The beauty of Bali attracts foreigners who want to buy property or earn fr om rentals. But is it worth the risk, studying the market, and spending time? However, the latest news makes one think.
Bali is seeing an increasing campaign to demolish properties built without the required permits. More than 100 villas and residential complexes that violated zoning and environmental regulations are under threat, including areas such as Bingin, Ubud, and others wh ere demolitions have already taken place. Among the victims are popular projects purchased by foreign investors.
In the near future, the island authorities plan to demolish about 40 residential complexes — both individual villas and apartment buildings.
The issue of overdevelopment on the island has been discussed for several years. Back in 2024, the authorities announced strict restrictions on the construction of new hotels and villas, but in practice that moratorium was never enforced.
Nevertheless, in August 2025, six Bali districts made their own decisions — banning the construction of hotels and restaurants on agricultural land. Thus, the authorities are trying to restrain chaotic development and concentrate new projects in established tourist areas: Kuta, Seminyak, Ubud, and Nusa Dua.
A well-known case — the residential complex PARQ Ubud, the "Russian Village," was closed and sealed: its owner faces a criminal case for land use violations. The government is tightening control: since September 2024, a moratorium has been in effect on new permits in overheated tourist zones that threaten natural and cultural values.
Land is leased: foreigners are not owners
Foreigners are not allowed to acquire land — only through long-term lease (leasehold), lease for construction (Hak Guna Bangunan), or Hak Pakai. In reality, the tenant is not the owner, and the land may return to the original owner after the lease ends.
According to the Basic Agrarian Law (UU No. 5/1960), full ownership rights (Hak Milik) belong only to Indonesian citizens. Any transaction where a foreigner becomes a direct or indirect landowner is considered invalid.
In fact, foreigners cannot simply "buy a villa" — they are not allowed to register land in their own name. Circumventing schemes are used:
Leasehold (long-term lease) — lease for 25–30 years with possible extension. After expiration, the land returns to the owner. This is not ownership, but temporary use.
Hak Pakai (right of use) — available to foreigners with residence permits, allows ownership of a house for up to 50 years, but only for personal residence and subject to price and land restrictions.
Nominee ownership through a local citizen — the riskiest scheme, considered illegal. In case of dispute, foreigners almost always lose the property.
Through PT PMA (foreign company) — gives rights for commercial construction (Hak Guna Bangunan) for 30–80 years, but requires company registration and business activity.
All these options are far fr om full ownership. In practice, foreigners remain vulnerable: the lease may not be extended, laws may change, and nominee schemes often end with loss of money.
Invalid permits, lack of title, land disputes, as well as debts of previous tenants — all this can turn a villa into a financial trap. Problems with access rights, unpaid Banjar (local community) fees, and unstable infrastructure worsen the situation.
Mass construction and declining quality
The post-COVID construction boom brought an influx of inexperienced developers. To make up for lost time, they saved on materials, used low-quality labor, and sacrificed quality and technical standards. Owners complain about swollen floors, leaking roofs, cracked walls — the quality did not stand the test of time.
Oversaturated market, falling rental income
Despite growing tourist flows, many villas remain empty — due to oversupply and inflated prices. For example, one-bedroom "villas" are rented for 30 million IDR per month but stay vacant, and yields do not meet expectations. Bukit Vista warns of illusory marketing promises of profitability that failed due to oversupply and unstable demand.
Construction grew by 20% annually from 2018 to 2023, exceeding demand by 15%. The government intends to inspect 1,000 properties per month in 2025.
Any investment must be accompanied by thorough due diligence, legal study, and trusted connections.
10–15% annual return, quick payback, and profitable resale?
Due to high humidity, frequent rains, and heat, a house in Bali may not last the 25 years of a lease agreement and may lose its “marketable condition.” Renewing the lease — on even less favorable terms — may become meaningless. A house without land is not considered a full-fledged real estate object in legal terms, but only an "improvement on leased land."
When the lease ends, the house legally ceases to belong to you, since the land rights return to its owner. Many villa contracts explicitly state: everything built remains with the landowner after the lease ends. When reselling a villa, you are not selling real estate, but the remaining lease term + the structure legally tied to someone else’s land. Its future value and the prospect of quick return on investment with rental income are questionable.
When choosing a developer in Bali, it is important to consider construction quality requirements dictated by the climate. High-quality imported materials such as steel, concrete, and finishing cost 2–3 times more in Bali due to complicated logistics. Properly built property cannot be cheap.
What to choose for investment?
For risk-free investments, you can choose other popular foreign destinations wh ere the law is clear and supports the investor — for example, Dubai or Türkiye.
In Türkiye, a foreigner owns not only the apartment but also a share of the land under the residence. Villas and the land beneath them are full property protected by law. You can buy apartments, townhouses, or a villa in Türkiye worth from USD 400,000 in total and obtain citizenship. Residence permits are also available for owners. Real estate can be rented out short-term through a licensed management company, generating passive income in euros without personal involvement.
In your villa in Türkiye, you are the owner. And your children are heirs to lasting property, not a lease agreement.
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