a 5-minute walk of a white sand beach.
ROI Comparison Between Bali and Lombok
| Metric | Last 3 Years (Historical) | Current ROI | Future ROI (Projection) |
|---|---|---|---|
| Bali ROI | 20% to 25% | 7% to 13% | 5% to 9% |
| Lombok ROI | 40% | 6% to 14% | 9% to 15% |
How to Secure Your Investment in Lombok
Despite the investment being promising, it is crucial to secure your investment in Lombok properly. Some scams persist, despite improvements in the property market.
Some lands still lack land certificates, and some land remains in dispute; therefore, it is crucial to conduct thorough due diligence on each deal. At ILA Global Consulting, we ensure to cover all aspects of:
- Reviewing your contract or drafting the contract to ensure appropriate protections
- Perform due diligence to check the documentation, ownership, access road, and tax
- Analyse the numbers and provide a vision on how realistic the project is
- Define the best tax structure to invest in Lombok
The last point is also essential to consider, as the way you invest through a PT PMA or under your own name might sensibly affect the global Return On Investment and, ultimately, your income.
Lombok is a new and beautiful place for investment, but it should be taken cautiously. The occupancy rate has increased to an average of 51%, with a higher rate of around 80-95% during the high season.
Key Terms for Lombok’s Investment in Property
| Term | Definition |
|---|---|
| Leasehold Property (Hak Sewa) | A contractual right to rent property for a fixed term (e.g., 25–30 years) where the buyer does not own the land. Historically common in Bali, but less dominant in the developing Lombok market. |
| Freehold (SHMSRS or HGB) | The form of property ownership is primarily offered in Lombok. SHMSRS (Sertifikat Hak Milik atas Satuan Rumah Susun) grants ownership of apartment units, while HGB (Hak Guna Bangunan) grants the right to build and use land, offering investors potential for capital gain. |
| Capital Gain | The profit realized from the sale of a property is calculated as the difference between the selling price and the original purchase price. This is deemed highly potential for Freehold properties in a developing market like Lombok. |
| PT PMA | The Foreign-Owned Limited Liability Company structure, which is the recommended legal entity for foreign investors to structure their investment and maximize their global ROI, as opposed to purchasing under an individual name. |
